3.

0 Evolution of Management Theory

Lecture Objectives
 To appreciate the concept of management
theory
 To learn four management theories or schools
and their applications in modern management
practices

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 Overview of Theory

 The driving force behind the evolution of

management theory is the search for better ways to
utilize organizational resources
 The desire to venture into new areas to complete the
existing thoughts or ideas to make organizations
become responsive to changes

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 Defining Theory

 A theory is a principle or set of principles designed to

explain relationships between two or more observable
facts
 It is more than a rule of thumb that provides a hard and
fast explanation for the relationship between the facts as
they occur
 Ideally a theory should be testable and its validity and
durability should rest on research based findings

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Importance of Studying Theories

 Guides management to decision making

 How it shapes lives of organizations
 Makes one become aware of the various
environments that affects the organization
 Different approaches to managing an
organization

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 Why concerned with theories

1. Managers have many ways of looking at

organization, its activities, performance and
satisfaction of people.
2. Not one approach is applicable in all situations
3. Managers use both intuition and theories to
explain situations
4. Management continues to evolve over time

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 Early Schools or thoughts of
Management

There are four schools or thoughts of Management

1. Scientific School of Management: increase productivity
2. Classical Organizational School: need to find
guidelines for managing complex organizations
3. Behavioral School of Management: to deal effectively
with “people” side of organization
4. Quantitative School of Management: use of
mathematical models, analysis and solution for
management problems

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7
Evolution of Management Theories

 The evolution of management theories began in the

late nineteen century after the industrial revolution
 In the agricultural revolution and into the prehistoric
period, man was able to provide what he needed to
survive.
 Industrial revolution brought with it many changes:
economic, technical and cultural changes

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The Challenges

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1. Scientific School of Management

 Arose in part from the need to increase productivity

 Formulated by Frederick Taylor and others between
1890 and 1930
 Aims to determine scientifically the best methods for
performing any tasks and for selecting, training and
motivating workers instead of trial and error methods
 Taylor broke each job into components and designed
the quickest and best method of operation for each
parts of the job

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Job Specialization and Division of Labor

 Famous Economist, Adam Smith journeyed around

England in 1700s studying the effects of industrial
revolution

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Job Specialization Rewards

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Continuation of Improvement

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 F.W Taylor (1856-1915)
Scientific Management

 The systematic study of relationship between people

and tasks for the purpose of redesigning the work
process to increase efficiency
 Taylor believed that if the amount of time and effort
that each worker expends to produce a unit can be
reduced by increasing specialization and division of
labor, the process will become more efficient

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Principles of Scientific Management
a) The development of a true science of management
so that the best method for performing each task
could be determined instead of unnecessary
movements
b) Scientific selection of workers so that each worker
would be given responsibility for tasks for which he
or she is best suited
c) The scientific education and development of the
worker
d) Intimate, friendly cooperation between
management and labor
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 Example: Attending the Clinic

Being sick and so wanted to get treatment

 Stay in a que
 Called in to brief and examination
 Medication is prescribed
 Medicine is given with instruction

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Contribution of Scientific Management

1. A team of people working together each tending expertly

to one or a few tasks which greatly increases output
2. The scientific selection and development of workers
increases ability and worker efficiency
3. Encouraged managers to seek the best way of getting a
job done
4. It supported the advent of automation and use of robots
to do a variety of jobs

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 Limitations

1. Appropriate for mechanized organization but not human

interactions
2. Readily adopting technology leads to increase output
but causes employee layoff
3. Considered the popular economic model of human
behavior where workers are motivated primarily by a
desire for material gain but overlooked the social needs
of worker
4. Overlooked the desire for job satisfaction (monotonous)

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 2. Classical Organizational Theory
 The scientific thought then led to the development of
administrative or organizational thought.
 It grew out of the need to manage complex organizations
 Early attempt by Henry Fayol ( 1841-1925)
 Attempted to identify principles and skills that underlie
effective management
 He divided and classified business operations into six
activities all of which are closely related

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Henry Fayol Business Classification
1. Technical: production
2. Commercial: buying and selling
3. Financial: acquiring and use of funds
4. Security: protection of resources
5. Accounting: recording of financial transactions
6. Managerial: plan, organize, lead and control

Five of the above were well known and devoted greater

part of his analysis to the sixth - Managerial.

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 Fayol’s Managerial Grouping

Fayol classified managerial into six sub groupings and

qualities required by managers to being physical, mental,
moral, educational and technical
1. Forecasting
2. Planning
3. Organizing
4. Coordinating
5. Commanding
6. Controlling

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Fayol’s 14 Principles of Management
1. Division of labor:
2. Authority
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of Individual Interests to
common goals
7. Remuneration (compensation to be fair)

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Fayols 14 Principles of Management
Cont

8. Centralization of Decision Making

9. The hierarchy
10. Order (job description)
11. Equity (friendly and fairness)
12. Stability of staff
13. Initiative (freedom)
14. Esprit de Corps (promoting team sprit)

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 Contributions

1. Despite knowledge limited, the theory has endured

time pressure
2. Its perspectives have for sometime being well received
by practicing managers
3. Raised issues that remain important to managers so as
to become aware of basic kind of problems in
organizations

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 Limitations

1. Most appropriate for the past than the present due to

turbulent environment
2. Today’s better educated employees are less accepting
formal authority when applied arbitrary
3. Criticized as being too general for today’s complex
organization
4. Mechanistic organizations are insensitive to employees
social and psychological needs.

