The Development of Management Thought

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By the end of this Study Unit you should be able to: Understand the early developments in management thought regarding the organisation and its management Appreciate the relationships between management theory and practice Compare and contrast the main contributions to the development ofmanagement thinking and organisational behaviour

With the advent of the Industrial Revolution came:

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The need to increase efficiency and effectiveness has driven the evolution of management theory Job specialization, the division of labor and the study of how people do things is central to the pursuit of increased efficiency Theories about the best ways to motivate and control employees have evolved The study of the external environments impact on an organization has become a central issue in management thought
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Classical Approaches
1890 1900 1910 1920 1930 1940

Contemporary Approaches
1950 1960 1970 1980 1990 2000

Systematic management Scientific management

Administrative management

Quantitative management

Systems theory

Contingency theory

Current and future revolutions

Human relations

Organizational behavior

Bureaucracy
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The effectiveness of management activities/ functions in practice is based on appreciating early ideas whether accepted or displaced. Practical management of people and their behaviour is founded on ideas of what will work in practice Management thought has evolved to cope with environmental changes Management insight requires combining conceptual frameworks of organizational behaviour, and its application in practice They form the foundations of current understanding of organizational behaviour
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A management perspective that th and early emerged during the 19 20th centuries that emphasized a rational, scientific approach to the study of management, and sought to make organizations efficient operating machines.
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Focuses on the individual worker s productivity

Focuses on the overall organizational system

Focuses on the functions of management

1) 2) 3) 4)

Understand the purpose of the organization Examine organizational structure Focus on the operations of the organization undertaken to achieve organizational objectives Sought to prescribe one best way for organizations to be structured and managed

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Adam Smith (18th century economist)

Observed that firms manufactured pins in one of two different ways:

- Craft-styleeach worker did all steps. - Productioneach worker specialized in one step.

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Smith realized that:

Breaking the total job down into steps allowed workers to become very skilled at specific tasks, thus increasing productivity

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A subfield of the Classical Management Perspective that emphasized scientificallydetermined changes in management practices as the solution to improving labour productivity.
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EFFICIENCY by increasing the output per worker and reducing deliberate underworking (a.k.a. systematic soldiering) by employees PREDICTABILITY of job performance, through standardizing tasks by dividing up tasks into small, closely specified subtasks CONTROL by establishing discipline through hierarchical authority and introducing a system whereby all managements policy decisions could be implemented

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A clear division of tasks and responsibilities between management and workers Use of scientific methods to determine the best way of doing a job Scientific selection of the person to do the newly designed job Training the selected worker to perform the job in the prescribed way Surveillance of workers through the use of hierarchies of authority and close supervision The introduction of payment on a piecework basis
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Studied fatigue caused by lighting, heating, and the design of tools and machines. ` Time and motion studies
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x Breaking up each job action into its components. x Finding better ways to perform the action. x Reorganizing each job action to be more efficient.

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It assumed that securing maximum earnings was the sole motivator of employees Neglected personal and interactional aspects of work Ignored the psychological needs and capabilities of workers Proposed a complex and unwieldy mode of supervision functional foremanship It failed to appreciate worker reactions to proposed procedures

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The study of how to create an organizational structure that leads to high efficiency and effectiveness.

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Focuses on managing the whole organization rather than individuals.

Henri Fayol (18411925)

x Was first to identify the specific management functions of planning, organizing, leading, and controlling.

Lyndall Urwick (18911983)

x Integrated the work of previous management theorists.

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A subfield of the Classical Management Perspective that focused on the total organization rather than the individual worker, and delineating the activities/ functions of management to create an organizational structure that leads to high efficiency and effectiveness
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FORECASTING predicting future outcomes PLANNING devising a course of action to meet expected
circumstances in the future

ORGANIZING allocating resources, dividing/ grouping

tasks to achieve objectives

COMMANDING providing direction to employees COORDINATING ensuring resources and activities are
working well towards the common goal

CONTROLLING monitoring progress to ensure that plans

are being carried out properly
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Like Taylor, Fayol prescribed principles which he believed would suit all organizations irrespective of size, technology, environment, employees etc., and was based on the application of certain key principles:
    

Functional division of work Hierarchical relationships Bureaucratic forms of control Narrow supervisory spans Closely prescribed roles
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1) 2) 3) 4) 5)

6) 7)

Division of Labour Authority Discipline Unity of Command Scalar principle/chain Unity of direction Interest subordination

8) 9) 10) 11) 12) 13) 14)

