MBA PRESENTATIION MCOB OF MBA CLASS IFRST

Management Practices Past to
Present
Unit 1
Shaivya Dixit

Schools of Management Thought
Stages in the History of Development of Management Thought
1. Classical Approach
• Scientific management theory by F.W. Taylor
• Functional and administrative theory by Henry Fayol
• Bureaucratic theory by Max Weber
2.The Neo Classical Approach
• Human relation movement by Elton Mayo
• Behavioral Science by Maslow, McGregor
3.The modern Approach
• System Approach by Boulding, Johnson and others.
• Contingency Approach by Lorsch, Lawrence and others.

Scientific management theory by F.W. Taylor
• The scientific theory of management changed how organizations perceived
workers as lazy and who work, but inefficiently, for earning income.
• Frederick Winslow Taylor, who formulated the scientific management theory,
came up with a solution for the inefficiency by observing worker productivity
through scientific methods.
• His work, Principles of Scientific Management, published in 1911,
differentiated the scientific method from the traditional management
approach.
• Taylor opined that under classical management, the workers are incentivized
only through higher pay and that management itself is not responsible for any
issues causing bad work environments.
• According to Taylor, the ‘remedy for the inefficiency lies in systematic
management’. He believed that workers are not inherently lazy. Bad working
conditions are a reason for their inefficiency.

• But this is not the only reason for the worker’s inefficiency. Taylor
identified two more reasons causing it. One was that workers cannot
produce the desired output in a given time. Second, the job was not
understood by the worker and was done wrong.
• Scientific management theory aims to analyze the workflow of workers to
improve labour productivity which leads to improved economic efficiency.
By improving efficiency, it reduces the waste of resources and time.
• Taylor proposed an empirical observation of how employees in an
organization worked. And in his research, he focused on the routine tasks of
the employees. Then, in his management methods, he would look into the
equipment or technology used and try to customize it for the worker’s ease
of use.
• Taylor proposed that every task of the labourer must be planned in advance
by a dedicated department. This approach led to the idea of a systematic
organizational structure that is found in Max Weber’s bureaucratic
management theory.

Principles of Scientific Management
1. Replace the “rule of thumb” with science and standardization
• There should only be one method of working. It must be defined
scientifically. According to Taylor, the best way to do a job must be
determined beforehand in a scientific fashion. If workers have devised their
own ways of working, it will not lead to productivity.
• The ‘ways of working’ here refer to the tools used. These tools must be
standardized and that will remove the factor of bad working conditions.
• There should be no rule of thumb, nor any trial and error for any job. That
way, the worker’s performance will increase.

2. The Right Person for the Job
For any job, the management should hire the right person for the right job.
That worker should have the necessary skills to perform the tasks to fruition.
The management should also hire a worker knowing they will have challenges
too. For that, training workers would be required once they are selected. Then
the worker should be introduced to standardized tools for their work process.
3. Proper Division of Work Between Workers and Managers
The core functions of management, planning, organizing, directing, and
controlling must be adopted by the organization. The worker who is assumed
to be able to work should not be assumed to know and apply these facts of
management. By assigning the worker with the correct workload, there can be
a better mutual understanding between two parties, and will further eliminate
uncertainties in the future.

4.Collaboration Between Workers and Managers
Workers and managers should work in harmony, according to this principle. It
is the responsibility of the management to create a healthy environment for
the workers by eliminating distrust. For that, there should be clear
communication and development of team spirit.
Objectives of Scientific Management
• Scientific management theory aims to increase efficiency so that revenue is
increased. This can be achieved through the following goals.
• Improving productivity by standardizing tools to achieve a high production
rate.
• Ensuring quality is consistent in products through research and quality
control.
• Introducing cost control techniques to minimize the cost of production
• Making sure consumers find a regular supply of goods

Techniques of Scientific Management
1. Functional Foremanship:
According to this technique, the work of supervision is divided into
several specialized foremen. Taylor believes that one foreman is not an
expert in all aspects of work. Therefore, each worker should be
supervised by several foremen. Those who are specialized in their field.
This technique will improve the quality of supervision and will also
improve the quality of work and efficiency of workers. Taylor suggested
that 8 specialists out of these 4 will be responsible for looking after the
planning work, and the other four will be responsible to supervise and
executing of work.

