EARLY CONTRIBUTIONS

PERIOD: - UPTO 19th CENTURY

Before the systematic study of management which started close to 19th

century, contributions in the field came from a variety of sources. These sources are
as follows:-

− The concept of organisation and administration existed in Egypt in 1300

B.C.
− Confucius’s parables included suggestions for proper public administration
and admonitions to choose honest, unselfish and capable public officers long
before Christ
− Kautilya has offered sound principles of state administration in 320 B.C.
− Roman Catholic Church introduced the concept of staff personnel in church
administration which was further carried on by military organisations.
− The cameralists, a group of German and Austrian public administrators and
intellectuals, emphasised systematic administration as a source of strengths
during 16th to 18th century.
− Robert Owen emphasised personnel aspects in management and advocated a
number of benefits to employees.
− James Watt, Charles Babbage, and Henry Town concentrated on developing
concepts relating to effective utilisation of resources at the shop-floor level.

These contributions provide some insights about how resources could be

utilised more effectively; however, these contributions were outside the field of
business and other economic organisations.

Their ideas created awareness about managerial problems. By the end of 19th
century, a stage was set for taking systematic study of management and the beginning
was made by Taylor in the early part of 20th century which took the shape of
scientific management.

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 Frederick Winslow Taylor

20 March 1856 (1856-03-20)

Born
Philadelphia, Pennsylvania U.S.
21 March 1915 (1915-03-22)
Died
Philadelphia, Pennsylvania U.S.
Cause of death Pneumonia
West Laurel Hill Cemetery
Resting place
Bala Cynwyd, Pennsylvania U.S.
Nationality American
Efficiency expert
Occupation
Management consultant
"Father" of the Scientific management
Known for
& Efficiency Movement
Spouse(s) Louise M. Spooner
Kempton, Robert and Elizabeth
Children
(all adopted orphans)
Franklin Taylor
Parents
Emily Annette Winslow

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Biography:-

Frederick Winslow Taylor widely known as F. W. Taylor was an American

mechanical engineer who sought to improve industrial efficiency. He is regarded as
the father of scientific management and was one of the first management consultants
and director of a famous firm. Taylor was also an accomplished tennis player, who
won the first doubles tournament in the 1881 U.S. National Championships, the
precursor of the U.S. Open, with Clarence Clark.

Taylor, born in Philadelphia, prepared for college at Philips Academy in

Exeter, N.H., and was accepted at Harvard. His eyesight failed and he became an
industrial apprentice in the depression of 1873. At Exeter he was influenced by the
classification system invented by Melvil Dewey in 1872 (Dewey Decimal System).
He became in 1878 a machine shop laborer at Midvale Steel Company. In 1883 he
earned a degree by night study from Stevens Institute of Technology (which now
archives his papers and has announced plans to put them online. He became general
manager of Manufacturing Investment Company, 1890, and then a consulting
engineer to management.

Taylor's ideas, clearly enunciated in his writings, were widely misinterpreted.

Employers used time and motion studies simply to extract more work from employees
at less pay. Unions condemned speedups and the lack of voice in their work that
"Taylorism" gave them. Quality and productivity declined when his principles were
simplistically instituted.

Modern management theorists, such as Edward Deming, often credit Taylor,

however, with generating the principles upon which they act. Others, such as Juran,
though, continue to denigrate his work. Modern theorists generally place more
emphasis on worker input and teamwork than was usual in much of Taylor's time. A
careful reading of Taylor's work will reveal that he placed the worker's interest as
high as the employer's in his studies, and recognized the importance of the suggestion
box, for example, in a machine shop.

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Work:-

Working at Midvale steel company in U.S.A. and Bethlehem steel company,

he carried experiments about how to increase the efficiency of people. Even after his
retirement he continued to develop scientific management. On the basis of his
experiments, he published many papers and books and all his contributions were
compiled in his book “scientific management”. His contributions can be described in
two parts: elements and tools of scientific management and principles of scientific
management.

Scientific management:-

F.W. Taylor is by far the most influential person of the time and someone who
has had an impact on management service practice as well as on management thought
up to the present day. Taylor formalized the principles of scientific management, and
the fact-finding approach put forward and largely adopted was a replacement for what
had been the old rule of thumb.

He also developed a theory of organizations which altered the personalized

autocracy which had only been tempered by varying degrees of benevolence, such as
in the Quaker family businesses of Cadbury's and Clark's.

Taylor was not the originator of many of his ideas, but was a pragmatist with
the ability to synthesize the work of others and promote them effectively to a ready
and eager audience of industrial managers who were striving to find new or improved
ways to increase performance.

At the time of Taylor's work, a typical manager would have very little contact
with the activities of the factory. Generally, a foreman would be given the total
responsibility for producing goods demanded by the salesman. Under these
conditions, workmen used what tools they had or could get and adopted methods that
suited their own style of work.

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Elements and tools of scientific management:-

Taylor conducted certain experiments at his work-places to find out how

human beings could be made more efficient by standardizing the work and better
method of doing the work. These experiments have provided the following features-

− Separation of planning and doing

− Functional foremanship
− Job analysis
• Time study
• Motion study
• Fatigue study
− Standardization
− Scientific selection and training of workers
− Financial incentives
− Economy
− Mental revolution

Principles of scientific management:-

The five principles of management under scientific management were as

follows:

− The development of a science for each element of a man's work to replace

the old rule-of-thumb methods.
− Attempts should be made to obtain harmony in group action rather than
discord.
− The development of a spirit of hearty cooperation between workers and
management to ensure that work would be carried out in accordance with
scientifically devised procedures.
− There should be continuous increase in production and productivity to
obtain maximum output.
− For company’s highest prosperity, the workers should be developed to the
fullest extent possible.

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F.W. Taylor's contributions to scientific management:-

By 1881 Taylor had published a paper that turned the cutting of metal into a
science. Later he turned his attention to shovelling coal. By experimenting with
different designs of shovel for use with different material, (from 'rice' coal to ore,) he
was able to design shovels that would permit the worker to shovel for the whole day.
In so doing, he reduced the number of people shovelling at the Bethlehem Steel
Works from 500 to 140. This work, and his studies on the handling of pig iron, greatly
contributed to the analysis of work design and gave rise to method study.

To follow, in 1895, were papers on incentive schemes. A piece rate system on

production management in shop management, and later, in 1909, he published the
book for which he is best known, Principles of Scientific Management.

