The Evolution of Management

Theory
Mala Sarat Chandra
Twitter: @malachandra

Learning Objectives
Explain what a management theory is.
Understand the evolution of management
theories and their major contributions.

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EVOLUTION OF MANAGEMENT
THEORY
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Evolution of Management Theory

1920-1950

Neo-Classical
Management
School
1880 - 1930

Classical
Management
School

Human Relations
Behavioral

Modern
Management
School
Systems
Contingency
Organizational
Humanism
Management
Science

Scientific
Administrative
Bureaucratic
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1900 - 1930

THE CLASSICAL SCHOOL OF

MANAGEMENT
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Core Ideas
1. Application of science to the practice of
management.
2. Development of basic management functions.
3. Articulation and application of specific principles
of management.
Evolved in response to the shift from handicraft to industrial
production.
Emphasis is on economic rationality of people and organizations;
motivated by economic incentives, they make choices that yield
the greatest monetary benefits.

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Max Webber
1905
The Theory of Social and Economic Organization

The Bureaucratic School of Management

A major contribution is his bureaucracy
theory, a formalized and idealized view of
organizations, comprising 6 major principles.
1.
2.
3.
4.
5.
6.

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A formal hierarchical structure.

Management by rules.
Organization by task competency.
Impersonal relationships.
A focused mission.
Employment based on technical qualifications.

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Frederick Taylor
1911
Principles of Scientific Management

The Scientific School of Management

Proposed an objective and systematic
method to identify the one best way to
do a job using scientific selection and
training methods; co-operation and clear
division of responsibility between
managers and workers; pay for
performance.

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Frank & Lillian Gilbreth

1912 - 1924
Time and Motion Studies

Disciples of Frederick Taylor, their

time and motion studies helped lay the
foundations for Scientific Management
the best possible way for a worker to
complete a job.
The expected results are employee satisfaction,
productivity and efficiency.

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Henry Gantt
1910 - 1915
Project Scheduling The Gantt Chart

A protg and associate of Frederick Taylor,

he designed a project scheduling model for
increasing the efficiency of project
execution and completion.

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Henri Fayol
1916
Administration Industrielle et Generale

The Administrative School of Management

Managers need specific roles in order to
manage work and workers.
He enumerated 6 functions / roles of management.
1. Forecasting
4. Commanding
2. Planning
5. Coordinating
3. Organizing
6. Controlling
These roles evolved into 14 principles of management.
Division of work, Authority, Discipline, Unity of Command, Unity of
Direction, Subordination of Interests, Remuneration, Centralization,
Scalar Chain, Equity, Order, Stability of Tenure of Personnel, Initiative,
Esprit de Corp.
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Ford and Frederick Taylors

Scientific Management

http://www.youtube.com/watch?v=8PdmNbqtDdI

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Summary: The Classical School of

Management

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Scientific

Bureaucratic

Administrative

Concern for
precise work
methods

Impersonal view
of organizations

Development of
managerial
principles

Best way for jobs

to be done

Formal structure,
legitimate
authority and
competence of
management

Best way to
organize all jobs in
a business

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Criticisms of The Classical School of

Management
No one is entirely driven by economic motivations.
Peoples choices and behavior are dictated by other
factors such as social needs, security and selfesteem.
There is no such thing as the best way to do a job.
Extreme division of labor tends to produce
monotony and reduce overall skill levels.
People are managed like machines. Introduction of
newer machines led to job elimination.
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1920 - 1950

THE NEO-CLASSICAL SCHOOL OF

MANAGEMENT
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Core Concepts
Grew in reaction against the Scientific Theory of
Management which emphasized standardization of
jobs, processes and technologies to maximize
economic return.
Focus shifted to the human side of organizations.
1. The best way to motivate, structure and support
employees.
2. The need for workers to find intrinsic value in
their jobs.
3. The positive impact of social relationships on
worker productivity.
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Mary Parker Follet

1925
The Psychological Foundations of Business Administration

Pioneered the notion of participative leadership.

Suggests that organizations are communities
involving networks of groups. Workers and
managers equally share power and
responsibility for decision making and therefore,
their outcomes. She introduces many
contemporary concepts such as leadership,
motivation and empowerment.

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The Hawthorne Studies

http://www.youtube.com/watch?v=W7RHjwmVGhs
2:49
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The Hawthorne Effect

Productivity increases when workers believe
that they are being observed closely.
Employees perform better when managers and
co-workers make them feel valued.
Financial rewards are not necessarily conducive
to increasing worker productivity.
Workers care about self-fulfillment, autonomy,
empowerment, social status and personal
relationships with co-workers.
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Human Relations Theory of

Management
Fritz Roethlisberger

Elton Mayo

1939

1933

The Human Poblems of

an Industrial Civilization

Management and the

Worker

People are social beings, motivated by social needs.

