2. Development of management
thought
Management thought refers to the theories that guide
management of people in the organisations
Initially, these theories developed out of practical
experience of managers in the industrial enterprises.
Later on, they borrowed ideas from other fields of
study like science, anthropology, sociology etc.

3. Management theories
 Pre-scientific theories
 Classical theories
a. Taylor’s scientific management theory
b. Fayol’s administrative theory
c. Weber’s bureaucracy theory
 Behavioral theories
a. Human relations theory
b. Behavioral science theory
 Modern management theories
a. Quantitative theory
b. Systems theory
c. Contingency theory
d. Operational theory

4. Pre-scientific Management
Theories
Important contributions are made by
- Charles Babbage
- James Montgomery
- Robert Owen
- Andrew Ure
- Charles Dupin
- Henry Robinson Towne
- James Watt and Mathew Robinson Boulton Watt
- Captain Henry Metcafe
These theories solved specific organizational problems but
these are not universally accepted theories that can be
applied to all organisations

5. Classical theories
They represent early works on management and
focus on increasing industrial output by providing
financial incentives to employees. The classical
approach was developed through three main streams:
Scientific management, Administrative theory and
Bureaucracy

6. Taylor’s scientific theory
Taylor developed his theory on the basis of his work
experience in three companies: Midvale Steel works,
Simond Rolling mills and Bethlehem Steel company.
He is regarded as Father of Scientific Management.
He focused on finding the best way to do the job by
eliminating wastage of men and material. He
developed time and motion studies to find optimum
time and nature of operations for successful
completion of tasks.
He also introduced differential wage rate system to
pay more to productive workers.

7. Principles of Taylor’s theory
Rule of thumb should be replaced with science
There should be harmony, not discord in group
actions.
Cooperation, not individualism
Maximum output, not restricted output
Development of workers to their fullest capacity.

8. Techniques of scientific
management given by Taylor
Time study
Motion study
Scientific task planning
Standardization and simplification
Differential piece rate system
Functional foremanship
High speed steel

9. Evaluation of Taylor’s theory
Better management through scientific methods
Discovered true capacity of workers
Scientific selection of workers
 Mental revolution on the part of employers and employees.
In addition to Taylor, several other persons like Henry L Gantt,
Harington Emerson, Frank Gilbreth and Lillian Gilbreth also
supported and contributed in scientific management
movement.
Limitations
Unrealistic assumptions
Mechanistic approach
Exploitation of labour
Impracticable
Narrow view

10. Fayol’s Administrative theory
Fayol focused on managing the organisation as a
whole rather than lower levels of organisation only
His theory revolves around
-Activities of a business: Technical, commercial,
financial, security, accounting and managerial
-Functions of a manager : Planning / organizing /
commanding /coordinating/ controlling.
- Abilities of managers: Physical, Mental, Moral,
General education, special knowledge and Experience
- Principles of management

11. Principles of management
 Division of work
 Authority and responsibility
 Unity of command
 Unity of direction
 Discipline
 Subordination of individual interest to general interest
 Remuneration
 Centralization
 Scaler chain
 Order
 Equity
 Stability of tenure of personnel
 Initiative
 Espirit-de-corps

12. Evaluation of Fayol’s Theory
His principles are widely accepted in business and
non-business world.
He pioneered in highlighting the principles of
management
Criticism
Too formal
Vague
Inconsistency
Pro-management bias
Historical value

13. Taylor and Fayol – A comparison
Basis of comparison Taylor Fayol
Aim To increase production at To increase overall
the shop level production of the
organization
Focus On improving workers’ On improving overall
output through work administration through
simplification and general principles
standardization
Management View From bottom to top From top to bottom
Results Scientific observation and Universal truths developed
measurement from personal experiences
Personality Scientist Practitioner
Major contribution Science of industrial A systematic theory of
management management
Perspective Narrow Wider
Aspects studied Micro aspect-management Macro aspect-management
of jobs of total organaization

14. Max Weber’s Bureaucracy theory
Max Weber(1864-1920), a German sociologist
introduced the rational-legal authority system/model
to manage the business organizations. His model is
characterized by
- Division of work
- Rules and regulations
- Hierarchy of authority
- Technical competence
- Record keeping
- Impersonal relations

15. Evaluation of Weber’s theory
 Advantages of specialization
 Rationality leads to efficiency
 Leads to optimum utilization of resources
 Depersonalization leads to equal treatment of all the workers
 Facilitates growth of large scale organizations
Limitations
 Ignores the sentiments of human beings
 Hampers human creativity and innovativeness
 Ignores the role of informal organizations
 Strict rules make the organizations procedure- oriented rather than goal-
oriented
 Written rules and regulations deny the benefits of open communication
 Views organizations as closed systems with little or no interaction with the
environment.

