Evolution of Management Theory
ABSTRACT In this paper, we examine how management theory concerning appropriate management practices has evolved in modern times, and look at the central concerns that have guided its development. First, we examine the so-called classical management theories that emerged around the turn of the twentieth century. These include scientific management, which focuses on matching people and tasks to maximize efficiency; and administrative management, which focuses on identifying the principles that will lead to the creation of the most efficient system of organization and management.
Next, we consider behavioural management theories, developed both before and after the Second World War, which focus on how managers should lead and control their workforces to increase performance. Then we discuss management science theory, which developed during the Second World War and which has become increasingly important as researchers have developed rigorous analytical and quantitative techniques to help managers measure and control organizational performance.
Finally, we discuss business in the 1960s and 1970s and focus on the theories that were developed to help explain how the external environment affects the way organizations and managers operate. By the end of this chapter, one would understand the ways in which Management Theory has evolved over time. You will also understand how economic, political, and cultural forces have affected the development of these theories and the ways in which managers and their organizations behave. INTRODUCTION
Changes in management practices occur as managers, theorists, researchers, and consultants seek new ways to increase organizational efficiency and effectiveness. The driving force behind the evolution of management theory is the search for better ways to utilize organizational resources. Advances in management theory typically occur as managers and researchers find better ways to perform the principal management tasks: planning, organizing, leading, and controlling human and other organizational resources.
The evolution of modern management began in the closing decades of the nineteenth century, after the industrial revolution had swept through Europe, Canada, and the United States. In the new economic climate, managers of all types of organizations—political, educational, and economic—were increasingly trying to find better ways to satisfy customers’ needs. Many major economic, technical, and cultural changes were taking place at this time. The introduction of steam power and the development of sophisticated machinery and equipment changed the way in which goods were produced, particularly in the weaving and clothing industries.
Small workshops run by skilled workers who produced hand-manufactured products (a system called crafts production) were being replaced by large factories in which sophisticated machines controlled by hundreds or even thousands of unskilled or semiskilled workers made products. Owners and managers of the new factories found themselves unprepared for the challenges accompanying the change from small-scale crafts production to large-scale mechanized manufacturing.
Many of the managers and supervisors had only a technical orientation, and were unprepared for the social problems that occur when people work together in large groups (as in a factory or shop system). Managers began to search for new techniques to manage their organizations’ resources, and soon they began to focus on ways to increase the efficiency of the worker–task mix. CLASSICAL MANAGEMENT THEORIES One of the first schools of management thought, the classical management theory, developed during the Industrial Revolution when new problems related to the factory system began to appear.
Managers were unsure of how to train employees (many of them non-English speaking immigrants) or deal with increased labor dissatisfaction, so they began to test solutions. As a result, the classical management theory developed from efforts to find the “one best way” to perform and manage tasks. This school of thought is made up of two branches: scientific and administrative management, described in the following sections: Scientific Management Scientific Management arose because of the need to increase productivity and efficiency.
The emphasis was on trying to find the best way to get the most work done by examining how the work process was actually accomplished and by scrutinizing the skills of the workforce. The classical scientific school owes its roots to several major contributors, including Frederick Taylor, Henry Gantt, and Frank and Lillian Gilbreth. Frederick Taylor is often called the “father of scientific management. ” Taylor believed that organizations should study tasks and develop precise procedures. Also, he developed an incentive system that paid workers more money for meeting the new standard.
As a result, many theorists followed Taylor’s philosophy when developing their own principles of management. Henry Gantt, an associate of Taylor’s, developed the Gantt chart, a bar graph that measures planned and completed work along each stage of production. Based on time instead of quantity, volume, or weight, this visual display chart has been a widely used planning and control tool since its development in 1910. Frank and Lillian Gilbreth, a husband-and-wife team, studied job motions. In Frank’s early career as an apprentice bricklayer, he was interested in standardization and method study.
He watched bricklayers and saw that some workers were slow and inefficient, while others were very productive. He discovered that each bricklayer used a different set of motions to lay bricks. From his observations, Frank isolated the basic movements necessary to do the job and eliminated unnecessary motions. Workers using these movements raised their output from 1,000 to 2,700 bricks per day. This was the first motion study designed to isolate the best possible method of performing a given job. Later, Frank and his wife Lillian studied job motions using a motion-picture camera and a split-second clock.
