The Evolution of Management

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The Evolution of Management

• Theory and Practice

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Why study Management History ?

• Management is the most used tool today in any
  enterprise. History of its evolution helps us to
  understand its metamorphosis to its current
  level.

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Looking back

• Organized endeavors directing people for
  planning, organizing, executing, leading,
  monitoring and controlling activities have
  existed since the beginning of the civilization.
  (Pyramids, Monuments, Mythology)
• It has been only during the last century that
  this subject has undergone systematic
  investigation, acquired a common body of
  knowledge and has become a formal discipline.
• It has been the fastest growing discipline both
  in content and application over the last 50 years

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The run up to the formal theory. Literature review

• Sun Tzu the Chinese General (6tn century BC) in
  his The art of War recommends that the success
  can be achieved by being aware of utilizing the
  organizations strength to exploit the weakness of
  rival the enemy. (Coordinated group effort)
• Chanakyas Arthashastra (3rd century BC) It lays
  down the principles that should be taken into
  consideration by the leader while formulating
  policies
• Machiavelli (Discourses 1513) written for the
  leadership of Florence, recommended that the ends
  justifies means and that a leader should use
  fear, not hatred, to maintain control.

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The run up to the formal theory.

• Adam Smith (The wealth of nations -1776).
  Economic advantages organizations would gain by
  division of labor.
• The Industrial Revolution and the mechanization
  of the process (large volume outturn)
• Coordination of tasks (Forecasting, supply chain,
  quality control, monitoring, marketing)
  contributed by Elin Whitney, James Watt and
  Mathew Boulton.
• The modern management discipline evolved as an
  offshoot of economics. John Stuart Mill, Leon
  Walras, Alfred Marshall took forward the theory
  towards a more comprehensive theoretical
  background.
• Rapid expansion of the railroads brought down the
  costs.
• No government control supported the development
  of large corporations (J. Rockefeller- oil,
  Andrew Carnegie steel).

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The run up to the formal theory.

• This demanded formal managers and formalized
  management practices.
• In 1881, Joseph Wharton took the profession one
  step forward by becoming the first management
  scholar to offer a tertiary level course in
  management
• Harvard became one of the first American
  Universities to offer a graduate degree in
  business management in 1908. The first textbook
  on management was written by J Duncan in 1911.
• Around World War II, H. Dodge, Ronald Fisher and
  Thornton C. Fry introduced mathematical and
  statistical techniques to give it a scientific
  basis.
• Peter Drucker published Concept of the
  Corporation in 1946 describing different facets
  of business organization. He also developed the
  concept of MBO in 1950 as a comprehensive system
  based approach to accomplish the organizational
  objectives

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Why Study Management Theory?

• Theories are perspectives with which people make
  sense of their world experiences
• Theories provide a stable focus for understanding
  what we experience (Henry Ford large and
  compliant work force Alfred Sloan of GM on
  market strategy)
• Theories enable us to communicate effectively and
  thus move into more complex relationships with
  other people (Ford / Sloan)
• Theories make it possible to keep learning about
  our world. Theories have boundaries. Triggers to
  look beyond. (Cold war, Model T and GM)

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Theories (guided by the perceptions of the
researcher)
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A. The Classical Theories

• The classical management focused on
  attainment of efficiency and productivity in an
  organizational setting. The predominant
  characteristics are
• Emphasis was placed on economic rationality of
  the individual employee. Advocated the provision
  of monetary incentives to encourage to work hard
  to realize their true potential.
• They are based on the negative views about human
  nature with respect to performance of role
  responsibility in an organizational setting.
• They recognized that humans have emotions, but
  felt the emotions could be controlled by logical
  and rational structuring of jobs
• Can be classified in three main branches
  1. Scientific, 2. Administrative and
  3.Bureaucratic Management

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1. Four pillars of Scientific Management

• Scientific Management arose from the need to
  increase productivity.
• Breakdown the work into elements and develop
  science for each (re-look into the conventional
  mode) Scientific job analysis
• Select, train and deploy appropriate worker
  (workers will not choose where they would work)
• Division of work and responsibilities.-
  Functional supervision and standardization
• Establish synergic relationship with workers.
  Management cooperation and financial incentives

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Major Contributors to Scientific Management

• Frederick Taylor (mechanical engineer) published
  Principles of Scientific Management (1911)
  one best way, appropriate selection of workers,
  training, deployment and environment.
  (experiments with loading iron blocks and shovel
  sizes, financial incentives). The fundamentals
  are
• 1. Find the best practice and use as benchmarking
• 2. Decompose the task into its constituents now
  called business process redesign
• 3. Get rid of things that dont add value

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Major Contributors contd.