16. Behavioural theories
These theories focus on organisational goals along
with satisfaction of human needs.
Shift in focus from workplace conditions to human
side of the organisation
People- oriented approach substituted the
production- oriented approach
Two important theories:
- Human relations theory
- Behavioural science theory

17. Human relations theory
Elton Mayo, the father of Human relation approach
focuses on increasing organizational productivity by
increasing the morale of workers
Results were obtained through experiments:
- Test room studies
(a) Illumination experiment
(b) Relay assembly room experiment
- Interviewing studies
- Observation studies

18. Results of the experiment
Informal groups are important complements to
formal groups
Social groups are more important than financial
incentives to motivate the workers
Worker is a social man rather than rational man
motivated by financial incentives
Work is considered as a group activity and not as
operations performed by individuals.
Social and psychological factors influence employee
behaviour and productivity more than physical work
conditios

19. Evaluation of the theory
Focus on organizational efficiency through satisfaction of
social and psychological needs of the workers
Participative management is better than authoritarian
management.
Design of the theory: social needs are secondary to
physiological needs
Analysis of the theory: group dynamics may not be as
important as emphasized upon.
Interpretation of the theory: cordial relations are over
emphasized . Conflict of opinion also generates new ideas
Human relations philosophy: informal relations are as
important as formal motivation, communication and
leadership styles

20. Behavioural science theory
It applies scientific vision to human relations theory
Concepts from Psychology, Sociology and
Anthropology are applied to study human behaviour
Psychology – Study of individual behaviour
Sociology – Study of human behaviour in groups
Anthropology - Study of human behaviour as
individuals and members of groups
Concepts from various disciplines are tested before
applying them in business organisations.

21. Continued……………..
Several sociologists and psychologists like Abraham
Maslow, Federick Herzberg, MC Gregor, Douglas,
Rensis Likert, Kurt Lewin, Keith davis, Charles
Angris,George Homans and others have made
significant contribution to the development of this
approach.
This approach is an extension and improvement of
human relations movement. As this approach
suggested that individuals differ in their attitudes,
perceptions, their needs and goals also differ from
organisation’s needs and goals. So the need is to
achieve fusion between organisation’s goals and
human needs.

22. Human relations theory and
Behavioural science theory- A
comparison
Human relations Behavioural Approach
1. Focus on individual behaviour and Focus on groups and group behaviour
needs.
2. Emphasizes on interpersonal Emphasizes on group relationships.
relationships.
3. Views worker as ‘social man’ Views worker as ‘self actualising man’
4. Always views group conflict as a Views group conflict as a source of new
negative force. ideas and innovations.
5. Views organisation as a social system Views organisation as a socio-technical
system
6.Emphasis on motivation, morale, and 6.Emphasis on group dynamics and
job satisfaction informal organisation structure
6. Narrow scope as based on Wide scope as based on Human
Hawthrone experiment relations movement.

23. Modern management theories
 These theories are responsive to environment changes
 They view organisations as dynamic open systems having
multiple objectives
 Management is multi-disciplinary and draws knowledge from
various fields to solve complex business problems
 They forecast environment changes through scientific
techniques and discount them to the present business
situations
 These theories include:
- Quantitative theory
- Systems theory
- Contingency theory
- Operational theory

24. Quantitative theory
It uses the services of quantitative specialists to apply
inter-disciplinary techniques to solve business
problems
It includes:
- Management science: it uses mathematical models
like PERT, CPM, Simulation etc. to solve business
problems.
- Operations management: It applies quantitative
techniques of inventory management, statistical
quality control etc. to manage the production and
delivery of goods and services

25. Continued………
-Management information system: It uses computer
based information to make business decisions

26. Evaluation of Quantitative
theory
It uses quantifiable data to frame mathematical
models and handles complex decision- making
problems
It uses comprehensive information through
computers which could not otherwise have been
available
Limitations
- It cannot be applied to study human behaviour as it
cannot be predicted through mathematical equations
- The models may be used more for analysing the
results than used for making decisions

27. Continued………….
- All the variables affecting the business decisions
cannot be quantified in numeric terms
- It may land up making satisfying decisions rather
than optimum decisions because of constraints of
time and cost to collect the relevant data.

28. Systems Approach
As per this approach organisation is viewed from a
systems point of view.
The main elements of systems approach are as
follows:
 Organisation as a purposeful system consisting of
several interconnected and interdependent parts.
 The parts or components of a system are called sub-
systems.
 The position and function of each subsystem can be
analyzed and understood only in relation to the other
sub-systems and to the organisation as a whole.
 Synergy effect.
 Every system has a boundary that separates it from its
environment.

29.  Feedback is useful in evaluating and improving the
functioning of the system.