When her husband died at the age of 56, Lillian continued their work. Thanks to these contributors and others, the basic ideas regarding scientific management developed. They include the following: • Developing new standard methods for doing each job • Selecting, training, and developing workers instead of allowing them to choose their own tasks and train themselves • Developing a spirit of cooperation between workers and management to ensure that work is carried out in accordance with devised procedures • Dividing work between orkers and management in almost equal shares, with each group taking over the work for which it is best fitted Administrative Management Whereas scientific management focused on the productivity of individuals, the classical administrative approach concentrates on the total organization. The emphasis is on the development of managerial principles rather than work methods. Contributors to this school of thought include Max Weber, Henri Fayol, Mary Parker Follett, and Chester I. Barnard. These theorists studied the flow of information within an organization and emphasized the importance of understanding how an organization operated.
In the late 1800s, Max Weber disliked that many European organizations were managed on a “personal” family-like basis and that employees were loyal to individual supervisors rather than to the organization. He believed that organizations should be managed impersonally and that a formal organizational structure, where specific rules were followed, was important. In other words, he didn’t think that authority should be based on a person’s personality. He thought authority should be something that was part of a person’s job and passed from individual to individual as one person left and another took over.
This non-personal, objective form of organization was called a bureaucracy. Weber believed that all bureaucracies have the following characteristics: • A well-defined hierarchy • Division of labor and specialization • Rules and regulations. • Impersonal relationships between managers and employees. • Competence. • Records. Henri Fayol, a French mining engineer, developed 14 principles of management based on his management experiences. These principles provide modern-day managers with general guidelines on how a supervisor should organize her department and manage her staff.
Although later research has created controversy over many of the following principles, they are still widely used in management theories. They are: • Division of work • Authority and responsibility • Discipline • Unity of command • Unity of direction • Subordination of individual interest to general interest • Remuneration of personnel • Centralization • Scalar chain • Order • Equity • Stability of tenure of personnel • Initiative • Esprit de corps Mary Parker Follett stressed the importance of an organization establishing common goals for its employees.
However, she also began to think somewhat differently than the other theorists of her day, discarding command-style hierarchical organizations where employees were treated like robots. She began to talk about such things as ethics, power, and leadership. She encouraged managers to allow employees to participate in decision making. She stressed the importance of people rather than techniques — a concept very much before her time. As a result, she was a pioneer and often not taken seriously by management scholars of her time. But times change and innovative ideas from the past suddenly take on new meanings.
Much of what managers do today is based on the fundamentals that Follett established more than 80 years ago. Chester Barnard, who was president of New Jersey Bell Telephone Company, introduced the idea of the informal organization — cliques (exclusive groups of people) that naturally form within a company. He felt that these informal organizations provided necessary and vital communication functions for the overall organization and that they could help the organization accomplish its goals. Barnard felt that it was particularly important for managers to develop a sense of common purpose where a willingness to cooperate is strongly encouraged.
He is credited with developing the acceptance theory of management, which emphasizes the willingness of employees to accept that managers have legitimate authority to act. Barnard felt that four factors affected the willingness of employees to accept authority: • The employees must understand the communication. • The employees accept the communication as being consistent with the organization’s purposes. • The employees feel that their actions will be consistent with the needs and desires of the other employees. • The employees feel that they are mentally and physically able to carry out the order.
Barnard’s sympathy for and understanding of employee needs positioned him as a bridge to the behavioral school of management, the next school of thought to emerge. Behavioral Management Theory As management research continued in the 20th century, questions began to come up regarding the interactions and motivations of the individual within organizations. Management principles developed during the classical period were simply not useful in dealing with many management situations and could not explain the behavior of individual employees. In short, classical theory ignored employee motivation and behavior.
As a result, the behavioral school was a natural outgrowth of this revolutionary management experiment. The behavioral management theory is often called the human relations movement because it addresses the human dimension of work. Behavioral theorists believed that a better understanding of human behavior at work, such as motivation, conflict, expectations, and group dynamics, improved productivity. The theorists who contributed to this school viewed employees as individuals, resources, and assets to be developed and worked with — not as machines, as in the past.