A feature of Taylor's work was stop-watch timing as the basis of observations.

However, unlike the early activities of Perronet and others, he started to break the
timings down into elements and it was he who coined the term 'time study'.

F.W. Taylor's contribution to organizational theory:-

His framework for organization was:

− clear delineation of authority

− responsibility
− separation of planning from operations
− incentive schemes for workers
− management by exception
− task specialization

Propaganda techniques:-

Taylor promised to reconcile labour and capital.

With the triumph of scientific management, unions would have nothing left to
do, and they would have been cleansed of their most evil feature: the restriction of
output. To underscore this idea, Taylor fashioned the myth that 'there has never been a
strike of men working under scientific management', trying to give it credibility by
constant repetition. In similar fashion he incessantly linked his proposals to shorter
hours of work, without bothering to produce evidence of "Taylorized" firms that
reduced working hours, and he revised his famous tale of Schmidt carrying pig iron at
Bethlehem Steel at least three times, obscuring some aspects of his study and stressing
others, so that each successive version made Schmidt's exertions more impressive,
more voluntary and more rewarding to him than the last.

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Some problems:-

Taylor's uncompromising attitude in developing and installing his ideas caused

him much criticism. Scientific method, he advocated, could be applied to all problems
and applied just as much to managers as workers. In his own words he explained:

"The old fashioned dictator does not exist under Scientific Management. The man at
the head of the business under Scientific Management is governed by rules and laws
which have been developed through hundreds of experiments just as much as the
workman is, and the standards developed are equitable."

However, there were problems-Taylor's papers were not always well received,
as many of his ideas were associated with bad practice, such as rate-cutting by
unscrupulous managers.

In 1911 and 1912 Taylor was questioned at length by a special committee of

the US House of Representatives. As a result laws were passed banning the use of
stop-watches by civil servants and it was only in 1949 that this restriction was lifted.

Taylor's view of the motivations of workers has had a profound influence

throughout the century until the present day. His belief that man was rational and
would make economic choices based on the degree of monetary reward led him to
devise payment systems that closely related the kind of effort he sought with the level
of reward offered.

Not surprisingly, there was strong criticism of this theory that treats human
beings like machines and assumes that workers are satisfied by money alone.

Underlying assumptions:-

His views on motivation, management and organization all presupposed

certain conditions to be constant, which we now know, they are not.

The assumptions underlying his work were:

− The presence of a capitalist system and a money economy, where

companies in a free market have as their main objective the improvement
of efficiency and the maximization of profit;
− The Protestant work ethic, that assumes people will work hard and behave
rationally to maximize their own income, putting the perceived
requirements of their organization before their own personal objectives
and goals;
− That an increased size is desirable in order to obtain the advantages of the
division of labour and specialization of tasks.

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 Taylor's impact has been so great because he developed a concept of work
design, work-measurement, production control and other functions, that completely
changed the nature of industry. Before scientific management, such departments as
work study, personnel, maintenance and quality control did not exist. What was more
his methods proved to be very successful.

Relations with ASME:-

Taylor was the President of the American Society of Mechanical

Engineers (ASME) from 1906 to 1907. While president, he tried to implement his
system into the management of the ASME but was met with much resistance. He was
only able to reorganize the publications department and then only partially. He also
forced out the ASME's long-time secretary, Morris L. Cooke, and replaced him
with Calvin W. Rice. His tenure as president was trouble-ridden and marked the
beginning of a period of internal dissension within the ASME during the Progressive
Age.

Publications by Taylor:-

Taylor published many articles and short monographs. A selection:

− 1894. Notes on Belting

− 1895. A Piece-rate System
− 1896. The adjustment of wages to efficiency; three papers New York, for
the American economic association by the Macmillan company; London,
S. Sonnenschein & co.
− 1903. Shop management; a paper read before the American society of
mechanical engineers. New York.
− 1906. On the art of cutting metals, by Mr. F. W. Taylor; an address made
at the opening of the annual meeting in New York, December 1906. New
York, the American society of mechanical engineers.
− 1911. Principles of Scientific Management. New York and London,
Harper & brothers.
− 1911. Shop management, by Frederick Winslow Taylor ... with an
introduction by Henry R. Towne, New York, London, Harper & Brothers.
− 1911. A treatise on concrete, plain and reinforced: materials, construction,
and design of concrete and reinforced concrete. (2d ed). New York, J.
Wiley & sons.
− 1912. Concrete costs. New York, J. Wiley & sons.

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 Henri Fayol (1841-1925)

Functions and Principles of Management

Henri Fayol, a French engineer and director of mines, was little unknown
outside France until the late 40s when Constance Storrs published her translation of
Fayol's 1916 “Administration Industrielle at Generale".

Fayol's career began as a mining engineer. He then moved into research

geology and in 1888 joined Comambault as Director. Comambault was in difficulty
but Fayol turned the operation round. On retirement, he published his work - a
comprehensive theory of administration - described 1became recognised and
referenced by others in the growing discourse about management. He is frequently
seen as a key, early contributor to a classical or administrative management school of
thought (even though he himself would never have recognised such a "school").

His theorising about administration was built on personal observation and

experience of what worked well in terms of organisation. His aspiration for an
"administrative science" sought a consistent set of principles that all organizations
must apply in order to run properly.

From administrative point of view, he placed commerce, industry, religion,

philanthropy, and the state on equal footing. His administrative science can be applied
equally well to public and private affairs. Therefore, management is a universal
phenomenon. However, he has emphasised that principles of management are flexible
and not absolute and are usable regardless of changing and special conditions.

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 He emphasized the role of administrative management and concluded that all
activities that occur in business organizations could be divided into six main groups.

1. Technical (production, manufacturing)

2. Commercial (buying, selling, exchange)
3. Financial (obtaining and using capital)
4. Security (protection of property and persons)
5. Accounting (balance sheet, stocktaking, statistics, costing)
6. Managerial (planning, organizing, commanding, coordinating,
controlling).

