Evolution of Management Thoughts

Arun Mishra
Definitions of Management
 Harold Koontz & Heiz Weihrich defined management
as “the process of designing and maintaining an
environment in which individuals, working
together in groups, efficiently accomplish selected
aims.”
 Louis E. Boone & David L. Kurtz defines management
as “the use of people and other resources to
accomplish objectives.”
Definitions of Management
 Delton E. McFarland defines management as “a
process, by which managers create, direct,
maintain, and operate purposive organizations
through systematic, coordinated, cooperative
human efforts.”
 Mary Parker Fellot termed management as “the act of
getting things done through people.”
Management?
 Management is a set of activities including planning
and decision making, organizing, leading, and
controlling, directed at an organization’s resources
(human, financial, physical, and information) with
the aim of achieving organizational goals in an
efficient and effective manner.
Some practical aspects of Management
 All these definition suggest the following aspects of
management:
 Managers carry out the functions of Planning, organizing,
staffing, leading & controlling.
 Management is essential to all kinds of organizations.
 Management is necessary at all levels hierarchy.
 The goal of all managers is to accomplish the objective of
creating surplus.
 The aim of managers is to improve productivity, efficiency ad
effectiveness.
Evolution of the Management Thought
Evolution dates back to human civilisation
Every human group needs management
Instances - Agricultural revolution – 5000 BC
Egyptian civilisations, pyramids - 4000 BC
Ancient India - Harappa & Mohenjodaro – 2000 BC
Italian trading houses: Introduction of double entry book
keeping – 1300 and 1400 AD
In the 19th century
 - Industrial revolution
 - Mass production
 - Huge capital
 - Ownership separated from management
20th century
 - World war I
 - Limited resources available
 - Need for solution to use them in an optimum way
 - World War II added to the problem
Thus, the issue of managing complex and huge business and
growing competition forced us to develop systematic
management concepts and principles
Scientific Management -Frederick W.
Taylor (1856-1915)
A worker and then a supervisor in steel company
Carried experiments to increase efficiency of the workers
Published many books and papers
Studied M.E (Masters of Engineering)
His experiments are divided into
Elements and tools of scientific management
Principles of scientific management
Elements and tools of scientific management
1. Separation of planning and doing-Supervisor plans, worker only
carries out the task
2. Functional foremanship- 4 types of supervisors for planning aspect,
while 4 for supervision aspect of the work
3. Job Analysis- best way to do a job
4. Standardisation – of process, period and amount of work, working
conditions, tools used etc
5. Scientific selection and training of workers
6. Financial incentives
7. Economy- optimum usage of resources an eliminate or reduce
wastages
8. Mental revolution – cooperation between workers and the
management
Principles of scientific management
Replacing rule of thumb with science
Harmony in group actions
Cooperation
Maximum output
Development of workers
Critical Analysis of Scientific Management
Relevant from an engineering point of view rather than
management point of view
Human aspect of the work was sidelined- workers got
aggressive resulting in unhealthy competition
Increased authoritarian approach in industries- strict
supervision
Financial incentives exploited the workers (Differential
piece rate system)
Administrative Management – Henry
Fayol (1841-1915)
Henry Fayol- French Industrialist
Used the term- Administration instead of Management
Divided industrial organisation into 6 groups-
Technical
Commercial
Financial
Security
Accounting
Managerial
Identified qualities of a Manager
Managerial Qualities and training- according to
Fayol
Physical- Health
Mental- ability to learn, judge, think, plan
Moral- loyalty, firmness, tact, dignity
Educational- acquaintance to subjects not related to
functions performed
Technical- pertaining to the function performed, eg,
production
Experience- arising through work
Fayol’s 14 principles of Management
1. Division of work
To take advantage of specialisation, every worker/ manager
works on a same part/function. It increases the accuracy,
ability and speed of work.
2. Authority and responsibility
Both are related. Authority arises out of a manager’s position
and responsibility, out of assignment of activity. Acc, to Fayol,
there should be parity (equality) between both.
3. Discipline
It can be self imposed, or commanded. Disciple by command
arises through company policies.
4. Unity in command
A person should get orders from only one superior. This
increases clarity, reduces conflict and builds a personal
responsibility for results
If it is violated, discipline is lost, importance of authority
decreases and stability is threatened.

5. Unity of direction
Each group of activities with same objective, must have only one
plan and one head.
Unity in command defines the reporting relationship, while unity
in direction defines the grouping of activities.
It ensures better coordination among activities.
6. Subordination of individual, to general interest
Interest of the organisation is more important than the interest
of one/few employees, when there is a conflict between the
two.
Hence, superiors should be the ideals, supervise employees
continuously and also have a fair agreement with them.