Remuneration Centralization Order Equity of treatment Stability of employment Opportunity for initiative Esprit de Corps
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Urwick consolidated Fayols ideas and, to an extent, synthesized them with the Scientific Management approach to prescribe 10 principles of organization
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1) 2) 3) 4) 5) 6) 7) 8) 9) 10)

Principle of the objective Principle of authority Principle of responsibility Principle of correspondence Principle of continuity Principle of specialization Principle of definition Span of Control Principle of coordination Principle of balance
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It misleadingly proposed a single, standardized organizational model as the optimum one It promoted a militaristic, mechanistic organization. It overlooked the negative consequences of tight control and narrow task specialization which can de-motivate and hinder efficiency Over-emphasized an organizations formal structure.

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It underestimated the complexity of organizations Based on personal knowledge, rather than systematic research Lacked concern for social interactions Underestimated the effects of conflict Misunderstood how people thought, and processed information

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Webers work stemmed from his interest in POWER and AUTHORITY within societies. This concept was then extended to examine its relevance and applicability to organizations.
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` POWER

is used to refer to the capacity of individuals to overcome resistance on the part of others, to exert their will, and to produce results consistent with their interests and objectives. - is the right to give orders, enforce rules, make decisions and exercise power and control over others
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` AUTHORITY

Type

Description
Subordinate obedience based upon custom or tradition Subordinate obedience based upon special personal qualities associated with certain social reformers, political leaders, religious leaders, or organizational leaders Subordinate obedience based upon the position held by superiors within the organization

Traditional Charismatic

Rational legal

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A form of organization structure underpinned by the rational-legal type of authority. Weber used the term to describe a particular type of organization and was concerned with how work was divided, coordinated and controlled. The bureaucratic organizations continuity was related to formal structure and positions, rather than on particular individuals, based on the themes of IMPERSONALITY and RATIONALITY.

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Webers Principles of Bureaucracy

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JOB SPECIALIZATION jobs are broken down into simple,

routine and well-defined tasks. Clear definitions of authority and responsibility are legitimated as official rules HIERARCHY OF AUTHORITY clear chain of command, and workers clearly know to whom they are accountable.

EMPLOYMENT personnel are selected, promoted, paid

etc. on the basis of their technical qualifications and expertise

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RECORDING administrative acts and decisions are

recorded in writing to provide organizational memory and continuity over time. RULES & PROCEDURES all individuals are subject to explicit rules, procedures, guidelines etc. to ensure reliable, predictable behaviour. IMPERSONALITY rules and procedures are impersonal and uniformly applied to all individuals, managerial and nonmanagerial alike

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1)

2)

The positive and negative consequences of the characteristics of bureaucracy for the individual and organization as a whole. The efficiency, effectiveness and applicability of bureaucratic approach in modern organizations

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Emphasized individual attitudes and behaviors, and group processes, and recognized the importance of behavioral processes in the workplace Hugo Munsterberg (18631916): A German psychologist,
the father of industrial psychology, who advocated applying psychological concepts to employees selection and motivation industrial settings. Mary Parker Follett (18681933): Recognized the importance of the role of human behavior in the workplace.

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vs.
Classical Perspective
Focused on rational behavior

Behavioral Perspective
Acknowledged the importance of human behavior
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Acknowledged the importance of human behavior in shaping management style, and is associated with the work of:
x Mary Parker Follett x Elton Mayo x Douglas McGregor x Chester Barnard

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A system is a set of interrelated parts that function as a whole to achieve a common purpose. Any change in one part of the system would usually lead to a change in another part.
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Organisations are comprised of interrelated parts e.g. departments, functions, people, technology etc. These parts function as a whole e.g. planning/ coordination/ control of activities, policies and procedures etc. These parts work together for a common purpose

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Closed systems are those that are considered to be isolated from its environment, and independent of it

Open systems are those which are connected to, and interacts with its environment.

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This approach describes organizations as open systems that are characterized by entropy, synergy and subsystem interdependence.

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` Entropy

The tendency for a system to run down and die. ` Synergy The concept that the whole is greater than the sum of its individual parts. ` Subsystems parts of a system that depend on one another for their functioning
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` Technical

sub-system ` Psycho-social subsystem ` Structural subsystem ` Goals and values subsystem ` Managerial subsystem
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Encapsulates the technology being used in an organization, as it influences the way work is done, the organizational form and the relationships between people. It includes all aspects of information and communications technology.

