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Chapter 2 – The Evolution of Management

2
Chapter
The Evolution of Management
CHAPTER CONTENTS

Learning Objectives 2

Key Student Questions 2

Class Roadmap 3

Key Terms Presented in This Chapter 7

Sustainability Box 7

Lecturettes 8

Suggested Discussion Questions 13

Examples 15

Expanded PowerPoint Slide Show 17

Supplemental Features 22

Chapter Videos 22

Young Manager Clips 24

Manager’s Hot Seat 24

Self-Assessment 24

Test Your Knowledge 24

 2-1
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
 Chapter 2 – The Evolution of Management

LEARNING OBJECTIVES

LO 1 Describe the origins of management practice and its early concepts and
influences.
LO 2 Summarize the five classical approaches to management.
LO 3 Discuss the four contemporary approaches to management.
LO 4 Identify modern contributors who have shaped management thought
and practices.

KEY STUDENT QUESTIONS

What does history have to do with management? It provides the context of how management has evolved
over time. For instance, your students may ask:

  1. “What does past management theories have to do with managing employees today?”
2. “What are the classical approaches to management?”

3. “What are the cotemporary approaches to management and why are they important?”
4. “Who are some of the modern day contributors?”

While these questions have to do with past efforts, breakthroughs and failures, they are also the guide to
the present and future management approaches. For example:

1. Understanding the past management approaches, what has worked and what hasn’t worked will pro-
vide students with the understanding to be a more effective manager today. The dynamics of organi-
zations and people have changed and will continue to change, and management needs to evolve with
them.

2. The classical approaches to management evolved during the 19th century. They included systematic
management, scientific management, bureaucracy, administrative management, and human relations.

3. The contemporary approaches to management include socio-technical systems theory, quantitative

management, organizational behavior, and systems theory. These approaches emerged after World
War II and are considered the building blocks of the modern management thought.

4. Modern day contributors include people such as Peter Drucker, Steven Covey, Gary Hamel, Christo-
pher Bartlett, Sumatra Ghoshal and Jim Collins. All of these leaders have contributed to the ad-
vancement in the way management is practiced today.

Teaching Tip:
Ask students to name modern day leaders of the 21st century. They might come up with names
like Steven Jobs, Sergey Brin and Larry Page, Mark Zuckerberg or Jack Dorsey. How have and
how will these leaders impact the future evolution of management? Although none of these lead-
ers have advanced management academically, they have provide the model for the management
approaches to the future.

2-2
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
 Chapter 2 – The Evolution of Management

CLASS ROADMAP

LO1 - Origins of management

4000 B.C. – Egyptians used planning, organizing, leading and controlling

1100 B.C. – Chinese applied delegation, cooperation, organization and control
500 B.C. – Sun Tzu discussed planning and leading in his book “The Art of War”
400-350 B.C. – Greeks advocated a scientific approach to management
1436 A.D. – Venetians utilized assembly line and inventory system
1776 A.D. – Smith discussed the principle of specialization of manufacturing workers

The Evolution of Management

1800-1930’s – Classical Approaches to Management

1940’s – Present – Contemporary Approaches to Management

LO2 - Classical approaches

2.1 Systematic management

The systematic management approach attempted to build specific procedures and processes
in-to operations to ensure coordination efforts.
Systematic management emphasized internal operations because managers were concerned
primarily with meeting the explosive growth in demand brought about by the industrial
revolu-tion.

2.2 Scientific management

Frederick Taylor introduced a second approach called scientific management because the
sys-tematic management approach failed to lead to widespread production efficiency.

Taylor identified four principles of scientific management:

1. Management should develop a precise, scientific approach for each element of one’s
work to replace general guidelines.
2. Management should scientifically select, train, teach, and develop each worker so that
the right person has the right job.
3. Management should cooperate with workers to ensure that jobs match plans and principles.
4. Management should ensure an appropriate division of work and responsibility
between managers and workers.