7. Centralisation
An organisation must have a proper balance of centralisation
and decentralisation, depending on its size, activities,
objectives, employees etc.
8. Remuneration
Should be fair to both- employee and employer
In line with cost of living and value of employee
Fayol did not advocate profit sharing plan for workers, but for
managers

9. Scalar chain
It is the flow of authority or command, through which every
communication, must pass
In special circumstances, this flow can be ‘short-circuited’ in
situations, when the scalar chain of communication is non
feasible. This is done, using a gang plank
10. Order
This refers to arrangement of things and people in an
organisation - A place for everything and everything in place
Similarly, the right person must be placed at the right position.
This demands for precise knowledge of human requirement
and resources

11. Equity
combination of justice and kindness
It should be maintained in behaviour and treatment towards
employees
12. Stability of Tenure
Employee should be given a minimum job security at least
This ensures that he is given time to adjust to new work and
succeed in it.
13. Initiative
Managers must encourage employees to take initiative, within
the limits of their authority.
It increases the zeal and energy in the employee
14. Espirit de Corps
Union is strength
Managers must encourage the team spirit among the
employees
Erring employees must be given oral directions and not asked
for a written explanation
The human relations approach –
Elton Mayo
 Conducted the famous Hawthorne Experiments carried out at the
Western Electric Company, in the United States of America that
started in the early 1920s.
 In the approaches by Taylor and Fayol, the human element in the
organisation was not stressed upon.
 The elements in these approaches were not giving evoking positive
results.
 The Western Electric Company, Chicago had Hawthorne plant that
manufactured telephone bell system
 The company was progressive, with sickness and pension benefits
 In spite of this, there was a dissatisfaction among workers.
Experiment I: Two group of workers, experimented with the
lighting or illumination and its effect on productivity, showed no
clear correlation between light level and productivity.
Experiment II: A girls group was chosen who worked in the
telephone relay assembly department. 5 types of changes
introduced over a period of time and productivity measured after
every change.
Experiment III: 20,000 interviews conducted in two years to
determine employee’s attitude towards company, work,
supervision, waged, insurance, incentives etc.
Experiment IV: 14 male workers were employed and
hypothesis was that they would produce more in order to earn
more. It was proved wrong due to 4 reasons given by workers
for a lesser output.
 Salient Features
 Focus on individual, his needs and behavior
 Highlight interpersonal relations
 Emphasis on motivation morale and job satisfaction
 Conflict in an organization is always destructive and
should be always avoided.
 Based on Hawthorne experiments.
 People behavior as a individual may be different than
his behavior in a group.
 Salient Features
 Emphasis on improving the working condition,
interpersonal relation, supervisory styles and
communication systems.
 People working in the organization may have different
goals but it is the work of management to guide them
toward the common goal.
 People working in the organization form their own
informal groups and these groups have a significant
influence on the attitude and values of people.
 Recap!
Bureaucratic Approach – Max Weber
Scientific Management Theory – F.W.
Taylor
Administrative Management Theory –
Henry Fayol
Human Relations Approach – Elton Mayo
Overview of Scientific, Administrative & Bureaucratic Approaches

Focuses on the
individual worker’s
productivity
Focuses on the
overall
organizational
system
Focuses on the
functions of
management
 The human relations approach –
Chester Barnard
He was the president of New Jersey Bell Telephone
Company.
He saw organizations as social systems that required
human cooperation.
He believed that managers’ major roles were to
communicate and stimulate subordinates to high levels
of effort.
He also introduced the idea that managers have to
examine the environment and then adjust the
organization to maintain a state of equilibrium.
The human relations approach – Chester Barnard
He connected Scientific Management with Human
Relations.
Felt that executives serve two primary functions:
Must establish and maintain a communications system among
employees.
Must establish the objectives of the organization and motivate
employees.
Developed an acceptance theory of authority:
Authority of a manager flows from the ability of subordinates
to accept or reject an order from the manager once they:
 Comprehend what the order requires of them.
 Review the order’s consistency with organization goals.
 Perceive a personal benefit in obeying the order.
 Modern Approach to management
 Quantitative Approach
 The Systems Approach
 The Contingency Approach
 The Japanese management style
(theory z)
 Quantitative Approach
Characterized by its use of mathematics, statistics, and
other quantitative techniques for management decision
making and problem solving.
This approach has four basic characteristics:
1. A decision-making focus
2. Development of measurable criteria
3. Formulation of a quantitative model
4. The use of computers
Decision-Making Focus
 The primary focus of the quantitative approach is on
problems or situations that require direct action, or a
decision, on the part of management.
 Quantitative Approach
Measurable Criteria
The decision-making process requires that the decision
maker select some alternative course of action.
The alternatives must be compared on the basis of
measurable criteria.
Quantitative Model
To assess the likely impact of each alternative on the stated
criteria, a quantitative model of the decision situation must be
formulated.
Computers
Computers are quite useful in the problem-solving process.
Contributions of Quantitative Approach

In Production Management-

Focus is on manufacturing technology and the flow of
material in plants.
In Operation Management
Focus is on organization such as hospitals, banks,
government & the military.
Limitations of Quantitative Approach

