Evolution of Management Thoughts

1. UNIT – 1 (DEVELOPMENT OF MANAGEMENT THOUGHT)
Managementandorganizationsareproductsoftheirhistoricalandsocialtimesandplaces.
The Evolution of management practices occur as managers, theorists, researchers, and
consultants seek new ways to increase organizational efficiency and effectiveness. The
driving force behind the evolution of management theory is the search for better ways to
utilize organizational resources.
There were several individuals who defined or assumed management theories in eighteenth
to twentieth century, but only 3 people lived during this period and made lasting
contribution of the evolution of management thought.
1). Henry Fayol [Father of Modern Management]
2). Frederick Winslow Taylor [Father of Management Thoughts]
3). Max Webber
Henry Fayol [Father of Modern Management]
Jules Henry Fayol (1841-1925), a French Manager-Engineer was the first writer to advance a
formal statement of management elements & principles.
Fayol defined theory as ‘a collection of principles, rules, methods & procedures tried &
checked by general experience’.
According to him, Managerial ability depended on certain qualities and knowledge:
 Physical Qualities: health, vigor, address [manned of behaviour]
 Mental Qualities: ability to understand and learn, judgment, mental vigor, and
adaptability.
 Moral Qualities: energy, firmness, willingness to accept responsibility, initiative,
loyalty, tact & dignity.
 General Education: general acquaintance with matters not belonging exclusively to
the function performed.
 Special Knowledge: that peculiar to the function, be it technical, commercial,
financial, managerial and so on.
 Experience: knowledge arising from the work proper; the recollection of lessons a
person has derived from the things.
As he explained, managerial ability was essential for organizational success.

2. ‘Higher the level of authority, more dominant the need for managerial ability’ which means,
ability in commercial, financial, security and accounting matters also diminishes in
importance as a manager’s authority increases.
Fayol’s Principles of Management
Fayol recognized that the term ‘principles’ is often misunderstood where it suggests an
unquestioned or rigid way of doing things.
For this reason, Fayol was careful to explain fourteen ‘‘principles’’ as:
• Division of work
• Authority
• Discipline
• Unity of Command
• Unity of Direction
• Subordination of individual interests to general interest
• Remuneration
• Centralization
• Scalar Chain (Line of Authority)
• Order
• Equity
• Stability of tenure of personnel
• Initiative
• Esprit de corps

3. 1). Division of Work: is the well-known idea of assigning separate tasks to individual
specialists with the intent of producing “more and better work with the same effort”
2). Authority: was defined as “the right to give orders and the power to exact
obedience”.
3). Discipline: is essentially respect and obedience between a firm and its
employees, it came from placing knowledgeable managers at all levels of authority,
workplace agreements that are satisfactory to both managers and employees.
4). Unity of Command: was expressed as “For any action whatsoever an employee
should receive orders from one superior only”.
5). Unity of Direction: one head and one plan for a group of activities having the
same objective.
6). Subordination of individual interests to the general interest: is a request to
eliminate ignorance, selfishness, ambition, laziness, weakness and all human
passions.
7). Remuneration: deals with day wages, piece rates, bonuses and profit sharing.
8). Centralization: is a principle that Fayol felt was always present to a greater or
lesser extent and belonged to the natural order. It is not a system of management
good or bad of itself, capable of being adopted or discarded at the whim of
managers or circumstances; it is always present to a greater or less extent.
9). Scalar Chain: refers to “the chain of superiors ranging from the ultimate authority
to the lowest ranks” and it is also called as gang plank.
Gang Plank allows communications to cross lines of authority.

4. Presiden
t
A
Works
Manager
B ------------
L Works
Manager
Superintendent
C ------------------------------------ M Superintendent
Department
Head D -------------------------------------------------------------
N Department
Head
Supervisor
E ---------------------------------------------------------------------------------------- O Supervisor
Forema
n F -----------------------------------------------------------------------------------------------------------------
P
Foreman
Worker
G ------------------------------------------------------------------------------------------------------------------------------------
Q
Worker
10). Order: with regard to material order, ensures, “a place for everything &
everything in its place”. The objective of material things is to avoid wasting
resources.
and with regard to social order, requires, good organization and good selection and,
by necessity, a need to balance a firm’s human requirements with its available
resources.
11). Equity: is result from the combination of kindliness and justice. It provides a
basis for dealing with employees and instilling devotion and loyalty.
12). Stability of Tenure of personnel: sought to provide for orderly human-resource
staffing and establishing provisions to ensure that employees possessed the
requisite abilities for the work to be performed.
13). Initiative: as a principle, exhorted employees to display zeal and energy in all
endeavors.
14). Esprit de corps: stressed building harmony and unity within a firm.

