Historical Roots of Contemporary Management Practices - By Dr. G C Mohanta, Professor

1. Historical Roots of
Contemporary Management
Practices
Dr. G C Mohanta, BE, MSc(Engg), MBA, PhD(Mgt)
Professor

2. Historical Roots of Contemporary
Management Practices
 Up to the 20th century (pre-modern era)
 Adam smith’s contribution to the field of management
 Industrial revolution’s influence on management practices
 In the early 20th century
 Scientific management
 General administrative theory
 The human resources approach
 The quantitative approach
 From the later 20th century to the present
 The process approach
 The systems approach
 The contingency approach

3. Adam Smith’s Contribution to
the Field of Management
 The general popularity today of job specialization
is undoubtedly due to Smith’s view about division
of labor.
 Division of labor is the breakdown of jobs into
narrow, repetitive tasks.

4. Industrial Revolution’s Influence
on Management Practices
 Industrial Revolution has originated in late-18th-
century in Great Britain, and crossed the Atlantic to
America by the end of the Civil War.
 Because of the Industrial Revolution, machine power
was rapidly substituted for human power, which made it
economical to manufacture goods in factories.
 With the development of big organizations, a formal
theory to guide managers running these organizations
efficiently and effectively was needed.

5. Evolution of Management Theory
1890
2000
Administrative Management
Behavioral Management
Scientific Management
Management Science
Org. Environment
1940

6. Scientific Management
 Frederick Taylor was called as the father of
Scientific management.
 His book - The Principles of Scientific
management was published in 1911.
 Immediately, its contents became widely
accepted by managers throughout the world.

7. Background of That Time
 There were no clear concepts of
responsibilities to workers and managers.
 No effective work standards existed.
 Management decisions were based on hunch and
intuition.
 Workers were placed on jobs with little or no
concern for matching their abilities and
aptitudes with the tasks required.
 Managers and workers considered themselves to
be in continual conflict - any gain by one would be
at the expense of the other.

8. Taylor’s Four Principles of
Management
 Develop a scientific way for each element of an individual’s
work, which replaces the old rule-of-thumb method.
 Scientifically select and then train, teach, and develop the
worker.
 Heartily cooperate with the workers, so as to ensure that all
work is done in accordance with the scientific way that has
been developed.
 Divide work and responsibility almost equally between
managers and workers. Managers take over all work for
which it is better fitted than the workers.

9. Problems of Scientific Management
Managers often implemented only the
increased output side of Taylor’s plan.
 They did not allow workers to share in
increased output.
 Specialized jobs became very boring, dull.
 Workers ended up distrusting Scientific
Management.
 Workers could purposely “under-perform”
 Management responded with increased use of
machines.

10. The Gilbreths
Frank and Lillian Gilbreth refined Taylor’s
methods.
 Made many improvements to time and
motion studies.
Time and motion studies:
 1. Break down each action into components.
 2. Find better ways to perform it.
 3. Reorganize each action to be more
efficient.
 Gilbreths also studied fatigue problems, lighting,
heating and other worker issues.

11. General Administrative Theory
 Henry Fayol’s contributions
He argued that management was an activity
common to all human undertakings in business, in
government, and even in the home. He stated 14
principles of management—fundamental or universal
truths.

12. Fayol’s 14 Principles of Management
1. Division of Work
2. Authority
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of
Individual Interests to the
General Interest
7. Remuneration
8. Centralization
9. Scalar Chain
10. Order
11. Equity
12. Stability of Tenure of
Personnel
13. Initiative
14. Esprit de corps - a feeling
of pride and mutual loyalty
shared by the members of a
group.

13. Administrative Management
 Seeks to create an organization that leads
to both efficiency and effectiveness.
 Max Weber developed the concept of
bureaucracy.
 A formal system of organization and
administration to ensure effectiveness and
efficiency.
 Weber developed the Five principles shown in
the following Figure.

14. Bureaucratic Principles
A Bureaucracy
should have
Written rules
System of task
relationships
Hierarchy of
authority
Fair evaluation
and reward

15. Weber’s Ideal Bureaucracy
 Division of labor
 Authority hierarchy
 Formal selection
 Formal rules and regulations
 Impersonality
 Career orientation

16. Key points of Bureaucracy
Authority is the power to hold people accountable
for their actions.
Positions in the firm should be held based on
performance, not social contacts.
Position duties are clearly identified; people
should know what is expected of them.
Lines of authority should be clearly identified;
workers should know who reports to whom.
Rules, Standard Operating Procedures (SOPs)
& Norms used to determine how the firm
operates.
 Sometimes, these lead to “red-tape” and other
problems.