Pointing out that these activities exist in every business of every size, Fayol
observed that the first five were well known, consequently he devoted most of his
time to analyse the sixth one, that is, managerial activity. Fayol has divided his
approach of studying management into three parts:

1. Managerial qualities and training,

2. General principles of management, and
3. Elements of management.

Management qualities and training:-

Fayol was the first person to identify the qualities required in a manager.
According to him, there are six types of qualities that a manager requires. These are as
follows:

1. Physical (health, vigour, and address)

2. Mental (ability to understand and learn, judgement, mental vigour, and
capability)
3. Moral (energy, firmness, initiative, loyalty, tact and dignity)
4. Educational (general acquaintance with matters not belonging exclusively
to the function performed)
5. Technical (peculiar to the function being performed) and
6. Experience (arising from the work)

Fayol has observed that the most important ability for a worker is technical;
the relative importance of managerial ability increases as one goes up the scalar chain,
with insight becoming the most important ability for top level executives. On the basis
of this conclusion, Fayol recognised a widespread need for principles of management
and for management teaching. He held that managerial ability should be acquired first
at school and later in the workshop. In order to acquire managerial knowledge, he
developed principles of management to be taught in academic institutions.

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General principles of management:-

F. W. Taylor published "The Principles of Scientific Management" in the USA

in 1911, and Fayol in 1916 examined the nature of management and administration on
the basis of his French mining organisation experiences.

Fayol also synthesised 14 principles for organisational design and effective

administration. It is worthwhile reflecting on these are comparing the conclusions to
contemporary utterances by Peters, Kanter and Handy to name but three management
gurus. Fayol's 14 principles are:

1. Specialisation/division of labour- A principle of work allocation and

specialisation in order to concentrate activities to enable specialisation of skills
and understandings, more work focus and efficiency.
2. Authority with corresponding responsibility- If responsibilities are
allocated then the post holder needs the requisite authority to carry these out
including the right to require others in the area of responsibility to undertake
duties. Authority stems from:
− That ascribed from the delegation process (the job holder is assigned to
act as the agent of the high authority to whom they report - hierarchy)
− Allocation and permission to use the necessary resources needed
(budgets, assets, and staff) to carry out the responsibilities.
− Selection - the person has the expertise to carry out the responsibilities
and the personal qualities to win the support and confidence of others.

The R = A correspondence is important to understand. R = A enables

accountability in the delegation process. Who do we cope with situations
where R > A? Are there work situations where our R< A?

“Judgement demands high moral character, therefore, a good leader

should possess and infuse into those around him courage to accept
responsibility. The best safeguard against abuse of authority and
weakness on the part of a higher manager is personal integrity and
particularly high moral character of such a manager. This integrity is
conferred neither by election nor ownership.”1916

A manager should never be given authority without responsibility--and

also should never be given responsibility without the associated authority
to get the work done.

3. Discipline- The generalisation about discipline is that discipline is essential

for the smooth running of a business and without it - standards, consistency of
action, adherence to rules and values - no enterprise could prosper.

"in an essence - obedience, application, energy, behaviour and outward

marks of respect observed in accordance with standing agreements
between firms and its employees " 1916

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4. Unity of command- The idea is that an employee should receive instructions
from one superior only. This generalisation still holds - even where we are
involved with team and matrix structures which involve reporting to more than
one boss - or being accountable to several clients. The basic concern is that
tensions and dilemmas arise where we report to two or more bosses. One boss
may want X, the other Y and the subordinate is caught between the devil and
the deep blue sea.
5. Unity of direction- The unity of command idea of having one head (chief
executive, cabinet consensus) with agree purposes and objectives and one plan
for a group of activities) is clear.
6. Subordination of individual interest to the general interest- Fayol's line
was that one employee's interests or those of one group should not prevail over
the organisation as a whole. This would spark a lively debate about who
decides that the interests of the organisation as a whole are. Ethical dilemmas
and matters of corporate risk and the behaviour of individual "chancers" are
involved here. Fayol's work - assumes a shared set of values by people in the
organisation - a unitarism where the reasons for organisational activities and
decisions are in some way neutral and reasonable.
7. Remuneration of staff- The general principle is that levels of compensation
should be "fair" and as far as possible affords satisfaction both to the staff and
the firm (in terms of its cost structures and desire for profitability/surplus).
8. Centralisation- Centralisation for HF is essential to the organisation and a
natural consequence of organising. This issue does not go away even where
flatter, devolved organisations occur. Decentralisation - is frequently
centralised-decentralisation!!! The modes of control over the actions and
results of devolved organisations are still matters requiring considerable
attention.
9. Scalar chain/line of authority- The scalar chain of command of reporting
relationships from top executive to the ordinary shop operative or driver needs
to be sensible, clear and understood.
10. Order- The level of generalisation becomes difficult with this principle.
Basically an organisation "should" provide an orderly place for each
individual member - who needs to see how their role fits into the organisation
and be confident, able to predict the organisations behaviour towards them.
Thus policies, rules, instructions and actions should be understandable and
understood. Orderliness implies steady evolutionary movement rather than
wild, anxiety provoking, unpredictable movement.
11. Equity- Equity, fairness and a sense of justice "should" pervade the
organisation - in principle and practice.
12. Stability of tenure- Time is needed for the employee to adapt to his/her work
and perform it effectively. Stability of tenure promotes loyalty to the
organisation, its purposes and values.
13. Initiative- At all levels of the organisational structure, zeal; enthusiasm and
energy are enabled by people having the scope for personal initiative. (Note:
Tom Peters recommendations in respect of employee empowerment)
14. Esprit de corps- Here Fayol emphasises the need for building and
maintaining of harmony among the workforce, team work and sound
interpersonal relationships.

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Five elements of management:-

Henri Fayol, the father of the school of Systematic Management, was

motivated to create a theoretical foundation for a managerial educational program
based on his experience as a successful managing director of a mining company. In
his day, managers had no formal training and he observed that the increasing
complexity of organisations would require more professional management.

