The evolution of management theory through the 20th Century.

1. The Evolution of Management
Theory
Mala Sarat Chandra
Twitter: @malachandra

2. Learning Objectives
Explain what a management theory is.
Understand the evolution of management
theories and their major contributions.
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3. EVOLUTION OF MANAGEMENT
THEORY
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4. Classical
Management
School
Scientific
Administrative
Bureaucratic
Neo-Classical
Management
School
Human Relations
Behavioral
Modern
Management
School
Systems
Contingency
Organizational
Humanism
Management
Science
Evolution of Management Theory
1920-1950
1880 - 1930
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5. THE CLASSICAL SCHOOL OF
MANAGEMENT
1900 - 1930
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6. Core Ideas
1. Application of science to the practice of
management.
2. Development of basic management functions.
3. Articulation and application of specific principles
of management.
Evolved in response to the shift from handicraft to industrial
production.
Emphasis is on economic rationality of people and organizations;
motivated by economic incentives, they make choices that yield
the greatest monetary benefits.
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7. Max Webber
1905
“The Theory of Social and Economic Organization”
The Bureaucratic School of Management
A major contribution is his “bureaucracy”
theory, a formalized and idealized view of
organizations, comprising 6 major principles.
1. A formal hierarchical structure.
2. Management by rules.
3. Organization by task competency.
4. Impersonal relationships.
5. A focused mission.
6. Employment based on technical qualifications.
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8. Frederick Taylor
1911
“Principles of Scientific Management”
The Scientific School of Management
Proposed an objective and systematic
method to identify “the one best way” to
do a job using scientific selection and
training methods; co-operation and clear
division of responsibility between
managers and workers; pay for
performance.
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9. Frank & Lillian Gilbreth
1912 - 1924
Time and Motion Studies
Disciples of Frederick Taylor, their
time and motion studies helped lay the
foundations for Scientific Management
– the best possible way for a worker to
complete a job.
The expected results are employee satisfaction,
productivity and efficiency.
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10. Henry Gantt
1910 - 1915
Project Scheduling – The Gantt Chart
A protégé and associate of Frederick Taylor,
he designed a project scheduling model for
increasing the efficiency of project
execution and completion.
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11. Henri Fayol
1916
Administration Industrielle et Generale
The Administrative School of Management
Managers need specific roles in order to
manage work and workers.
He enumerated 6 functions / roles of management.
1. Forecasting 4. Commanding
2. Planning 5. Coordinating
3. Organizing 6. Controlling
These roles evolved into 14 principles of management.
Division of work, Authority, Discipline, Unity of Command, Unity of
Direction, Subordination of Interests, Remuneration, Centralization,
Scalar Chain, Equity, Order, Stability of Tenure of Personnel, Initiative,
Esprit de Corp.
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12. Ford and Frederick Taylor’s
Scientific Management
http://www.youtube.com/watch?v=8PdmNbqtDdI
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13. Summary: The Classical School of
Management
Scientific
Concern for
precise work
methods
Best way for jobs
to be done
Bureaucratic
Impersonal view
of organizations
Formal structure,
legitimate
authority and
competence of
management
Administrative
Development of
managerial
principles
Best way to
organize all jobs in
a business
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14. Criticisms of The Classical School of
Management
No one is entirely driven by economic motivations.
People’s choices and behavior are dictated by other
factors such as social needs, security and self-
esteem.
There is no such thing as “the best way” to do a job.
Extreme division of labor tends to produce
monotony and reduce overall skill levels.
People are managed like machines. Introduction of
newer machines led to job elimination.
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15. THE NEO-CLASSICAL SCHOOL OF
MANAGEMENT
1920 - 1950
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16. Core Concepts
Grew in reaction against the Scientific Theory of
Management which emphasized standardization of
jobs, processes and technologies to maximize
economic return.
Focus shifted to the human side of organizations.
1. The best way to motivate, structure and support
employees.
2. The need for workers to find intrinsic value in
their jobs.
3. The positive impact of social relationships on
worker productivity.
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17. Mary Parker Follet
1925
The Psychological Foundations of Business Administration
Pioneered the notion of participative leadership.
Suggests that organizations are communities
involving networks of groups. Workers and
managers equally share power and
responsibility for decision making and therefore,
their outcomes. She introduces many
contemporary concepts such as leadership,
motivation and empowerment.
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18. The Hawthorne Studies
http://www.youtube.com/watch?v=W7RHjwmVGhs
2:49
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19. The Hawthorne Effect
Productivity increases when workers believe
that they are being observed closely.
Employees perform better when managers and
co-workers make them feel valued.
Financial rewards are not necessarily conducive
to increasing worker productivity.
Workers care about self-fulfillment, autonomy,