5. It understood that real talent is needed to co-ordinate effort, encourage keenness,
use each man’s abilities, and reward each one’s merit without arousing jealousies
and disturbing harmonious relations.
Frederick Winslow Taylor [Father of Management Thoughts]
Frederick W Taylor (1856-1915), an American mechanical engineer was one of the first
management consultants and defined the techniques of scientific management, the
systematic study of relationships between people and task for the purpose of redesigning
the work process to increase efficiency.
He stated that “Scientific Management is the substitution of exact scientific investigations
and knowledge for the old individual judgement or opinion in all matters relating to the
work done in the shop”.
Principles of Scientific Management
Based on his experiments & observations as in scientific management, he developed five
principles to increase the efficiency in the workplace:
1. Replacement of old rule of thumb method: scientific investigation should be used
for taking managerial decisions instead of basing decisions on opinion, intuition or
rule of thumb (a principle that provides guidance to appropriate behaviour).
2. Scientific selection and training of workers: the selected workers are to be trained
to avoid wrong methods of work. Management is responsible for their scientific
education and training.
3. Cooperation between labour and management: this requires change of mental
attitudes of the workers and the management towards each other. Taylor called it
mental revolution.
4. Maximum Output: the management and the workers should try to achieve
maximum output in place of restricted output. This will be beneficial for both the
parties.
5. Equal division of responsibility: there must be equal division of responsibility
between the managers and the workers. The management should be responsible for
the execution of work as per instructions of the management.
What is Mental Revolution?

6. Mental Revolution is the idea behind the principles of scientific management is to change
the mental attitudes of the workers and the management towards each other. The mental
revolution has three aspects:
(i) All out efforts for increase in production.
(ii) Creation of the spirit of mutual trust and confidence; and
(iii) Instructing and developing the scientific attitude towards problems.
According to Taylor, the management should try to find the best methods of doing various
jobs and introduce standardized materials, tools and equipment so that wastages are
reduced. The workers should be disciplined, loyal and sincere in fulfilling the tasks assigned
to them.
Taylor laid importance on the following:
 Science, not rule of thumb.
 Maximum output in place of restricted output.
 Scientific selection, training and placement of the workers.
 Development of all workers to the fullest extent possible for their own and
organisation’s highest prosperity.
Techniques of Scientific Management
To put the philosophy of scientific management into practice, Taylor and his associate
suggested the following techniques:
1. Scientific Task Setting: it is essential to set the standard task which average worker
should do during a working day.
2. Work Study: it implies an organized, objective, systematic, analytical and critical
assessment of the efficiency of various operations in an enterprise, it includes the
following techniques:
(i) Method Study helps in reducing the distance travel by materials and brings
improvements in handling, transporting, inspection and storage of raw
material and goods.
(ii) Motion Study is the study of the movement of an operator or a machine
which purpose is to eliminate useless motions and find out the best method
of doing a particular job.
(iii) Time Study is the study of technique of observing and recording the time
required to do each element of an industrial operation.
(iv) Fatigue Study has an adverse effect on worker’s health and his efficiency.