A sense of identity is derived from inter-personal relationships.
Workers are more receptive to social forces of peer groups
than monetary incentives and management controls.
Workers respond positively to attention from management, coworkers and customers.
The psychological needs of individuals significantly impact
group performance.
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Chester Barnard
1938
The Functions of the Executive

Proposes the acceptance theory of authority,

that organizational goals will be achieved and
managerial authority will be accepted if
workers believe that their individual needs are
being met.

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Behavioral Theory of Management

The fulfillment of emotional needs of workers is important in
achieving economic goals.
Employee satisfaction and working conditions are important in
achieving worker productivity.
Workers are intrinsically motivated to work when they feel a
sense of belonging and participate in decision making.
Workers desire diverse and challenging work.

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Abraham Maslow
1954
Motivation and Personality
Autonomy, Empowerment
Recognition and Rewards
Collaboration, teamwork, work-life balance
Personal and financial security

Self
Actualization
Esteem

Social

Safety

Working Conditions and

Work hours

Physiological

Hierarchy of Needs Theory

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Douglas McGregor
1960
Human side of Enterprise

Theory X Managers
Workers must be coerced and controlled to work towards organizational
goals.
Workers are inherently lazy, lack ambition and prefer to be directed rather
than take responsibilities.
Workers are self-centered and only care about themselves, not the
organization.
Workers dislike change and will resist it at all cost.

Theory Y Managers
Workers encouraged to develop their full potential will work towards
achieving organizational goals.
With appropriate incentives and support, workers will seek out and fulfill
responsibilities on their own.
Workers will apply their ingenuity, creativity and hard work to meet
organizational goals.

Caution: Self-Fulfilling Prophecy

Workers behave as expected by managers due to the managers own
behavior and actions.
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Notable Contributors to the Behavioral

School of Management (1)

Chris Argyris
1957
Personality and
Organization
Fundamental
conflicts between
Individual and
Organizational needs.
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Frederick
Herzberg
1959
The Motivation to
Work.
Two-factor Theory.

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Kurt Lewin
1944 1951

Model of
planned change:
unfreeze,
change, refreeze
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Notable Contributors to the Behavioral

School of Management (2)

Rensis Likert
1967
The Human
Organization
Linking-pin model to
bridge human
relations and
organizational
structure
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George
Homans

Warren Bennis

1950

The Planning of
Change

The Human Group

Extrapolates from a
small group to
understanding the
social system.
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1961

Foundation for
planned
organizational change
and development.
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Summary: Neo-Classical School of

Management
Behavioral School is a logical extension of the
Human Resource School.
They are largely concerned with motivation of
workers.
Workers are diverse in their needs and want
challenging work, participative decision-making,
self-direction and control.
Managers must help workers deal with situational
constraints and social aspects of organizational and
environmental changes.
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THE MODERN SCHOOL OF

MANAGEMENT
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Core Concepts
Dealing with complexity is the core of modern management
theory.
Organizations, Workers, Environment and the interactions between them.

It is a synthesis of several theories.

Behavioral science, mathematics, statistics, operations / quantitative research and
computing technologies.

Management is an exercise in logic applied to situations.

Situations can be measured.
Computers have an increasing role to play.

Application of management knowledge is extended to nonbusiness areas.

Education, government, health care and others.

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The Quantitative School of

Management
Combines classical management theory and behavioral science
through the use of statistical models and simulations.
A major focus is on the process with which decisions are made,
to ensure informed results.
The quantitative school comprises
Scientific Management
Managers use of math and statistics for problem solving.

Operations Management
Managing the process of combining materials, workers and capital to produce goods and
services.

Management Information Systems

Transforming historic, current and projected data from internal and external sources into
useful, usable management information.

Systems Management Theory

Transforming inputs into outputs and receiving feedback.
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The Systems School of Management

Ludwig von Bertalanffy
1937

Allgemeine Systemlehre (General Systems Theory)

Feedback from the environment
used to change & grow

Throughput
Input
Resources from the
environment

The process of
converting or
transforming
resources within the
system into a product
or service

Output
The product or
service exported to
the environment

The Environment in which the system operates.

