( An IACBE Accredited Institution )

Foundation Course
Principles of Management
Post Graduate Programme (2008 – 10)
(PGP)

Alliance Business School

Bangalore
Chapter 2
Evolution of
Management

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1.1

Learning
Objectives
After reading this chapter, you should
be able to:
o Describe early evidences of management
practice.
o Describe the current trends and issues in
management.

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Major Classification of
Management Approaches

o Pre-Classical Thoughts
o Classical Approach
o Behavioral Approach
o Quantitative Approach
o Modern Approach

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Pre-Classical
Contributors
Name Area Contribution
Adam Smith Advocated the concept of ‘job
Political Economist
(1723 – 1790) specialization’ to increase the productivity
of workers.
Proposed legislative reforms to improve
Robert Owen working conditions of labor. Recommended
British
(1771 – 1858) Entrepreneur the use of a ‘silent monitor’ to openly rate
an employee’s work on a daily basis.

Impressed with the concept of work

specialization and advocated the concept of
Charles British Professor of ‘division of labor’. Devised a profit-sharing
Babbage Mathematics plan under which bonus were given for
(1792 – 1871) useful suggestions contributed by
employees and wages were based on the
profits generated by the factory.

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Pre-Classical
Contributors (Contd.)
Name Area Contribution
Andrew Ure
British Academician Advocated the study of
(1778 – 1857) management.
Charles Dupin
French Engineer Advocated the study of
(1784 – 1873) management.
Henry R.Towne American Mechanical Emphasized the need to consider
(1844 – 1924) Engineer and management as a separate field of
businessman study and the importance of
business skills for running a
business.

So, Preclassical theorists tried to find solutions to contemporary

managerial problems. The early pioneers, with their technical
background, did not regard management as a separate field of study.

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Classical Approach
Classical theorists formulated principles for setting
up and managing organizations. These views are
labeled ‘Classical’ because they form the foundation
for the field of management thoughts.
Approach Rationale Focus

Scientific Management One best way to do each job Job level

One best way to put an

Administrative Principles Organizational level
organization together
Rational and impersonalOrganizational level
Bureaucratic
organizational
Organization
arrangements

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Major Branches in the
Classical Approach

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Scientific
Management
“One best way” for a job to be done:
» Putting the right person on the job with the correct tools and
equipment.
» Having a standardized method of doing the job.
» Providing an economic incentive to the worker.

Fredrick Winslow Taylor

- The ‘Father’ of Scientific Management
- Published Principles of Scientific Management (1911)

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Taylor’s Five Principles of
Management
1. Develop a science for each element of an individual’s
work, which will replace the old rule-of-thumb method.
2. Scientifically select and then train, teach, and develop
the worker.
3. Heartily cooperate with the workers so as to ensure
that all work is done in accordance with the principles
of the science that has been developed.
4. Divide work and responsibility almost equally between
management and workers.
5. Management takes over all work for which it is better
fitted than the workers.
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Scientific Management
(Contd.)
Frank and Lillian Gilbreth
o Focused on increasing worker productivity through the reduction of
wasted motion.
o Developed the microchronometer to time worker motions and optimize
performance.

How Do Today’s Managers Use Scientific

Management?
o Use time and motion studies to increase productivity.
o Hire the best qualified employees.
o Design incentive systems based on output.
o Train workers to perform jobs to the best of their abilities.