7. 3. Planning the Task: planning function should be separated from the executive
function where workers should not be asked to choose their own methods and
decide; department should prepare detailed instructions for the workers as to type,
quality and quantity of the products to be produced.
4. Standardization: means to provide standardized working environment and methods
of production to the workers.
5. Scientific Selection and Training: workers should be specifically trained for the jobs
they are appointed so that they can perform their job effectively.
6. Differential Piece-Wages Plan: under this plan, there are two piece work rates:
Lower and Higher. If a worker finishes work within standard time or produces more
than standard output within the standard time, he will be given higher piece rate. On
the other hand, if a worker is below the standard, he shall be given lower piece rate.
7. Specialisation: Taylor advocated specialisation in terms of positions defined for
getting required performance in the organisation in all to control the various aspects
of production.
Taylor’s scientific management was criticized not only by the workers and managers but
also by the psychologists and the general public. These criticisms were later remedied by
2 prominent followers of Taylor: Frank Gilbreth (1864-1924) and Lillian Gilbreth (1878-
1972).
They refined the Taylor’s analysis of work movements and made many contributions to
time-and-motion study. Their aims were to:
(a) Break up into each of its component actions and analyze every individual action
necessary to perform a particular task.
(b) Find better ways to perform each component action, and
(c) Reorganize each of the component actions so that the action as a whole could be
performed more efficiently-at less cost of time & effort.
Max Webber
Max Webber (1864-1920), a German economist-sociologist, addressed the more
fundamental issue of how organisations should be structured. He wrote when Germany was
undergoing its industrial revolution.
Weber developed the principles of Bureaucracy-a formal system of organisation and
administration designed to ensure efficiency and effectiveness. A bureaucratic system of
administration is based on five principles:

8. Principles of Bureaucracy
1. Legitimate Authority: authority is the power to hold people accountable for their
actions and to make decisions concerning the use of organizational resources. It can be
described by three types are as follows:
(i) Rational-legal authority: obedience in owned to a legally established
positions or rank within the hierarchy of a business, military unit,
government, and so on.
(ii) Traditional authority: people obey a person because he belongs to certain
class or occupies a position traditionally recognized as possessing authority,
such as a royal family.
(iii) Charismatic authority: obedience is based on the followers’ belief that a
person has some special power or appeal.
2. Position Occupation: people should occupy their positions because for their
performance, not because of their social standing or personal contacts. Some
organisation and industries are still affected by social networks in which personal
contacts and relations, not job-related skills, influence hiring and promotional decisions.
3. Specified Task Responsibilities and Relationship with job: the extent of each position’s
formal authority and task responsibilities, and its relationship to other positions in an
A bureaucracy have a
System of written rules and
standard operating
procedures that specify
how employees should
behave.
Clearly specified system of task
and role relationships.
Clearly specified hierarchy of
authority.
Selection and evaluation
system that rewards
employees fairly and
equitably.

9. organisation, should be clearly specified, managers and workers know what is expected
of them and what to expect from each other.
4. Organisational Hierarchy of Authority: authority can be exercised effectively in an
organisation, positions should be arranged hierarchically, so employees know whom to
report to and who reports to them.
5. Rules & SOPs: rules are formal written instructions that specify actions to be taken
under different circumstances to achieve specific goals. SOPS (Standard Operating
Procedures) are specific sets of written instructions about how to perform a certain
aspect of a task.
Rules, SOPs, and norms provide behavioural guidelines that improve the performance
of a bureaucratic system because they specify the best ways to accomplish
organisational task.
e.g: McDonald’s and Wal-Mart
They have developed extensive rules and procedures to specify the types of behaviours
that are required of their employees, such as, “Always greet the customer with a smile.”
Merits of Bureaucracy
Bureaucracy is administrative device that can help in achieving the following advantages:
1. Competence is proper delegation of authority in organisation where people are given
tasks according to their competence.
2. Rules and Regulation, because of it, all actions are taken carefully.
3. Rationality, the behaviour of the employees is rational. They take decisions as per
law, rules and regulations.
4. Predictability is known how employees will react under different situations as
guidelines are already there in writing.
5. Efficiency, there is a division of work leading to specialisation which results in
efficiency.
6. Impartiality, officials are guided by the policies, rules and regulations rather than
their personal whims and faces.
Demerits of Bureaucracy
Bureaucracy is not free of flaws. It may lead to certain undesirable consequences as
discussed below:

