Maryland International College

Chapter 2:
The Evolution Management
 Chapter 2 Outline
• Scientific Management Theory
Job Specialization and the Division of Labor
F. W. Taylor and Scientific Management
The Gilbreths
• Administrative Management Theory
The Theory of Bureaucracy
Fayol’s Principles of Management
• Behavioral Management Theory
The Work of Mary Parker Follett
The Hawthorne Studies and Human Relations
 Development of Mgt thought
Despite the long history of In 20th century, the situation changed
management, it walked as a tortoise. rapidly, some of the factors that
Because of : contributed to the need a systematic
• Low esteem to business in society management are:

• Indifferent approaches of various • 1. The development of capitalism and

disciplines towards business the emergence of industries, mass
organizations. production, trade unions,
competition for markets,
• Treatment of management as an art not technological innovations, the
as a science and increase in capital investment, etc.
forced organizations to be efficient or to
• The attitudes that successful managers find out ways for efficiency.
are born but not made • 2. The complexities of organizations,
society became more complex. Due to
division of labour, increased gov’t
These factors made management not regulations, organized trade unions
develop and studied systematically and
scientifically.
 Early Influencers
• A few of the contributor of early 2. Charles Babbage /1792-1871/
influences are:-
• 1. Robert Owen (1771-1858) • He was a British professor of
• * He was a successful textile mill mathematics;
manager in Scotland from 1880-1828.
• convinced that the application of
• * He believed that factory workers would scientific principles to work processes
be more productive if they were would both increase productivity and
motivated through rewards rather lower expenses.
than punishments.
• advocated profit-sharing plans & bonus
• * He experienced with several systems as ways to achieve better
motivating techniques. relations between management & labor.
• The improved working conditions with in
the factory (Reducing the workday to 10 • emphasis on cutting costs and
½ hrs. ) increasing efficiency led to the
emergency of the classical school of
• Because of his emphasis on the management theory
workers, he is regarded as the father of
modern personal management.
 The Evolution of Management Theory

Source: Figure 2.1

 Scientific Management Theory
• Evolution of Modern Management
Began in the industrial revolution in the late 19th
century as:
• Managers of organizations began seeking ways to
better satisfy customer needs.
• Large-scale mechanized manufacturing began to
supplanting small-scale craft production in the ways
in which goods were produced.
• Social problems developed in the large groups of
workers employed under the factory system.
• Managers began to focus on increasing the efficiency
of the worker-task mix.
 F.W. Taylor and Scientific Management
• Scientific Management
The systematic study of the relationships between
people and tasks for the purpose of redesigning the
work process for higher efficiency.
• Defined by Frederick Taylor in the late 1800’s to
replace informal rule of thumb knowledge.
• Taylor sought to reduce the time a worker spent on
each task by optimizing the way the task was done.
• Taylor: increase specialization & division of labor to
make production process more efficient
• Money is the prime motivator
 F.W. Taylor and Scientific Management
• Scientific Management (Taylor) Principles
 Gather data about ways workers
perform their tasks;
experiment with
different ways to improve performance
Codify methods into written rules
and standards
Select people who have skills/abilities needed in the
task and train them on the particular task
Establish acceptable level of performance and
reward for performance above that level
Organizations chose to select some, rather than all, of
these principles.
 Frank and Lillian Gilbreth
• Refined Taylor’s work and made many
improvements to the methodologies of time
and motion studies.
Time and motion studies
• Break up each job action into its component actions.
• Find better ways to perform the action.
• Reorganize each job action to be more efficient.
• Also studied worker-related fatigue problems
caused by lighting, heating, and the design of
tools and machines.
 Scientific Management Principles:
the result …

Jobs were more repetitive, boring, monotonous

Workers increasingly dissatisfied

Workers tried to hide the potential efficiency of

the work environment
When jobs are boring, output declines…
Employees lack of motivation and bad work
ethics are costly for the company
 Administrative Management Theory
• Administrative Management
The study of how to create an organizational
structure that leads to high efficiency and
effectiveness.
• Max Weber
Developed the concept of bureaucracy as a formal
system of organization and administration designed
to ensure efficiency and effectiveness.
 Weber’s
Principles of
Bureaucracy

Figure 2.2
 Key points of Bureaucracy

Authority is the power to hold people accountable for

their actions.
Positions in the firm should be held based on
performance not social contacts.
Position duties are clearly identified. People should
know what is expected of them.
Lines of authority should be clearly identified. Workers
know who reports to who.
Rules, Standard Operating Procedures (SOPs), &
Norms used to determine how the firm operates.
• Sometimes, these lead to “red-tape” and other
problems.
 Bureaucracy
• Strengths
Claimed to improve organizational performance
Easier for managers to organize and control
Fair and equitable raises and promotion
• Improves feeling of security
• Reduces stress
• Encourage ethical behavior
• Weaknesses
What if poorly managed?
Decisions and changes are slow
Inflexibility
 Fayol’s Administrative Theory
• Henri Fayol (1841-1925)
General and Industrial Management
Principles and Elements of Management - how
managers should accomplish their managerial
duties
PRIMARY FOCUS: Management
(Functions of Administration)
More Respect for Worker than Taylor
• Workers are motivated by more than money
• Equity in worker treatment
More PRESCRIPTIVE
 Fayol’s Administrative Theory
• Five Elements of Management -- Managerial Objectives
Planning
Organizing
Command
Coordination
Control
• Keep machine functioning effectively and efficiently
• Replace quickly and efficiently any part or process that
did not contribute to the objectives
 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.

