Evolution of management thoughts from classical theories to contingency theory

1. DEVELOPMENT OF MANAGEMENT
THOUGHTS
Dr K.Sunanda
Associate Professor
Department of Business Management

2. STAGES IN MANAGEMENT THOUGHT
I. The Classical Theory of Management
1. Bureaucratic Model
2. Scientific Management
3. Administrative/Process/Modern Management
II. The Neo-Classical Theory
1. Human Relations Movement
2. Behavioural Sciences Movement
III. The Modern Management Theories
1. Systems Approach
2. Contingency Approach

3. VARIOUS APPROACHES OF MANAGEMENT
• The Classical Approach ( traditionally accepted views) : This approach
emphasizes organizational efficiency to increase organizational success. It believes in
functional relationship, following of certain principles based on experience, a bureaucratic
structure and reward-punishment nexus.
• The neo-classical approach: It emphasizes human relations, individual as well as group
relationships, and social aspects. This approach was pioneered by Mayo and his associates.
This was further extended to behavioural sciences approach pioneered by Maslow, Chris
Argyris, Douglas McGregor and Rensis Likert.
• Modern management thought: It combines concepts of the classical school with social
and natural sciences. It basically emerged from systems analysis.

4. 1. MAX WEBER (1864-1920) BUREAUCRATIC MODEL
A German Sociologist, was a teacher at Berlin University. He was the Chief
exponent of the Bureaucratic Model.
Characteristics of Weber’s ideal Bureaucracy:
• Work specification and division of labor
• Abstract rules and regulations
• Impersonality of managers
• Hierarchy of organization structure

6. 2. F.W. TAYLOR’S SCIENTIFIC MANAGEMENT
He is called as the ‘Father of Scientific Management’ (1878).
He started his experiment with the concept of scientific management at Midvale Steel Co.
He saw that the employees were deliberately working at a pace slower than one
capabilities.
He found the reasons behind it:
a) Faulty wage systems
b) Outdated methods of working.
Two major managerial practices:
 Piece-rate incentive system
 Time-and-motion study

7. Principles of scientific
management
Replacement of Rule of Thumb
Harmony in group
Development of Workers
Maximum Output
Elements of scientific
management
Work Study
Standardisation of Tools and Equipment
Scientific Selection, Placement and Training
Financial incentives
Mental Revolution

8. 3. HENRY FAYOL’S ADMINISTRATIVE MANAGEMENT
• He started his career as a junior engineer in a coal mine company in France
and became its General Manager in 1980.
• His contribution may be classified under three categories: classification of
business activities, functions of management, principles of management.
• It focused on principles that could be used by managers to coordinate the
internal activities of organizations.

9. 14 PRINCIPLES OF MANAGEMENT
1. Division of labour: Division of work leads to specialisation resulting in higher output. This
principle recommends grouping of people as per their area of specialization. If people are
specialized at their work, they can perform their task better.
2. Authority: Managers must have the authority to issue orders and instructions to the
subordinates. Yet , formal authority alone may not help to compel obedience from
subordinates; managers must have the expertise to exert personal authority.
3. Discipline: Discipline means respect for rules and agreements. People working in an
organization need to comply with rules and agreements that govern the organization.
Without discipline results cannot be achieved.

10. 4. Unity of command: There should be one boss for one subordinate. Conflict will arise when one
receives order and instructions from multiple managers.
5. Unity of direction: All operations in an organization need to be directed towards one objective.
Without this achievement of goal cannot be ensured.
6. Subordination of individual interest to general interest: If there is a conflict between the individual
goals and organizational goals, preference should be given to organizational goals, i.e., individual goals
should not supersede the goals of the organization.
7. Remuneration: There should be a fair system of remuneration that ensures equal pay for equal work.
It should be fair to both employees and employers.
8. Centralisation: It refers to declining role of subordinates in the decision making. Though major
decisions are taken by the managers at the top level, but at the same time enough authority should be
given to the subordinates to do the jobs properly.

