Theories of Management

- Prachi Agarwal

What is a Theory?

A theory is a conceptual (idea) framework for organizing knowledge and providing a blueprint (picture design) for action.

What is Management Theory?

Management Theory is used to build organizations and guide them toward their goals.
Most managers develop and refine their own theories of how they should run their organizations and manage the behavior of their employees.

The Value of History People who ignore destined to relive it. the past are

A person unaware of mistakes made by others is likely to repeat them.

The Emergence of Modern Management Perspectives

I. The Classical Management Perspective

The classical approach (ca1890) to management is a management approach that emphasizes organizational efficiency to increase organizational success. A theory that focused on finding the one best way to perform and manage tasks.

The Classical Management Perspective Consists of three distinct branches: Scientific Management
Frederick W. Taylor Frank and Lillian Gilbreth Henry Gantt

Administrative Management
Henri Fayol

Bureaucratic Management
Max Weber

The Classical Management Perspective (continued)

1. Scientific Management
Concerned with improving the performance of individual workers. Frederick Taylor was the chief designer of this theory. He studied and timed each element of the workers jobs. He determined what each worker should be producing and then determined the most efficient way of doing each part of the job. Introduced rest periods to reduce fatigue. Introduced the first piecework pay system workers were paid for each target met and/or exceeded.

Steps in Scientific Management

The Classical Management Perspective (continued)

2. Administrative Management
Focuses on managing the total organization.

Henri Fayol
French industrialist who was this theorys chief promoter. Adopted a wider perspective by attempting to improve efficiency of total organization rather than technical efficiency alone. First to identify the functions of planning, organizing, leading and controlling.

Fayols Administrative Principles

1. Division of work 2. Authority and responsibility 3. Discipline 4. Unity of command 5. Unity of direction 6. Subordination of individual interest 7. Remuneration: pay for work done 8. Centralization 9. Scalar chain 10. Order 11. Equity 12. Stability and tenure of staff 13. Initiative 14. Esprit de corps

The Classical Management Perspective (continued)

3. Bureaucratic Management
Max Weber German sociologist who laid the foundation for contemporary organization theory. Developed the concept of bureaucracy which is a rational set of guidelines for structuring organizations in the most efficient manner.

Key Characteristics of Webers Ideal Bureaucracy

Specialization of labor Formal rules and procedures Impersonality Well-defined hierarchy Career advancement based on merit

Assessing Classical Management Perspective Laid the foundation for later developments in management theory. Managers still use many of Fayols principles Overemphasizes the rational behavior of managers Advantages & disadvantages of bureaucracy
Benefits: efficiency, consistency Costs: rigid, slow, difficult to adapt

II. The Behavioral Management Perspective

The behavioral approach (ca 1910) to management is a management approach that emphasizes increasing organizational success by focusing on human variables within the organization.
This perspective places emphasis on individual attitudes and behaviors and on group processes and recognizes the importance of behavioral process in the workplace.

 Basic Assumptions
Employees are motivated by social needs Social forces exerted by peers is strong Employees respond to managers who help them satisfy their needs Managers need to coordinate the work of subordinates democratically to improve efficiency

The Behavioral Management Perspective (continued)

1. The Hawthorne Studies

Conducted by Elton Mayo and his associates at the Hawthorne Plant of Western Electric in the US; sponsored by General Electric. Productivity increased for both the experimental and control groups when lighting was increased. Lighting was not a factor, but the special attention given both groups by their supervisors was a contributing factor.

The Behavioral Management Perspective (continued)

2. The Human Relations Movement

Argues that workers respond primarily to the social context of the workplace. Believes managers concerns for workers would lead to increased satisfaction, which would in turn lead to improved performance. Abraham Maslow believed that people are motivated by a hierarchy of needs. Douglas McGregor developed Theory X (the scientific management approach) and Theory Y (the human relations approach)

Maslows Hierarchy of Needs

Needs-based theory of motivation
physiology security affiliation esteem self-actualization

McGregors Theory X and Theory Y

Leaders and managers who hold Theory X assumptions believe that employees are inherently lazy and lack ambition. - A negative perspective on human behavior. Leaders and managers who hold Theory Y assumptions believe that most employees do not dislike work and want to make useful contributions to the organization. - A positive perspective on human behavior.
.