• Frank and Lillian Gilbreth (used camera and
  micro-chronometer to analyze the motions of brick
  laying fatigue and motion studies). They defined
  time and motion studies as the science of
  eliminating wastefulness resulting from
  unnecessary, ill directed and inefficient motion
• Henry L Gantt (charts for planning and
  monitoring, and the concept of group incentives)
  Formed the basis of CPM, PERT (project evaluation
  and review technique) and Gantt Charts. He
  focused on the importance of motivational schemes
  by laying emphasis on rewards for good work
  rather than penalties for poor work. He advocated
  that provisions of rewards is relatively more
  effective than threat of penalties

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Scientific Management Era In Perspective

• The era was characterized by low standard of
  living, labor intensive working pattern, and
  financially cheap environment
• Scientific management attempted to raise the
  standard of living by way of making workers more
  efficient and productive and consequently adding
  to their income.

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2. The General Administrative Management

• Grew out of need to find guidelines for
  managing complex organizations to prescribe the
  interventions in Management. The two most
  prominent contributor was
• Henry Fayol (MD of a French Coal Company)
  described management as the designated set of
  functions, and unlike Taylor, concentrated on the
  managerial level. Fayol was the first thinker to
  outline the desirable qualities of a manager.
  They are physical qualities, mental qualities,
  moral qualities, proper education qualities,
  specialized knowledge about some function and
  experiential knowledge from past work

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Fayols 14 Principles of Management- busted the
myth that Managers are Born and not made. He
insisted that management is a skill which can be
taught

• Centralization
• Hierarchy
• Orderliness (right people and right material at
  right place)
• Equity (principle of hot stove)
• Stability of Tenure
• Initiative
• Esprit de corps

• Division of work (training)
• Authority / responsibility
• Discipline (obey rules)
• Unity of Command
• Unity of Direction (one plan)
• Individuals interest subordinate to
  organizations interest.
• Fair Remuneration

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3. Bureaucratic Management

• Max Weber (German Sociologist) described
  goal oriented large organization as bureaucracy
  -- defined as an administrative system which is
  deliberately designed for accomplishment of large
  scale tasks through coordination of individual
  efforts in a rule bound, fair and efficient
  manner. It is characterized by clear division of
  labor, well trained personnel appointed on the
  basis of their competence, hierarchy (clear
  career path), rules and regulations, rational
  power (traditional / charismatic) and impersonal
  relationships.
• Although the term bureaucracy has been
  popularized for referring to government
  organizations, it is being practiced in virtually
  every large and formal organization

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Webers ideal Bureaucracy

• Division of labor
• Authority / Hierarchy
• Formal Selection
• Formal rules and regulations
• Impersonality
• Career Orientation
• Webers concepts (bureaucracy) are a lot
  similar to Taylors (scientific management). Both
  emphasize rationality, predictability,
  impersonality, technical competence and
  authoritarianism.

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General Admin / Bureaucratic Theories In
Perspective

• Fayols theory can be benchmarked as the starting
  point of the many current management ideas. He
  was the first to systemize managerial
  interventions.
• Webers idea of bureaucracy was the model
  prototype of large organizations, bereft of
  inefficiencies, ambiguity and patronage.
• Though Bureaucracy is not a very fancied term
  today, it still provides the steel frame to most
  large organizations

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B. Human Relations School Why?

