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Strategic Leadership InstituteThe Historical Evolution of Management Theory from 1900 to
Present: The Changing role of Leaders in Organizations
15/01/2009 16:12
The Historical Evolution of Management
Theory from 1900 to Present: The Changing
role of Leaders in Organizations
By Manie Bosman
The evolution in management theory over the last century is the history of the constantly
changing role of leaders in organizations. As organizational leaders evolved from the carrot-and-
stick wielding owner-managers of the earlier Industrial Era to the Servant Leaders of the 21st
Century, the impact of individual leaders on organizations became progressively important.
Whereas early managers could rely on authority and strong-arm tactics to reach their goals,
2. servant leaders in our time are challenged to set personal examples by living the values and
principles they wish their followers to achieve.
Early Management and the study of management
Although great feats of human achievement such as the Egyptian pyramids, the Great Wall of
China, the Colosseum in Rome and the Taj Mahal in India all bear testimony to skilled
management in ancient times, the formal study of management only began late in the 19th
century.
The main driving force behind this development of management as a science was the
transition from 19th century “entrepreneurial capitalism” to early 20th century “managerial
capitalism”. Whereas the first capitalists were business owners who used their own finances to
fund organizations that they managed themselves, rapid industrial growth saw the formation of
large organizations with capital often provided by outsiders. This not only “widened the gap”
between owners or shareholders and management, it also brought new management challenges
(Smit & Cronjé, 2002, p34-35; George, 1968).
Scientific Management
One of the early pioneers of management theory was Frederick W. Taylor (1856-1915), a
mechanical engineer who believed that it was management’s task to design jobs properly and to
provide incentives to motivate workers to achieve higher productivity.
While working at the Midvale Steel Company in Philadelphia, Taylor developed a new, and at
the time radical approach to managing, known as scientific management. He conducted studies
into how workers or machines performed tasks, measuring and analyzing each measurable aspect
of the work. He then determined standard times and sequences for the completion of each task.
3. With this information, Taylor provided managers with realistic production standards per man-
and machine-hour.
Taylor’s scientific management changed the role of managers from being run-of-the-mill
whip men to specialized foremen who were adequately equipped to supervise each phase of the
production process. On a larger scale, he revolutionized managerial thought and laid the
foundation for the formation of many other management systems in decades to come.
The Administrative Approach
Across the Atlantic ocean Jules Henri Fayol (1841-1925), a fellow engineer and manager of a
group of French mines, came to the conclusion that management was an activity common to all
human undertakings (including home, business, government, schools, etc.) and that all these
undertakings needed five basic administrative functions (planning, organizing, commanding,
coordinating and controlling). He argued that because management was an all-encompassing
activity, it should be taught in schools, colleges and universities.
Fayol’s approach rejected the old notion that “managers are born, not made”, proposing
instead that management is a skill which can be acquired if its principles are understood.
The Bureaucratic Approach
Max Weber (1864-1920) was a German sociologist who approached management by focusing
on organizational structure, dividing organizations into hierarchies with clear lines of authority
and control. This meant that managers were given “legal authority” based on their position in the
organizational structure, to enforce rules and policy (Smit & Cronjé, 2002, p41).
4. Weber’s bureaucratic system helped large organizations to function in a more stable,
organized and systematic manner. However, by doing away with personality based or
charismatic leadership, individuality and creativity is often sacrificed. Bureaucratic leaders and
workers are required to obey rules and do only what they are told. The result is that these leaders
seldom think “outside the box” and therefore find it very difficult to adapt to changing
environments and new challenges.
The Human Relations Movement
Elton Mayo (1880-1949) was a Harvard professor who proposed that managers should
become more “people-orientated” (Smit & Cronjé, 2002, p43). Conducting experiments on
conditions in the workplace and incorporating the well-published findings of the Hawthorne
Studies, Mayo declared that “logical factors were far less important than emotional factors in
determining productive efficiency” (George, 1968, p129). He concluded that participation in
social groups and “group pressure”, as opposed to organizational structures or demands from
management, had the strongest impact on worker productivity (Smit & Cronjé, 2002, p43).
Mayo’s findings once again revolutionized the role of managers in organizations. The work
performed by individuals has to satisfy their “personal, subjective” social needs as well as the
company’s productive requirements. He and other proponents of this movement therefore called
for managers to “accept a new role” in their relationship with workers; develop a new concept of
authority; and help foster a new social order in the workplace (George, 1968). In practice
managers were encouraged to consult workers about change, take note of their views, and to
show concern for their physical and mental health (Wren, 2005, p. 293).