Fayol's legacy is his generic Principles of Management. Of Fayol's six generic

activities for industrial undertakings (technical, commercial, financial, security,
accounting, managerial), the most important were The Five Functions of Management
that focused on the key relationships between personnel and its management. The
Five Functions are:

1. Planning- Drawing up plans of actions that combine unity, continuity,

flexibility and precision given the organisation's resources, type and
significance of work and future trends. Creating a plan of action is the most
difficult of the five tasks and requires the active participation of the entire
organisation. Planning must be coordinated on different levels and with
different time horizons;
2. Organising- Providing capital, personnel and raw materials for the day-to-day
running of the business, and building a structure to match the work.
Organisational structure depends entirely on the number of employees. An
increase in the number of functions expands the organisation horizontally and
promotes additional layers of supervision.
3. Commanding- Optimising return from all employees in the interest of the
entire enterprise. Successful managers have personal integrity, communicate
clearly and base their judgments on regular audits. Their thorough knowledge
of personnel creates unity, energy, initiative and loyalty and eliminates
incompetence.
4. Coordinating- Unifying and harmonizing activities and efforts to maintain the
balance between the activities of the organisation as in sales to production and
procurement to production. Fayol recommended weekly conferences for
department heads to solve problems of common interest.
5. Controlling- Identifying weaknesses and errors by controlling feedback, and
conforming activities to plans, policies and instructions. Fayol's management
process went further than Taylor's basic hierarchical model by allowing
command functions to operate efficiently and effectively through co-
ordination and control methods. For Fayol, the managing director overlooked
a living organism that requires liaison officers and joint committees.

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 ELTON MAYO THEORY

Neo classical theories:-

The neo classical approach developed as a reaction to classical principles, but

it abodes them altogether. Some of the neo classicists like Simon, Smithburg and
Thompson concentrated on the criticism of structural aspects of the classical theory
and they tried to modify classical principles.

According to W.G.Scott, the new classical theory of organization embarked on

the task of compensating for some deficiency in classical doctrine. The neo classical
approach takes the postulates of the classical school, regarding the pillars of the
organization as given.

The human behaviour school:-

This school takes particular note of psychological factors underlying the

human behaviour in organized groups under the given situation. Management is not
mechanical process; it involves mobilization and utilization of man power to achieve
the chosen aims of a business undertaking. Management, as we know is getting things
done through other people. Men should be treated as human beings with all their
instincts, emotions, sentiments, likes or dislikes. Management depends on response
from the subordinates to the directions given by the higher officers. Receptivity and
response are psychological. Their behaviour is stirred up by incentives, material and
mental.

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 This school emphasizes the inter-personal relations characterizing
management processes. It concentrates its analytical focus on the motivation and its
effect on his efficiency in performing job. It also underlines the role of personal
leadership in management. Mayo, Roethlesberger, Dickinson and others led to the
development of this school. The famous experiments conducted in Western Electric
Company known as the famous Hawthorne experiments brought out the effect of
environment on output turned out by the workers. The effect of physical conditions of
work—lightening, ventilation etc on workers capacity was experimented.

HAWTHORNE STUDIES:-

As noted earlier, the roots of modern organizational behaviour lie in

Hawthorne studies that began in the 1920s.These studies taking their name from the
Hawthorne Works plant of the Western Electric Company in the Chicago area were
initiated in an attempt to prevent the characteristic drop that occurs each day in
worker productivity. Management and engineering staff considered a variety of
methods that might keep worker efficiency at a high level through the entire shift.
Among the methods studied were increased illumination, various schedules of work
hours and breaks, different forms of wage incentives, even the providing of
sandwiches for those operators who hurried to work without taking time for breakfast.

The prime purpose of this school is to find out the functions of managers and
install in them the basic principles and practice of management. Management involves
the performance of functions by managers aiming at proper and systematic utilization
of resources. Management process consists of planning, organizing, staffing, directing
and controlling. Thorough knowledge of such principles makes one versatile in the art
of management.

Elton Mayo is generally recognized as the father of human relations school. It

was he who led the team conducting the study at Westerns Electric Hawthorne Plant
(1927-1932) to evaluate the attitude and psychological reactions of workers in on the
job situations. His associates included John Dewy, Kurt Lewin, F.J.Roethisberger and
W.J Dickson.

Earlier, from 1924 to 1927, the National Research Council made a study in
collaboration with the Western Electric Company to determine the effect of
illumination and other conditions upon workers and their productivity. The first series
of experiments failed to establish any consistent relationship between output and
illumination. Contrary to normal expectations, output tended increase as the intensity
of lighting varied from the normal level both in the upward and downward direction.
As the intensity of light was increased or decreased, the productivity of the workers
under observation kept on increasing. It is at this stage that George Elton Mayo and
Fritz J.Roethlisberger took over the investigation and continued the research to find
out the real factors i.e. factors other than working conditions which were influencing
output which originally began with observation of 5 workers was ultimately extended
to cover more than 20,000 workers.

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Stages in Hawthorne experiments:-

Chronologically, the Hawthorne studies can be divided into 4 stages. Each

stage involved certain alterations in the original hypothesis and utilizing a variety of
research techniques. The first stage was concerned with an experiment on working
conditions and employee efficiency. The second stage was concerned with an
interviewing programme designed to determine what aspects of the environment
employees either liked or disliked. During the third stage, the interview results were
analyzed and a theory was presented to explain the nature of employee satisfaction or
dissatisfaction. The fourth stage involved supplementing the interview method
through direct observation of fourteen operators.

a. The test room study:-The study was designed to determine the effect of
changes in working conditions on employee efficiency. Two groups of female
workers were constituted for this purpose. Contrary to normal expectations,
the researchers found that output increased despite a detoriation in
illumination, temperature, rest pauses etc. They concluded that the increase in
output was due to a favourable change in workers attitude caused by changes
in the pattern of supervision, social conditions of workers, and so on. By
asking their help and cooperation, the investigator has made the girls feel
important. They had found stability, a place where they belonged, and work
ever did in their lives.
b. Relay assembly room study:-In this study 6 female employees assembly
telephone relays were selected and brought into a special test room separate
from the rest of the plant. This group of employees was largely a friendly
group and in the test room the atmosphere was quite informal. The object of
this study was to measure the effect of fatigue or rest on output. There was no
supervisor in the test room but an observer for recording results and
counselling the girls was engaged .Improvements were made in rest periods,
working hours, incentive payment and temperature. There was an increase in
productivity even when these conditions were brought to their original
position. It was concluded that productivity is not simply a function of
physical work environment. The perceived feeling of importance due to
participation, tension free inter-personal relations, informal atmosphere and
group cohesions are the main causes of increased productivity. The
importance of human relationships in industry was recognized
c. Bank wiring observation room study:-In order to verify the conclusions of
the interviewing programme, a group of 14 male workers employed in the
bank wiring room, were deeply observed. A detailed study of the social
organization and forces operating within the bank wiring observation group
was made to judge the influence of informal groups on human behaviour as
well as the influence of social environment on individual’s attitude. An
incentive wage plan based on group output was used with the hypothesis that
workers would produce more individually and help others to do so to
advantage of group bonus. On the contrary it was found that each individual in
the group was restricting his output much below the company’s standard. The
informal group had laid down the norm of a “fair days work” and group
pressure was applied to ensure that members of the group did not produce
more than the group standards. The informal group restricted output due to
fear of unemployment, fear in increase of standard and to protect the slower
workers. The researchers also found that there were pervasive small cliques
among the workers.