Despite its potential impact, this approach has certain

limitations:-
Does not deal with the people aspect of an
organization!!!
Unfamiliar with advanced quantitative tools!!
 The Systems Approach
System Defined
A set of interrelated and interdependent parts arranged in a
manner that produces a unified whole.
An approach to problem solving based on an understanding
of the basic structure of systems.
 The Systems Approach
Basic Types of Systems
Closed systems
Are not influenced by and do not interact with their
environment (all system input and output is internal)
Open systems
Dynamically interact to their environments by taking in
inputs and transforming them into outputs that are
distributed into their environments
 The Operating Model in Organizational System

Input Transformation Output

Feedback
INPUT TRANSFORMATION OUTPUT

Labour, Finances, Management & Production Products/Services,

Material, Information Process Profit/Loss

Companies use inputs such as labour, funds, equipment, and materials to

produce goods or to provide services and they design their subsystems to attain
these goals.
 The Contingency Approach
Contingency Approach Defined
Also sometimes called the situational approach.

There is no one universally applicable set of management

principles (rules) by which to manage organizations.
Organizations are individually different, face different
situations (contingency variables), and require different ways
of managing.
Asserts that managers are responsible for determining which
managerial approach is likely to be most effective in a given
situation.
This requires managers to identify the key contingencies in a
given situation.
Blending Components into a Contingency Perspective
Assessment of Contingency Approach
Useful because of its diagnostic approach, which
clearly departs from one of the best approach of
traditionalist.
It is more flexible, although draw heavily from other
approaches.
Allows managers to apply principles from those
approaches selectively and appropriately.
 Japanese Management Style
Theory Z
Theory Z is humanistic approach to management
approach by William Ouchi.
Advocates trusting employees and making them feel like an
integral part of the organization.
Based on the assumption that once a trusting relationship with
workers is established, production will increase.
 The key features of Japanese industrial organizations:
 Offer lifetime employment (at least for their core workers).
 Promote from within.
 Insist on mandatory retirement of core workers at age 55.
 Employ a large number of temporary employees mostly women.
There is a high degree of mutual trust and loyalty between management
and employees.
Career paths are non-specialized with life-long job rotation as a central
feature of career development.
Decision making is shared at all levels.
Performance appraisal is long term (ie the first appraisal takes place 10
years after joining the company).
There is a strong sense of collective responsibility for the success of the
organization.
And cooperation effort rather than individual achievement is encouraged.
 Management Challenges
 Increasing number of global organizations.
 Building competitive advantage through superior
efficiency, quality, innovation, and responsiveness.
 Increasing performance while remaining ethical
managers.
 Managing an increasingly diverse work force.
 Using new technologies.
Henry L. Gantt
A colleague of Taylor’s at Bethlehem Steel Works
Implemented a wage incentive program.
Gantt’s incentive system provided bonuses for workers
who completed their jobs in less time than the standard.
 Initiated a bonus plan for supervisors.
Developed planning and control techniques using a
simple graphic bar chart , The Gantt Chart, to display
relationships between planned and completed work on
one axis and elapsed time on the other.

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 The Gilbreths (1868-1924)
Frank and Lillian Gilbreth refined Taylor’s methods and
made many improvements to time and motion studies,
and industrials efficiency & were early contributors to
personnel management.

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 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.
 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.
The McKinsey approach to
problem-solving
McKinsey's problem-solving process has
three pillars:

Fact-based
Rigidly structured
Hypothesis driven
 Facts
Facts are the foundation of problem solving.
Facts aid in the development of a sound hypothesis, and then
provide the evidence needed to support or refute it.
Facts compensate for the lack of instinct a consultant must
face since he or she does not have a lifetime of experience in
the industry on which to draw.
Facts also bridge the credibility gap, lending respect to the
analysis of newcomers.
Hiding from the facts is only a recipe for failure, because
sooner or later, the truth will show itself.
Thus, a successful consultant will find the facts and use them
to his or her advantage.
 MECE
One of the most fundamental tenants of McKinsey problem
solving is the concept of MECE, mutually exclusive,
collectively exhaustive.
MECE can be used when developing and listing issues
related to the problem at hand.
First, the associate must ensure that the list is mutually
exclusive, or that every item is separate and distinct. Then,
he must check that it is collectively exhaustive, that it
includes every issue relevant to the problem.
This approach prevents overlap and confusion.
 The Initial Hypothesis
The 3rd pillar of the McKinsey problem-solving process is
the initial hypothesis (IH).
The initial hypothesis serves as a roadmap toward the
solution.
It is the solution that seems most probable early in the
engagement, after the group has brainstormed using their
knowledge of the situation, but before they have spent a lot
of time gathering additional information and analyzing.
The initial hypothesis may or may not prove correct, but it
will provide a starting point from which to work and it will
guide the research and early data analysis.
Any Questions……….?????