2. Standardization and simplification of work:
• Standardization means fixing standards for everything. To attain
standard production, the standard of performance is established for the
workers. Standard of work means standard set for material, machine
method, and condition of work. Simplification refers to eliminating
unnecessary varieties, sizes, and grades of the product. It results in
saving the cost of labour, cost of machines, and tools. It also brings
economy in turnover and operation. It facilitates better control of
activities.
• Simplification aims at eliminating unnecessary varieties, sizes and
dimensions. It results in saving the cost of labour, machines and tools.
With the help of simplification, inventories are reduced and resources
are fully utilised.
• For example, Hindustan Unilever Ltd. reduced its variety of shops and
increased effective and efficient results for the organization.

3. Method Study
It is a concern with finding ‘one best way’ of doing a job. The main aim of
this technique is to improve work methods to minimize the cost of products
and maximize the satisfaction of customers. The search for the best method
starts from the procurement of raw materials and continues till the final
product is delivered to the customer. For example, raw materials should be
stored near the place of production to avoid unnecessary wastage of time
and money in transporting goods to the place of production.
4.Time Study
It is the technique that is used to determine the standard time taken by a
worker. It helps in determining how much work an employee should be able
to do in a given period. Under time study, the work is divided into a series of
elements, and the time taken to perform each element of work. The method
of time study depends on the volume and frequency of the work.

5. Differential price wage system:
This is a system in which efficient and inefficient workers are paid at
different rates. According to Taylor, financial incentives act as a motivator.
So, Taylor developed the concept of a differential piece wage system. In
this technique, incentives are directly linked with productivity. Under this
technique, first of all, a standard task is established, and then two rates
are fixed. Higher rates for those workers who produce more than the
standard, and a low rate for those workers who do not produce above or
equal to the standard.
For example, in a factory, the standard output is 20 units per day. Workers
producing more than standard output will get 5 rupees per unit, for
producing less than the standard, they will get 4 rupees per unit, and for
producing less than the standard output, they will get 3 rupees per unit. If
a worker produces 22 units in a day, he will get (22x 5)=110 rupees; a
worker producing 20 units will get (20×4)= 80 rupees; and if a worker
produces 19 units, then he will get (19×3)=57. The difference between
different units is enough to motivate the workers to perform better.

6.Motion Study: This study refers to making a thorough analysis of various motions
being performed by a worker while he is doing a particular job. The main purpose
of motion study is to detect and eliminate unnecessary movement, and to find out
the best method of doing a particular job. This study is conducted with a help of a
movie camera or stopwatch. Taylor experimented with motion study, and he proved
that the productivity of a worker can be increased to the extent of about four
times, just by eliminating wasteful motion.
7.Fatigue Study
It refers to determining the amount and frequency of rest intervals required in
completing a work. Fatigue means tiredness from physical and mental work. Taylor
suggested that a person gets tired when he works continuously without a break. So,
he must be provided with a rest interval to regain his lost stamina. Fatigue study
also helps in maintaining the operational efficiency of the worker. The amount and
frequency of rest intervals should be decided through a fatigue study and not
randomly. The fatigue study is conducted by observing workers while performing
the job. It is also helpful to find out, how long a person can work without having
any adverse effect on his health.