10. 1. Rigidity in Operations: rules and regulations in a bureaucracy are often rigid and
inflexible. Strict compliance with rules and regulations discourages initiative and
creativity.
2. Delay and Red Tapism: the rules may be followed in letter and not in spirit; may
become a source of inefficiency leading to delays in operations and may be misused
by the person concerned with the implementation.
3. Goal Displacement may take place in bureaucratic organisation. It may give priority
to rules and regulations or to the secondary goals and forget about the primary
goals.
4. Ineffective Communication, communication from the top level to the lowest level will
take a very long time.
5. Compartmentalisation of activities, job are divided into watertight categories which
restricts people from performing tasks that are capable of performing.
6. Empire Building, every departmental head tries to increase the number of his
subordinates as a symbol of power and prestige.
7. Lack of personal fouch, bureaucracy does not allow inter-personal relations between
employees and informal groups in the organisation.
Approaches to Management [School of Management Thought]
For an easier understanding of the development of management thought, we can classify
the different schools of management thought as follows.
1. Classical Theory:
(a) Scientific Management Approach (by F W Taylor).
(b) Management Process or Administrative Management Approach (by Henry Fayol)
(c) Bureaucratic Organisation Approach (by Max Webber)
2. Neo-classical or Human Relations Approach
3. Behavioural Science Approach
4. Quantitative or Management Science Approach
5. Decision Theory Approach
6. Empirical Approach
7. Systems Approach
8. Contingency Approach

11. 9. Operational Approach
Classical and neo-classical approaches constitute the ‘traditional school of management
thought’ and the other approaches are often termed as ‘modern approaches’. These
approaches are briefly discussed below:
1. Classical Theory
The classical theory represents the traditionally accepted views about organisations.
It is said to be the oldest school of thought about organisations and their
management. It is also called as the “traditional theory”.
It emphasis on the planning of work, the technical requirements of the organisation,
principles of management and the assumption of rational and logical behaviour.
It can be studied under three streams, namely (a) scientific management, (b)
Administrative Management and (c) bureaucracy.
Features of Classical Theory
The salient features of classical approach are as follows:
(i) It laid emphasis on division of labour and specialisation, structure, scalar and
functional processes and span of control.
(ii) It also emphasised organisation structure for co-ordination of various activities.
(iii) It ignored the impact of external environment on the working of the organisation.
(iv) The efficiency of the organisation can be increased by making each individual
efficient.
(v) The integration of organisation can be increased by making each individual efficient.
(vi) There is no conflict between the individuals and the organisation.
(vii) The people at work could be motivated by the economic rewards as they
were supposed to be rational “economic persons”.
Contribution/Merits of Classical Theories
 It provided principles of management which can be applied different types of
situations. It highlighted the universal nature of management.
 Management principles are flexible in nature. Managers can modify them to suit the
given situation.

12.  It focussed on the functions of managers in different types of organisations.
 It provides a scientific basis for management practice. It also provides a starting
point for researchers to verify the validity and to improve the applicability of
management knowledge.
 It emphasised the role of money or financial incentives motivating the workers.
 It gave supreme importance to the organisation and its objectives.
Criticism of Classical Theory
The fundamental objections against the classical theory are discussed below:
1. Narrow View of Organisation: In order to achieve rationality, the classical writers
ignored the relations aspect. The interplay of individual personality, informal groups
and interorganisational conflicts in the formal organisation were neglected.
2. Assumption of Closed System: classical theorist viewed organisation as a closed
system, i.e. having no interaction with environment. This assumption is totally
unrealistic.
3. Assumption about Human Behaviour: the human beings were treated like any other
factor of production. The classical writers ignored the social, psychological and
motivational aspects of human behaviour.
4. Economic Rewards as Main Motivators: the assumption that people at work can be
motivated solely through economic rewards is also wrong. Non-monetary factors like
better status and job enrichment can also motivate the workers.
5. Lack of Empirical Verification (derived from experiment rather than observation):
the classical principles are mostly based on the personal experiences and limited
observations of the practitioners. They are not based on empirical research. They
lack precision and comprehensive framework for analysis.
6. Lack of Universality of Principles: Classical theorists claimed that their principles
have universal application; the empirical researches suggest that none of principles
has such characteristics.
7. Excessive emphasis on rules and regulations: observation of rules and regulations
becomes the main objective while the real objectives for which these rules and
regulations are formed are forgotten.

