Unit 2

Scientific Management School Administrative Management School Behavioral School Management Process School Management science School System Approach Contingency Approach

It is a conceptual frame work for organizing knowledge and providing the blue print for actions. It used to build organization and guide them toward their goals are grounded in reality. Most managers develop and refine their own theories of how they should run their organization and manage the behavior of their organization.

It has two distinct Branches which are given below A. Scientific Management: It is defined as that kind of management which conducts a

business by standard established by facts or truth gained through systematic observation and experiment. It means to

advocated the application of scientific methods to analyze work and to determine how to complete production tasks efficiently. Frederick W. Taylor Was the father of scientific management. Frank Gilbreth, Lillian Gilbreth, Henry Gantt, Henry Emersion was the followers of Taylor. Taylors first jobs was as a foreman at the Midvale Steel Company in Philadelphia. He observed employees their deliberately working at a pace slower than their capabilities.

He designed the most efficient way of doing each part of the overall tasks through a piecework pay system. After Taylor left Midvale, he work as a consultant for several companies where he studied and redesigned jobs, introduced rest periods to reduced fatigue, and implemented a piece work pay system. He was expected the results were higher quality, and quantity of output and improved morale. Taylor believed that Managers who followed his given guidelines would improve the efficiency of

their workers.

Guidelines: 1. Develop a science for each element of the job to replace old rule of thumb methods. 2. Scientifically select employees and than train them to do the job. 3. Supervise employee to make sure they followed the prescribed methods for performing their jobs. 4. Continue to plan the work but use workers to get the work done.

The main principles of Taylors scientific Management:

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2. 3. 4. 5. 6. 7.

8.

Replacing rule of thumb with science (standardization) Time and task study. Systematic selection and training and development. Pay incentives ( differential payment system ) Close cooperation between managers and employees. Mental revolution Economy Reorganization of supervision( seperation of planning and doing )

Contribution of scientific management: 1. Foundation of modern management 2. Production efficiency 3. Improved working condition 4. It develops many management tools ( time study, motion study, fatigue study and flow charts )

Limitation: It is Mechanistic ( It consider man as a machine ) It neglects Human aspects There is no one best method of doing job in all work situations. Works become monotonous. Only concern with" shop level" It didn't favor groups

Limitation:
Although Taylor's methods led to dramatic increases in productivity and to higher pay in a number of instances, workers and unions began to oppose his approach because they feared that working harder or faster would exhaust whatever work was available causing layoffs.

Moreover, Taylors system clearly meant that time was of the essence. His critics objected to the speed up conditions that placed undue pressures on employees to perform at faster and faster levels. The emphasis on productivity and by extension, profitability led some managers to exploit both workers and customers. As a result more workers joined unions and thus reinforced a pattern of suspicion and mistrust that shaded labor management relations for decades.

B. Administrative Management School or theory: Scientific Management theory deals with the job of individual or productivity of individual but Administrative management

school deals with managing the organization and its problems.

total

Four authorities like Henri fayol, Max Weber, Chester Barnard and Mary P. Follett had major contributions to the development of this administrative management theory.

Henry Foyal (1841-1925) is considered to be the father of this theory. He was a French Mining Engineer and become Managing Director and Successful Industrialist. His already published book General and industrial management developed a broad frame work of Administration management. He was the first management author to state a series of management principles.

Foyal looked upon the elements of management as its functions. He divided a manager's job into five functions like: Planning, Organizing, Commanding, Coordinating, and Controlling. He considers these functions as essential to managerial success. His basic idea was that since all enterprises require management. He identified 14 different principle of management. These principles provide modern day managers with general guidelines on how a supervisor should organize her or his department and manage her staff. 14 principles are given below.

Division of Work: Specialization of labor is necessary for organizational success. Authority: The right to give orders must accompany responsibility. Discipline: Obedience and respect help an organization run smoothly. Unity of Command: Each employee should receive orders from only one superior. Unity of Direction: The effort of every one in the organization should be coordinated and focused in the same direction. Organizational activities must have one central authority and one plan of action.