Henry Fayol 14 Principles of Management
Henry Fayol, also known as the ‘father of modern management theory’ gave
a new perception of the concept of management. He introduced a general
theory that can be applied to all levels of management and every department.
The Fayol theory is practised by the managers to organize and regulate the
internal activities of an organization. He concentrated on accomplishing
managerial efficiency.
The fourteen principles of management created by Henry Fayol are
explained-
1. Division of Work-
Henry believed that segregating work in the workforce amongst the worker
will enhance the quality of the product. Similarly, he also concluded that the
division of work improves the productivity, efficiency, accuracy and speed of
the workers. This principle is appropriate for both the managerial as well as
a technical work level.

2. Authority and Responsibility-
These are the two key aspects of management. Authority facilitates the
management to work efficiently, and responsibility makes them responsible for
the work done under their guidance or leadership.
3. Discipline-
Without discipline, nothing can be accomplished. It is the core value for any
project or any management. Good performance and sensible interrelation
make the management job easy and comprehensive. Employees good
behaviour also helps them smoothly build and progress in their professional
careers.
4. Unity of Command-
This means an employee should have only one boss and follow his command. If
an employee has to follow more than one boss, there begins a conflict of
interest and can create confusion.

5. Unity of Direction-
Whoever is engaged in the same activity should have a unified goal. This
means all the person working in a company should have one goal and motive
which will make the work easier and achieve the set goal easily.
6. Subordination of Individual Interest-
This indicates a company should work unitedly towards the interest of a
company rather than personal interest. Be subordinate to the purposes of an
organization. This refers to the whole chain of command in a company.
7. Remuneration-
This plays an important role in motivating the workers of a company.
Remuneration can be monetary or non-monetary. However, it should be
according to an individual’s efforts they have made.

8. Centralization-
In any company, the management or any authority responsible for the
decision-making process should be neutral. However, this depends on the
size of an organization. Henri Fayol stressed on the point that there should be
a balance between the hierarchy and division of power.
9. Scalar Chain-
Fayol on this principle highlights that the hierarchy steps should be from the
top to the lowest. This is necessary so that every employee knows their
immediate senior also they should be able to contact any, if needed.
10. Order-
A company should maintain a well-defined work order to have a favourable
work culture. The positive atmosphere in the workplace will boost more
positive productivity.
.

11. Equity-
All employees should be treated equally and respectfully. It’s the responsibility
of a manager that no employees face discrimination.
12. Stability-
An employee delivers the best if they feel secure in their job. It is the duty of the
management to offer job security to their employees.
13. Initiative-
The management should support and encourage the employees to take
initiatives in an organization. It will help them to increase their interest and
make then worth.
14. Esprit de Corps-
It is the responsibility of the management to motivate their employees and be
supportive of each other regularly. Developing trust and mutual understanding
will lead to a positive outcome and work environment

Bureaucratic Theory
• According to this theory of Max weber, bureaucracy is the basis for the systematic formation of
any organization and is designed to ensure efficiency and economic effectiveness.
• It is an ideal model for management and its administration to bring an organisation’s power
structure into focus. With these observations, he lays down the basic principles of bureaucracy and
emphasises the division of labour, hierarchy, rules and impersonal relationship.
Max Weber’s six characteristics
• Task specialization (Specialization and Division of Labor)
• Hierarchical layers of authority
• Formal selection
• Rules and requirements
• Impersonal (Impersonality and Personal Indifference)
• Career orientation

Task specialisation
• Tasks are divided into simple, routine categories on the basis of competencies and
functional specialisation.
• Every employee is responsible for what he/she does best and knows exactly what is
expected of him / her. By dividing work on the basis of specialisation, the
organisation directly benefits. Each department has specific powers.
• As a result, there is a delineation of tasks and managers can approach their
employees more easily when they do not stick to their tasks. Every employee knows
exactly what is expected of him/ her and what his/ her powers are within the
organisation.
• Every employee has a specific place within the organisation and is expected to solely
focus on his/ her area of expertise. Going beyond your responsibilities and taking on
tasks of colleagues is not permitted within a bureaucracy.

