Chapter 2 Development of Management Thought

Glossary

Group Harmony Management Science Approach Motion Study Functional Foremanship Standardization Division Of Labor Authority Time Study
Systems Approach

Glossary
Contingency Approach
HRM Approach Work Group

Unity of Command
Synergy Open System Closed System Differential Payment Human Relations

Topics To Be Covered
Scientific management Contribution of: Taylor, Fayol, Mary Follet, Elton

Mayo.

Hawthorne Experiments Contingency Approach Indian Heritage in Production and Consumption

Questions to be prepared
1) What is Scientific Management? Discuss the
2) 3) 4) 5) 6)

principles, Nature and Role of scientific management. OR Discuss in detail Fayols Principles of management and their relevance to modern companies Why and how the principles of scientific management have been criticized? Discuss the contribution of F W Taylor Explain the contributions made by Elton Mayo to Management Thought. Comment on Hawthornes Experiments and their outcome.

Classical Contributions
Classical approach The term used to describe the hypotheses of the scientific management theorists and the general administrative theorists.

Scientific management theorists Fredrick W. Taylor, Frank and Lillian Gilbreth, and Henry Gantt General administrative theorists Henri Fayol and Max Weber

Scientific Management
Frederick W. Taylor
The Principles of Scientific Management (1911)

Advocated the use of the scientific method to define the one best way for a job to be done

Believed that increased efficiency could be achieved

by selecting the right people for the job and training them to do it precisely in the one best way. To motivate workers, he favored incentive wage plans. Separated managerial work from operative work.

Scientific Management
According to F W Taylor, scientific management involves the application of a scientific approach to managerial decision making (this consists of collection of data, an analysis of data and basing decisions on the outcome of such analyses)and discarding at the same time, all unscientific approaches, like-rule of the thumb, a hit or miss approach and a trial or error approach.

Contribution of Taylor to Scientific Management

F W Taylor was the father of Scientific Management of the opinion that the objective of management should be the maximum prosperity for the employer and maximum prosperity to each employee. The prosperity for the employer means lower costs but higher returns. Maximum prosperity to the employee means fair as well as higher wages. These can be achieved through the adoption of Scientific Management.

Contribution of Taylor to Scientific Management:

F W Taylor applied the principles of Scientific

Management to solve the problems of Management. According to him it was the duty of the Management to tell the employees about the expectation of management from the employees. Besides, the management should specify the way through which the job is to be completed. Taylor was the first person who supported the mental revolution both on the part of the employer and the employee. Time study and Motion study were first conducted by him. He was the first person to separate the planning function from the executive function.

Principles of Scientific Management

The contribution to Scientific Management evolve into principles. These principles are called as principles of Scientific Management. 1) Time and Motion Study: Workers were performing their work haphazardly before the era of Scientific Management. F W Taylor observed that a number of movements of the workers at the workplace were unnecessary and consequently they were taking more time to do the job than necessary. Hence Taylor proposed Time and Motion studies.

This study involves the following aspects: a. Observing the various motions or movements of the worker at the work place. b. Identifying the necessary and unnecessary movements in carrying out the work. c. Elimination of unnecessary movements. d. Observing the time required for each of the unnecessary movements with the help of a stop watch.

e. Developing shorter and fewer motions f. Standardizing the motions and time.

Principles of Scientific Management

2) Science, but not Rule of the Thumb: Scientific Management suggests doing the work systematically, determining the work clearly and sequentially, standardization of motions and time for each motion and allotment of fair work to each worker. Thus, scientific management eliminated the rule of thumb at the work place.

Principles of Scientific Management

3) Differential Payment: F W Taylor suggested differential piece rate system. He fixed the standard level of production. Those employees who produce less than the standard production received low piece rate and employees produced above the standard production received higher piece rate. Differential piece rates are introduced in order to motivate the employees to produce more than the standard level and enhance productivity.

Principles of Scientific Management

4)Group Harmony : F W Taylor emphasized upon group harmony which can be achieved through satisfying the needs of the group members, eliminating the dissatisfaction and frustration of the group members, maintaining the sound interpersonal relations among the group members and involving them in various group activities.

Principles of Scientific Management

5)Cooperation between workers and management: Taylor advocated sound employer-employee relations which should result in cooperation between workers and the management. This can be achieved as: Management should understand the workers needs and take steps to satisfy them Workers should understand the organizational requirements like increasing productivity, sales, profitability, etc and maximizing their contribution

Principles of Scientific Management

6) Methods Study: Taylor believed that a methodological and systematic movement of materials ensure fast movement of materials in the factory, avoidance of unnecessary transportation of material from one stage to another stage of production, reduction of distance from one machine to another , reduction of transportation time, etc.