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 d. Mass interviewing programme:-Under this programme, about 20,000
interviews were conducted to find out the opinions or attitudes of employees
towards the job, the company, supervision and working conditions. Initially
these interviews were carried out by means of direct questioning. Later on a
non-directive approach was adopted wherein the interviewer simply listened to
what employees had to say. It was found that merely giving an employee an
opportunity to talk and air his grievances had a beneficial effect on his morale
and efficiency. Worker is satisfied or dissatisfied not in terms of any objective
frame of reference but rather in terms of how he regards his social status in the
firm and what he feels is entitled to in the ways of rewards. Experiences,
perceptions, interactions and interpersonal relations were fond to be the basic
factors responsible for human behaviour at the work place.

Contributions of Hawthorne studies:-

The main propositions of Hawthorne studies are as follows:

− The organization is a social system.

− The social environment on the job affects people and are also affected by
them and not management alone.
− In the formal organization, informal organization also exists and it affects
and is affected by formal organization.
− A conflict between organizational and individual goals often exists which
increases the importance of integration between these two.
− Man is interdependent and his behaviour can be predicted in terms of
social and psychological factors.
− Man is diversely motivated and wants to fulfil different types of need.
− Man’s approach is not always rational. Often he behaves irrationally in
terms of the rewards, which he seeks from the work.
− Communication is necessary as it carries information to the functioning of
the organization and the feelings and the sentiments of the people who
work in it.
− Team work is essential for cooperation and sound organization
functioning. This work is not automatic but achieved through behavioural
approach.

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Appraisal for human relations approach:-

The human relations approach has been criticized on the following grounds:

− Lack of scientific approach-The human relationists drew conclusions from

Hawthorne studies. These conclusions are based on clinical insight rather
than scientific evidence the groups chosen for study were not representative
in character the findings based upon temporary groups do not apply to
groups that have continuing relationship with one another. Moreover, the
experiments focused on operative employees only.
− Over emphasis on group-The human relations approach over-emphasizes
the group dynamics, group decision-making. But in practice, groups may
create problems for the management and collective decision making may not
be possible.
− Over stretching of human relations-It is assumed that all organizational
problems are amenable to solutions through human relations. This
assumption does not hold well in practice. The satisfied workers may not be
more productive workers.
− Limited focus on work-The human relations approach lacks adequate focus
on work. It puts all the emphasis on interpersonal relations and on the
informal group. It tends to over emphasize the psychological aspects at the
cost of the structural and technical aspects.
− Over stress on socio-psychological factors-The human relations approach
undermines the role of economic incentives in motivation and gives
excessive stress on social and psychological factors. If the wages are too low,
the employees will feel dissatisfied despite good interpersonal relations at the
work place. Thus, it may be said that the human relations approach seeks to
exploit the sentiments of employees for the benefit of the organization.

18
 HERBERT SIMON

DECISION THEORY APPROACH

Decision theory approach looks at the basic problem of management around

decision making. Every organization has to face this problem of choosing the right
option out of several available alternatives. Major contributions in this approach have
come from Herbert Simon, a Nobel Prize winner in economics. The major emphasis
of this approach is that decision making is the job of every manager. The manager is a
decision maker and organization is a decision making unit. Thus, the basic problem in
managing is to make rational decision. Decision theory approach has following
features:-

1. Management is essentially decision making.

2. The members of the organization are decision makers or problem solvers.
3. Organization can be treated as a combination of various decision centres.
4. Quality of decision affects the organizational effectiveness.
5. All factors affecting decision making are the subject matter of study of
management.

Contributions of Herbert Simon:-

Herbert Simon looked organizational problems in totality of socio-

psychological context and viewed that decision making takes place in this context.
His major contributions to management are summarized below:-

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1. Concept of Organization: According to Simon organization is a complex
network of decisional processes, all pointed towards their influence upon the
behaviour of the operatives. Psychology of the organization is to be found in
the process whereby organization influences the decisions of its members,
supplying these decisions with their devices. Thus the best way to analyze an
organization is to find out where and by whom decisions are made.

2. Decision making: Decision making is the core of management and

management is synonymous with decision making. This is why Simon is been
referred to ‘Decision Theorist’. According to him the decision process
involves three steps:

- Intelligent Activity: Searching the environment for conditions calling

for decisions
- Design Activity: Inventing, developing and analyzing possible course
of action to take place
- Choice Activity : Selecting a particular course of action from those
available

3. Bounded Rationality: Simon has advocated the principle of bounded

rationality that means that no man is completely rational. He said managers do
not go for maximum satisfaction out of a decision but are satisfied with good
enough satisfaction from a decision. For a decision to be rational proper means
are adopted to reach desired ends. Also means and ends cannot be separated.
A simple end-means chain analysis may not help in reaching accurate
conclusion because what is an end at one point of time or at one level of
organization might be a means at the other time or at other level of the
organization.

4. Administrative Man: Simon has given the concept of administrative man as

the model of decision making. It has following assumptions:

- Administrative man adopts satisfying approach rather than maximizing

approach
- He perceives the world as a simplified model of real world
- Can make choice without determining all the alternatives
- Is able to make decisions with simple rules and tricks of trade

5. Organizational Communication: According to Simon there are three stages

in the communication process initiation, transmittal and receipt of information.
In order to overcome the blockage of communication role of informal
communication is given more importance than formal communication.

20
 PETER DRUCKER

One of the world's most respected thinkers on management and society

Peter Drucker had a great way with words. He distilled meaningful concepts
into short phrases more effectively than any other management guru. The concepts
and philosophies he developed have shaped modern management thinking. He wrote
over 30 books and articles about innovation, entrepreneurship and strategies for
dealing with a changing world;

"Because the purpose of business is to create and keep a customer, the

business enterprise has two--and only two--basic functions: marketing and innovation.
Marketing and innovation produce results; all the rest are costs. Marketing is the
distinguishing, unique function of the business."