• This school of thought emerged in 1920 in
  reaction to the limitations of the classical
  theories that ignored the human aspects in
  organizations. The main characteristics are
• Employees are social beings and hence could not
  respond to purely rational rules, chain of
  authority and economic incentives.
• Employees bring their social needs along with
  them to the organization consequently, effective
  management required a more human oriented
  approach.
• Emphasis is required on the social needs, drives
  and attitudes of individuals to motivate them to
  perform to their true potential

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Outcome of Human Relations Movement

• Following fundamentals of human behavior
  highlighted
• 1. Individuals desire to continuously associate
  with his fellow workers significantly affects
  performance
• 2. Scientific management in its original form
  (Robotization of the work force) not accepted.
  Social understanding and social skills are
  equally important.
• 3. The working group informally determines the
  output level (dependent upon fair days work)
  that an individual worker would produce in a
  given timeframe.
• 4. Fair and transparent management can foster
  collaborative and cooperative atmosphere.
• 5. Rather than just adding to the overall
  compensation through production linked
  incentives, management needs to improve the
  overall quality of life of the workers

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Major contributors to the approach

• The proponents recognized the importance of human
  factor in success of organizations. Four
  individuals stand out
• Robert Owen Scottish businessman, committed to
  releasing the suffering of the working class
  banned child labor, regulated work hours and
  improved working conditions showing concern for
  labor welfare was a profitable management
  initiative.
• Hugo Munsterberg Created the discipline of
  industrial psychology substantially contributed
  to our current knowledge of selection technique,
  training, job design and motivation.

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Major contributors contd.

1. Mary Parker Follett Propounded that no one could
   become a whole person except as a member of a
   group. Defined Management as the art of getting
   things done. Her holistic model took into account
   not only individuals and groups but also
   politics, economics and biology. It was
   forerunner of the idea that management was not
   internally focused and is affected by external
   environment.
2. Chester BarnardPresident of New Jersey Bell
   Telephone Co. viewed organizations as social
   systems that require nurturing. People come to
   join the organization to achieve the objectives
   they can not accomplish alone. There needs to be
   sync between the organization and individual
   goals. Adjustments need to be made to attain
   equilibrium managers need to understand
   employees zone of indifference.

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Hawthorne Studies.(Western Electric Co. 1924 33)

• Elton Mayo established relationship between
  social environment (redesign of job, changes in
  work day and work week length, rest periods,
  individual versus group pay etc) and work output
  through a series of experiments known as
  Hawthorne Studies (Illumination experiment, Relay
  assembly test room study, Bank wiring room study
  etc). He concluded that behavior and sentiments
  were closely related, that group influences
  significantly affected individual behavior, group
  standards established individual worker output
  and money was less a factor in determining output
  than were group standards, group sentiments and
  security. These studies established that
  employees were different from the machines and
  would need to be treated differently and
  deferentially.

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HR Approach - Human Relations Movement

• The members had unshakable optimism about
  peoples capabilities and strongly believed that a
  satisfied worker was more productive. Three
  stalwarts of this group are
• Dale Carnegie Believed that way to success was
  through winning the cooperation of the people.
• Abraham Maslow Propounded the theory of need
  hierarchy (physiological, safety, social, esteem,
  and self actualization lower level needs must be
  satisfied first).
• Douglas McGregor Best known for his two sets of
  assumptions about human nature. (Theory X -
  motivated by external stimuli, Theory Y
  inherently motivated manager replacing the boss)

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HR Approach - Behavioral Science Theorists

• A group of psychologists and sociologists
  (Fred Fiedler, Victor Vroom, Richard Hackman
  etc), carefully attempted to keep their personal
  beliefs out of their work and relied on the
  scientific methods for the study of
  organizational behavior. They have made
  significant contributions to our current
  understanding of leadership, employee motivation,
  job design etc.

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Behavioral Sciences Approach - In Perspective

• The classical theorists viewed employees as
  machines and managers as engineers. Any failure
  of the employees to generate desired output was
  viewed as an engineering problem. Contributors to
  the human resource approach forced managers to
  reassess this simplistic model view.
• However, this approach takes a myopic view of the
  discipline of management. It ignores managerial
  concepts. In any case, psychological training
  alone is not enough to become an effective
  manager.