Principles of Scientific Management

7)Scientific selection and training : He suggested the scientific selection of employees based on job analysis and using various selection tests. He also suggested providing training and development facilities to all the employees based on training needs. This process helps the organization to exploit the employers potentialities and faculties for organizational success.

Principles of Scientific Management

8) Standardization : Taylor advocated the importance of standardization tools, instruments, working hours, working conditions, quality of work, cost of production, etc
9)Separation of Planning from execution: He advocated separation of the planning function from the executive function. He advocated that supervisors perform planning function whereas workers perform execution functions.

Criticism Of Taylors contributions

Taylors contribution was criticized on the following grounds: The consideration of the word Scientific before management was criticized since what actually is meant by scientific management is nothing but approach to management. His principles were mostly confined to production management. He ignored other functional areas of management like finance, marketing, personnel and accounting.

Criticism Of Taylors contributions

His functional foremanship violates the principle of unity of command. Trade unionists criticized Taylors principles as the means to exploit workers due to the reason that wages of the workers were not increased in direct proportion to the increase in productivity. Despite the criticisms, the techniques advocated by him were further refined by his followers like Henry Gantt, Frank Lillian and Gilberth.

Henry Fayol
Henry Fayol was a major contributor to Administrative Management Approach

Henry Fayol
According to Fayol business activities can be divided into 6 groups. i. Technical ii. Commercial iii. Financial iv. Security v. Accounting vi. Managerial

Henry Fayol
According to Fayol, the first 5 were well known and as a result, devoted most of his book to an analysis of the sixth. He classified the managerial group into six sub groups, forecasting, planning, organizing, coordinating, commanding and controlling. He stated the qualities required by managers to be physical, mental, moral, educational and technical. Fayol emphasized that as one goes higher up in the levels of management, the administrative knowledge and skills becomes relatively more and more important, technical knowledge and skills less important.

Fayols 14 Principles of Management

1) Division of labour: The more people specialize, the more efficiently they can perform their work. This principle is epitomized by the modern assembly line. 2) Authority: Managers must give orders so that they can get things done. While their formal authority gives them the right to command, managers will not always compel obedience unless they have personal authority and (relevant expertise)as well.

Fayols 14 Principles of Management

3) Discipline: Members in an organization need to

respect the rules and agreements that govern the organization. To Fayol, discipline results from good leadership at all levels of the organization, fair agreements (such as provisions for rewarding superior performance)and judiciously enforced penalties for infractions.

Fayols 14 Principles of Management

4) Unity of Command: Each employee must receive

instructions from only one person. Fayol believed that when an employee reported to more than one manager, conflicts in instructions and confusion of authority would ultimately result.

5) Unity of direction: Those operations within the organization that has the same objective should be directed by only one manager using one plan. For Eg-the personnel dept in a company should not have two directors, each with a different hiring policy

Fayols 14 Principles of Management

6) Subordination of Individual Interest to the common goal: In any undertaking, the interest of employees should not take precedence over the interests of the organization as a whole. 7) Remuneration: Compensation of work done should be fair to both the employer and the employee. 8) Centralization : Decreasing the role of subordinates in decision making is centralization and increasing their role is decentralization. Fayol believed that managers should retain final responsibility, but should at the same time give enough authority to do their jobs properly.

Fayols 14 Principles of Management

9) The Hierarchy: The lines of authority in an organization
are often represented today by the neat boxes and lines of the organization chart that runs in order of rank from the top management to the lowest level of the enterprise. 10) Order: Materials and people should be in the right place at the right time. People in particular, should be in the jobs or positions in which they are most suited. 11) Equity: Managers should be both friendly and fair to their subordinates.

Fayols 14 Principles of Management

12) Stability of staff: A high employee turnover rate
undermines the efficient functioning of an organization. 13) Initiative: Subordinates should be given the freedom to conceive and carry out their plans, even though some mistakes may result. 14) Esprit de Corps: Promoting team spirit will give the organization a sense of unity. To Fayol, even small factors could help to develop the spirit. Eg: to use verbal communication instead of formal, written communication whenever possible.

Criticism of Fayols Principles

1. Principles of Unity of Command and Unity of

direction are redundant in modern pvt organizations. Most of the organizations after liberalization, privatization and globalization are dynamic in order to meet the customers needs before the customers identify or realize them.