Subordination of individual interest the general interest Remuneration: Employees should be paid fairly in accordance with their contribution. Centralization: The relationship between centralization and decentralization is a matter of proportion, the optimum balance must be found for each organization. Scalar Chain: Subordinate should observe the formal chain of command unless expressly authorized by their respective superiors to communicate with each other.

Order: Both material thing and people should be in their proper placed. Equity: Fairness that results from a combination of kindliness and justice will lead to devoted and loyal service. Stability and tenure of personnel: People need time to learn their jobs. To attain the maximum productivity of personnel, a stable work force is needed. Initiative: One of the greatest satisfactions is formulating and carrying out a plan. Esprit de corps: Harmonious effort among individuals is the key to organizational success.

Skills:
Physical Mental Moral Education Technical Experience

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The Weber Bureaucracy Approach: Max Weber was a German sociologist. He made significant contribution to management thought and development . He developed the principle of bureaucracy a formal system of organization and administration designed to ensure efficiency and effectiveness as well as performance . Bureaucracy is a system characterized by division of labor, clearly defined hierarchy, detailed rules and regulations and impersonal relationship.

The important 6 contents of Weber's theory of bureaucracy are as follows: Job specialization ( simple, and well defined tasks) Authority Hierarchy Formal selection ( Training, education, formal examination) Formal rules and regulations. Impersonality ( No personal preference of employees ) Career Orientation.

So Weber believed that organization that implement six principles would establish a bureaucratic system that will improve organizational performance.

This theory prescribed universal procedures that are not appropriate in some settings. Most classical theorists emphasized the structure and the formal relationship and ignored the human element. They viewed employees as tools rather than resources for organizations. The theory ignored the dynamism and complexity of organizations. Organizations are considered to be functioning in a stable and simple environment, the modern day organizations operate in very unstable and fast changing environments.

The stability and efficiency, which are expected to be achieved through fixed rules and system, becomes a hurdle for development, flexibility and adaptability. At times, following the rules and functions becomes more important than serving the purpose for which the rules were made. The end result of the activities is forgotten.

A management research continued in the 20th century, questions began to come up regarding the interactions and motivations of the individual within organizations. The classical organization theory as explained above did not fully explain the organizational phenomena. And could not explain the behavior of individual employees. In short classical theory ignored employee motivation and behavior. As a result the behavioral school was a natural outgrowth of this revolutionary management experiment.

It is concerned with importance of human element in management. They focus on people. They stress people part of management. Group dynamics, participative

management, communication, personality, motivation and leadership are important

aspects of these theories. They focus on employee satisfaction and human capabilities.

The theorists who contributed to this school viewed employees as individuals, resources and assets to be developed and worked with, not as machines as in the past. Several individuals and experiments contributed to this theory are given below.

1.

Human relation Theory:

Hawthorn Studies ( Elton Mayo ): Self respect influence worker behavior which improve their employees performance. Productivity is not only a technical but also social phenomenon. Workers are motivated by social needs. Money is not the only motivator. Workers are social man so it focuses group efforts. Team work improves efficiency.

 Theory of Participatory Management (Mary Parker Follet): Management should achieve integrative unity through coordination. Cooperation, unity and self control serve as keys to better human relations.

2. Behavioral Theory: Abraham Maslow, a practicing psychologist, developed one of the most widely recognized need theories. A theory of motivation based upon a consideration of human needs. His theory of human needs had three assumptions:

Human needs are never completely satisfied. Human behavior is purposeful and is motivated by the need for satisfaction. Needs can be classified according to a hierarchical structure of importance from the lowest to highest. Physiological, Safety, Social, Ego, Self actualization.

General example Organizational example Achievements Self actualization job Status Friendship work Stability Pension plan Food salary Ego needs Social needs

Challenging

Job title Friends at

Security needs

Physiological needs

Basic

3. Theory X and Theory Y ( Douglas McGregor ): He was heavily influenced by both the Hawthorne studies and Maslow. He believed that two basic kinds of managers exist. One type, the theory X managers has a negative view of employees and assumes that they are lazy, untrustworthy and incapable of assuming responsibility. On the other hand the theory Y manager assumes that employees are not only trustworthy and capable of assuming responsibility but also have high levels of motivation.