Taylor used time and motion studies to identify the “one best way” to perform the job. He also
implemented a pay system in which workers were paid additional wages when they exceeded a
standard level of output for each job.

Henry L. Gantt became a protégé of Taylor extended the piece rate system to include supervi-
sors and is also known for creating the Gantt chart.

Frank B. and Lillian M. Gilbreth, a husband and wife team, used a camera to record workers

2-3
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 2 – The Evolution of Management

and identify wasteful movements. Lillian Gilbreth was also known as the “mother of modern
management”. She earned a PhD and went on to teach at Purdue University.

2.3 Bureaucracy
The bureaucracy approach to management emphasizes a structured, formal network of rela-
tionships among specialized positions in the organization.

Developed by Max Weber, a German sociologist, lawyer, and social historian, he showed how
to eliminate the variability that results from managers with different skill levels.

Bureaucracy can be efficient, but it lacks flexibility, and is difficult to dismantle.

2.4 Administrative management

The administrative management approach emphasized the perspective of senior managers
within the organization, and argued that management was a profession and could be taught.

Henri Fayol, a French mining engineer and executive, identified five functions and 14 princi-
ples of management. The five functions are planning, organizing, commanding, coordinating,
and controlling. The 14 principals include:

1. Division of work—divide work into specialized tasks and assign responsibilities to specific
individuals.
2. Authority—delegate authority along with responsibility.
3. Discipline—make expectations clear and punish violations.
4. Unity of command—each employee should be assigned to only one supervisor.
5. Unity of direction—employees’ efforts should be focused on achieving organizational ob-
jectives.
6. Subordination of individual interest to the general interest—the general interest must pre-
dominate.
7. Remuneration—systematically reward efforts that support the organization’s direction.
8. Centralization—determine the relative importance of superior and subordinate roles.
9. Scalar chain—keep communications within the chain of command.
10. Order—order jobs and material so they support the organization’s direction.
11. Equity—fair discipline and order enhance employee commitment.
12. Stability and tenure of personnel—promote employee loyalty and longevity.
13. Initiative—encourage employees to act on their own in support of the organization’s direc-
tion.
14. Esprit de corps—promote a unity of interests between employees and management.

2.5 Human relations

Developed during the 1930’s, the human relations approach is aimed at understanding how
psychological and social processes interact with the work situation to influence performance.

The Hawthorne studies were conducted during 1924-1932 and concluded that productivity may be
affected more by psychological and social factors than by physical or objective influences. The
conclusion of the study was that the workers performed and reacted differently because the re-
searchers were observing them. This reaction is known as the Hawthorne Effect.

Critics believed that one result of human relations— a belief that a happy worker was a produc-
tive worker—was too simplistic.

2-4
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 2 – The Evolution of Management

LO3 - Contemporary approaches

3.1 Sociotechnical systems theory

Sociotechnical systems theory suggests that organizations are effective when their employees
(the social system) have the right tools, training, and knowledge (the technical system) to
make products and services that are valued by customers.

A precursor to the total quality management (TQM) movement, it also promoted the use of
teamwork and semiautonomous work groups as important factors for creating efficient
produc-tion systems.

3.2 Quantitative management

Quantitative management emphasizes the application of quantitative analysis to management
decisions and problems. A manager makes a decision by developing formal mathematical
models of the problem.

Typically they use these techniques as a supplement or tool in the decision process, not the
primary approach. The limited use of quantitative management is due to managers not being
trained in using these techniques.

3.3 Organizational behavior

Organizational behavior studies and identifies management activities that promote employee
effectiveness through an under- standing of the complex nature of individual, group, and organ-
izational processes.

Douglas McGregor influenced the field of management in the 1960’s with his Theory X and
Theory Y perspective. Theory X managers assume workers are lazy and irresponsible and re-
quire constant supervision and external motivation to achieve organizational goals. Theory Y
managers assume employees want to work and can direct and control them- selves. Theory X is
known as a self-fulfilling prophecy.