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Administrative
Theory
The Administrative Management Theory focused on
principles that could be used by managers to
coordinate the internal activities of organization. The
most prominent of the administrative theorists was
Henri Fayol.
Henri Fayol (1841 – 1925)
o Believed that the practice of management was
distinct from other organizational functions.
o Developed fourteen principles of management that
applied to all organizational situations.
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Fayol’s 14 Principles of
Management
Work specialization results in improving efficiency of
1. Division of Work
operations. Thereby the person can be more productive.
The right to issue commands, along with which must go the
2. Authority
balanced responsibility for its function.
It involves obedience to authority, adherence to rules,
3. Discipline
respect for superiors and dedication to one’s job.
Each worker should have only one boss with no other
4. Unity of
conflicting lines of command.
Command
Activities should be organized in such a way that they all
5. Unity of Direction
come under one plan and are supervised by only one
person
Subordination ofIndividual interests should not take precedence over the
6.
individual goal of the organization.
interest to
general interest
Payment should be fair & based on factors - business
7. Remuneration
condition, cost of living, productivity of employee & ability
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the firm to pay
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Fayol’s 14 Principles of
Management (Contd.)
Depending on the situation, company should adopt a
8 Centralization
centralized or decentralized approach to make optimum use
of its personnel.
Refers to the chain of authority that extends from the top to
9 Scalar Chain
the bottom of company. Defines the communication path in
company
Material order implies everything is kept in right to have
10 Order
smooth coordination & social order implies right person is
placed at right job
All employees should be treated fairly. A manager should
11 Equity
treat all employees in the same manner without prejudice.
Stability ofA high labor turnover should be prevented and managers
12
tenure ofshould motivate their employees to do a better job.
Personnel
Employees should be encouraged to give suggestions and
13 Initiative
develop new and better work practices.
This means ‘a sense of union’. Management must inculcate a
14 Espirit de corps
team spirit in its employees.

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Bureaucratic
Management
Bureaucratic Management emphasizes the
need for organizations to function on a
rational basis (It is a formal organization
structure with a set of rules and regulations).
The most prominent contributor was Max
Weber.
Max Weber (1864 – 1920)
Emphasized rationality, predictability, impersonality,
technical competence, and authoritarianism.
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Weber’s Ideal
Bureaucracy

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Behavioral Approach
The Behavioral Approach to management
emphasized individual attitudes and behaviors and
group processes, and recognized the significance of
behavioral processes in the workplace.

The study of the actions of people at work; people

are the most important asset of an organization -
Organizational Behavior (OB).

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Contributions of
Behavioral Thinkers
1. Mary ParkerEmphasized group influence and advocated the concept of
Follet power sharing and integration.
(1868 – 1933)
Laid the foundation for the Human Relations Movement;
2. Elton Mayo
recognized the influence of group and work place culture
(1880 – 1949) on jo performance.

3. Abraham Maslow Advocated that humans are essentially motivated by a

(1908 – 1970) hierarchy of needs.

4. Douglas Differentiated employees and managers into Theory X and

McGregor Theory Y personalities.
(1906 – 1964)

5. Chris Argyris Classified organizations based on the employees’ set of

(1923 – values.

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Foundations in the
Behavioral Approach

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Mayo's Hawthorne
Experiments
A series of productivity experiments conducted at Hawthorne Works
of the General Electric Company in Chicago between 1924 and 1927.
Experiment Issues: To find out what effect fatigue and monotony had
on job productivity and how to control them.
Variables considered: Rest breaks, work hours, temperature and
humidity.
Experiment: Mayo took six women from the assembly line, segregated
them from the rest of the factory and put them under the eye of a
supervisor who was more a friendly observer than disciplinarian. Mayo
made frequent changes in their working conditions, always discussing
and explaining the changes in advance.

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Mayo's Hawthorne
Experiments (Contd.)
He changed the hours in the working week, the hours in the
workday the number of rest breaks, the time of the lunch
hour. Occasionally, he would return the women to their
original, harder working conditions.
Experimental findings:
o Productivity unexpectedly increased under imposed
changed working conditions.
o The effect of incentive plans was less than expected.
Research conclusion
Social norms, group standards and attitudes more strongly
influence individual output and work behavior than do
monetary incentives.
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Maslow’s Hierarchy
of Needs

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Mc Gregor’s Theory X
and Theory Y
Douglas McGregor developed two assumptions about human behavior
which he labeled ‘Theory X’ & ‘Theory Y’. These two theories reflect two
extreme sets of belief that different managers have about their workers.
Theory X presents negative view of people and Theory Y presents positive
view.
Theory X Theory Y
Because of their dislike for work, theyWork is a natural activity like play or rest.
avoid it when they can.
Most people must be coerced andPeople are capable of self-direction and
threatened with punishment before theyself-control if they are committed to
work. They require close direction. objectives.
Most people prefer to be directed. TheyPeople become committed to
avoid responsibility and have littleorganizational objectives if they are
ambition. They are interested only inrewarded in doing so.
security.