Drucker was born in Vienna, and educated there and in England. He received
a doctorate in international law while working as a newspaper reporter in Frankfurt,
Germany. For a time, he worked as an economist for a bank in London, and then
moved to the United States in 1937. In the early 1940s, General Motors invited
Drucker to study its inner workings. That experience led to his 1946 management
book "Concept of the Corporation". He introduced the concept of decentralisation as a
principle of organisation, in contrast to the practice of command and control in
business.

In "The Practice of Management,(1954)" Drucker posed three now-classic

business questions:

- What is our business?

- Who is our customer?
- What does our customer consider valuable?

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 He coined the terms "knowledge workers" and "management by objectives."
Central to his philosophy was the belief that highly skilled people are an
organisation's most valuable resource and that a manager's job is to prepare and free
people to perform.

Some useful Drucker quotes:

- The aim of marketing is to know and understand the customer so well the
product or service fits him and sells itself.
- Management is doing things right; leadership is doing the right things.
- Checking the results of a decision against its expectations shows
executives what their strengths are, where they need to improve, and
where they lack knowledge or information.
- The most important thing in communication is hearing what isn't said.
- Trying to predict the future is like trying to drive down a country road at
night with no lights

Management's New Paradigm:-

The Seven Old Assumptions of Management:-

There is a critical difference between a natural science and a social discipline,

according to Drucker. "A natural science deals with the behaviour of OBJECTS. But a
social discipline such as management deals with the behaviour of PEOPLE and
HUMAN INSTITUTIONS. Drucker identifies the following old assumptions for the
social discipline of management.

Three Old Assumptions for the Discipline of Management:-

1. Management is Business Management

2. There is- or there must be- ONE right organization structure.
3. There is- or there must be- ONE right way to manage people.

Four Old Assumptions for the Practice of Management

1. Technologies, markets and end-users are given.

2. Management's scope is legally defined.
3. Management is internally focused.
4. The economy as defined by national boundaries is the "ecology" of
enterprise and management.

According to Drucker, six out of seven assumptions (2, 3, 4, 5, 6, and 7) were

close enough to reality to be useful until the early 1980s. However, all are now
outdated- "they are now so far removed from actual reality that they are becoming
obstacles to the Theory and even more serious obstacles to the Practice of
Management.

22
The Eight New Management Assumptions:-

Drucker identifies the following new assumptions for the social discipline of
management.

1. Management is NOT only for profit-making businesses. Management is the

specific and distinguishing organ of any and all organizations.
2. There is NOT only one right organization. The right organization is the
organization that fits the task.
3. There is NOT one right way to manage people. One does not "manage"
people. The task is to lead people. And the goal is to make productive the
specific strengths and knowledge of each individual.
4. Technologies and End-Users are NOT fixed and given. Increasingly, neither
technology nor end-use is a foundation of management policy. They are
limitations. The foundations have to be customer values and customer
decisions on the distribution of their disposable income. It is with those that
management policy and management strategy increasingly will have to start.
5. Management's scope is NOT only legally defined. The new assumption on
which management, both as a discipline and as a practice, will increasingly
have to base itself is that the scope of management is not legal. It has to be
operational. It has to embrace the entire process. It has to be focused on results
and performance across the entire economic chain.
6. Management's scope is NOT only politically defined. National boundaries are
important primarily as restraints. The practice of management - and by no
means for business only - will increasingly have to be defined operationally
rather than politically.
7. The Inside is NOT the only Management domain. The results of any
institution exist ONLY on the outside. Management exits for the sake of the
institution's results. It has to start with the intended results and organize the
resources of the institution to attain these results. It is the organ that renders
the institution, whether business, church, university, hospital or a battered
woman's shelter, capable of producing results outside of it.
8. Management's concern and management's responsibility are everything that
affects the performance of the institution and its results - whether inside or
outside, whether under the institution's control or totally beyond it.

Strategy- The New Certainties:-

Strategy converts an organization's set of assumptions into performance by

allowing it to be purposefully opportunistic. According to Drucker, strategies must
consider the following five new certainties that are more social and political, rather
than economic.

1. The Collapsing Birth-rate in the Developed World.

2. Shifts in the Distribution of Disposal Income.
3. Defining Performance.
4. Global Competitiveness.

23
5. The Growing Incongruence between Economic Globalization and Political
Splintering.

24
Knowledge-Worker Productivity:-

Drucker reviews the history of manual-worker productivity in manufacturing

during the 20th century (which saw a fifty-fold increase) and speaks to the need for
new methods that will make the improvements in knowledge-worker productivity that
will be required in the 21st century. The knowledge-worker has a different job
description from the manual-worker on a production line. Drucker identifies these six
major factors for knowledge-worker productivity in the future.

1. The knowledge-worker's question is "What is the task?"

2. Knowledge-workers have to manage themselves and have autonomy.
3. Continuing innovation has to be part of the work, the task and the
responsibility of knowledge workers.
4. Knowledge work requires continuous learning, and continuous teaching by
the knowledge worker.
5. Productivity of the knowledge worker is not primarily a matter of quantity
of output. Quality is at least as important.
6. Knowledge workers must be treated as "assets" rather than a "costs". They
must prefer to work for the organization, over all other opportunities.

Managing Oneself:-

Drucker believed that the only way to find out one's strengths is through what
he calls feedback analysis - "Whenever one makes a key decision, and whenever one
does a key action, one writes down what one expects to happen.

1. Concentrate on your strengths. Place yourself where your strengths can

produce performance and results.
2. Work on improving your strengths. The feedback analysis shows where to
improve skills, and get new knowledge. One can usually get enough skill
or knowledge not to be incompetent in it.
3. Identify areas where intellectual arrogance causes disabling ignorance.
4. Take action to remedy bad habits that inhibit effectiveness and
performance.
5. Be on the lookout for failures due to bad manners and lack of common
courtesy.
6. Do not take on jobs and work assignments where there is little talent and
little chance to be even mediocre in performance. Use your energy to make
a competent person into a star performer.

Like one's strengths, how one performs is individual. It is personality. It surely

is formed long before a person goes to work. And how a person performs is a given,
just as what a person is good at is a given. It can be modified, but is unlikely to be
changed. And just as people have results by doing what they are good at, people have
results by performing how they perform. .