Servant Leadership
5. Although the concept of servant-leadership is found in the Bible and might even date further
back into antiquity, it was first proposed as a management approach by Peter Greenleaf (1904-
1990) in his book Servant Leadership (Smit & Cronje, 2002). He explained that becoming a
servant-leader “begins with the natural feeling that one wants to serve” followed by the
aspiration to lead (Carroll, 2005).
This approach completely revolutionized the role of managers in organizations as it calls for
leaders to place the priorities and needs of their followers before their own or that of the
organization. It also differentiates clearly between the functions of leadership and management,
although the ideal is that modern day servant leader / managers should be able to perform both
functions simultaneously. Servant-leadership “encourage collaboration, trust, foresight, listening,
and the ethical use of power and empowerment as a way of improving the life of the individuals
and/or the organizations” (Hartley p288). According to Greenleaf, the ultimate test for successful
servant leadership is whether or not followers have grown as persons as a result of being served
– becoming “healthier, wiser, freer, more autonomous and more likely themselves to become
servants”.
Summary and Recommendations
The role and responsibilities of leaders in organizations has undergone some radical changes
over the last 100 years. Evolving from the strong-armed bosses of early entrepreneurial
capitalism to bureaucrats whose authority rested in their organizational position, to leaders who
have to find new ways to convince employees to follow them in the quick-changing information
era, the challenges and opportunities for leadership is perhaps now greater than ever.
6. References
BusinessDirectory.com. Retrieved January 20, 2009, from. http://www.businessdictionary.com
Carroll, A. B. (2005). Servant Leadership: An Ideal for Nonprofit Organizations. Nonprofit
World, May/June 2005. 18-20.
George, Claude S. 1968. The history of management thought (1st ed). Englewood Cliffs: N. J.
Prentice-Hall.
Hartley, Nell T. (2006.) Management history: an umbrella model. Journal of Management
History, 12 (3), 2006. pp. 278-292.
Helms, M. M. (2006). "Management Thought." Encyclopedia of Management. Ed. Gale
Cengage, eNotes.com. Retrieved in January 21, 2009, from
http://www.enotes.com/management-encyclopedia/management-thought>.
Holy Bible. (1994). New King James Version. Nashville, TE: Thomas Nelson.
Jacobs, G. A. (2006). Servant Leadership and Follower Commitment. Regent University Servant
Leadership Research Roundtable – August 2006.
7. Smith, M. K. (2001). Peter Senge and the learning organization. The encyclopedia of informal
education. Updated: October 2008. Retrieved on January 15, 2009 from
http://www.infed.org/thinkers/senge.htm
Smit, P. J. and Cronje, G. J. de J. (2002). Management Principles – a Contemporary edition for
Africa, (3rd ed). Cape Town, South Africa: Juta.
Van Buuren, H. J. III. (2008). Fairness and the Main Management Theories of the Twentieth
Century: A Historical Review, 1900–1965. Journal of Business Ethics. Vol 82. 634-644.
Wren, D. A. (2005.) The history of management thought, (5th ed). Hoboken, N.J.: John Wiley.
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14. Chapter 2 The Evolution Of Management Theory —
Presentation Transcript
1. The Evolution of Management Theory Chapter 2
2. The driving force behind the evolution of management theory is the search for better
ways to utilize organizational resources.
3. The Evolution of Management Theory 1890 1900 1910 1920 1930 1940 1950 1960
1970 1980 1990 2000 Scientific Management Theory Administrative Management
Theory Behavioral Management Theory Management Science Theory Organizational
Environment Theory
4. Evolution of modern management began in the late nineteenth century, after the
industrial revolution. Economic, technical and cultural changes
5. Mechanization changed systems like crafts production into large scale manufacturing,
where semi or unskilled workers operated machineries.
6. Small-scale Crafts Production Large-scale Mechanized Manufacturing Managed by
engineers who only had Technical orientation Problems faced: How to handle people
Social problems relating to working t ogether in large groups How to increase efficiency
of the worker-task mix
7. Job specialization and the Division of Labor Famous economist, Adam Smith ,
journeyed around England in 1700’s studying the effects of industrial revolution.