13. 2. Neo-Classical Theory
As Webber, Taylor and Fayol neglected the human relations aspect; the neo-
classicists focussed on the human aspect of industry. They modified the classical
theory by emphasizing the fact that organisation is a social system and the human
factor is the most important element within it.
This led to the development of human relations approach.
The Human Relations Approach is concerned with the recognition of the importance
of human element in organisations & revealed the importance of social and
psychological factors in determining workers’ productivity and satisfaction.
The basic tenets of neo-classical theory or human relations approach are as under:
 The business organisation is a social system.
 The behaviour of an individual is dominated by the informal group of which he is a
member.
 An individual employee cannot be motivated by economic incentives alone.
 It is ultimately cooperative attitude and not the mere command which yields result.
Factors affecting Human Relations
Human Relations in the organisation are determined by the individual, work-group,
leader and work environment.
a. Individual is an important element of the organisation and each individual is unique.
Behaviour of an individual is affected by his feelings, sentiments, values and
attitudes.
b. Work-group is the centre of focus of human relations approach & has an important
role in determining the attitudes and performance of individual workers.
c. Work-Environment where organisational goals are achieved through satisfaction of
employees.
d. Leader must ensure full and effective utilisation of organisational resources to
achieve organisational goals.
INDIVIDUAL
WORK GROUP LEADER
WORK
ENVIRONMEN
T

14. 3. Behavioural Science Approach
This approach emerged as a result of the contributions of psychologists, sociologists
and anthropologists to the field of management.
It utilises methods and techniques of social sciences such as psychology, sociology,
social psychology and anthropology for the study of human behaviour. The pioneers
of this school reasoned that in as much as managing involves getting things done
with and through people; the study of management must be centred on people and
their interpersonal relations.
The behaviourists concentrated on motivation, individual drives, group relations,
leadership, group dynamics and so forth.
4. Quantitative or Management Science Approach
The quantitative or mathematical approach uses pertinent scientific tools for
providing a quantitative basis for managerial decisions. The belief of this approach is
that management problems can be expressed in terms of mathematical symbols and
relationship.
This approach is also called ‘Mathematical’, Operations’ Research’ or ‘Management
Science’ approach.
The basic feature of this approach is the use of mixed teams of scientists from
several disciplines. The technique commonly used for managerial decision-making
includes Linear Programming (LP), Critical Path Method (CPM), Programme
Evaluation Technique (PERT), Games Theory, Queuing Theory, Break-even Analysis.
etc.
The basic assumptions of quantitative approach are as follows:
(i) Management is essentially decision-making and an organisation is a decision-
making unit.
(ii) Organisational efficiency depends upon the quality of managerial decisions.
(iii) The problem is expressed in the form of a quantitative or mathematical
model containing mathematical symbols and relationships.
(iv) The different variables in management can be quantified and expressed in
the form of an equation.
(v) Development of decision-making models may require the skills of many
disciplines such as engineering, mathematics, economics, statistics, physical
sciences, behavioural sciences and cost accountancy.
(vi) The mathematical models enable the managers to discover significant
relationships between variables that could be controlled.

15. 5. Decision Theory Approach
It is concerned with rational decision-making by way of defining problems,
development of alternatives, evaluating such alternatives and choosing the best
solution thereof.
This approach looks at the basic problem of management around decision-making –
the selection of a suitable course of action out of the given alternatives.
6. Empirical Approach
It is also known as ‘Management Experience Approach’ or ‘Case Approach’
According to this approach, management is considered a study of managers in
practice. The major contributors to the empirical approach include Mooney and
Reiley, Urwick and Earnest Dale. The broad features of this approach include the
following:
 Management is basically a study of managerial experiences and can be taught by the
case method.
 Managerial experience can be passed from on practitioner to another or to students.
 The techniques used by successful managers in the past can be used by future
managers.
 Management theory could be developed by studying large number of experiences
because some sort of generalisations can be possible.
 This approach emphasises the most conventional way of acquiring skills in
management, that is, learning through the experience of others.
7. System Approach
It is based on the generalisation that an organisation is a system and its components
are inter-related and inter-dependent.
According to Cleland and King, “A system is composed of related and dependent
elements which, when in interaction, form a unitary whole.
Its important feature is that it is composed of a hierarchy of sub-systems.
An organisation as a system has the following characteristics:
(i) A system is goal-oriented.
(ii) A system consists of several sub-systems which are interdependent and inter-
related.
(iii) A system is engaged is processing or transformation of inputs into outputs.
(iv) An organisation is an open and dynamic system. It has continuous interface
with the external environment.
(v) A system has a boundary which separates it from other systems.