3.4 Systems theory

The systems theory states that organizations are open systems, dependent on inputs from the
outside world, such as raw materials, human resources, and capital. They transform these inputs
into outputs that (ideally) meet the market’s needs for goods and services. The environment re-
acts to the outputs through a feedback loop; this feedback provides input for the next cycle of
the system.

The contingency perspective refutes universal principles of management by stating that a varie-
ty of factors, both internal and external to the firm, may affect the organization’s performance.
Therefore, there is no “one best way” to manage and organize because circumstances vary.

Situational characteristics are called contingencies.

The contingencies include
Circumstances in the organization’s external environment.
The internal strengths and weaknesses of the organization.
The values, goals, skills, and attitudes of managers and workers in the organization.
The types of tasks, resources, and technologies the organization uses.

2-5
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 2 – The Evolution of Management

LO4 - Modern contributors

In 2001 Jim Collins authored an influential book titled Good to Great. His research team ana-
lyzed 1,435 companies and discovered that great companies are managed by “level 5 leaders”
who often display humility while simultaneously inspiring those in the organization to apply
self-discipline and self-responsibility while pursuing high standards.

Other exceptional leaders who have left their mark on management practice include Herb
Kelleher, cofounder of Southwest Airlines, Sam Walton, founder of Walmart, Jack Welch, Ex-
CEO of General Electric, and Lou Gerstner, former CEO of IBM.

One of Peter Drucker’s major contributions to the practice of management was the need for or-
ganizations to set clear objectives and establish the means of evaluating progress toward those
objectives. He was the first person to discuss “management by objective” (MBO), by which a
manager should be self-driven to accomplish key goals that link to organizational success.

In the Seven Habits of Highly Effective People: Powerful Lessons in Personal Change, Stephen
Covey discussed how a leader’s success hinges on balancing between personal and professional
effectiveness.

All of these historical perspectives have left legacies that affect contemporary
management thought and practice. Just remember, times do pass, and things do change.

2-6
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
 Chapter 2 – The Evolution of Management

KEY TERMS PRESENTED IN THIS CHAPTER

Administrative Management A classical management approach that attempted to identify major princi-
ples and functions that managers could use to achieve superior organizational performance
Bureaucracy A classical management approach emphasizing a structured, formal network of relation-
ships among specialized positions in the organization
Contingencies Factors that determine the appropriateness of managerial actions
Contingency Perspective An approach to the study of management proposing that the managerial strate-
gies, structures, and processes that result in high performance depend on the characteristics, or im-
portant contingencies, or the situation in which they are applied
Economies of Scale - Reductions in the average cost of a unit of production as the total volume produces
increases
Hawthorne Effect People’s reactions to being observed or studied resulting in superficial rather than
meaningful changes in behavior
Human Relations A classical management approach that attempted to understand and explain how hu-
man psychological and social processes interact with the formal aspects of the work situation to
influ-ence performance.
Inputs Goods and services organizations take in and use to create products or services
Organizational Behavior A contemporary management approach that studies and identifies management
activities that promote employee effectiveness by examining the complex and dynamic nature of in-
dividual, group, and organizational processes
Outputs The products and services organizations create
Quantitative Management A contemporary management approach that emphasizes the application of
quantitative analysis to managerial decisions and problems
Scientific Management A classical management approach that applied scientific methods to analyze and
determine the “one best way” to complete production tasks
Sociotechnical Systems Theory An approach to job design that attempts to redesign tasks to optimize
operation of a new technology while preserving employees’ interpersonal relationships and other
hu-man aspects of the work
Systematic Management A classical management approach that attempted to build into operations the
specific procedures and processes that would ensure coordination of effort to achieve established
goals and plans
Systems Theory A theory stating that an organization is a managed system that changes inputs into out-
puts

SUSTAINABILITY BOX

The Greenest Companies Worldwide

While some critics still see the green movement as a fad or temporary trend, many global companies are
taking real steps to become greener. Managers and leaders of these organizations see many benefits to
pursuing sustainability initiatives, including a reduction in operating costs, the creation of more efficient
products, and the resulting generation of goodwill from customers who are concerned about the environ-
ment. Since 2009, Newsweek magazine has compiled an annual ranking of the greenest U.S. and global
companies. An expert advisory panel and two environmental research firms analyze data from each com-
pany such as its environmental footprint (green- house gas emissions and water use), management efforts

2-7
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
 Chapter 2 – The Evolution of Management

(environmental policies and initiatives), and disclosure (company reporting of environmentally related
activities).