8. Each worker responsible for All tasks Each worker performed only 1 or a few tasks to
produce Crafts-style Factory System Poorer performance Few thousands p/d Cannot be
equally Skilled in all tasks Better performance 48,000 pins p/d More skilled at their tasks
9. Job Specialization Division of Labor Increased Efficiency Better Organizational
performance
10.
11. With insights gained from Adam Smith’s observations, other managers and
researchers began to investigate how to improve job specialization to increase
performance. They focused on how to organize and control the work process.
12. F.W. Taylor (1856-1915) Scientific Management The systematic study of
relationships between people and tasks for the purpose of redesigning the work process to
increase efficiency.
13. Taylor believed that if the amount of time and effort that each worker expends to
produce a unit of output can be reduced by increasing specialization and division of
labor, the production process will become more efficient.
14. Taylor’s Principles 1. Study the way workers perform their tasks, gather all
informational job knowledge that workers possess, and experiment with ways of
improving how tasks are performed
15. 2. Codify the new methods of performing tasks into written rules and standard
operating procedures. 3. Carefully select workers who possess skills and abilities that
match the needs of the task, and train them to perform the task according to the
established rules and procedures.
16. 4. Establish a fair or acceptable level of performance for a task, and then develop a
pay system that provides a reward for performance above the acceptable level.
15. 17. This scientific management became nationally known, but the selective
implementation of the principles created more harm than good.
18. Workers felt that as their performance increased, managers required them to do more
work for the same pay. Increases in performance meant fewer jobs and greater threat of
layoffs Monotonous and repetitive Dissatisfaction
19. Ford Achieving the right mix of worker-task specialization Linking people and tasks
by the speed of the production line
20. Franklin Motor Company Redesigned the work process using the scientific
management principles. Production increased from 100 cars a month to 45 cars a day.
21. The Gilbreths Frank Gilbreth (1868-1924) Lilian Gilbreth (1878-1972)
22. Time and Motion Study Break and analyze every individual action necessary to
perform a particular task into each of its component actions Find better ways to perform
each component action Reorganize each component action so that it is more efficient-less
cost of time and effort
23. Their goal was to maximize the efficiency with which each individual task was
performed.
24. Study of Fatigue How physical characteristics of the workplace contribute to job
stress Effects of lighting Effects of heating Effects of color of walls Design of tools and
machines
25. Administrative Management Theory Theory of Bureaucracy Fayol’s Principles of
Management
26. Administrative Management The study of how to create an organizational structure
that leads to high efficiency and effectiveness.
27. Theory of Bureaucracy Max Weber (1864-1920) Developed the principles of
bureaucracy-a formal system of organization and administration designed to ensure
efficiency and effectiveness.
28. System of written rules and SOPs that specify how Employees should behave
Selection and evaluation System that rewards Employees fairly and Equitably. Clearly
specified System of task and Role relationships Clearly specified Hierarchy of authority
A bureaucracy Should have
29. 5 Principles: A Manager’s formal authority derives from the position he or she holds
in the organization People should occupy positions because of their performance , not
because of their social standing or personal contacts.
30. The extent of each position’s formal authority and task responsibilities and its
relationship to other positions in an organization, should be clearly specified . Authority
can be exercised effectively in an organization when positions are arranged hierarchically
, so employees know whom to report to and who reports to them.
31. Managers must create a well-defined system of rules , standard operating procedures
and norms so that they can effectively control behavior within an organization.
32. Rules Formal written instructions that specify actions to be taken under different
circumstances to achieve specific goals. Rule: At the end of the day employees are to
leave their machines in good order.
33. Standard Operating Procedures Specific sets of written instructions about how to
perform a certain aspect of a task. SOP: Specifies exactly how they should do so, which
machine parts should be oiled or replaced.
16. 34. Norms Norms are unwritten, informal codes of conduct that prescribe how people
should act in particular situations. E.g.: An organizational norm in a restaurant might be
that waiters should help each other if time permits.
35. Fayol’s Principles of Management Henri Fayol (1841-1925)
36. 14 Principles of Management: Division of Labour Authority and Responsibility Unity
of Command Line of Authority Centralization Unity of Direction Equity
37. Order Initiative Discipline Remuneration of Personnel Stability of tenure of Personnel
Subordination of Individual Interests to the Common Interest Esprit de Corps
38. 1. Division of Labour Job specialization and the division of labour should increase
efficiency. Pointed out the downside of too much specialization; so workers should be
given more duties to perform.