Criticism of Fayols Principles

2. The dynamic organizations are team based, loosely structured, flat organizations and they change their structures based on strategy, etc. Orders and commands flow through different directions in teams and loosely structured organizations.
Similarly, direction also flows through various directions in modern organizations. Thus these two principles are not applicable in modern organisations.

Criticism of Fayols Principles

3)The principle of Scalar chain is also not applicable in modern organizations as the information requests for carrying out the work flow in different lines.

Criticism of Fayols Principles

4) Many org implemented Business Process reengineering and enterprise resource planning. These two techniques are based on team work and need the employees with multiple skill sets as the team members are required to carry out various activities. As such, the principles of division of labor and specialization are not applicable to those org which implemented BPRE and ERP

Criticism of Fayols Principles

5) Fayols principles indicate that organizations are a closed system. But most of the organizations today are open systems. As such, Fayols principles are not applicable to the organizations based on open systems.

Criticism of Fayols Principles

6) Fayols principles like Unity of Command, unity of direction, division of labor, specialization and span of management are applicable to tall and mechanistic organizations. Mechanistic organizations are insensitive to employees social and psychological needs. Further, they do not use the employees skills and potentialities to the maximum extent.

Mary Follet
Mary Parker Follet is considered to be a pioneer of

management thought in the field of Human Relations. She gave importance to the professional nature of management. She believed that psychology plays an important role in human activity. She has used psychology to solve the problems in managing a business. She considered the human character at various levels workers level, supervisory level and managers level of management.

Principles of Mary Follet

Follet has expressed her views on different aspects of management explained as below:
1.

Conflict: According to her, a conflict can be removed in 3 ways, domination, compromise and integration. She has rejected domination and compromise ways of removing conflict. The reason is that domination creates a feeling of compulsion. Compromise leads to surrender of one person to another person. So, she was in favour of integration. Under integration, the wishes of both the parties are integrated., both the parties would be satisfied w/o sacrificing their desires.

Principles of Mary Follet

2)Authority: Authority is the root of all evils. Hence subordination can create anger and increase human emotion. Hence she suggested that authority and responsibility should go hand in hand. Employeremployee relation is based on co-operation rather than on status i.e authority. A smooth employer-employee relation is based on good industrial organisation.

Principles of Mary Follet

3) Group: A group is more than a mere aggregation of individuals. The members of a group act towards each other and there is an overall impact of the group on individual members.

Principles of Mary Follet

4) Participation: Acording to her, participation rests on understanding and co-ordination. She was of the view that the management should know the techniques of motivation of the individuals and the group. 5) Integration: Integration of interest is not only necessary within the organisation but also essential for the integration of the interests of the workers, investors and consumers.

Principles of Mary Follet

6) Leadership: Mary Follet was of the view that leaders are not only born but they can also be made through proper training in human behavior. She did not believe in dominating leadereship. Follet believed that Leader guides the group and at the same time is himself guided by the group, is always a part of the group. The power of leadership is the power of integrating.

Principles of Mary Follet

7) Co-ordination : Mary Follet is well-known for her four principles of co-ordination. They are: a. Co-ordination by direct contact by the responsible people concerned. b. Co-ordination in the early stages of planning and policy making c. Co-ordination as a reciprocal relation of all factors ina situation and d. Co-ordination as a continous process

Elton Mayo
Human machine civilisation had entered machine age

after industrial revolution. Max o/p is emphasized during the machine age. Nobody considers human relations i.e the relationship between employers and the emplyees to be significant. They lead to the exploitation of workers and do n ot care to fulfill the psychological needs of workers. George Elton Mayo was the first person to look into the matter of human relations emphasizing the importance of desires, attitudes and feeling of the workers.

Hawthorne Experiments
Hawthorne experiments were conducted at the

Hawthorne Plant of the Western Electric Company in Chicago from 1924-1932. These experiments were conducted by Prof.Elton Mayo, F.J. Roethlisberger Whithead, Dickson and their colleagues. The results of these experiments have been published into 6 volumes. The Hawthorne plant was a manufacturing telephone system bill. Near 30,000 employees worked during this experiment period.

Hawthorne Experiments
The objective was to find out the behavior and

attitudes of the employees under better working conditions. Benefits of pension and medicall allowance were available along with recreational facilities to the employees. The productivity of the employees was not upto the mark though the employees derived job satisfaction. To find out the reasons for dissatisfaction of employees, Elton Mayo with his team conducted research infour phases.