What were the top 25 greenest companies in 2011? IBM was ranked second among all companies in the
world and was the only U.S. firm to make the top 10. Over the past 20 years, IBM has saved more than
5.4 billion kilowatt-hours of electricity, reducing energy costs by approximately $400 million. The only
other U.S. firms that made the top 25 were Hewlett-Packard, Sprint Nextel, and Baxter. European firms
dominated the list. Nine European firms made the top 25, including Munich Re (Germany), BT Group
(Great Britain), and Philips (Netherlands). Green companies did not come from only the United States
and Europe; the remainder of the list consisted of organizations from Australia, Brazil, India, Canada,
and Japan.

Based on the investments that these organizations are making, there is little doubt that “going green” and
managing for sustainability are becoming part of the current and future fabric of managerial thought and
practice.

LECTURETTES

LECTURETTE 2.1: Administrative Management

THE HAWTHORNE EFFECT

1. The Hawthorne Studies were a series of experiments conducted from 1924 to 1932. During the first
stage of the project (the Illumination Experiments), various working conditions, particularly the light-
ing in the factory, were altered to determine the effects of those changes on productivity. The re-
searchers found no systematic relationship between the factory lighting and production levels. In
some cases, productivity continued to increase even when the illumination was reduced to the level
of moonlight. The researchers concluded that the workers performed and reacted differently because
the researchers were observing them. This reaction is known as the Hawthorne Effect.

TODAY’S MANAGER

1. The question always seems to be, how does this apply to becoming a manager in today’s society.
This is simple. The Hawthorne Effect demonstrates the importance of managers focusing on their
employees, being visible to their employees and taking notice of what their employees are doing.
Whatever the manager focuses on will be what their employees focus on. If the manager is invisible
and never leaves their office, the employees will take notice of this. On the other hand, if the manag-
er is on the floor watching what the employees are doing, delegating, leading and controlling, then the
employees will be motivated to do a better job. This is directly related to the “Management By Walk-
ing Around” theory. The more visible you are as a manager, the more productive your employees will
be.

LECTURETTE 2.2: Classical Approaches

THE IDEAL BUREAUCRACY

1. Max Weber, a German sociologist, made his mark on management theory when he developed his
concept of bureaucracy. As large organizations were evolving out of the industrial revolution, they

2-8
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 2 – The Evolution of Management

clearly lacked a basis for orderly organization and management. To meet this need, Weber designed
his “ideal bureaucracy” to improve the operations of large, complex organizations.
2. Weber coined the term “bureaucracy” based on the German word, “buro,” which meant office. We-
ber’s ideal bureaucracy was a large organization that operated on a rational basis.
3. Weber understood that the “ideal bureaucracy” did not exist anywhere, but he advocated that manag-
ers should work to that end by creating organizations with the following characteristics:

Specialization of Labor Tasks should be broken down into routine, well-defined activi-
ties so that all employees would know exactly what is expected
of them and would become, in a short time, expert in their spe-
cific task assignments.

Formal Rules and Procedures There should be a documentation of rules and procedures that
would clearly:
➢
Delineate work behaviors.
➢
Facilitate work coordination.
➢
Ensure uniformity of work and behavior.
Impersonality Once rules, procedures, and sanctions are documented, and they
should be uniformly applied to all employees, with no adjust-
ment for personalities or other personal considerations.

Well-defined Hierarchy Positions should be placed in multiple levels, with precise report-
ing relationships among levels. The hierarchy provides for the
supervision of lower-level offices by higher-level ones, a method
for handling exceptions, and the ability to establish accountabil-
ity.

