Lecture 3&4

Historical background of Management

Changes in Management Field

The field of management is undergoing tremendous
changes. For example:
Methods that kept the organization successful in the past no
longer seem right to keep it thriving today and into the future.
Management philosophies and organizational forms change over
time to meet new needs.
The workplace of today is different.
Yet some ideas and practices from the past are still highly
relevant and applicable to management.

Why history of
management matters to
managers?

BACKGROUND

Major Management Theories

Management Theories

Historical
Background

Classical Approach

Early Examples

of Management

Scientific
Management

Behavioral
Approach

Quantitative
Approach

Contemporary
Approach

Early Advocates

Hawthorne Studies

Adam Smith
General
Industrial

Revolution

Organizational
Behavior

Administrative
Theorists

System Theory
Contingency

Theory

Background
Organizations have existed
for thousands of years.
Management has been
practiced a long time, for
example:
Egyptian Pyramids
Great Wall of China

Background (Cont.)
These are the tangible evidence that projects of
tremendous scope, employed thousands of people in
ancient times. For example, pyramids were
constructed with involvement of 100 thousands
workers for 20 years.
So questions arises how there activities were
coordinated, who guided and instructed the workers?
The answer is managers.
We are not sure about the exact nomenclature used
in those days, but some1 must had instructed,
planned activities and organized the people involved
in these projects.

Background (Cont.)
Significant Pre-Twentieth-Century Events

Wealth of Nations ( Adam Smith).

Advocated the economic advantages that organizations and
society would gain from division of labor.
Breakdown of jobs into narrow and repetitive tasks
increased productivity
With division of labor could produce 48000 pins and
without specialized tasks it would be quit an
accomplishment if they produce 10 pins per day.

Background (Cont.)
Industrial Revolution
Substitution of machine power for human power
Became more economical to produce goods at factories
instead of home.
Large organizations required formal management
Organizations needed someone to direct the activities of
workers, plan things etc. So the jobs of managers were
demanded in those days.
The time reached when theories of management were
required.

CLASSICAL APPROACH

Classical Approach
Developed rational principles to make workers &
organizations efficient.
Scientific Management
FW Taylor

Frank and Lillian Gilbreth

General Administrative Management

Henri Fayol

Max Weber

Classical Approach

Scientific Management
F.W. Taylor (1856-1915) Mechanical Engineer (Midvale and
Bethlehem Steel).
Modern Management Theory was born in 1911 with publication
of Principles of Scientific Management by Taylor. It got popularity
among managers around the world.
He used scientific methods to define the one best way for a
doing a job.
Spent 2 decades to improve the productivity and efficiency of
manual workers on to shop floor jobs.
Provided guidelines for improving production efficiency.

Classical Approach

Scientific Management (Cont.)

Observed workers inefficient, different techniques for same job.
Output was1/3 of the potential output.
Jobs were assigned without considering the aptitude and attitude
of the worker.
He performed experiment on pig iron.
Workers used to load 12.5 tons in a day.
With application of Taylors scientific management different
combination of tools, techniques they succeeded to achieve 47
to 48 tons i.e. 200%.
He put right person at right job with right tools and equipment
and they followed Taylors instructions. Also motivated with high
pay.
His studies got popularity across the world.

Classical Approach

Taylors Four Principles of Management

Develop a science for each element of a man's work,
which replaces the old rule-of-thumb method.
Scientifically select and then train, teach, and develop
the workers. (in the past they choose with own
choice).
They heartily cooperate with the men so as to insure
all of the work being done in accordance with the
principles of the science, which has been developed
Divide work and responsibility between the
management and the workmen. The management
takeover all work for which they are better fitted than
the workmen.

Classical Approach

Scientific Management (cont.)

Frank and Lillian Gilbreth refined Taylors work and made
many improvements to the methodologies of time and
motion studies.
The construction contractors gave up their career after
hearing Taylor at a professional meeting.
Frank and his wife studied work and eliminated inefficient
hand-and-body motion.

Classical Approach

Scientific Management (cont.)

Time and motion studies
Breaking up each job into its components.
Finding better ways to perform the action.
Reorganizing each job action to be more efficient.

Also studied worker-related fatigue problems

caused by lighting, heating, and the design of tools
and machines.
Carefully examine the bricklayers job and reduced
bricklayer exterior 18 to 5 and interior 18 to 2.
worker also less fatigued.