Theory X and Theory Y ( Douglas McGregor ):

Factors Theory Y

Theory X

Work Disliked and avoided Control Managerial Control Direction Formal by Supervisors Responsibility Avoided Ambition Security oriented Change Rejected Needs Lower order needs

Liked and accepted Self control Self direction Learn to accept Creativity oriented Accepted Higher order needs

Theory of X' and Y' ( Douglas Mc Gragor ) Theory X: Employees are lazy Employees need to be controlled and threatened to get the job done. Employees avoid responsibility. They display little ambition and initiative Most employees have little capacity for solving the organization problems. Theory x' is pessimistic, static, rigid and control oriented. It presents negative view of people. Theory Y: Employees view work as a natural activity like play and rest. Employees exercise self direction and control The average employee can learn to accept responsibilities Creativity is not the monopoly of managers Greater freedom in doing work. So this theory y' is optimistic, dynamic and flexible, It presents a positive view of people. There fore management should adopt theory y, assumptions to get people's commitment to work

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4. Frederick Hertzberg: ( Two factor theory )

Actually the behavior theory emerged partly because the classical approach did not the achieve sufficient production efficiency and work place harmony.

He proposed a theory of job motivation. According to him people work in the environment where two kinds of factors are present. Hygiene Factor Motivator

For motivation of people he focuses two factors like: Hygiene factors: Motivator Hygiene Factors: Pay \ working conditions \ supervision \ organizational policies etc. When the hygiene factors are felt to be inadequate by workers, They functions as dissatisfiers. When these factors are present do not necessarily motivate employees to greater productivity. Motivator; Recognition, achievement, desires to take more responsibility etc. When these factors are present they create the condition for motivation. So the task of every managers is to increase the presence of such motivator factors.

Limitation of Behavior School: The assumptions of the theory are simple and vague. The analyses if human religionists and behavioral scientists are inadequate. Human behavior is a complex issue, which is not easy to explain. This theory is only a partial view of an organization. It fails to analyze the wider aspects of organization. Hence the holistic view of organization missing. The application of these views is doubtful to bring that anticipated behavioral outcomes. The complexities of the human factor and the organizational setting make exact predictions impossible. Many of the finding of the behavioral science they are tentative and require further investigation. For instance, in some situation, the economic rewards may equally be effective as non economic rewards.

It is also known as mathematical or quantitative approach. At the beginning of World War 11, Great Britain desperately needed to solve a number of new complex problems in warfare. With their survival at stake, the British formed the first operational research teams, by pooling the expertise of mathematicians, physicists and other scientists in operational research teams, The British were able to achieve significant technological and tactical breakthrough When the Americans entered the war they formed what they called operations research teams based on the successful British model to solve similar problems. The teams used early computers to perform the thousands of calculation involved in mathematical modeling. When the war was over, the applicability of operations research to problems in industry gradually became apparent.

It makes use of mathematical and quantitative modes to solve complex problems. This theory has its origin in military science. Information technology have extended the application of management science approach to many others areas of business except panning, production, operations, transportation problems etc. This theory has opened new frontiers for managers. It has provided managers with plenty of decision making tools and techniques.

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2.
3.

Management science means the mathematical techniques for modeling, analysis and solution of management problems. It concerned with helping the organization more efficiently produce its products or services. Today there are three main branches of management science: Quantitative management Operation management MIS

Contributions and limitation: 1. It emphasis on only the aspect of organization that can be computed in numbers. It ignores the importance of people relationships, and other non quantifiable factors. 2. It is useful for solving physical problems of the organization. But it cannot fully account for individual behaviours and attitudes. 3. It can not be substitute for sound judgment and other skills of managers. 4. It ignores environmental factors 5. Many aspects of management cannot be modeled

In another words we can say integrating prospective. This theory is developed by Chester Bernard, R.A. Johnson. Etc. The system theory of management is a relatively new approach to the continually expanding body of management thoughts. A system is a group of interrelated and interdependent part working towards a common goal. It is a combination of several parts forming a complex whole. It tries to give the manager a way of looking the organization as a whole. It tells us that the activity of any part of an organization affects the activity of other parts.