empowerment, social status and personal
relationships with co-workers.
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20. Human Relations Theory of
Management
Elton Mayo
1933
“The Human Poblems of
an Industrial Civilization”
Fritz Roethlisberger
1939
“Management and the
Worker”
People are social beings, motivated by social needs.
A sense of identity is derived from inter-personal relationships.
Workers are more receptive to social forces of peer groups
than monetary incentives and management controls.
Workers respond positively to attention from management, co-
workers and customers.
The psychological needs of individuals significantly impact
group performance.
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21. Chester Barnard
1938
The Functions of the Executive
Proposes the acceptance theory of authority,
that organizational goals will be achieved and
managerial authority will be accepted if
workers believe that their individual needs are
being met.
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22. Behavioral Theory of Management
The fulfillment of emotional needs of workers is important in
achieving economic goals.
Employee satisfaction and working conditions are important in
achieving worker productivity.
Workers are intrinsically motivated to work when they feel a
sense of belonging and participate in decision making.
Workers desire diverse and challenging work.
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23. Abraham Maslow
1954
“Motivation and Personality”
Self
Actualization
Esteem
Social
Safety
Physiological
Hierarchy of Needs Theory
Working Conditions and
Work hours
Personal and financial security
Collaboration, teamwork, work-life balance
Recognition and Rewards
Autonomy, Empowerment
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24. Douglas McGregor
1960
“Human side of Enterprise”
Theory X Managers
Workers must be coerced and controlled to work towards organizational
goals.
Workers are inherently lazy, lack ambition and prefer to be directed rather
than take responsibilities.
Workers are self-centered and only care about themselves, not the
organization.
Workers dislike change and will resist it at all cost.
Theory Y Managers
Workers encouraged to develop their full potential will work towards
achieving organizational goals.
With appropriate incentives and support, workers will seek out and fulfill
responsibilities on their own.
Workers will apply their ingenuity, creativity and hard work to meet
organizational goals.
Caution: Self-Fulfilling Prophecy
Workers behave as expected by managers due to the manager’s own
behavior and actions.
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25. Notable Contributors to the Behavioral
School of Management (1)
Chris Argyris
1957
“Personality and
Organization”
Fundamental
conflicts between
Individual and
Organizational needs.
Frederick
Herzberg
1959
“The Motivation to
Work”.
Two-factor Theory.
Kurt Lewin
1944 – 1951
Model of
planned change:
unfreeze,
change, refreeze
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26. Notable Contributors to the Behavioral
School of Management (2)
Rensis Likert
1967
“The Human
Organization”
Linking-pin model to
bridge human
relations and
organizational
structure
George
Homans
1950
“The Human Group”
Extrapolates from a
small group to
understanding the
social system.
Warren Bennis
1961
“The Planning of
Change”
Foundation for
planned
organizational change
and development.
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27. Summary: Neo-Classical School of
Management
Behavioral School is a logical extension of the
Human Resource School.
They are largely concerned with motivation of
workers.
Workers are diverse in their needs and want
challenging work, participative decision-making,
self-direction and control.
Managers must help workers deal with situational
constraints and social aspects of organizational and
environmental changes.
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28. THE MODERN SCHOOL OF
MANAGEMENT
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29. Core Concepts
Dealing with complexity is the core of modern management
theory.
Organizations, Workers, Environment and the interactions between them.
It is a synthesis of several theories.
Behavioral science, mathematics, statistics, operations / quantitative research and
computing technologies.
Management is an exercise in logic applied to situations.
Situations can be measured.
Computers have an increasing role to play.
Application of management knowledge is extended to non-
business areas.
Education, government, health care and others.
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30. The Quantitative School of
Management
Combines classical management theory and behavioral science
through the use of statistical models and simulations.
A major focus is on the process with which decisions are made,
to ensure informed results.
The quantitative school comprises
Scientific Management
Managers use of math and statistics for problem solving.
Operations Management
Managing the process of combining materials, workers and capital to produce goods and
services.
Management Information Systems
Transforming historic, current and projected data from internal and external sources into
useful, usable management information.
Systems Management Theory
Transforming inputs into outputs and receiving feedback.
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31. The Systems School of Management
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The Environment in which the system operates.
Environmental elements have the potential to affect all or part of the system
Throughput
The process of
converting or
transforming
resources within the
system into a product
or service
Input
Resources from the
environment
Output
The product or
service exported to
the environment
Feedback from the environment
used to change & grow
Ludwig von Bertalanffy
1937
“Allgemeine Systemlehre” (General Systems Theory)

