1. 2-1
Unit 2
Development &
Evolution of
Management
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2. 2-2
Evolution of Management thought-
Classical Approach
Also known as Functional approach, Empirical approach
and Management process approach.
Its main features are:
1. Mgt is viewed as systematic network of various functions.
2. Based on the experience of the managers, mgt thoughts were
developed.
3. Universal application of management.
4. Education, economic efficiency & training were emphasized.
5. Formal organization structure.
6. People are motivated by economic gains.
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3. 2-3
Advantages of Classical approach
1. Focuses on what managers actually do.
2. Highlights the universal nature of management.
3. Scientific basis for managerial practice.
4. Plays important role in conducting future research in
the area of management.
But suffers from the following limitations:
1. Ignores environment.
2. Relies too much on past experience.
3. Oversimplified assumptions
4. Mechanistic framework
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4. 2-4
Pillars of classical approach
Bureaucracy
Scientific
management
Administrative theory
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5. 2-5
Bureaucracy
Max Weber, a German Social scientist, developed the
concept of bureaucracy.
He analyzed the formal system of organization and
administration to ensure effectiveness and efficiency.
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6. 2-6
Bureaucratic Principles
Written rules
System of task A Bureaucracy Hierarchy of
relationships should have authority
Fair evaluation
and reward
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7. 2-7
Key features of Bureaucracy
 Division of work
 Rules, Standard Operating Procedures (SOPs), &
Norms used to determine how the firm operates.
 Hierarchy of authority
 Technical competence
 Record keeping
 Impersonal relations
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8. 2-8
Bureaucracy
Advantages Disadvantages
Specialization Rigidity
Structure Goal displacement
Rationality Impersonality
Predictability Compartmentalisation of
Democracy activities.
Paperwork
Empire building
Red tape
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9. 2-9
Scientific Management theory
Modern management began in the late
19th century.
 Organizations were seeking ways to better
satisfy customer needs.
 Machinery was changing the way goods
were produced.
 Managers had to increase the efficiency of
the worker-task mix.
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10. 2-10
Job specialization
Adam Smith, 18th century economist, found
firms manufactured pins in two ways:
 Craft-- each worker did all steps.
 Factory -- each worker specialized in one step.
Smith found that the factory method had
much higher productivity.
 Each worker became very skilled at one, specific
task.
Breaking down the total job allowed for the
division of labor.
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11. 2-11
Scientific Management
Defined by Frederick Taylor, late 1800’s.
The systematic study of the relationships
between people and tasks to redesign the
work for higher efficiency.
 Taylor sought to reduce the time a worker spent on
each task by optimizing the way the task was done.
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12. 2-12
The 4 Principles
Four Principles to increase efficiency:
1. Study the way the job is performed now &
determine new ways to do it.
 Gather detailed, time and motion information.
 Try different methods to see which is best.
2. Codify the new method into rules.
 Teach to all workers.
3. Select workers whose skills match the rules set
in Step 2.
4. Establish a fair level of performance and pay
for higher performance.
 Workers should benefit from higher output.
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13. 2-13
Problems of Scientific Management
Managers often implemented only the
increased output side of Taylor’s plan.
 They did not allow workers to share in increased
output.
 Specialized jobs became very boring, dull.
 Workers ended up distrusting Scientific
Management.
Workers could purposely “under-perform”
Management responded with increased use
of machines.
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14. 2-14
Major schools of mgt thoughts
Mgt process school – mgt as a process of getting things
done with people operating in organized groups.
Empirical school – mgt is the study of experience
Human relations – mgt is centred on inter personal
relations.
Social system school – views mgt as a social system
Decision theory school – scientific approach to decision.
Mathematical school
Systems approach school
Contingency approach school
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15. 2-15
Fayol’s Principles
Henri Fayol, developed a set of 14 principles:
1. Division of Labor: allows for job specialization.
 Fayol noted firms can have too much specialization leading to
poor quality and worker involvement.
2. Authority and Responsibility: Fayol included both formal
and informal authority resulting from special expertise.
3. Unity of Command: Employees should have only one
boss.
4. Line of Authority: a clear chain from top to bottom of the
firm.
5. Centralization: the degree to which authority rests at the
very top.
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16. 2-16
Fayol’s Principles
6. Unity of Direction: One plan of action to guide the
organization.
7. Equity: Treat all employees fairly in justice and
respect.
8. Order: Each employee is put where they have the
most value.
9. Initiative: Encourage innovation.
10. Discipline: obedient, applied, respectful employees
needed.
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17. 2-17
Fayol’s Principles
11. Remuneration of Personnel: The payment system
contributes to success.
12. Stability of Tenure: Long-term employment is
important.
13. General interest over individual interest: The
organization takes precedence over the individual.
14. Esprit de corps: Share enthusiasm or devotion to the
organization.
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18. 2-18
Behavioral Management
Focuses on the way a manager should
personally manage to motivate employees.
Mary Parker an influential leader in early
managerial theory.
 Suggested workers help in analyzing their jobs
for improvements.
 The worker knows the best way to improve the
job.
 If workers have the knowledge of the task, then
they should control the task.
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19. 2-19
The Hawthorne Studies
Study of worker efficiency at the Hawthorne
Works of the Western Electric Co. during
1924-1932.
 Worker productivity was measured at various
levels of light illumination.