Classical Approach

Scientific Management (cont.)

1st to use of motion pictures to study hand-andbody movements.
Invented micro chronometer for motion and time study
They classified 18 basic motions e.g. search, grasp

Classical Approach

Scientific Management (cont.)

Increased productivity across all industries, and they
are still important today.
Harvard Business Review put it on the top of the list
among 12 influential innovations. Many organization
used to analyze basic work tasks, hire best qualified
workers etc.
Criticism
It ignored the social context and workers needs
Increased conflict and violent clashes between
managers and employees.
Regarded workers as uninformed and ignored their
ideas and suggestions.

Classical Approach

General Administrative Theory

Henri Fayol

He wrote during the same time of Taylor but with

different perspective.
Taylors focus was 1st line managers & scientific
methods, while Fayol focused on activities of all
managers.
Looked management from the perspective of
entire organization.
Focused on what managers do and what
constituted good management.

Classical Approach

General Administrative (cont.)

Concerned with making the overall organization more
effective
Developed theories of what constituted good
management practice:
Published principles of management
Fundamental, rules of management applicable to all organizations.

Classical Approach

Henri Fayols 14 Points

Division of labor
Authority
Discipline
Unity of command
Unity of direction
Subordination of
individual interest
Remuneration

Centralization
Scalar chain
Order
Equity
Stability and tenure of
staff
Initiative
Esprit de corps

Classical Approach

General Administrative (cont.)

Max Weber
German sociologist who studied organizations.
During 1800, organization managed on family basis.
Employees were loyal to single person instead of
organization.
Resource were used to satisfy individual instead of
organization.
Weber envisioned that organization would be
managed by rational and impersonal basis.
Rational authority would be more efficient and
adaptable to change, as it continues and is not effected
if person die.

Classical Approach

General Administrative (cont.)

Max Weber
Developed the concept of bureaucracy as a formal
system of organization and administration designed to
ensure efficiency and effectiveness.
Bureaucracy - ideal type of organization
Division of labor
Clearly defined hierarchy
Detailed rules and regulations
Impersonal relationships

Classical Approach

General Administrative (cont.)

Labor is divided with clear definitions of authority
and responsibility.
Positions are in hierarchy.
Personnel are selected and promoted based on
qualifications.
Management is separate from the ownership.
Rules and procedures ensure reliable behavior.
Rules are impersonal and uniformly applied.

Classical Approach

WEBERS IDEAL BUREAUCRACY

Classical Approach

General Administrative (cont.)

Weber believed that this ideal types of organization

doesnt exist in reality. Instead, he gave broad
guidelines to get thing done by large organizations. His
theory became structural design for many
organizations todays.
Both Taylor and Weber theories matches in terms of
authoritarianism, rationalities, technical competencies.
Weber less practical than Taylor. It is not popular today
as it was in 20th century. Many managers feel that such
structure hinders employee creativity.

BEHAVIORAL APPROACH

Behavioral Approach

Behavioral Approach
Study of people at work.
The human relations movement was based on the idea that
truly effective control comes from within the individual
worker rather than from strict, authoritarian control.
Early advocates:
Believed that people were the most important asset of
the organization
Ideas provided the basis for a variety of human resource
management programs:
Employee selection procedures
Employee motivation

Behavioral Approach

Behavioral Approach (cont.)

Robert Owen

Successful businessman, bought 1st factory in age of 18.

Repulsed by harsh practices such as, child labor,
miserable working conditions, 13 hours work days.
Chided factory owner for treating machines better then
humans.
Money spent on improving labor conditions as best
investment.
He is remembered due to his commitment and courage.

Behavioral Approach

Behavioral Approach (cont.)

Hugo Munsterberg

Created field of industrial organization psychology

He suggested psychological test to select
employees.
Development of training methods
Techniques to motivate employees.

Behavioral Approach

Behavioral Approach (cont.)

Mary Parker Follett

Viewed organization from perspective of individual &

group behavior.
Wrote in times of scientific management but focus was
on human beings
Organizations should be based on groups.
Managers should coordinate groups to achieve
objectives
Managers and workers are partners.
Managers should use their knowledge & skills to lead
people, instead of authority.

Behavioral Approach

Behavioral Approach (cont.)