17. The Human Resources Approach
 Hawthorne Studies
 Human Relations Movement
- Dale Carnegie
- Abraham Maslow
- Douglas McGregor
 Behavior Science/Behavioral Management

18. Behavioral Management
Focuses on the way a manager should
personally manage to motivate
employees.
Mary Parker Follett, an influential
leader in early managerial theory
 Suggested workers’ help in analyzing their jobs
for improvements.
 The worker knows the best way to improve the
job.
 If workers have the knowledge of the task, then
they should control the task.

19. Hawthorne Studies
 Time: 1924—the early 1930s
 Place: Hawthorne plant in the Western Electric Company
 Designer: Western Electric industrial engineers
Elton Mayo and his associates
Mayo’s Finding:
 Individuals improve or modify an aspect of their
behavior in response to their awareness of being
observed.
 Behavior and sentiments are closely related.
 Group influences significantly affect individual behavior.
 Group standards establish individual worker output.
 Money is less a factor in determining output than are group
standards, group sentiments, and security.

20. Dale Carnegie’s Contribution
 One of the core ideas in his books is that it is possible
to change other people's behavior by changing one's
behavior toward them.
 How to Win Friends and Influence People

21. Maslow’s Hierarchy of Needs
Self-
actualization
Esteem
Belongingness
Security
PhysiologyFood
Achievement
Status
Friendship
Stability
Job
Friends
Pension
Base
NEEDS
General Examples Organizational Examples
jobChallenging
title
at work
plan
salary

22. Theory X and Y
 Douglas McGregor proposed the two different sets
of worker assumptions.
Theory X: Assumes the average worker is lazy, dislikes
work and will do as little as possible.
 Managers must closely supervise and control through
reward and punishment.
Theory Y: Assumes workers are not lazy, want to do a
good job and the job itself will determine if the worker
likes the work.
 Managers should allow the worker great latitude, and
create an organization to stimulate the worker.

23. Theory X vs Theory Y
Theory Y
Employee is not
lazy
Must create work
setting to build
initiative
Provide authority to
workers
Theory X
Employee is lazy
Managers must
closely supervise
Create strict rules
& defined rewards

24. Theory Z
Emphasizes:
 Long-term employment
 Slow career development
 Moderate specialization
 Group decision making
 Individual responsibility
 Informal control over the employee
 Concern for workers

25. Japanese Theory Z:
Characteristics of a Theory Z
organisation – Ouchi
 Long-term employment, often for a lifetime
 Relatively slow process of evaluation and
promotion
 Development of company-specific skills &
moderately specialised career path

26. Japanese Theory Z:
Characteristics of a Theory Z
organisation – Ouchi (contd.)
 Implicit, informal control mechanisms supported
by explicit, formal measures
 Participative decision-making but individual
ultimate responsibility
 Broad concern for the welfare of subordinates &
co-workers as a natural part of a working
relationship & informal relationships among
people

27. The Quantitative Approach
 The quantitative approach to management,
sometimes referred to as, operations research (OR)
or management science.
 It includes applications of statistics, optimization
models, information models, and computer
simulations, linear programming, and so on,
which can be used to solve management
problems.
 In general, the quantitative approaches have
contributed directly to management decision
making, particularly to planning and control
decisions.

28. Systems Approach
 The system approach defines a system as a
set of interrelated and interdependent parts
arranged in a manner that produces a
unified whole.
 Societies are systems and so, too, are
computers, automobiles, organizations, and
animal and human bodies.

29. An Organization Is an Open System
 An organization is a system that interacts with and
depends upon its environment.
- Organization’s stakeholders: any group that is affected by
organizational decisions and policies.
- The manager’s job is to coordinate all stakeholders to
achieve the organization’s goals.
 Organizational survival often depends on successful
interactions with the external environment.

30. The Operating Model in
Organizational System
Input Transformation Output
Feedback

31. Contingency Approach
 Assumes there is no one best way to
manage.
 The environment impacts the organization
and managers must be flexible to react to
environmental changes.
 The way the organization is designed &
control systems selected, depend on the
environment.
 Technological environments change rapidly,
so must managers.

32. Four Popular Contingency
Variables
Organization size
Routineness of task technology
Environmental uncertainty
Individual differences

33. MCKINSEY’S 7S FRAMEWORK

35. THE HARD S’s
 Strategy: the direction and scope of the company
over the long term.
 Structure: the basic organization of the company,
its departments, reporting lines, areas of expertise
and responsibility (and how they inter-relate).
 Systems: formal and informal procedures that
govern everyday activity, covering everything from
management information systems, through to the
systems at the point of contact with the customer
(retail systems, call center systems, online systems,
etc).

36. THE SOFT S’s
 Skills: the capabilities and competencies that exist
within the company: what it does best.
 Shared values: the values and beliefs of the
company: ultimately they guide employees towards
'valued' behavior.
 Staff: the company's people resources and how
they are developed, trained and motivated.
 Style: the leadership approach of top management
and the company's overall operating approach.