39. 2. Authority and Responsibility Managers have the right to give orders and the power
to exhort subordinates for obedience.
40. 3. Unity of Command An employee should receive orders from only one superior.
41. 4. Line of Authority The length of the chain of command that extends from the top to
the bottom of an organization should be limited.
42. 5. Centralization Authority should not be concentrated at the top of the chain of
command.
43. 6. Unity of Direction Those operations within the organization that have the same
objective should be directed by only one manager using one plan. For example the
personnel department in a company should not have two directors each with a different
hiring policy.
44. 7. Equity Managers should be both friendly and fair to their subordinates.
45. 8. Order Materials and people should be in the right place at the right time. People
should be in the jobs that they are most suited to.
46. 9. Initiative Subordinates should be given the freedom to conceive and carry out their
plans, even though some mistakes may result.
47. 10. Discipline Members in an organization need to respect the rules and agreement
that govern the organization. To Fayol, discipline results from good leadership, fair
agreements and judiciously enforced penalties for infractions.
48. 11. Remuneration of Personnel Compensation for work done should be fair to both
employees and employers.
49. 12. Stability of Tenure of Personnel A high employee turnover rate undermines the
efficient functioning of an organization.
50. 13. Subordination of Individual Interests to the Common Interest Interests of
employees should not take precedence over the interests of the organization as a whole.
51. 14. Esprit de Corps Promoting team spirit will give the organization a sense of unity.
To Fayol, even a small factors should help to develop the spirit. He suggested, for
example, the use of verbal communication instead of formal, written communication
whenever possible.
52. Behavioral Management Theory The Work of Mary Parker Follet The Hawthorn
Studies and Human Relations Theory X and Y
53. Behavioral Management The study of how managers should behave to motivate
employees and encourage them to perform at high levels and be committed to the
achievement of organizational goals.
17. 54. Mary Parker Follet Mary Parker Follett advocated for a human relations emphasis.
Her work contrasted with the "scientific management" of Frederick W.
Taylor. Mary Parker Follett stressed the interactions of management and workers.
55. Follett was one of the first to integrate the idea of organizational conflict into
management theory, and is sometimes considered the "mother of conflict
resolution.“ She coined the words "power-over" and "power-
with" to differentiate coercive power from participative decision-making.
56. She was of the view that authority should go with knowledge. Advocated
involvement of workers in job analysis and work development process. Managers of
different departments should communicate with each other directly. Cross-functioning
57. The Hawthorne Studies Hawthorn effect is the finding that a manager’s behavior or
leadership approach can affect worker’s level of performance.
58. Human Relations Movement Advocates of the idea that supervisors receive
behavioral training to manage subordinates in ways that elicit their cooperation and
increase their productivity.
59. Informal Organization The system of behavioral rules and norms that emerge in a
group.
60. Organization Behavior The study of the factors that have an impact on how
individuals and groups respond to and act in organizations.
61. Theory X and Theory Y Douglas McGregor proposed that two sets of assumptions
about how work attitudes and behaviors not only dominate the way managers think but
also affect how they behave in organizations. He named these two assumptions Theory X
and Theory Y.
62. Theory X Assumptions: Average worker is lazy Dislikes work Will try to do as little
as possible Have little ambition and avoid responsibility
63. Managers Who Accept Theory X To keep performance high, workers must be
supervised closely and their behaviors be controlled by means of “the carrot and stick”-
rewards and punishments.
64. Design and shape work setting to maximize control over workers’ behaviors.
Minimize the workers’ control over the pace of work. Focus is on development of rules,
SOPs and a well-defined system of reward and punishment to control behavior. Managers
see little point in giving autonomy to solve their own problems. Managers see their role
as closely monitoring workers.
65. Theory Y Assumptions: Workers are not inherently lazy Do not naturally dislike
work If given the opportunity, will do what is good for the organization.
66. Characteristics of the work setting determine whether workers consider work to be a
source of satisfaction or punishment. Managers do not need to closely control workers’
behavior. They exercise self-control
67. “The limits of collaboration in the organization are not limits of human nature but of
management’s ingenuity in discovering how to realize the potential represented by its
human resources.”
68. Decentralize authority More control of workers over their jobs Accountable for their
jobs Managers’ role is not to control but to provide support and advice and to evaluate
them on their ability
69. Management Science Theory An approach to management that uses rigorous
quantitative techniques to help managers make maximum use of organizational resources.