16. Open System Concept
A system may be closed or open. A closed system is self-sufficient and does not
recognize external environment. A closed system concentrates completely on
internal relationships, i.e. interaction between sub-systems only. Also an open
system has active interface with the environment through the input-output process.
An open system obtains inputs, such as raw materials, labour, capital, technology
and information, from the environment.
Features of System Approach / Modern Management
The system approach is far more superior to classical and neo-classical approaches
because of the following features:
 Open System view of organisation: it has continuous interaction with the
environment and transforms them into output desired by environment.
 Adaptive System: organisation is an open system, its survival and growth in a
dynamic environment demands an adaptive system which can continuously adjust to
changing environment.
 Interdependent Sub-system: in a business enterprise, production, sales and other
departments are sub-systems. They are tied together into an organic whole through
goals, authority flows, and resources flows.
ENVIRONMENT
INPUT OUTPUT
Labour, Raw
Material, Technology Goods
and Services
THE ORGANISATION
AND MANAGERIAL
PROCESSES

17.  Whole Organisation: the system approach provides a unified focus to organisational
efforts. It gives managers a way of looking at the organisation as a whole.
 Synergy: the output of a system is always more than the combined output of its
parts. This is called the law of energy. The parts of a system become more
productive when they interact with each other.
 Multi-disciplinary: modern theory of management is enriched by contributions from
various disciplines like psychology, sociology, economics, anthropology,
mathematics, operations research.
Contributions of Systems Approach
The system approach is based on the General System Theory and is of great significance
to the management of modern organisation as discussed below:
 The system approach examines interrelationship and interdependency among
organisational parts and seeks to answer questions arising from this relationship.
 The system approach is an attempt to design an overall theory of management. It
emphasizes adaptability as well as efficiency.
 The system approach represents a balanced thinking on organisation and
management. It stresses that managers should avoid analysing problems in isolation
and rather develops the ability for integrated thinking.
 It stresses the dynamic, multi-dimensional and adaptive nature of organisations. It
provides a strong conceptual framework for meaningful analysis and understanding
of organisations.
Limitations of Systems Approach
Its critics have pointed out the following deficiencies:
 Lack of Unification: this approach cannot be considered a unified theory of
organisation; it is one which can be applied to all types of organisations and present
their comprehensive analysis so that various people who want to study organisations
from different angles can derive knowledge.
 Abstract Analysis: this approach is too abstract to be of much use to the practising
managers, it indicates that various parts of the organisation are interrelated and this
interrelationship is dynamic.
 Limited view of organisation-Environment Interface: this approach has failed to
specify the nature of interactions and interdependencies between an organisation
and its external environment.

18.  Limited Application: the systems approach has limited application, it does not
provide action framework applicable to all types of organisations.
8. Contingency Approach
This approach is concerned with the analysis of interaction of specific organisations
with their external environment and the adoption of structure to meet the
requirements of situation.
This approach suggests that there is no one best way to handle any of the
management problems and there is no best organisational structure to suit all
situations.
Practical Utility of Contingency Approach
The utility of contingency approach will be clear from the following features:
 It advocates that there is no single best way of managing applicable in all situations.
The best solution is the one that is responsive to the peculiarities of the given
situation.
 This approach rejects universality of management concept and it appeals to common
sense. It requires the ability to analyse and diagnose a managerial situation correctly.
 Management should match or ‘fit’ its approach to the requirements of the particular
situation.
 This approach is action-oriented as it is directed towards the application of systems
concepts and the knowledge gained from other approaches.
9. Operational Approach
It regards management as a universally applicable body of knowledge that can be
brought to bear at all levels managing and in all types of enterprises. It recognises
that the actual problems managers face and the environment in which they operate
may vary between enterprises and levels.