 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.
 Fayol’s Principles

11. Remuneration of Personnel: The payment

system contributes to success.
12. Stability of Tenure: Long-term employment is
important than employees turnover.
13. General interest over individual interest:
The organization takes precedence over the
individual benefits.
14. Esprit de corps: Share enthusiasm or devotion
to the organization.
 Behavioral Management Theory
• Behavioral Management
The study of how managers should behave to
motivate employees and encourage them to
perform at high levels and be committed to the
achievement of organizational goals.
Focuses on the way a manager should personally
manage to motivate employees.
 Behavioral Management
• Mary Parker Follett (1868-1933)

An influential leader in early managerial theory

Concerned that Taylor was ignoring the human side
of the organization and the number of ways
employees can help managers
Held a horizontal view of power and authority
• “Authority should go with knowledge …”
• Managers should be facilitators rather than monitors
or supervisors
• Root of the work in self-managed teams,
empowerment, and cross-functioning
 The Hawthorne Studies
• Studies of how characteristics of the work
setting affected worker fatigue and
performance at the Hawthorne Works of the
Western Electric Company from 1924-1932.
Worker productivity was measured at various levels
of light illumination.
Productivity increased regardless of whether the
light levels were raised or lowered.
• Why? … the presence of the researchers
• Implication … human relations movement
Hawthorn Studies by George Elton Mayo
• was known of conducting an • The relay assembly test room
experiment at the Hawthorn helped them to conclude that
plant at the Western Electric the most likely cause was that
Co. in U. S. A. changes in the social
• The illumination experiment conditions and in the method
was designed to prove the of supervision brought about
effect/impact of physical the improved attitude and
surroundings such as noise, increased output.
light, tonicity on productivity. • Based on the responses,
• The result of the experiment They realized that the
was that was little individuals work performance,
relationship/or physical position and status in the
surroundings did not have an organization were determined
impact on productivity. not only by the person himself
but by the group members as
well.
• His peers had an effect on his
performance.
 Human Relations Movement
• Sparked by the Hawthorne Studies
 Workers attitude towards their managers affect their work
performance
• Train supervisors to elicit cooperative behavior from
subordinates so productivity will increase
• Workers making telephone switching equipment
 The norm of output vs. “ratebusters” vs. “chiselers”
 Worker’s influence can be as great as the manager’s
• Managers must understand the informal organization
• The beginning of Organizational Behavior
 Theory X versus Theory Y
(Douglas McGregor)

Source: Figure 2.3

 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.
 Management Science Theory
• An approach to management that uses
rigorous quantitative techniques to maximize
the use of organizational 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
improving quality throughout an organization.
Management Information Systems (MIS)—
manage information throughout the organization so
that it gets to the right people at the right time.
 Organizational Environment Theory
• Organizational Environment
The set of forces and conditions that operate
beyond an organization’s boundaries but affect a
manager’s ability to acquire and utilize resources.
• What “forces” are presently in the
“environment” that affect the manager’s ability
to acquire and utilize resources?
 The Open-Systems View
(Katz, Kahn, Thompson, 1960s)

• Organization takes resources from the external

environment and transforms them into goods and
services that are sent back out to environment
• Organization interacts with environment in order to
survive
• Not a closed system, which is:
 self contained
 likely to experience entropy
• The whole is greater than the sum of its parts
• Synergy: gains acquired when entities coordinate
their efforts
 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
 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.
 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.
 Contingency Theory
(Burns & Stalker, Britain, 1960s)

• No one best way to organize because the

external environment (ability to gain
resources) influences the organizational
structures and controls
• A quickly changing environment works against
this … why?
• Mechanic vs. Organic structure
 Summary of Theories

• Scientific Management Theory

Job specialization and division of labor
Taylor (Scientific Management)
Gilbreths

• Administrative Management Theory

Theory of Bureaucracy
Fayol (14 principles of management)
Summary of Theories (continued)

• Behavioral Management Theory

Follett
Hawthorne Studies and Human Relations
McGregor (Theory X & Theory Y)
• Management Science Theory
Quantitative management
• Organizational Environment Theory
Open-systems View
Contingency Theory
 End of
Chapter 2