Chester Barnard

People are important for organization

Manager to communicate and motivate
subordinates to achieve high level efforts
Organization's success depends on employees
cooperation.
Success depends on relationship with people and
organization with whom interact
Idea of external environment of organization

Behavioral Approach

Hawthorne Studies
A struggle developed between manufacturers of gas
and electric lighting fixtures.
Campaign to convince industrial users that they
needed more light to get more productivity.
Began using experimental tests, when advertising did
not work.
Series of studies (scientific management experiments)
were conducted by engineers of Western Electric
Company in 1924.
To check the impact of lighting level on productivity
Experimental and control groups were set.

Behavioral Approach

Hawthorne Studies (cont.)

Findings: Productivity of both groups increased with
increased lighting. Surprisingly, with decreasing Level of
lighting, productivity increased in both groups.
Engineers confirmed that something else was affecting the
productivity not lighting level.

Behavioral Approach

Hawthorne Studies (cont.)

1927-32 Elton Mayo and associates joined the
study.
They conducted experiments regarding job
redesign, workday changes, work week length,
rest periods, individual versus group wage plan.
Employees performed better when managers
treated them in a positive manner
Group factors (group standards, group attitudes)
are closely related to individuals performance as
compared to money.

Behavioral Approach

Hawthorne Studies (cont.)

Recent re-analyses of the experiments have revealed
money the single most important factor
worker productivity increased partly as a result of
the increased feelings of importance and group
pride.
Researcher can influence the outcome of an
experiment by being too closely involved with
research subjects. (Hawthorne effect)
Although these studies were criticized a lot due
procedures, findings etc but these stimulated the
human behavior studies in organization.

EARLY ADVOCATES OF OB

Quantitative Approach
It evolved from Mathematical and statistical developed
for solution to military problems in WW II.
An approach to management that uses rigorous
quantitative techniques to maximize the use of
organizational resources.
Quantitative managementsimulation systems, computer
models, statistics.
Operations managementtechniques to analyze all aspects
of the production system.
Total Quality Management (TQM)focuses on improving
quality throughout an organization.
Management Information Systems (MIS)provides
information about the organization.

Contemporary Approaches
Early theories focused on how to manage organization
i.e. (internal focus).
Starting in 1960 researchers started looking in the
external environment of organization.

Contemporary Approaches
System Theory
System - A set of interrelated and interdependent
parts arranged in a manner that produces a
unified whole.
Provides a more general and broader picture of what managers do
than the other approaches.

Closed system - Not influenced by and do not interact

with their environment
Open system - Interact with their environment
Organizations - take in inputs from their environments
Transform or process inputs into outputs
Outputs are distributed into the environment

The Organization As An Open System

Environment

System

Inputs
Raw materials
Human resources
Capital
Technology
Information

Transformation
Employees work
activities
Management
activities
Technology and
operations methods

Feedback

Environment

Outputs
Products and services
Financial results
Information

Contingency Approach
Early theorists argued that management principles
universally applicable.
Research found some exceptions.
Different and changing environments need
managers to use different approaches.
The contingency approach says that organizations
are different, face different situations and require
different ways of managing.

POPULAR CONTINGENCY VARIABLES

Current Trends and Issues

Globalization
Ethics
Workforce Diversity
Entrepreneurship
E-business
Knowledge Management
Learning Organizations

Current Trends and Issues (Cont.)

Globalization
Management in international organizations
Political and cultural challenges of operating in a global market

Ethics
Increased emphasis on ethics education in college curriculums
Increased creation and use of codes of ethics by businesses

Current Trends and Issues (cont.)

Workforce Diversity
Increasing heterogeneity in the workforce
More gender, minority, ethnic, and other forms of diversity
in employees
Aging workforce
Older employees who work longer and not retire
The cost of public and private benefits for older workers will
increase
Increased demand for products and services related to aging

Current Trends and Issues (Cont.)

Entrepreneurship
The process whereby an individual or group of individuals use
organized efforts to create value and grow by fulfilling wants and
needs through innovation and uniqueness.

Current Trends and Issues (Cont.)

E-Business (Electronic Business)
The work preformed by an organization using electronic linkages
to its key constituencies
E-commerce: the sales and marketing component of an ebusiness

Current Trends and Issues (Cont.)

Knowledge Management
The cultivation of a learning culture where
organizational members systematically gather and share
knowledge with others in order to achieve better
performance.
Learning Organization
An organization that has developed the capacity to
continuously learn, adapt, and change.