2. Hierarchical layers of authority
• Managers are organised into hierarchical layers, where each layer of
management is responsible for its staff and overall performance. In
bureaucratic organizational structures, there are many hierarchical positions.
This is essentially the trademark and foundation of a bureaucracy.
• The hierarchy of authority is a system in which different positions are
related in order of precedence and in which the highest rank on the ladder
has the greatest power. The bottom layers of bureaucratic organizational
structures are always subject to supervision and control of higher layers.
• This hierarchy reflects lines of bureaucratic communication and the degree
of delegation and clearly lays out how powers and responsibilities are
divided.

3. Formal selection
• All employees are selected on the basis of technical skills and competences,
which have been acquired through training, education and experience.
• One of the basic principles is that employees are paid for their services and
that level of their salary is dependent on their position. Their contract terms
are determined by organisational rules and requirements and the employee
has no ownership interest in the company.
• 4. Rules and requirements
• Formal rules and requirements are required to ensure uniformity, so that
employees know exactly what is expected of them. In this sense, the rules
and requirements can be considered predictable.
• All administrative processes are defined in the official rules. By enforcing
strict rules, the organisation can more easily achieve uniformity and all
employee efforts can be better coordinated. The rules and requirements are
more or less stable and always formalised in so-called official reports.
• New rules and requirements should be introduced, then senior management
or directors are responsible for this.

5. Impersonal
• Regulations and clear requirements create distant and impersonal relationships
between employees, with the additional advantage of preventing nepotism or
involvement from outsiders or politics. These impersonal relationship are a
prominent feature of bureaucracies.
• Interpersonal relationships are solely characterised by a system of public law and
rules and requirements. Official views are free from any personal involvement,
emotions and feelings. Decisions are solely made on the basis of rational factors,
rather than personal factors.
6. Career orientation
• Employees of a bureaucratic organisation are selected on the basis of their
expertise. This helps in the deployment of the right people in the right positions
and thereby optimally utilising human capital.
• In a bureaucracy, it is possible to build a career on the basis of experience and
expertise.
• As a result, it offers lifetime employment. The right division of labour within a
bureaucratic organisation also allows employees to specialise themselves further,
so that they may become experts in their own field and significantly improve their
performance.

Human relation movement by Elton Mayo
• Hawthorne Experiment by Elton Mayo
In 1927, a group of researchers led by Elton Mayo and Fritz Roethlisberger of
the Harvard Business School were invited to join in the studies at the Hawthorne
Works of Western Electric Company, Chicago. The experiment lasted up to
1932. The Hawthorne Experiment brought out that the productivity of the
employees is not the function of only physical conditions of work and money
wages paid to them. Productivity of employees depends heavily upon the
satisfaction of the employees in their work situation. Mayo’s idea was that
logical factors were far less important than emotional factors in determining
productivity efficiency. Furthermore, of all the human factors influencing
employee behavior, human factors influencing employee behavior, the most
powerful were those emanating from the worker’s participation in social groups.
Thus, Mayo concluded that work arrangements in addition to meeting the
objective requirements of production must at the same time satisfy the
employee’s subjective requirement of social satisfaction at his work place.

The Hawthorne experiment consists of four parts.
• Illumination Experiment.
• Relay Assembly Test Room Experiment.
• Interviewing Programme.
• Bank Wiring Test Room Experiment.

Illumination Experiment:
This experiment was conducted to establish relationship between output
and illumination. When the intensity of light was increased, the output
also increased. The output showed an upward trend even when the
illumination was gradually brought down to the normal level. Therefore,
it was concluded that there is no consistent relationship between output
of workers and illumination in the factory. There must be some other
factor which affected productivity.

Relay Assembly Test Room Experiment:
This phase aimed at knowing not only the impact of illumination on
production but also other factors like length of the working day, rest hours,
and other physical conditions. In this experiment, a small homogeneous
work-group of six girls was constituted. These girls were friendly to each
other and were asked to work in a very informal atmosphere under the
supervision of a researcher. Productivity and morale increased considerably
during the period of the experiment. Productivity went on increasing and
stabilized at a high level even when all the improvements were taken away
and the pre-test conditions were reintroduced. The researchers concluded that
socio-psychological factors such as feeling of being important, recognition,
attention, participation, cohesive work-group, and non-directive supervision
held the key for higher productivity.