 Researchers found that regardless of whether
the light levels were raised or lowered,
productivity rose.
Actually, it appears that the workers enjoyed
the attention they received as part of the study
and were more productive.
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20. 2-20
Theory X and Y
Douglas McGregor proposed the two
different sets of worker assumptions.
 Theory X: Assumes the average worker is lazy,
dislikes work and will do as little as possible.
 Managers must closely supervise and control through
reward and punishment.
 Theory Y: Assumes workers are not lazy, want to
do a good job and the job itself will determine if
the worker likes the work.
 Managers should allow the worker great latitude, and
create an organization to stimulate the worker.
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21. 2-21
Theory X v. Theory Y
Theory X Theory Y
Employee is lazy Employee is not
lazy
Managers must
closely supervise Must create work
setting to build
Create strict rules initiative
& defined
rewards Provide authority
to workers
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22. 2-22
Theory Z
William Ouchi researched the cultural
differences between Japan and USA.
 USA culture emphasizes the individual, and managers
tend to feel workers follow the Theory X model.
 Japan culture expects worker committed to the
organization first and thus behave differently than USA
workers.
Theory Z combines parts of both the USA
and Japan structure.
 Managers stress long-term employment, work-group, and
organizational focus.
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23. 2-23
Management Science
Uses rigorous quantitative techniques to
maximize resources.
Quantitative management: utilizes linear
programming, modeling, simulation systems.
Operations management: techniques to analyze all
aspects of the production system.
Total Quality Management (TQM): focuses on
improved quality.
Management Information Systems (MIS): provides
information about the organization.
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24. 2-24
Organization-Environment Theory
Considers relationships inside and outside
the organization.
 The environment consists of forces, conditions, and
influences outside the organization.
Systems theory considers the impact of
stages:
Input: acquire external resources.
Conversion: inputs are processed into goods and
services.
Output: finished goods are released into the
environment.
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25. 2-25
Systems Considerations
An open system interacts with the
environment. A closed system is self-
contained.
 Closed systems often undergo entropy and lose
the ability to control itself, and fails.
Synergy: performance gains of the whole
surpass the components.
 Synergy is only possible in a coordinated system.
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26. 2-26
The Organization as an Open System
Input Stage Conversion Output
Stage Stage
Raw
Materials Machines Goods
Human skills Services
Sales of outputs
Firm can then buy inputs
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27. 2-27
The Organization as an Open System
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28. 2-28
Contingency Theory
Assumes there is no one best way to
manage.
 The environment impacts the organization and
managers must be flexible to react to
environmental changes.
 The way the organization is designed, control
systems selected, depend on the environment.
Technological environments change rapidly,
so must managers.
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29. 2-29
Structures
Mechanistic: Authority is centralized at the
top. (Theory X)
 Employees closely monitored and managed.
 Very efficient in a stable environment.
Organic: Authority is decentralized
throughout employees. (Theory Y)
 Much looser control than mechanistic.
 Managers can react quickly to changing
environment.
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30. 2-30
Management By Objective
(MBO)
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31. 2-31
Management By Objectives (MBO)
“objective are goals, aims or purposes that
organisation wish over varying periods of
time.
Designed by Peter Drucker, MBO is a
method whereby managers and employees
define objectives for every department,
project, and person and use them to monitor
subsequent performance.
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32. 2-32
MBO is a program that encompasses:
 specific goals
 participatively set
 for an explicit time period
 with feedback on goal progress
MBO operationalizes the concept of objectives by
devising a process by which objectives cascade
down through the organization.
According to Drucker, mgt has two imp functions:
1. Innovation
2. Marketing
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33. 2-33
He said modern org are knowledge based firms and their
workers are knowledge workers.
Org to achieve the purpose & mission follow:
1. Make the work productive & worker achieving
2. Effective mgt of social responsibility
Acc to him, objectives shd be set all the KRAs.
MBO shd be done together by superior & subordinates.
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34. 2-34
Federalism
Drucker also propounded Federalism.
It involves centralised control in a decentralised structure.
It makes top mgt devote for policy making.
Defines functions & responsibilities of employees.
Creates yardstick for measure their performance.
Continuity in educating the employees.
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35. 2-35
Coordination
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36. 2-36
Meaning & definition
In every organisation, different types of work are
performed by various groups and no single group can be
expected to achieve the goals of the organisation as a
whole.
Hence, it becomes essential that the activities of different
work groups and departments should be harmonised.
This function of management is known as ‘co-
ordination’.
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37. 2-37
Acc to E F L Brech, Coordination is balancing & keeping
together the team by ensuring suitable allocation of task to
the various members and seeing that tasks are performed
with due harmony among the members themselves.
It is the centre point of managerial tasks.
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38. 2-38
Characteristics of Coordination
Represents core function
Purpose is to achieve common objective
Continuous process.
It is the result of concerted (combined) action.
PRINCIPLES OF COORDINATION
1. Early start
2. Direct personal contact
3. Continuity
4. Integration
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39. 2-39
Need for coordination
Increasing specialization
Empire building
Harmony within the group
To attain common interest between mgt & worker.
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40. 2-40
Types of coordination
Internal & External
Vertical & Horizontal
Procedural & Substantive (General & specific)
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41. 2-41
Techniques of Coordination
Sound planning
Simplified organisation
Effective communication
Effective supervision
Associated department
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