Career Advancement Based Employee selection, placement, and promotion on Merit should
be based on the individual qualifications and performance of
the employee.

THE OFFICERS IN A BUREAUCRACY

1. According to Weber, one of the critical features of the ideal bureaucracy was the appointment of its
officers. It was his contention that all organizational officers (managers) should be appointed and
should function according to the following criteria:

➢ Officers (managers) are free as individuals and are subject to organizational authority only in terms of
their impersonal, official obligations.
➢
Officers (managers) are to be organized in a clearly established hierarchy of offices.
➢
Each managerial office should have a clearly defined sphere of competence.
➢
Each managerial office should be filled in a spirit of a free contractual relationship.
➢
Candidates for the managerial offices should be selected on the basis of technical qualifications.
➢
Officers (managers) should be compensated through fixed salaries, with salary scales graded pri-
marily on the basis of rank in the organizational hierarchy. The employing institution would not
have the right to terminate an officer’s appointment, except under certain circumstances. Howev-
er, the officer is always free to resign the position.
➢ Once appointed to a position, that office should be treated as the sole, or at least the fundamental,
occupation of the office-holder.

2-9
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 2 – The Evolution of Management

➢ Serving as an organizational officer should be perceived as a career with a system of promotion based on
achievement or authority, or both.
➢
The officer (manager) works apart from the ownership.
➢
The officer (manager) should be subject to a system of strict discipline and control with respect to the
conduct of the office.

THE COMING DEATH OF BUREAUCRACY

1. Contemporary management writers, reflecting the public’s negative attitude toward modern-day bu-
reaucracies with their red tape and complexities, argue that bureaucracies will die unless they are able
to adapt to the change in their environments.
2. Weber would agree because he never envisioned the sort of bureaucracy that has evolved and
re-placed his “ideal bureaucracy.”
Over the years, bureaucracies have moved away from Weber’s ideal and have assumed a
number of negative characteristics, which will probably cause their demise. Specifically, they:
➢
No longer allow for adequate personal growth and development.
➢
Foster “groupthink” and stubborn conformity to norms.
➢
Fail to consider the informal organization and the people problems therein.
➢
Have obsolete control systems.
➢
Have no judicial process.
➢
Have no mechanism for resolving differences and conflicts that occur between ranks and be-tween
functional work groups.
➢
Stifle communication and creative ideas.
➢
Fail to utilize the full value of their human resources due to employee fear and mistrust.
➢
Cannot assimilate the wave of new technology.
➢
Modify the personalities of their members who reflect the dull and conditioned “organization man.”
3. Bureaucracies must clean up their acts or die.1

LECTURETTE 2.3: Modern Contributors

GOOD TO GREAT – JIM COLLINS

1. In 2001 Jim Collins authored an influential book titled Good to Great in which he and his research
team analyzed 1,435 companies to understand why some companies reach high levels of sustained
performance while other companies fail to reach greatness. He discovered that great companies are
managed by “level 5 leaders” who often display humility while simultaneously inspiring those in the
organization to apply self-discipline and self-responsibility while pursuing high standards. These
leaders often leave enduring legacies without drawing a lot of attention to themselves.

TODAY’S MANAGER

1. The question asked by Collins is “Why some companies make the leap… and others don’t?” Collins
and his team explored what does into a company transforming from mediocre to excellent. In the
process, the team uncovered timeless principles on how the Good to Great companies produced sus-

1
Adapted from Warren Bennis, “The Coming Death of Bureaucracy,” Think, March 1986, 30-35; Warren Bennis, “Beyond Bureau-
cracy,” American Bureaucracy, 1970, 3-16; Max Waber, “The Ideal of Bureaucracy,” from M Weber, The Theory of Social and Eco-
nomic Organizations, translated by A. Henderson and T. Parsons (New York: the Free Press, 1947); William Wolf, the
Management of Personnel (San Francisco: Wadsworth Publishing Co., Inc., 1961), 8-43.

2-10
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
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