32. Types of Systems
Closed System
Open System
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Systems and “wholeness”
Guidelines for System Analysis
1. The focus of analysis is the whole, parts receive
secondary attention.
2. Integration (interrelatedness of the many parts
within the whole) is the key in wholeness analysis.
3. Possible modifications in each part should be
weighed in relation to possible effects on every other
part.
4. Each part has a role to perform so the whole can
accomplish its purpose.
5. The nature of the part and its function is determined
by its position in the whole.
6. All analysis starts with the existence of the whole.
Parts and their relationships should evolve to best
suit the purpose of the whole.
Source: Modern Management by Certo & Certo

33. The Management System
It is an open system
comprising parts such as
organizational resources
(capital, raw materials,
workers), the production
process, information
systems, finished goods,
that are needed to
achieve the organization’s
goals.
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Input
Process
Output
Customers Government
Competitors Suppliers
Environment

34. The Contingency School of
Management (1)
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Joan Woodward
1965
“Industrial
Organziation: Theory
and Practice”
&
P. Lawrence J.W. Lorsch
1967
“Organization & Environment:
Managing Differentiation and
Integration”
Argued that technology and
production systems were critical
aspects of organizational design;
advanced a contingency approach to
organizing.
Suggested that successful
organizations match their structure to
the nature of the environment

35. The Contingency School of
Management (2)
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Fred Edward Fiedler
1967
“A Theory of Leadership
Effectiveness”
Daniel Katz Robert Kahn
1966
“The Psychology of Organizations”
Present a unified, open systems approach
extending organizational theory beyond the
boundaries of a single organization.
Argued that leadership effectiveness is
contingent upon two interacting factors,
Leadership style and situational
favourableness.

36. Definition of an Organization
An Organization is
a social system
comprising
subsystems of
resource variables,
interrelated by
various
management
policies, practices
and techniques
which interact with
variables in the
environment to
achieve a set of
goals or objectives.
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Source: A General Contingency Theory of Management, Luthans and Stewart (1977)
SYSTEM
PERFORMANCE
Environmental
ManagementResource
ORGANIZATIONAL
PERFORMANCE
CRITERIASITUATIONAL
Variables and relationships in a
Contingency Model of the Organization

37. Core Concepts
What managers do depends on or is contingent
on the situation at hand; it emphasizes an “if-
then” relationship.
If a particular situational variable exists, then
managers are likely to take a particular action.
Successful managers must consider the realities
of the specific organizational circumstances they
face when applying management concepts,
principles, tools and techniques.
Source: Modern Management by Certo & Certo
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38. Challenges with the Contingency
Approach
1. Perceiving organizational situations as they
actually exist.
2. Choosing the management tactics best suited
to those situations.
3. Competently implementing those tasks.
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Source: Modern Management by Certo & Certo

39. Summary
Three distinct Schools of Management
Classical Process
Neo-Classical People
Modern Integrative - People, Process,
Environment
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40. Key Concepts: Definition of
Management
Management is the process of accomplishing an
organization’s goals by working with and
through people, utilizing all the resources
available to it.
The Role of Management
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41. Key Concepts: The Role of Management
Planning
Doing the right thing at the right time to accomplish organizational goals.
Choose the tasks that need to be performed and decide when and how to perform
those tasks.
Organizing
Creating a mechanism to put plans into action.
Assign tasks to individuals and teams to accomplish the tasks required to accomplish
organizational goals.
Influencing
Leading, motivating and directing an organization’s members toward accomplishing
organizational goals.
Increase productivity of members in the accomplishment of organizational goals and
to be responsive to changing needs of the organization.
Control
Establishing and tracking organizational performance standards.
Gather and analyze appropriate performance metrics and compare against established
standards. Make organizational changes needed to meet established standards.
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42. Common Mistakes of Management
Planning
Not establishing goals and objectives for all important organizational areas.
Making plans that are too risky.
Not exploring enough viable alternatives for reaching goals and objectives.
Organizing
Not establishing the appropriate organization structure – span of control, inter-
departmental coordination, geographic balance.
Influencing
Not establishing lines of communications, communicating infrequently, managing
rather than leading.
Controlling
Not tracking progress against goals, not establishing performance standards, tracking
performance metrics, analyzing trends or using insights to drive improvements.
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43. Management and Organizational
Resources
Organizational
Resources
•People
•Money
•Raw Materials
•Capital Resources
Production Process
Finished Products
•Goods
•Services
Inputs Outputs
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44. Goal Achievement:
Managerial Efficiency versus Effectiveness
Goals not
reached.
Resources
not wasted.
Goals
reached.
Resources
not wasted.
Goals not
reached.
Resources
wasted.
Goals
reached.
Resources
wasted.
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Ineffective Effective
InefficientEfficient

45. The Management Framework
Planning
• Vision and
Mission
• Strategy
• Goals and
Objectives
Organizing
• Organization
Design
• Culture
• Social Networks
Leading
• Leadership
• Decision Making
• Communications
• Groups and
Teams
• Motivation
Controlling
• Systems and
Processes
• Human
Resources
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46. The Future of Management
http://www.youtube.com/watch?v=K3-_IY66tpI
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