Theories of Management

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The construction of a single pyramid occupied more than 100,000
workers for 20 years.

Who told each worker what to do?

Who ensured that there would be enough stones at the site to keep
workers busy?

Copyright © 2014 Pearson Education, Ltd

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
Introduction
The following broad theories and approaches
are discussed :
• The Classical approach
• Human Resource Approach
• Modern Approach

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THE CLASSICAL APPROACH
• The Classical perspective to management
emerged during the nineteenth century and
continued into the twentieth century.
• Due to the new challenges that organizations
faced, management sought methods of
efficiency which included a rational and
scientific approach.

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Classical Theories
The Classical approach includes the following
three theories and their contributors:
• Scientific Management by Frederick Taylor
• Administrative Principle by Henry Fayol
• Bureaucratic Organization by Max Weber

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Scientific Management
theory
By Frederick W. Taylor (1856 – 1915)
Scientific Management or Taylorism was a
scientific method which was used to optimize
the way in which tasks were performed thus
improving the labour productivity.
One of Taylor’s philosophy was “In the past
man was considered first. In the future, the
system must be considered first.”

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The General Concept of Scientific
Management
Develop a standard method for performing a task
and train workers to use these methods. (Managers
developed precise procedures based on each
organizational task)
Provide workers with the proper tools needed to
work. Selected employees were chosen for specific
tasks. (Workers that were stronger both mentally
and physically were assigned specific tasks)
Wage incentives were provided when output was
increased. (Employees were motivated to increase
their output with the use of additional benefits)
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Disadvantages of Scientific Management

• Workers felt exploited because their social

aspect of life was disregarded. (Workers were
treated as machines and not humans)
• Management stereotyped workers and did
not allow them to prove their skills in other
areas.
• Workers were not allowed to form innovative
ways to perform their tasks.

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Further contributions to Scientific
Management
• Henry Gantt (Gantt Chart), also Lillian M.
Gilbreth (1878-1972) (Industrial Psychology
and Human Resource Management) and
Frank B. Gilbreth (1868-1924) (Time and
Motion Studies)

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HENRI FAYOL
• Principles of
management –
Fundamental rules of
management that could
be applied in all
organizational
situations and taught in
schools.
Administrative Principle
By Henry Fayol (1841 – 1925)
• This theory dealt with the entire organization (both
workers and management) which functioned with
four basic principles. Which are:
1. Unity of command – Each person receives order
from only one superior.
2. Division of work – Specialization and efficiency were
incorporated in workers.
3. Unity of direction – Related activities were grouped
under one manager.
4. Scalar Chain – is the organizational structure which
starts from the CEOs to the workers.

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Further contributions to Administrative
Principles
• Mary Parker Follet (1868-1933) (emphasis was
made on the common goals of the employees
in reducing organizational conflict as well as
the management gaining the trust and respect
of employees)
• Chester I. Bernard (18861961) (the concept of
informal organization where management and
subordinates group informally to create a
bond).

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MAX WEBER
• Max Weber built on
Taylor’s theory. He
argued for similar
principles. Weber
believed that all
managers must build
chains of command. He
also argued for
standardization.
Bureaucratic Organizations
By Max Weber (1864 – 1920)
• Weber’s theory concentrated on the fact that
positions should be structured where there must be
a clear line of authority (hierarchy) and all persons
must be selected by competency for the job and
promotion (promotion based on achievement and a
specialized division of labour) also, a formal structure
and position rather than an individual.

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Views and Misconceptions of
Bureaucratic Organizations
• Good bureaucracy removed or reduced opportunities for
corruption, favoritism and arbitrary exercises of power
(instead of bribing a single official, you now have to bribe
several officials) .
• Sometimes extra paperwork is added to a system.
• Identified bureaucracy with any large organization.
• Sometimes bureaucracy would be mistaken for civil
service (governmental organizations) but actually is
being used at various types of organizations.
• Bureaucracy is inflexible.

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THE HUMAN RESOURCE APPROACH

• The Human Resource perspective to

management suggested that jobs should be
designed to meet higher level needs by
allowing workers to use their full potential.

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Human Resource Approach Theories

• Hawthorne Studies by Elton Mayo

• Maslow’s Theory of Human Needs
• Mc Gregor’s Theory (x y theory)

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The Hawthorne Studies by Elton
Mayo
• After a series of studies, it was proven that
employees increase the level of output when given
better treatment.
• He carried out research at the Hawthorne Works of
the Western Electric Company in Chicago.
• He and his team of researchers took a group of six
women and segregated them.
E.g., They then altered their conditions of work in a
number of ways, over a five-year period, and
observed the effects on production and the morale
of the group.