25
Management by objective:-

What is MBO?

Management by objectives (MBO) is a systematic and organized approach that

allows management to focus on achievable goals and to attain the best possible results
from available resources.

It aims to increase organizational performance by aligning goals and

subordinate objectives throughout the organization. Ideally, employees get strong
input to identify their objectives, time lines for completion, etc. MBO includes
ongoing tracking and feedback in the process to reach objectives.

Management by Objectives (MBO) was first outlined by Peter Drucker in

1954 in his book 'The Practice of Management'. In the 90s, Peter Drucker himself
decreased the significance of this organization management method, when he said:
"It's just another tool. It is not the great cure for management inefficiency...
Management by Objectives works if you know the objectives, 90% of the time you
don't."

Core Concepts

According to Drucker managers should "avoid the activity trap", getting so

involved in their day to day activities that they forget their main purpose or objective.
Instead of just a few top managers, all managers should participate in the strategic
planning process, in order to improve the implement ability of the plan, and
implement a range of performance systems, designed to help the organization stay on
the right track.

Managerial Focus

MBO managers focus on the result, not the activity. They delegate tasks by
"negotiating a contract of goals" with their subordinates without dictating a detailed
roadmap for implementation. Management by Objectives (MBO) is about setting your
objectives and then breaking these down into more specific goals or key results.

Main Principle

The principle behind Management by Objectives (MBO) is to make sure that

everybody within the organization has a clear understanding of the aims, or
objectives, of that organization, as well as awareness of their own roles and
responsibilities in achieving those aims. The complete MBO system is to get
managers and empowered employees acting to implement and achieve their plans,
which automatically achieve those of the organization.

26
MBO is a Process

A process consisting of a series of interdependent and interrelated steps:

1. Formation of clear, concise statements of objectives

2. The development of realistic action plans for their attainment
3. The systematic monitoring and measuring of performance and
achievement
4. Taking correct actions necessary to achieve the planned results.

Every objective must meet these criteria:

- Is it Specific?
- Is it Measurable?
- Is it Appropriate?
- Is it Realistic?
- Is it Time-bound?

Objectives need quantifying and monitoring. Reliable management

information systems are needed to establish relevant objectives and monitor their
"reach ratio" in an objective way. Pay incentives (bonuses) are often linked to results
in reaching the objectives. All individuals within an organization are assigned a
special set of objectives that they try to reach during a normal operating period. These
objectives are mutually set and agreed upon by individuals and their managers.
Performance reviews are conducted periodically to determine how close individuals
are to attaining their objectives. Rewards are given to individuals on the basis of how
close they come to reaching their goals.

27
Stages of M.B.O:-

1. Define corporate objectives at board level

2. Analyze management tasks and devise formal job specifications, which
allocate responsibilities and decisions to individual managers
3. Set performance standards
4. Agree and set specific objectives
5. Align individual targets with corporate objectives
6. Establish a management information system to monitor achievements
against objectives

Advantages of M.B.O:-

1. Motivation- Involving employees in the whole process of goal setting and

increasing employee empowerment increases employee job satisfaction and
commitment.
2. Better communication and Coordination- Frequent reviews and interactions
between superiors and subordinates helps to maintain harmonious
relationships within the enterprise and also solve many problems faced
during the period.
3. Clarity of goals- With MBO, came the concept of SMART goals i.e. goals
that are:
- Specific
- Measurable
- Achievable
- Relevant, and
- Time bound.

The goals thus set are clear, motivating and there is a linkage between
organizational goals and performance targets of the employees. The focus is on future
rather than on past. Goals and standards are set for the performance for the future with
periodic reviews and feedback.

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Limitations of M.B.O

There are several limitations to the assumptive base underlying the impact of
managing by objectives, including:

1. It over-emphasizes the setting of goals over the working of a plan as a driver

of outcomes.
2. It underemphasizes the importance of the environment or context in which
the goals are set. That context includes everything from the availability and
quality of resources, to relative buy-in by leadership and stake-holders. As an
example of the influence of management buy-in as a contextual influencer, in
a 1991 comprehensive review of thirty years of research on the impact of
Management by Objectives, Robert Rodgers and John Hunter concluded that
companies whose CEOs demonstrated high commitment to MBO showed, on
average, a 56% gain in productivity. Companies with CEOs who showed low
commitment only saw a 6% gain in productivity
3. Companies evaluated their employees by comparing them with the "ideal"
employee. Trait appraisal only looks at what employees should be, not at
what they should do
4. It did not address the importance of successfully responding to obstacles and
constraints as essential to reaching a goal. The model didn’t adequately cope
with the obstacles of:
− Defects in resources, planning and methodology,
− The increasing burden of managing the information organization
challenge,
− The impact of a rapidly changing environment, which could alter the
landscape enough to make yesterday’s goals and action plans
irrelevant to the present.

29
 CHESTER BERNARD

SOCIAL SYSTEM APPROACH

Social system approach was introduced by Vilfredo Pareto, a sociologist. His

ideas were later developed by Chester Bernard. According to this approach an
organization is essentially a cultural system composed of people who work in
cooperation. The major features of this approach are as follows:

1. Social system, a system of cultural relationship

2. Relationship exist among internal and external environment of organization
3. Cooperation among group members is necessary
4. Efforts directed-harmony between goals of the organization and the various
groups therein

Contributions of Bernard

Chester Bernard’s contribution to management particularly social system

approach is overwhelming. He has analyzed management as a truly social system
approach since, in order to comprehend and analyze the functions of executives, he
has looked for their major tasks in the system in which they operate. He has analyzed
the nature of cooperative social system, as he found non logical factors also
influencing human behaviour in the organization. The major contributions of Barnard
can be presented as follows:-

Concept of Organization: An organization exists when three conditions are fulfilled:

1. There are persons able to communicate with each other

2. They are willing to contribute to the action
3. They attempt to accomplish a common purpose

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Formal and Informal Organizations: A manager needs to take care that both forms
of communication exists in the organization. Both have different roles and depend on
each other.