Several individuals and experiments contributed to this theory. Elton Mayo’s contributions came as part of the Hawthorne studies, a series of experiments that rigorously applied classical management theory only to reveal its shortcomings. The Hawthorne experiments consisted of two studies conducted at the Hawthorne Works of the Western Electric Company in Chicago from 1924 to 1932. The first study was conducted by a group of engineers seeking to determine the relationship of lighting levels to worker productivity.
Surprisingly enough, they discovered that worker productivity increased as the lighting levels decreased — that is, until the employees were unable to see what they were doing, after which performance naturally declined. A few years later, a second group of experiments began. Harvard researchers Mayo and F. J. Roethlisberger supervised a group of five women in a bank wiring room. They gave the women special privileges, such as the right to leave their workstations without permission, take rest periods, enjoy free lunches, and have variations in pay levels and workdays.
This experiment also resulted in significantly increased rates of productivity. In this case, Mayo and Roethlisberger concluded that the increase in productivity resulted from the supervisory arrangement rather than the changes in lighting or other associated worker benefits. Because the experimenters became the primary supervisors of the employees, the intense interest they displayed for the workers was the basis for the increased motivation and resulting productivity. Essentially, the experimenters became a part of the study and influenced its outcome.
This is the origin of the term Hawthorne effect, which describes the special attention researchers give to a study’s subjects and the impact that attention has on the study’s findings. The general conclusion from the Hawthorne studies was that human relations and the social needs of workers are crucial aspects of business management. This principle of human motivation helped revolutionize theories and practices of management. Abraham Maslow, a practicing psychologist, developed one of the most widely recognized need theories, a theory of motivation based upon a consideration of human needs.
His theory of human needs had three assumptions: • Human needs are never completely satisfied. • Human behavior is purposeful and is motivated by the need for satisfaction. • Needs can be classified according to a hierarchical structure of importance, from the lowest to highest. Maslow broke down the needs hierarchy into five specific areas: • Physiological needs. Maslow grouped all physical needs necessary for maintaining basic human well-being, such as food and drink, into this category. After the need is satisfied, however, it is no longer is a motivator. • Safety needs.
These needs include the need for basic security, stability, protection, and freedom from fear. A normal state exists for an individual to have all these needs generally satisfied. Otherwise, they become primary motivators. • Belonging and love needs. After the physical and safety needs are satisfied and are no longer motivators, the need for belonging and love emerges as a primary motivator. The individual strives to establish meaningful relationships with significant others. • Esteem needs. An individual must develop self-confidence and wants to achieve status, reputation, fame, and glory. Self-actualization needs. Assuming that all the previous needs in the hierarchy are satisfied, an individual feels a need to find himself. Maslow’s hierarchy of needs theory helped managers visualize employee motivation. Douglas McGregor was heavily influenced by both the Hawthorne studies and Maslow. He believed that two basic kinds of managers exist. One type, the Theory X manager, has a negative view of employees and assumes that they are lazy, untrustworthy, and incapable of assuming responsibility.
On the other hand, the Theory Y manager assumes that employees are not only trustworthy and capable of assuming responsibility, but also have high levels of motivation. An important aspect of McGregor’s idea was his belief that managers who hold either set of assumptions can create self-fulfilling prophecies — that through their behavior, these managers create situations where subordinates act in ways that confirm the manager’s original expectations. As a group, these theorists discovered that people worked for inner satisfaction and not materialistic rewards, shifting the focus to the role of individuals in an organization’s performance.
Management Science Theory Management science theory is a contemporary approach to management that focuses on the use of rigorous quantitative techniques to help managers make maximum use of organizational resources to produce goods and services. In essence, management science theory is a contemporary extension of scientific management, which, as developed by Taylor, also took a quantitative approach to measuring the worker–task mix in order to raise efficiency.