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Contd.
• Over the period, changes such as new payment systems,
rest breaks of different sorts and lengths, varying the length
of the working day, and offering food and refreshments
were tried. In almost all cases, productivity improved.
• the women had felt important because they had been
singled out.
• the women had developed good relationships amongst
each other and had been allowed to set their own work
patterns.
• the case of relationship had made for a much more
pleasant working environment.
• Conclusion: work satisfaction must depend, to a large
extent, upon the informal social relationships between
workers in a group and upon the social relationships
between workers and their bosses.
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Mayo’s conclusions
• Work is a group activity.
• The social world of an adult is primarily patterned by
their work activity.
• The need for recognition, security and belonging is
more important than physical conditions of the work
environment.
• A complaint is commonly a symptom manifesting
disturbance of an individual’s current position.
• An employee is a person whose attitudes and
effectiveness are conditioned by social demands.

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Conclusions contd.
• Informal groups within organization creates a strong
social control over the work habits and attitudes of an
individual.
• Groups collaboration must be planned and developed,
then a cohesion within an organization would be formed
thus resisting the disrupting effects of a continuously
adaptive society.
• The change from an established society in the home to
an adaptive society in the work plant resulting from the
use of new techniques contribute to the disruption of
the social organization of the workplace.

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Maslow’s Theory of Human’s Needs
• Maslow's hierarchy of needs is a theory in
psychology that contends, each of us is motivated by
needs. Our most basic needs are inborn, having
evolved over tens of thousands of years.
• Abraham Maslow's Hierarchy of Needs helps to
explain how these needs motivate us all.
• Maslow's Hierarchy of Needs states that we must
satisfy each need in turn, starting with the first,
which deals with the most obvious needs for survival
itself.

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Customers needs are different
(Maslow’s hierarchy of needs)

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Contd.
• Only when the lower order needs of physical
and emotional well-being are satisfied are we
concerned with the higher order needs of
influence and personal development.
• Maslow said that needs must be satisfied in
the given order.
• Lower levels are deficiency motivators; level
while higher levels are growth motivators and
relatively rarely found.
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Contd.
• So, while it is broadly true that people move up (or
down) the hierarchy, depending what's happening to
them in their lives, it is also true that most people's
motivational 'set' at any time comprises elements of
all of the motivational drivers.
• Like any simple model, Maslow's theory not a fully
responsive system nevertheless, it remains
extremely useful and applicable for understanding,
explaining and handling many human behavior
situations.

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Mc Gregor’s Theory
(X Y Theory)
• In 1960 Douglas McGregor, an American psychologist
wrote a book “The Human Side Of Enterprise”
making contrasting assumptions about the nature of
humans in the workplace.
• These assumptions are the basis of Theory X and
Theory Y teachings.
• Generally speaking, Theory X assumes that people
are lazy and will avoid work whenever possible.
• Theory Y, on the other hand, assumes that people
are creative and enjoy work.

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Theory X and Y
Theory X Theory Y
• The average individual dislikes • The average individual likes to
work and will avoid it. work and it’s a natural activity.
• Most people must be forced • A person could be self
or penalized to get them motivated and is committed to
effectively achieve the their work.
organizations goals. • The average human learns to
• The average human has little accept and seek responsibility.
or no ambition, • The average human has the
• The average human would capacity to be
avoid responsibility • The average human is
innovative and creative.
• The average human likes the
security and • The potential of a human
under modern industrial life is
• benefits.
moderately utilized.

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Contd.
• Mc Gregor’s theory is a useful and simple
reminder of the natural rules for managing
people.
• He maintained that there are two
fundamental approaches to managing people.
– Theory X Manager is an authoritarian manager
and generally gets poor results.
– Theory Y Manager is a participative manager
which produces better performance and results
and allows people to grow.

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Comparisons

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Comparisons
Theory X Theory Y
• Motivation style- Threats and • Motivation style- Rewarding
disciplinary action are used more • Leadership- Participative
effectively in this situation, also • Power & Authority- The manager
monetary gain. would take suggestions from
• Leadership- Authoritarian workers, but would keep the
• Power & Authority- Arrogant, power to implement the decision
one-way communicator • Conflict- Workers might be given
• Conflict- Intolerant the opportunity to exert
"Negotiating" strategies to solve
• Performance Appraisals-
their own differences
Appraisals occur on a regular
basis • Performance Appraisals-
Promotions also occur on a
regular basis.

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Contd.
• With respect to overall management style,
McGregor's Theory X and Theory Y managers seem
to have a much more formal leadership style and
managers seem to have different views of the
workers, while their views of the tasks remains the
same in both cases: that is, one of specialization, and
doing a particular task.
• Albeit that Theory Y suggests that the workers would
become very good at their particular tasks, because
they are free to improve the processes and make
suggestions. While the
• A theory X worker is said to require force, threats,
and possibly even disciplinary action.

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Contd.
• Theory Y are, again, self motivated, this allows
them to focus on the task, and also their role
within the company.
• Their desire is to be more productive and
enable the company to succeed.
• Theory X workers, on the other hand, seem to
have just enough self motivation to show up
at work, punch the time clock, as it were, and
do only that which is necessary to

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MODERN APPROACHES TO
MANAGEMENT
• Elements of various perspectives, mostly the
humanistic perspective evolved into what is
known as the Modern Approach to
management.