Mass Interview Programme:
The objective of this Programme was to make a systematic study of the
employees attitudes which would reveal the meaning which their “working
situation” has for them. The researchers interviewed a large number of
workers with regard to their opinions on work, working conditions and
supervision. Initially, a direct approach was used whereby interviews asked
questions considered important by managers and researchers. The researchers
observed that the replies of the workmen were guarded. Therefore, this
approach was replaced by an indirect technique, where the interviewer simply
listened to what the workmen had to say. The findings confirmed the
importance of social factors at work in the total work environment.

Bank Wiring Test Room Experiment:
This experiment was conducted by Roethlisberger and Dickson with a
view to develop a new method of observation and obtaining more exact
information about social groups within a company and also finding out
the causes which restrict output. The experiment was conducted to study
a group of workers under conditions which were as close as possible to
normal. This group comprised of 14 workers. After the experiment, the
production records of this group were compared with their earlier
production records. It was observed that the group evolved its own
production norms for each individual worker, which was made lower
than those set by the management. Because of this, workers would
produce only that much, thereby defeating the incentive system. Those
workers who tried to produce more than the group norms were isolated,
harassed or punished by the group.

Behavioral Science Theory of
Management
• Behavioral Science Theory combines elements of psychology, sociology, and
anthropology to provide a scientific basis for understanding employee behavior.
It examines why employees are motivated by specific factors, such as social
needs, conflicts, and self-actualization. It recognizes individuality and the need
for managers to be sociable.
• The behavioral approach is unique from the human relations theory in that it
emphasizes leadership as a determining factor in management success.
• It presents an increased focus on group relationships and group behavior in
organizational effectiveness.

The objective of behavioral science is the ability to predict future employee
behaviors.
• The main propositions of the behavioral science approach can be summarized as under.
• An organization is a socio-technical system
• The interpersonal or group behavior of people in the organization is influenced by a wide
range of factors.
• The goals of the organization are to be harmonized with an understanding of the human
needs
• Multitude of attitudes, perceptions, and values are prevalent amongst employees and these
characterize their behavior and influence their performance
• As a result, some degree of conflict is inevitable in the organization and not necessarily
undesirable.

Systems Theory
The Systems Approach to management theory, commonly viewed as the
foundation of organizational development, views the organization as an open
system made up of interrelated and inter-dependent parts that interact as sub-
systems.
Thus the organization comprises a unified singular system made up of these
subsystems. For example, a firm is a system that may be composed of sub-
systems such as production, marketing, finance, accounting and so on. As
such, the various sub-systems should be studied in their inter- relationships
rather, than in isolation from each other.

Components of an Organizational System
• The system approach envisions the organization as made up five
components:
• Inputs - Raw Materials, Human Resources, Capital, Information,
Technology
• A Transformational Process - Employee Work Activities, Management
Activities, Operations Methods
• Outputs - Products or Services, Financial Results, Information, Human
Results
• Feedback - Results from outputs influence inputs.
• The Environment - These components make up internal and external
factors that affect the system.

Contingency Theory
The contingency management theory is an organizational theory that claims that
there is no best way to organize a corporation, to lead a company, or to make
decisions. Instead, the optimal course of action is contingent (dependent) on the
internal and external situation.
The main ideas underlying contingency theory include:
• Organizations are open systems that need careful management to satisfy and
balance internal needs and to adapt to environmental circumstances.
• There is no one best way or organizing. The appropriate form depends on the
kind of task or environment within which the organization is operating.
• Management must be concerned, above all else, with achieving alignment and
good fit, that is, fit between the organization and its environment.
• Different types of organizations are needed in different types of environment.

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