Hawthorne Experiments
They are:
I.

Illumination experiments: This research was conducted to determine the effects of changes in lighting on productivity. The basic assumption of this research was that high lighting leads to high productivity. This expt was conducted for 2&1/2 years. Under this experiment, two groups were formed, experimental group and control group

Hawthorne Experiments
Experimental Group: Variations in lighting were

made and periodically and the results were observed and recorded. Control Group: No change in lighting and the researchers were required to work under constant lighting system upto the end of the experiment. Interestingly, it was observed that the o/p of both the groups increased steadily, which proved that there is no relation between lighting and productivity.

Hawthorne Experiments
This experiment revealed that there is no

relationship between lighting and productivity. The production decreased in two groups whenever the lighting fell below the normal level. The production was not affected in any way in the experimental group when the light is decreased up to the level of moon light. It means that the improved working conditions do not result in the increased productivity. Informal relations among the group members is the reason for increased productivity.

Hawthorne Experiments
II. Relay Assembly Test Room Experiment: This was conducted to determine the effects of changes in working conditions and productivity Conducted in 3 stages- First Relay Assembly Test, second Relay Assembly Test and The Mica Splitting group. A group was formed consisting of 6 girls, chosen on the basis of their past performance. The girls were placed in a separate test room and an observer was associated with the girls to supervise their work.

Hawthorne Experiments
III. Mass interviewing Programme: This programme was conducted to determine employees attitudes towards company, supervision, insurance plans, promotions and wages. Nearly 20,000 employees were interviewed, many of whom were interviewed more than once. Initially, the interviews were more or less structured. Only direct questions were asked by the researchers, hence researchers were not able to find the grass root of the problem.

Hawthorne Experiments
The interview method was changed into non

directive interview or unstructured interview. Under this nondirective method, the interviewer was asked to listen to instead of talking, arguing or advising. The employees were asked to discuss freely those issues which are relevant to the topics of their own choice.

Hawthorne Experiments
IV. Bank Wiring Observation room experiments:
A group was formed to conduct this experiment

consisting of fourteen male workers. Out of this, nine were wiremen, three were soldier men and two were inspectors. The main aim of this experiment was to analyse how a group could influence a worker to restrict his o/p even in the face of attractive incentive schemes for larger o/p Under this experiment workers have decided the target for themselves. The company target was more than the target fixed by the workers.

Hawthorne Experiments
Under this experiment, the workers failed to

achieve their targets due to following reasons: Unemployment problem: Workers feel that if they produce more, a few workers among them would be put of employment Unduly high standard: most of the workers were of the view that if they had reached the standard level of production, the management would raise the standard level of production still more ruthlessly.

Hawthorne Experiments
Protection of slow workers: The workers were

friendly on the job as well as off the job. The fast workers protected the slow workers by slowing down their production. Due to this the slow workers were prevented from retrenchment. Satisfaction of management: Workers were confident of the management accepting lower production. In other words, management seemed to accept the lower production rate and no one was being punished for lower production

Findings of Hawthorne Experiments

Hawthorne experiments have opened new

dimensions in human behavior. Human relations are very important to motivate workers in order to develop team spirit in an organization. Team spirit is essential to achieve organizational goals. Hawthorne experiments have identified the factors responsible for motivating workers at the work place.

Major findings and conclusions:

1. Social Factors: Hawthorne experiments proved

that social factors are responsible for deciding the level of output. A business organisation is a social group basically. According to Elton Mayo, A business organization is a social system, a system rituals and a mixture of logical, non logical and illogical behavior.

Major findings and conclusions:

1.Social Factors : The socio psychological characteristics of the workers determine the o/p levels and efficiency. Financial incentives may play a limited role but non financial incentives affect the behavior or workers significantly and their productivity.

Major findings and conclusions:

2. Group Influence : Workers create groups which are different from social group. These groups are formed to overcome the shortcomings of formal relationships. . A worker may try to change his group if he is not ready to accept a particular norm in a group. A management cannot deal with the worker independently. Reason is that group behavior can influence the individual behavior.

Major findings and conclusions:

3. Production level: There is no relation between

production level and working conditions.

The production level is determined by social norms and not by physiological capacities.

Major findings and conclusions:

4. Motivation : Workers are not merely motivated by money. Even though, management announced bonus, for eg, during experiments workers did not improve their production even though management announced group bonus scheme.