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Quantitative
Approach
Focuses on achieving organizational effectiveness through the
application of mathematical and statistical concepts. The three
main branches of this approach are: Management Science,
Operations Management and Management Information System.
Area Focus
It stress the use of mathematical models and statistical
Management methods for decision making. Examples – Queuing
Science theory, LPP, Decision theory, Probability theory, etc.
It is an applied form of management science. It is
Operations Mgmt. concerned with: (i) inventory mgmt. (ii) work schedule
(iii) production planning (iv) facilities location & design
(v) quality assurance.
MIS It focuses on designing and implementing computer
based information systems for business organizations.
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Modern Approach

o Systems Approach
o Contingency Approach

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Systems Approach
System Defined – A set of interrelated and
interdependent parts arranged in a manner that
produces a unified whole.
Basic Types of Systems
(a) Closed systems
Are not influenced by and do not interact with their environment
(all system input and output is internal).
(b) Open systems
Dynamically interact to their environments by taking in inputs
and transforming them into outputs that are distributed into their
environments.

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The Organization as an
Open System

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Implications of the
Systems Approach
oCoordination of the organization’s parts is
essential for proper functioning of the entire
organization.
oDecisions and actions taken in one area of the
organization will have an effect in other areas of
the organization.
oOrganizations are not self-contained and,
therefore, must adapt to changes in their
external environment.
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Contingency
Approach
Contingency Approach Defined
o Also sometimes called the situational approach.
o There is no one universally applicable set of management principles
(rules) by which to manage organizations.
o Organizations are individually different, face different situations
(contingency variables), and require different ways of managing.
Popular Contingency Variables
o Organization size
o Routineness of task technology
o Environmental uncertainty
o Individual differences

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2.8

Contingency Viewpoint
Behavioral Viewpoint
How managers influence others:
• Informal Group
• Cooperation among employees
• Employees’ social needs
Traditional Viewpoint
Systems Viewpoint What managers do:
How the parts fit together: • Plan
• Inputs • Organize
• Transformations • Lead
• Outputs • Control
Contingency Viewpoint
Managers’ use of other viewpoints
to solve problems involving:
• External environment
• Technology
• Individuals
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Current Trends and
Issues
o Globalization
o Ethics
o Workforce Diversity
o Entrepreneurship
o E-business
o Knowledge Management
o Learning Organizations
o Quality Management
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Current Trends and
Issues (Contd.)
o Globalization
 Management in international organizations.
 Political and cultural challenges of operating in a
global market.
o Ethics
 Increased emphasis on ethics education in
college curriculums
 Increased creation and use of codes of ethics by
businesses
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Current Trends and
Issues (Contd.)
o Workforce Diversity
(a) Increasing heterogeneity in the workforce
- More gender, minority, ethnic and other forms of diversity in employee

(b) Aging workforce

- Older employees who work longer and do not retire

- The increased costs of public and private benefits for older workers
- An increasing demand for products and services related to aging.

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Current Trends and
Issues (Contd.)
o Entrepreneurship Defined
The process whereby an individual or group of individuals use
organized efforts to create value and grow by fulfilling wants
and needs through innovation and uniqueness.

o Entrepreneurship process
- Pursuit of opportunities.
- Innovation in products, services, or business methods.
- Desire for continual growth of the organization.

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Current Trends and
Issues (Contd.)
o E-Business (Electronic Business) – The work
preformed by an organization using electronic linkages
to its key constituencies.
o E-commerce – The sales and marketing component of
an e-business.
o Categories of E-Businesses
1. E-business enhanced organization
2. E-business enabled organization
3. Total e-business organization
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Categories of E-Business
Involvement

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Current Trends and
Issues (Contd.)
oKnowledge Management - The cultivation of
a learning culture where organizational
members systematically gather and share
knowledge with others in order to achieve
better performance.

oLearning Organization - An organization that

has developed the capacity to continuously
learn, adapt, and change.
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Learning Organization vs.
Traditional Organization

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Current Trends and
Issues (Contd.)
o Quality Management
- A philosophy of management driven by
continual improvement in the quality of work
processes and responding to customer
needs and expectations.
- Inspired by the total quality management
(TQM) ideas of Deming and Juran.
- Quality is not directly related to cost.
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What is Management
Quality?
o Intense focus on the customer
o Concern for continual improvement
o Process-focused
o Improvement in the quality of everything
o Accurate measurement
o Empowerment of employees

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?
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