The Behavioral Management Perspective (continued)

3. The Emergence of Organizational Behavior

Believes that human behavior in organizations is much more complex than the human relationists realized. Organizational behavior looks at individual, group and organizational processes.
Important topics in this field include: job satisfaction, stress, motivation, leadership, group dynamics, organizational politics, interpersonal conflict, multicultural diversity, and the structure and design of organizations.

Behavioral Theory Assessment

Adds greatly to the mechanistic view of managing people. But human relation skills alone wont guarantee increased productivity or high quality work. Managing the human aspects of an organization is a very complex task.

III. The Quantitative Management Perspective

The management science approach (ca1940) is a management approach that emphasizes the use of the scientific method and quantitative techniques to increase organizational success. This perspective applies quantitative techniques to management. It focuses on decision making, economic effectiveness, mathematical models and the use of computers. Two branches include: Management Science Approach Operations Management Approach

The Quantitative Management Perspective (continued)

1. Management Science
Focuses specifically on the development of mathematical models.

A mathematical model is a simplified representation of a system, process or relationship. Examples include: GM uses a simulation model to determine damage to cars at various speeds, banks use models to determine how many tellers need to be on duty at various times of the day, etc.

The Quantitative Management Perspective (continued)

2. Operations Management
Concerned with helping the organization produce its products or services more efficiently.

Examples: inventory management which may include balancing carrying and ordering costs and determining the best order quantity; linear programming used by airlines to plan their flight schedules; breakeven analyses and running simulations.
Equally valuable in areas of finance, marketing and HR management.

IV. The Systems Perspective

The system approach (ca 50s-60s) to management is a management approach based on general system theory--the theory that to understand fully the operation of an entity, the entity must be viewed as a system. This requires understanding the interdependence of its parts. The theory that an organization comprises various parts that must perform tasks necessary for the survival and proper functioning of the system

The Systems Perspective (continued)

A system is an interrelated set of elements functioning as a whole. An open system is one which interacts with its environment. A closed system is one which does not interact with its environment.

The Systems Perspective (continued)

A subsystem is a system within another system. ( relationship between production, finance and
marketing)

Synergy occurs when two or more subsystems working together produce more than the total of what they might produce working alone. Entropy is a normal process leading to system decline. (not keeping pace with the environment)

The Systems Perspective of Organizations

Inputs from the environment: material inputs, human inputs, financial inputs, and information inputs.

Transformation Process: technology, operating systems, administrative systems, and control systems

Outputs into the environment: products/services, profits/losses, employee behaviors, and information outputs

Feedback

V. The Contingency Perspective

The contingency approach (ca 70s) to management is a management approach that emphasizes that what managers do in practice depends on a given set of circumstances--a situation. A theory based on the premise that managers preferred actions or approaches depend on the variables of the situation they face

The Contingency Perspective (continued)

The Universal Perspective includes the classical, behavioral and quantitative approaches because they tried to identify the one best way to manage organizations.
The Contingency Perspective suggests that there is no one best way for all organizations because each is unique. Believes that appropriate managerial behavior in a given situation depends on, or is contingent on, these unique elements in the situation.

VI. An Integrated Framework

Before attempting to apply any specific concepts or ideas from the three major perspectives, managers must recognize:
the interdependence of units within the organization the effect of environmental influences the need to respond to the unique characteristics of each situation.

The ideas of subsystem interdependencies and environmental influences are given to us by systems theory. The situational view of management is derived from a contingency perspective.

An Integrative Framework of Management Perspectives

Systems Approach Contingency Perspective

Recognition of internal interdependencies. Recognition of environmental influences.

Classical Management Perspectives: Methods for enhancing efficiency and facilitating planning, organizing, and controlling

Recognition of the situational nature of management. Response to particular characteristics of situation.

Quantitative Management Perspective: Techniques for improving decision making, resource allocation, and operations

Behavioral Management Perspectives: Insights for motivating performance and understanding individual behavior, groups and teams, and leadership

Effective and efficient management

Contemporary Management Challenges

Managers today face many challenges as they guide and direct their organizations: Stalled economy that limits growth Diversity [culture, values, beliefs] Employee privacy issues Technology Internet Globalization Ethics and social responsibility

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