Environmental elements have the potential to affect all or part of the system
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Types of Systems
Closed System

Systems and wholeness

Guidelines for System Analysis

Open System

1. The focus of analysis is the whole, parts receive

secondary attention.
2. Integration (interrelatedness of the many parts
within the whole) is the key in wholeness analysis.
3. Possible modifications in each part should be
weighed in relation to possible effects on every other
part.
4. Each part has a role to perform so the whole can
accomplish its purpose.
5. The nature of the part and its function is determined
by its position in the whole.
6. All analysis starts with the existence of the whole.
Parts and their relationships should evolve to best
suit the purpose of the whole.
Source: Modern Management by Certo & Certo

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The Management System

Customers

Input

Government

Process
Competitors

Output

Environment

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Suppliers

It is an open system
comprising parts such as
organizational resources
(capital, raw materials,
workers), the production
process, information
systems, finished goods,
that are needed to
achieve the organizations
goals.

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The Contingency School of

Management (1)
Joan Woodward
1965
Industrial
Organziation: Theory
and Practice

&

P. Lawrence

J.W. Lorsch

Argued that technology and

production systems were critical
aspects of organizational design;
advanced a contingency approach to
organizing.

Suggested that successful

organizations match their structure to
the nature of the environment

1967
Organization & Environment:
Managing Differentiation and
Integration
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The Contingency School of

Management (2)
Present a unified, open systems approach
extending organizational theory beyond the
boundaries of a single organization.

Daniel Katz

Robert Kahn

1966
The Psychology of Organizations

Fred Edward Fiedler

1967
A Theory of Leadership
Effectiveness

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Argued that leadership effectiveness is

contingent upon two interacting factors,
Leadership style and situational
favourableness.

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Definition of an Organization
An Organization is
a social system
comprising
subsystems of
resource variables,
interrelated by
various
management
policies, practices
and techniques
which interact with
variables in the
environment to
achieve a set of
goals or objectives.

Environmental

PERFORMANCE
CRITERIA

SITUATIONAL
SYSTEM
PERFORMANCE

Resource

Management
ORGANIZATIONAL
Variables and relationships in a
Contingency Model of the Organization

Source: A General Contingency Theory of Management, Luthans and Stewart (1977)

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Core Concepts
What managers do depends on or is contingent
on the situation at hand; it emphasizes an ifthen relationship.
If a particular situational variable exists, then
managers are likely to take a particular action.
Successful managers must consider the realities
of the specific organizational circumstances they
face when applying management concepts,
principles, tools and techniques.
Source: Modern Management by Certo & Certo

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Challenges with the Contingency

Approach
1. Perceiving organizational situations as they
actually exist.
2. Choosing the management tactics best suited
to those situations.
3. Competently implementing those tasks.

Source: Modern Management by Certo & Certo

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Summary
Three distinct Schools of Management
Classical
Process
Neo-Classical People
Modern
Integrative - People, Process,
Environment

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Key Concepts: Definition of

Management
Management is the process of accomplishing an
organizations goals by working with and
through people, utilizing all the resources
available to it.

The Role of Management

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Key Concepts: The Role of Management

Planning
Doing the right thing at the right time to accomplish organizational goals.
Choose the tasks that need to be performed and decide when and how to perform
those tasks.

Organizing
Creating a mechanism to put plans into action.
Assign tasks to individuals and teams to accomplish the tasks required to accomplish
organizational goals.

Influencing
Leading, motivating and directing an organizations members toward accomplishing
organizational goals.
Increase productivity of members in the accomplishment of organizational goals and
to be responsive to changing needs of the organization.

Control
Establishing and tracking organizational performance standards.
Gather and analyze appropriate performance metrics and compare against established
standards. Make organizational changes needed to meet established standards.
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Common Mistakes of Management

Planning
Not establishing goals and objectives for all important organizational areas.
Making plans that are too risky.
Not exploring enough viable alternatives for reaching goals and objectives.

Organizing
Not establishing the appropriate organization structure span of control, interdepartmental coordination, geographic balance.

Influencing
Not establishing lines of communications, communicating infrequently, managing
rather than leading.

Controlling
Not tracking progress against goals, not establishing performance standards, tracking
performance metrics, analyzing trends or using insights to drive improvements.

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Management and Organizational

Resources

Organizational
Resources
People
Money
Raw Materials
Capital Resources

Outputs Finished Products

Inputs
Production Process

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Goods
Services

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Efficient

Goals not
reached.
Resources
not wasted.

Goals
reached.
Resources
not wasted.

Inefficient

Goal Achievement:
Managerial Efficiency versus Effectiveness

Goals not
reached.
Resources
wasted.

Goals
reached.
Resources
wasted.

Ineffective

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Effective

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The Management Framework

Planning
Vision and
Mission
Strategy
Goals and
Objectives

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Organizing

Leading

Organization
Design
Culture
Social Networks

Leadership
Decision Making
Communications
Groups and
Teams
Motivation

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Controlling
Systems and
Processes
Human
Resources

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The Future of Management

http://www.youtube.com/watch?v=K3-_IY66tpI

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