Major findings and conclusions:

5. Leadership : Leadership is important for directing group behavior. A superior is accepted as a leader if his style is in accordance with human relations approach. From the bank wiring experiments, the supervisors could not exert pressure on the work group about production. The reason is that the superior was under considerable pressure to accept the group. The superior is accepted as a leader only because of his identification with group of objectives.

Major findings and conclusions:

6.Conflict: There maybe conflicts between management and workers group . Conflicts occur because of different objectives between management and workers.

Major findings and conclusions:

7. Cordial Relationship: Workers prefer to maintain cordial relations with their co-workers rather than earn money. It was ascertained that the efficient workers were not ready to increase the group output to get more group bonus. The efficient workers fear that the increased output would lead to loss of employment to the inefficient worker. A worker always feel to be divested of the sympathy of his co-workers.

Major findings and conclusions:

8. Behavior of workers: Workers are not as individuals but as members of a group. The informal groups have their own norms and beliefs. A leader of a group has an over influence on the attitudes, behavior and performance of individual workers.

Major findings and conclusions:

9.Supervision: The supervisory climate is also one of the factors which determines the rate of output. The friendliness and genuineness of the supervisor affects the productivity. In Hawthorne experiments, productivity was not affected because of the existence of friendly relations between the supervisor and the workers.

Major findings and conclusions:

10. Communication: The experiments show that communication is an important aspect of an organization. Workers can explain their views and feelings relating to a particular action. Participation of workers is possible in decision making process. The problems faced by the workers can be easily identified and they can be easily solved. These things are possible only through proper communication, which helps management to have better mutual understanding.

Major findings and conclusions:

11. Reaction of workers: Complaints and criticism by workers are symptoms of deeper satisfaction.

Contingency Approach:
This approach is also called situational approach. This approach was developed by managers

consultants and researchers who tried to apply the concepts of the major schools to real life situations Advocates of this approach answered that results differ because situations differ, as such a technique that works effectively in one situation will not necessarily work in all cases. In contingency approach, managers should find out which method works better in a particular situation.

INDIAN HERITAGE PRODUCTION AND CONSUMPTION

INDIAN HERITAGE PRODUCTION AND CONSUMPTION

TO INDIAN HERITAGE TO MENS ATTITUDE TOWARD

HIS SOCIAL EXISTENCE SHIFTED TOWARD DUTIES OBLIGATION AND SACRIFICE.

HE BELIEVED IN SIMPLE LIVING AND HIGH

THINKING.

INDIAN HERITAGE EMPHASIZED THAT THE ASSENT OF

CIVILIZATION LIES NOT IN MULTIPLICATION OF QUANT BUT IN THE PURIFICATION OF HUMAN CHARACTER.

INDIAN HERITAGE FOR PRODUCTION

FROM THE POINT OF BUDDHIST, ECONOMICS PRODUCTION FROM

LOCAL RESOURCES FOR LOCAL NEEDS IS THE MOST RATIONAL WAYS OF ECONOMIC LIFE. DEPENDENCE OF IMPORT AND CONSEQUENT NEEDS TO PRODUCE FOR EXPORT IS HIGHLY UNECONOMIC. NOW DAYS A BULK OF NON RENEWABLE RESOURCES LIKE COAL AND OIL ARE BEING WASTEFULLY USED IN PRODUCTION OF GOOD AND SERVICES THAT ARE NOT REALLY USEFUL TO MAN. IN THE BUDDHIST ECONOMIC PLANNING NON RENEWABLE AND SCARES RESOURCES WOULD BE CONSERVED BECAUSE THE PRIORITIES IN PRODUCTION WOULD BE DETERMINED ACCORDING TO THE MAN BASIC NEED OF FOOD, CLOTHING AND HOUSING. RATHER THAN PRODUCING ARMS, DRUGS, ALCOHOL AND HARMFUL CHEMICALS. PRODUCTION FOR BASIC REQUIREMENT SHOULD BE PRIME OUTLOOK

INDIAN HERITAGE FOR CONSUMPTION

ACCORDING TO MODERN ECONOMIES A MAJOR OF

STANDARD OF LIVING IS JUDGED BY THE AMOUNT OF ANNUAL CONSUMPTION.

WHEREAS A BUDDHIST ECONOMIST WOULD CONSIDER

THIS APPROACH TOTALLY IRRATIONAL; SINCE CONSUMPTION IS MAINLY THE MEANS TO HUMAN WELL BEING.

RATHER THE AIM SHOULD BE TO OBTAIN THE MAXIMUM

WELL BEING WITH MINIMUM OF CONSUMPTION.