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Focuses on the people within the organization, as their INDIVIDUAL goals, aspirations, values, beliefs, motivations etc. will influence the way work is done, and the nature of relationships. It recognizes the presence and influence of the informal organization, while ensuring adherence to the formal organization.

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Concerned with the ways in which the transformation process is undertaken (i.e. inputs to outputs), thus considering the division of tasks, employee groupings into departments, their coordination and control etc. this is very reminiscent of the Classical Approach to Management.

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Focuses on the goals and values of the ORGANIZATION as a whole, not its individual members (psycho-social) i.e. the mission/ purpose, supporting sub-goals etc. These goals and values are subject to change over time.

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Focuses to the mechanisms of coordination and control, beyond those of the structural subsystem e.g. management style, budgeting, MBO, quality control etc. This subsystem can exert influence over the other subsystems within the organization to suit their requirements

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TRANSFORMATION PROCESS

Technical subsystem Psycho-social subsystem

INPUTS

Structural subsystem Goals and values subsystem Managerial subsystem

FEED ACK

OUTPUTS

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LEVEL

TASK

TIMESCALE

APPROACH

TECHNICAL

Specific operations Coordination of specific operations

ShortShort-term

Costing & measuring Mediation & compromise Forecasting & negotiating

ORGANIZATIONAL

Short/ medium term

INSTITUTIONAL

Selection of operations to Long-term Longfit environment

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This approach proposes that the successful resolution of organizational problems is dependent on managers identification of key variables in any given situation, and address those issues as they arise i.e. there is no one best way structuring or managing an organization.

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Problem or Situation

Important Contingencies

Solution or ction

Solution or ction B

Solution or Action C ction

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Acute labor shortages in high-technology job sectors highand an oversupply of less skilled labor An increasingly diverse and globalized workforce The need to create challenging, motivating, and flexible work environments The effects of information technology on how people work The complex array of new ways of structuring organizations

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Woodward focused on the relationship between manufacturing technology and organization structure, and categorized firms along the lines of manufacturing capabilities given certain structural characteristics e.g. administrative overhead, span of control, formalization, centralization etc.

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` Unit

or Small Batch Production involves or Large Batch Production the Production the mechanization of the
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the production of goods in batches of one or a few products designed to customer specifications.
` Mass

production of a large volume of products with the same specifications.

` Process

entire workflow, and non-stop production non-

Burns & Stalker focused on the relationship between the organization and its environments, which led them to propose two ideal types of management organization, which form the extremes on a continuum along which most organizations can be placed. They are:
 The

Mechanistic System  The Organic System

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Mechanistic:
Organizations as machines i.e. a collection of moving parts which act and interact in defined, routine and expected ways.

Organic: Organic:
Organizations as biological organisms i.e. a growing entity which learns and adapts to its environment over time to ensure its survival

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The nature of the environment Distribution of tasks Nature of individual tasks Who has the power to define/ redefine tasks Task scope Structure of control, authority and communication Perceived location of knowledge

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The idea that the organizational structures and control systems are contingent on characteristics of the external environment

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Advocated that the main concern of management is the pursuit of excellence striving for, measurement and eventual achievement of high standards of performance. The theory is based on a total commitment to a series of management and organizational imperatives.

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Bias for action Autonomy and entrepreneurship Close to the customer Productivity through people Hands on, value driven Stick to the knitting Simple form, lean staff Simultaneous loose-tight properties loose-

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A more radical and flexible approach which proposed that certain functions and activities be withdrawn from functional departments and be allocated to outside specialists i.e. the concept of outsourcing. The formal structure of functional departments is to be replaced by teams. It proposed the creation of an eventual virtual organization.

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Ouchi developed this approach in an attempt to apply the lessons of Japanese organization and management styles and practices to the Western organizations. Its purpose was to develop a philosophy and value system which fosters commitment to organizational goals.
Note:the potential issues which would arise due to cultural differences.
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Secure lifetime employment Consensual, participative decision-making Collective responsibility Slow individual development Implicit, informal control Holistic concern for the organization and its members

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Individual expression and responsibility Lack of company loyalty Focus on short-term, personal rewards shortCompetition among employees Individualistic, autocratic decision-making decisionFormal, explicit structures and controls.

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Can you: Explain the nature of the Classical Approaches to Management, and assess their contribution to the study of people in organizations Understand and explain the Behavioural limitations of the Classical Approaches Explain the nature of Systems Theory and more Contemporary Approaches, and assess their contribution to Management

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