11. 9. Scalar Chain (Hierarchy): This the line of authority running from top level to lower level of
management. It is also known as hierarchy of authority. It illustrated in the form of an
organizational chart clearly showing the structure of authority from the top management to
employees down the line.
10. Order: People and material should be in the right place at the right time. Fayol followed the
concept of ‘ A place for everything and everything in its place ‘. When human beings are kept at
the right place( right man at the right place) it is social order, and when non-human or material
resources are kept at the right place, it is material order.
11. Equity: Managers should be fair to their subordinates.
12. Stability of staff: Employee turnover should be less to ensure efficiency of an organization.
13. Initiative: Subordinates should have the freedom to conceive new ideas and do their task,
even though they commit mistakes.
14. Esprit de corps: ‘ Unity is strength’. People should work as a team to enjoy the benefits of
synergy.

12. II. NEO-CLASSICAL THEORY
A. ELTON MAYO: He is recognized as the father of human relations approach.
Mayo and his associates conducted their study at Western Electric's
Hawthorne Plant between 1927-1932, to evaluate the attitude and
psychological reaction of workers in on-the-job situation.
Hawthorne effect — workers’ attitudes toward their managers affect the level
of workers’ performance.
Demonstrated the importance of understanding how the feelings, thoughts, and
behavior of work-group members and managers affect performance.
1. Human Relations Movement
The essence of these theories was the belief that the key to higher productivity
was employee satisfaction

13. MAYO CONCLUDED THAT
1. Individual behaviour and sentiments are closely related.
2. Group influences significantly affected individual behaviour.
3. Group standards established individual output.
4. Money was less a factor in determining output.
5. Group standards, group sentiments and security provided by the group were
Responsible for higher productivity.
The human relations school recognized that workers respond to appropriate changes
made in the work setting with their feelings and sentiments and by what they perceive
to be the social norms in the work setting.

14. 2. BEHAVIOURAL SCIENCES MOVEMENT
A. ABRAHAM MASLOW:
• An eminent U.S. psychologist, gave a
general theory of motivation known as
Need Hierarchy Theory. Human behavior is
goal-directed.
• The needs of individual serves as a driving
force in human behaviour. Therefore, a
manager must understand the “hierarchy
of needs”. Maslow has proposed “The Need
Hierarchy Model
• Once a need is satisfied, it declines in
importance and the next higher need is
activated
• There are opportunities for fulfillment off
the job and on the job in each of the five
levels of needs

15. B. DOUGLAS- McGregor:
He was a social psychologist and professor at Massachusetts Institute of Technology, U.S.A.
His famous works included: The Professional Manager, Leadership and Motivation, The Human
Side of Enterprise.
He is known for the development of a theory on Motivation, named as Theory X and Theory Y.

16. III. THE MODERN MANAGEMENT THEORIES
1. THE SYSTEMS THEORY APPROACH
The systems 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.
Open System
A system that takes resources for its external environment and transforms them into
goods and services that are then sent back to that environment where they are
bought by customers.
Closed System
A self-contained system that is not affected by changes in its external environment. The
organisation provides a boundary or a closes subset which separates it from other
systems.

17. THE OPEN SYSTEM VIEW
Inputs: the acquisition of
external resources to produce
goods and services
Conversion: transforms the
inputs into outputs of finished
goods and services.
Output: the release of finished
goods and services to its
external environment.

18. 2. CONTINGENCY OR SITUATIONAL APPROACH
This was developed by J.W. Lorsch and P.R. Lawrence in 1970 who were critical of other
approaches presupposing ‘one best way to manage’. Management problems are different
under different situations and need to be tackled as per the demand of the situation. One
best way of doing may be useful for repetitive things but not for managerial problems.
A manager should study to find out the method that fits into the situation and helps in
precise realization of goals of the enterprise.
• There is no one best way to organize”
• The idea that the organizational structures and control systems manager choose depend
on—are contingent on—characteristics of the external environment in which the
organization operates.

20. • THANK YOU