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C. The Quantitative Approach The Management
Science School (OR Procedures)

• During the World War II, the British brought in
  the concept of Operational Research.
• Post World War II, management included
  applications of Statistics, Optimization Models,
  Information Models and Computer, Simulations
  Linear Programming etc. They have been useful
  tools to decision making in planning and control.
• Use of such tools have added to the confidence
  limits to the management planning and
  projections.
• Important contributors were Robert McNamara (Ford
  Motors) and Charles Tex Thornton

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Management Science School In Perspective

• Management science school offered a whole new
  way to think about time. With computer model
  simulations, forecasting has become dependable.
  At the same time, management science school pays
  less attention to relationships in the
  organizations. The emphasis is only on numbers,
  missing the importance of people and
  relationships. It fails to provide solution for
  all facets of management, especially the areas
  with high level of human element, like
  leadership, motivation etc. management in not
  pure science and hence cannot be modeled for all
  types of situations

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D. Recent Years Towards Integration

• Theories are powerful influences. The longer
  we use a given theory, the more comfortable we
  become with it and more we tend not to seek out
  newer pastures unless forced. The days were
  changing fast and regular efforts were made to
  synthesize to customize requirements. This
  explains why modern management theory is really
  a rich mosaic of many theories that have endured
  over the past century. Concern with developing a
  unifying framework of management began in right
  earnest in early 60s.

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Recent Years1.Process or Operational approach

• Harold Koontz in his article management
  theory jungle advocated that each approach had
  something to offer to the management theory and
  the actual practice should synthesize various
  view points. The approach recognizes that there
  is a central core of knowledge about management
  that is pertinent only to the field of
  management. The process approach, originally
  introduced by Fayol, is based on the management
  functions. The performance of these functions
  planning, organizing, controlling and leading
  should be seen as a seamless activity of
  management. In addition this approach draws and
  absorbs knowledge from other fields.

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The interactive nature of Management process
Planning Use logic methods to think
through goals actions
Organizing Allocate work, authority
resources to achieve organizational goals
Controlling Make sure the organization is
moving towards its objectives
Leading Direct, influence motivate employees to
perform essential tasks
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Recent Years2.Systems approach

• An organized enterprise does not exist in vacuum
  and is dependent on external environment. Open
  systems recognize that no organization is self
  contained they would sink if they ignore
  external environment, goal inputs of claimants
  (supplier relation, govt regulations).
• Two basic types of systems are closed and open.
  Frederic Taylors machine view of the
  organization refers to closed while Christian
  Barnard proposed open system where it is in
  constant interaction with its environment.
• The job of the manager is to ensure that all
  parts of the organization are internally
  coordinated. In addition open system recognizes
  that organizations are not self contained and can
  not survive if they ignore external environment

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Systems approach to management
Inputs Human, Capital Managerial,
Technological others
External environment
Goal inputs of claimants Employees, consumers,
suppliers, Stockholders, governments, Communities
and others
Managerial knowledge, Goals of claimants use of
inputs
Planning
Organizing
Facilitated by communication Linking the
organization with External environment
External variables Opportunities Constraints Oth
ers
Reenergizing the system
External Environment
Staffing
Leading
Controlling
Outputs Products, Services, Profits,
Satisfaction, Goal integration others
To produce outputs
External environment
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External (micro) customers, suppliers, creditors,
distributors dealers though outside the
Influence of the 0organization, can be
influenced by them
Global
Global
External (macro- beyond influence of the org)
Competition
Economic
Ecosystem
Labor
Money
Business organization
Technological
Materials
Socio - Cultural
Equipments
Internal
Political / Legal
Demographic
Global
Constituents of Business Environment
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Recent Years 3.Contingency Approach

• Early management contributors gave us principles
  of management and organization that they
  generally assumed to be universally acceptable.
  Later research have found exceptions.
• Management, like life itself, is not based on
  simplistic principles. Contingency approach is a
  product of the integration of various management
  theories modulated by the situational variables.
  Since organizations are diverse, one size does
  not fit all. Four important variables are,
  Organization size, Routine-ness of Task
  Technology, Environmental Uncertainty and
  individual differences.
• A contingency approach to management is
  intuitively logical.

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Current Issues

• Workforce Diversity
• Ethics
• Stimulating Innovation and change
• Total Quality Management
• Re-engineering
• Empowerment and teams
• Bimodal Workforce
• Downsizing
• Contingent Workers

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Conclusions

• In view of the discussions so far, management
  has started to become less based on the
  conceptualization of classical theory of
  management and the typical military command and
  control, and more on facilitation and support of
  collaborative activity. Now management deals with
  the complexities of human interaction to achieve
  organizational or group goals in an effective and
  efficient manner.

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Suggested Reading

• Management P Stoner, Freeman and Gilbert, Jr.
• Management Stephen P. Robbins and Mary Coulter.
• Management A Global Perspective Heinz Weihrich
  and Harold Koontz