Evolution of Management

Thought

Dr. Manjunath Shettigar

Definitions of Management

Harold Koontz & Heinz 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 Follett 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 using an
organizations 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,
leading & controlling.
Management is essential to all kinds of organizations.
Management is necessary at all levels of hierarchy.
The goal of all managers is to accomplish the objective
of creating surplus.
The aim of managers is to improve productivity,
efficiency and 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. Standardization 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
Fayols 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
managers 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
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 employees attitude towards
company, work, supervision, wages, 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 workers
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 orders 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 Taylors at Bethlehem Steel
Works
Implemented a wage incentive program.
Gantts 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
46 and elapsed time on the other.
 The Gilbreths (1868-1924)
Frank and Lillian Gilbreth refined Taylors
methods and made many improvements to
time and motion studies, and industrials
efficiency & were early contributors to
personnel management.

47
 The Gilbreths
Frank and Lillian Gilbreth refined Taylors
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.?????