There are many branches of management science; each of them deals with a specific set of concerns: • Quantitative management utilizes mathematical techniques—such as linear and nonlinear programming, modelling, simulation, queuing theory, and chaos theory—to help managers decide, for example, how much inventory to hold at different times of the year, where to locate a new factory, and how best to invest an organization’s financial capital. • Operations management (or operations research) provides managers with a set of techniques that they can use to analyze any aspect of an organization’s production system to increase efficiency. Total quality management (TQM) focuses on analyzing an organization’s input, conversion, and output activities to increase product quality. • Management information systems (MIS) help managers design information systems that provide information about events occurring inside the organization as well as in its external environment—information that is vital for effective decision making. All these subfields of management science provide tools and techniques that managers can use to help improve the quality of their decision making and increase efficiency and effectiveness.
Organizational Environment Theory An important milestone in the history of management thought occurred when researchers went beyond the study of how managers can influence behavior within organizations to consider how managers control the organization’s relationship with its external environment, or 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.
Resources in the organizational environment include the raw materials and skilled people that an organization requires to produce goods and services, as well as the support of groups including customers who buy these goods and services and provide the organization with financial resources. One way of determining the relative success of an organization is to consider how effective its managers are at obtaining scarce and valuable resources. The importance of studying the environment became clear after the development of open-systems theory and contingency theory during the 1960s Contingency Theory
Another milestone in management theory was the development of contingency theory in the 1960s by Tom Burns and G. M. Stalker in the United Kingdom and Paul Lawrence and Jay Lorsch in the United States. 39 The crucial message of contingency theory is that there is no one best way to organize: The organizational structures and the control systems that managers choose depend on—are contingent on—characteristics of the external environment in which the organization operates. According to contingency theory, the characteristics of the environment affect an organization’s ability to obtain resources.
To maximize the likelihood of gaining access to resources, managers must allow an organization’s departments to organize and control their activities in ways most likely to allow them to obtain resources, given the constraints of the particular environment they face. In other words, how managers design the organizational hierarchy, choose a control system, and lead and motivate their employees is contingent on the characteristics of the organizational environment. CONCLUSION The search for efficiency started with the study of how managers could improve person–task relationships to increase efficiency.
The concept of job specialization and division of labour remains the basis for the design of work settings in modern organizations. New developments like lean production and total quality management are often viewed as advances on the early scientific management principles developed by Taylor and the Gilbreths. Max Weber and Henri Fayol outlined principles of bureaucracy and administration that are as relevant to managers today as when they were written at the turn of the twentieth century. Much of modern management research refines these principles to suit contemporary conditions.
For example, the increasing interest in the use of cross-departmental teams and the empowerment of workers are issues that managers also faced a century ago. Researchers have described many different approaches to managerial behaviour, including Theories X and Y. Often, the managerial behaviour that researchers suggest reflects the context of their own historical era and culture. Mary Parker Follett advocated managerial behaviours that did not reflect accepted modes of managerial behaviour at the time, but her work was largely ignored until conditions changed.
The various branches of management science theory provide rigorous quantitative techniques that give managers more control over their organization’s use of resources to produce goods and services. The importance of studying the organization’s external environment became clear after the development of open-systems theory and contingency theory during the 1960s. A main focus of contemporary management research is to find methods to help managers improve the way they utilize organizational resources and compete successfully in the global environment.
Strategic management and total quality management are two important approaches intended to help managers make better use of organizational resources. REFERENCES CliffsNotes. com, (2013). Classical Schools of Management. http://www. cliffsnotes. com/study_guide/topicArticleId-8944,articleId-8851. html. David Sibbet, (1997). 75 Years of Management Ideas and Practice. Supplement, Harvard Business Review, Reprint number 97500. David Stauffer, (2011). An Overview of Management Theories. http://www. ernsanalysis. com/sjsu/ise250/history. htm James Swartz, (1994). Evolution of Management Thought. Productivity Press, Portland OR Lyndsay Swinton, (2010). Frederick W. Taylor: Master of Scientific Management. http://www. skymark. com/resources/leaders/taylor. asp M. Bosman, (2010). Historical Evolution of Management Theory. http://www. scribd. com/doc/37785213/Evolution-of-Management-Theory Prof. M. Thenmozhi, (2007). EVOLUTION OF MANAGEMENT THEORY. Indian Institute of Technology, Madras.