The importance elements for a system theory are as follows: Goal orientation: Every system is goal oriented. Subsystems: Each subsystem interacts with other sub systems. Open and closed system: closed is internal and open is external systems. Synergy: It means that the whole is greater then the sum of its parts. Two or more sub system working together. System boundary: Closed system is rigid and open system is flexible. Flow of information Feed back

Inputs Material Human Financial Information

Environment Process Technology Operation system Administrative system Control system Management Feed Back Environment

Outputs Products/ services Profits / Losses Employees Behavior Information

Limitation: This theory doesn't offer specific tools and techniques for the practicing manager. It is criticized as being too vague. So it cannot be applied to practical problems. It fails to specify the nature of interactions and interdependence between and organization and its external environment. It tries to give the manager: Group of interdependent parts. Combination of several part. Way to looking the organization as a whole A change in one system can affects other system No single parts exist and operate in isolation from the others.

Another milestone in management theory was the development of contingency theory in 1960s by Tom Burns and G.M. Stalker in Britain and Paul Lawrence and Jay Lorsch in the U.S.A. This theory emerged from the experience of many other managers and practitioners. They found that the management concept don't produce the same result across situations. The concepts, tools and techniques which are highly effective in one situation are not at all effective in another situation. Therefore their conclusion was that management concepts are contingent on a particular situation. Results differ because situations differ. The situational characteristics are called contingencies. This theory doesn't agree with universalism.

This theory suggests that the applicability of management concepts depends on the variables involved in the view of the contingency theory is that the manager should be realistic in their approaches. Their task is to study the management situation first and then select the techniques of management which ca be used in that situation. If the result is positive, that would be the most effective technique for that kind of situation. This theory represents an important turn in modern management theory although this theory fails to identify all the important contingencies. So this theory may not be applicable to all managerial issues.

The four major contingency variables are: Size of the organization Task technology Environmental uncertainty Individual differences The geographical spread of the organization The type of work being done

Steps in contingency Theory of Management are: Analyze and understand the situation case by case. Examine the validity and applicability of management approaches to the situation at hand. Match the management approach to the situation and Implement the choice

Contribution: It is an integrative approach. / Situations are regarded important for management decisions. This theory is widely used in practice of management. Various theories of management have situational applications in the practices

Limitation: The theory is complex. It is difficult to identify relevant contingency variables and to determine their interrelationships. Every situation is unique. Managers may not be able to analyze each and every situation. This theory is not applicable for all types of managerial issues.

Conclusion: Their earlier thinker tried to find universal answers to organizational and managerial problems. This view is being rejected by the contingency theory. It suggest that the manager should be realistic in their approaches. Their task is to study the management situation first and then select the techniques of management which can be used in that situation.

We can say in another word Operation Management It is less Mathematical and Static than Management science. It is a form of applied management science. It is concerned with the helping the organization more efficiently product its products or services. For example inventory management, Linear programming, Queuing theory, BEP Analysis, Simulation etc.

1. As a practicing manager, which of the two approaches ( System or Contingency ) Would you adopt? Give reasons for your selection? 2. Discuss the contribution of F.W. Taylors Scientific Management in the development of Management Thought. 3. The behavioral management prospective places much more emphasis on individual attitudes and behaviors and on group processes and recognize the importance of behavioral processes in the work place. Explain this statement. 4. Explain the Fayols Fourteen Principles of management?

1. 2. 3.

4.

Functioning of Rastriya Banijya Bank Suppose you have got an assignment to study the management system of this bank. Which employs about 2900 employees and has a network 128 branches throughout the country. You are required to analyze the functioning of the bank from the following perspective. Model the bank from an open systems perspective. Identify its inputs, conversion, and output processes? Identify forces in the external environment that help the banks ability to obtain inputs and provide banking services? Use the principles of Maxweber and Fayol to decide on the system of organization and management that you think will be most effective for the bank. Which of their principles do you think would not be relevant and appicable taday? In a view of growing competition in the banking business which management approaches would you recommended for the banks effective performance and competitive advantages?