Elements of Organization: According to Barnard, there are four elements of a

formal organization

1. Departmentation
2. Effective And efficient incentives
3. A system of power
4. A system of logical decision making

Authority: According to Barnard a person does not follow an order just because it is
given by a superior but he will follow only when following four points are met

1. He can understand the communication

2. He believes it is not inconsistent with the organizational purpose
3. He believes it to be compatible with his personal interest as whole
4. He is mentally and physically able to comply with it

Functions of the Executive: Barnard has identified three types of functions which an
executive performs

1. Maintenance of organizational communication through formal interactions

2. To achieve organizational purpose
3. Formulation and Definition of organizational purpose

Motivation: Opportunity of power and distinction, pride of workmanship, pleasant

organization, etc are some non monetary incentives that motivate the employees.

Executive Effectiveness: For an executive to be effective there should be leadership

quality in him. The executive leadership should not have preconceived notions and
false ideologies. A leader should be firm and strong so that he can set an example for
his subordinates.

Organizational Equilibrium: It refers to the matching of individual and

organizational efforts to satisfy individuals. It is very important for an organization to
be successful that its employees work towards the objectives of the organization. For
this even the organization has to satisfy individual needs.

The above contributions of Barnard show how he was concerned for the
development of the organization through social systems. He believed that the field of
management was lacking in concepts and was clouded by ambiguous and even
erroneous thinking. In a sense he hoped that the functions would set things right. His
book ‘The Functions of the Executive’ is regarded as the most influential book on
management during the pre modern management era.

31
 MAX WEBER

BUREAUCRACY

Maximilian Carl Emil Weber (21 April 1864–14 June 1920) was a German
lawyer, politician, scholar, political economist and sociologist, who profoundly
influenced sociological theory. Weber's major works deal with rationalization in
sociology of religion, government, organizational theory, and behaviour.

BUREAURACY:-

Weber defined bureaucracies as "goal-oriented organizations designed

according to rational principles in order to efficiently attain the stated goals." Weber
saw the formation and execution of bureaucracies as necessary to complex societies.
Weber has observed three types of power in organizations: traditional, charismatic,
and rational-legal or bureaucratic. He has emphasised that bureaucratic type of power
is the ideal one.

32
Weber noted seven major principles:-

1. A formal hierarchical structure: - Each level controls the level below and
is controlled by the level above. A formal hierarchy is the basis of central
planning and centralized decision making.
2. Management by rules: - Controlling by rules allows decisions made at high
levels to be executed consistently by all lower levels.
3. Organization by functional specialty: - Work is to be done by specialists,
and people are organized into units based on the type of work they do or
skills they have.
4. An "up-focused" or "in-focused" mission: - If the mission is described as
"up-focused," then the organization's purpose is to serve the stockholders,
the board, or whatever agency empowered it. If the mission is to serve the
organization itself, and those within it, e.g., to produce high profits, to gain
market share, or to produce a cash stream, then the mission is described as
"in-focused."
5. Purposely impersonal: - The idea is to treat all employees equally and
customers equally, and not be influenced by individual differences.
6. Employment based on technical qualifications: - (There may also be
protection from arbitrary dismissal.) The bureaucratic form, according to
Parkinson, has another attribute.
7. Predisposition to grow in staff "above the line.” - Weber failed to notice
this, but C. Northcote Parkinson found it so common that he made it the
basis of his humorous "Parkinson's law." Parkinson demonstrated that the
management and professional staff tends to grow at predictable rates, almost
without regard to what the line organization is doing.

Pros and Cons of Bureaucracy:-

Pros:-

1. Insures (or attempts to insure) that organizations treat each client and employee
equitably and consistently.
2. Insures uniformity and consistency across the organization.
3. Seeks to reduce graft and corruption.

Cons:-

1. Very inflexible- does not deal with exceptions and unique situations well.
2. The rules tend to be difficult to change, and therefore slow to change, which
creates problems when the environment is dynamic.

33
 SUMMARY AND REVIEW

We have examined the evolution of management theory and research over the last
century.

Scientific Management Theory

The search for efficiency started with the study of how managers could improve
person-task relationships to increase efficiency. The concept of job specialization and
division of labour remains the basis for the design of work settings in modern
organizations. New developments like lean production and total quality management
are often viewed as advances on the early scientific management principles developed
by Taylor.

Administrative Management Theory

Max Weber and Henri Fayol outlined principles of bureaucracy and administration
that are as relevant to managers today as they were written at the turn of the twentieth
century. Much of modern management research refines these principles to suit
contemporary conditions. For example, the increasing interest in the use of cross-
departmental teams and the empowerment of workers are issues that managers also
faced a century ago.

Behavioural Management Theory

Researchers have described many different approaches to managerial behaviour,

including the Hawthorne Studies and Human Relations. Often, the managerial
behaviour that researchers suggest reflects the context of their own historical era and
culture.

34
 APPLYING MANAGEMENT PRINCIPLES

Tips for Managers

Analyze whether an organization’s division of labour is meeting its current needs.

Consider ways to change the level of job specialization to increase performance.

− Examine the way an organization works in reference to Weber and

Fayol’s principles. Decide if the distribution of authority in the hierarchy
best meets the organization’s needs. Similarly, decide if the right system
to discipline or remunerate employees is being used.

− Examine organizational policies to see if managers are consistently

behaving in an equitable manner and whether these policies lead to ethical
employee behaviour.

35
 CONCLUSION

As we conclude from this term paper that “Development of Management Thought” is

the framework through which managers operate. Their theories are the backbone of
effective and sound management because it helps in proper functioning of
administration growth, diversification, optimum use of human resources,
specialization, coordination, communication, training, development and adaptation of
new technologies.

All new innovations on the basis of management theories and practices are to be
brought into ideas and then implemented to get the desired results. Public opinion,
social responsibility, government organization relations and work forces composition
affect the success in future scenario.

36
 BIBLIOGRAPHY

BOOKS REFFERED:

1. Name:Management in 21st Century

Author: Peter F. Drucker.
Published: September 1999
Page No.: 207-212

2. Name: Principles and Practice of management

Author: L. M. Prasad
Edition: Seventh Edition 2007
Reprint: 2009
Page No. : 44-84

3. Name: Management
Author: James A.F Stoner
R. Edward Freeman
Daniel R. Gilbert, Jr.
Edition: Sixth edition
Page No. : 55-80

WEBSITES REFFERED:

1. www.reasearchandmarkets.com/reports
2. www.bolabiz/competitive/fayol.html
3. www.provenmodels.com
4. www.businessweek.com/magazine/contents
5. www.wikipedia.org/wiki/fwtaylor

37