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Modern theories
• Open Systems
• Contingency Thinking
• Lessons from the Japanese management style
(theory z)

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Open Systems
• A system is defined as a group of interacting units or
elements that have a common purpose.
• Therefore, Open systems refer to systems that
interact with other systems or the outside
environment.
• An organization is an entity that takes inputs from
the environment, transforms them, and releases
them as outputs in sequence with mutual effects on
the organization itself along with the environment in
which the organization operates.

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Contd
• For example, living organisms are considered open
systems because they take in substances from their
environment such as food and air and return other
substances to their environment.
• The three major characteristics of open systems
are:
1. They receive inputs or energy from their environment.
2. They convert these inputs into outputs.
3. They discharge their outputs into their environment

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Contd
• Companies use inputs such as labour, funds,
equipment, and materials to produce goods or
to provide services and they design their
subsystems to attain these goals.

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Proponents
• Two early pioneers in this effort, Daniel Katz and Robert
Kahn, began viewing organizations as open systems with
specialized and interdependent subsystems and processes
of communication, feedback, and management linking the
subsystems.
• Katz and Kahn argued that the closed-system approach fails
to take into account how organizations are reciprocally
dependent on external environments.
• For example, environmental forces such as customers and
competitors exert considerable influence on corporations,
highlighting the essential relationship between an
organization and its environment as well as the importance
of maintaining external inputs to achieve a stable
organization.
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Contingency theory
• Contingency approach – a management
approach that recognizes organizations as
different from each other, which means
they face different situations
(contingencies) and require different ways
of managing.
Contingency theory
• The contingency approach to management is an
extension of the humanistic perspective which is
based on the idea that in an organization there is no
one best way in the management process (planning,
organizing, leading, and controlling) to successfully
resolve any tailored circumstances; because
organizations, people, and situations vary and
change over time.
• Thus, the right thing to do depends on a complex
variety of critical environmental and internal
contingencies.

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Proponents
• The contingency approach was suggested by two American
academics, Lawrence and Lorsch in 1967.
• Their important contribution to this approach was as follows:
1. The more dynamic and diverse the environment, the higher the
degree of both differentiation and integration required for
successful organization.
2. Less changeable environments require a lesser degree of
differentiation but still require a high degree of integration.
3. The more differentiated an organization, the more difficult it is
to resolve conflict.
4. Where the environment is uncertain, the integrating functions
tend to be carried out by middle and low-level managers
5. Where the environment is stable, integration tends to be
achieved at the top end of the management hierarchy.

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Japanese Management Style Theory Z
• McGregor, identified a negative set of assumptions about human
nature, which he called Theory X.
• He asserted that these assumptions limited the potential for
growth of many employees.
• He presented an alternative set of assumptions that he called
Theory Y and were more positive about human nature as it relates
to employees.
• In McGregor's view, managers who adopted Theory Y beliefs would
exhibit different, more humanistic, and ultimately more effective
management styles and Theory Y became a well-known
prescription for improving management practices.
• Concerns about the competitiveness of U. S. companies led some to
examine Japanese management practices for clues to the success
enjoyed by many of their industries.
• This led to many articles and books purporting to explain the
success of Japanese companies.
• It was in this atmosphere that Theory Z was introduced
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Japanese orientation- Theory Z
• Theory Z is a humanistic approach to management (William
Ouchi).
• The key features of Japanese industrial organizations,
according to Ouchi are as follows:
1. Offer lifetime employment (at least for their core
workers).
2. Promote from within.
3. Insist on mandatory retirement of core workers at age 55.
4. Employ a large number of temporary employees mostly
women.
5. There is a high degree of mutual trust and loyalty when
career paths are non-specialized with life-long job
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rotation as a central feature of career development 43
The key features of Japanese industrial
organizations
7. Decision making is shared at all levels.
8. Performance appraisal is long term (i.e., the first
appraisal takes place 10 years after joining the
company).
9. There is a strong sense of collective responsibility for
the success of the organization.
10. Cooperation effort rather than individual
achievement is encouraged.

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Contd.
• Although Ouchi recognizes that many of the features
of Japanese management could not be translated into
Western industrial society, he believes that certain
features could be applied in a Western context.
• The move from the present hierarchical type of
organization to a Theory Z type organization is a
process which, says Ouchi:
“Has the objective of developing the ability of the organization
to coordinate people, not technology to achieve
productivity.”

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Contd.
• In his view, this requires a new philosophy of
managing people based on a combination of
the following features of Japanese
management:
1. Lifelong employment prospects
2. Shared forms of decision-making
3. Relationship between boss and subordinate
based on mutual respect

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Contd.
• According to Ouchi the introduction of Theory Z
approaches into Western firms requires the
following strategy:
– Adoption of a “Top down” approach, based on definition
of the new philosophy agreed and supported by the
organization’s top management.
– Implementation of the new approach should be carried
through on the basis of consultation and communication
with the workforce and with full training support to
develop relevant skills for managers, supervisors and their
teams.

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When applying these
theories always
remember…..

It is your job as a
manager to pull people
and the organization
out of holes when they
fall in!

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