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 3. The Behavioral School of
Management
 Emerged in part because managers found that classical
organizational approach did not achieve sufficient
production efficiency and work place harmony
 Workers be treated as human beings but not as factors
of production
 Leaned more towards the “people side” of their
organizations
 Workers needs, feelings, attitudes, values and desires
are extremely important

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 Human Relations Movement
 HR describe ways in which managers interact with their
subordinates
 To create effective human relations, managers must
know why employees act as they do and what social and
psychological factors motivate them
 Hawthorne Effect: the possibility that workers who
receive special attention will perform better simply
because they received that attention
 The social environment of employees had a positive
influence on productivity

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 Contribution
1. Understanding of individual motivation, group
behavior, interpersonal relationship at work and the
importance of work to human beings
2. Enabled managers to become much more sensitive and
sophisticated in dealing effectively with subordinates
3. Output being determined by group norms than mere
directives
4. Continue to offer new insights in such important areas
as leadership, conflict resolution, the acquisition and
use of power, organizational change and
communication

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Major Directions in H/Relations

1. Organizations be viewed as a social system with

economic and social dimensions
2. Work environment should be conducive for
restoring man’s dignity
3. Sound human relations encourages people to work
together
4. H/Relations determined by nature of the leader, the
work environment and the work

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 Limitations

1. Management writers believe that the potential of this

field has not been fully realized
2. Managers resist behavioral scientists suggestions
because they do not like to admit that they need help in
dealing with people
3. Models and theories proposed are seen by many as too
complicated
4. Human behavior is so complex

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 Theory X and Theory Y

 Theory X according to Douglas McGregor is the

traditional view of motivation that holds that work is
distasteful to employees who must be motivated by
force, money or praise
 Theory Y McGregor assumes that people are inherently
(born with, built in) motivated to work and do a good
job. They see the rewards as secondary and take their
job as a hobby

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 4. The Quantitative School

 At the beginning of World War II, Great Britain was faced

with a number of new, complex problems in warfare and it
needed desperately to solve
 Pooling together the expertise of various specialists in
Operational Research (OR) teams, it was able to achieve
significant technological and tactical break through
 When the war was over, the applicability of OR to
problems in the industry gradually became apparent
 Management Science: mathematical techniques for
modeling, analysis and solutions of management problems

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 Contributions

1. The techniques of management science (quantitative)

are well established part of the problem solving tool of
most large organizations
2. Management Science techniques are used in many
activities such as capital budgeting and cash flow
projections, production scheduling, development of
product strategies, planning for human resource
development programs, maintenance of optimal
inventory levels and aircraft scheduling

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 Limitations

1. Management science has not yet reached the stage where

it can effectively deal with the behavioral side of an
enterprise
2. Language and concepts of management science is said to
be too complicated to understand and implement quickly
3. Full potential for solving management problems have not
been achieved because of lack of remoteness and the lack
of awareness of the problems and constraints actually
faced by managers

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Systems Approach to Management

 A system is a set of interrelated but separate parts

working towards a common purpose
 Systems approach to management views an
organizations as a unified, purposeful system
comprised of interrelated parts
 Systems orientated managers make decisions only
after impact of decision on all other departments and
the entire organization is considered.

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Contingency Approach to Approach to
Management

 Contingency approach is an approach to management

by trying to apply concepts of the major schools to
real life situations
 Sought to know the causes of success methods in one
situation and failure in another situation
 Results differ because situations differ
 Managers aim to find out which method will work
better in a particular situation

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Future of Evolution of Management

 Dominance: One of the major schools could emerge as the

most useful incorporating ideas from other schools
 Divergence: Major schools could each go off their own paths
with decreasing cross fertilization as they show little interest in
each other’s perspectives
 Convergence: The schools could become more similar with
boundaries between them tending to blur
 Synthesis: The apparent convergence now taking place leading
to an integration of the perspectives of the existing schools
 Proliferation: More schools or perspectives may still appear
with specific focuses on relatively limited set of resources

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 Tutorial Exercise

Q1. Discuss the importance of the evolution of

management schools/thoughts of management
Q2. Explain the four major schools/thoughts of
management
Q3. Differentiate between theory X and theory Y
Q4. Explain the systems and contingency approach to
management.

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 Case Study

Contingency Theory
This theory is a kind of behavioural theory that asserts that in general there is no effective way to systematize a corporation, to direct it and
undertake decisions. In spite of this, the best way to manage an organization depends upon its internal and external situation. It was developed by
Chandler in 1962 and Lawrence and Lorsch in 1969. In respect to this theory different contingent approaches were developed in the late 1960
(Bacher 2007). Contingency theorists suggested that previous theories like Weber’s bureaucracy and Taylor’s scientific management had broken
down because they overlooked the environment (Walonick n.d.).
In modern time, management style and organizational structure of a firm is substantially influenced by its internal and external environment or
contingency factors. If CFC make use of this theory can effectively resolve all its troubles related with expansion and management of its operations.
An analysis of its environment will significantly help the company in its future business decisions (Organizational Theories n.d.). With an internal
environment analysis, the company can easily identify the substantial reasons of its employee dissatisfaction and level of their performance.
On the other hand, external environment will assist it in its future business planning and decisions. With the use of contingency theory, the
company will effectively become able in managing its conflicts rather than avoiding it. In addition to these advantages, this theory also has some
disadvantages like it is applicable only in a situation when organizational environment is unstable or changing (Jacques 2007). As well, this also
demands management time, money, and effort so that coordination can be attained.
Guiding Questions.
Q.1. Do internal and external environments continuously have direct impacts to the success/failure of any business operation?
Q2. Does expansion in operation expose businesses to internal and external environmental treats and opportunities?
Q3. Is it vital that businesses need to continuously involve in marketing research as to understand and be better informed of the forces involved
both external and internal?
Q4. Is it best to have a strategic plan capturing likely risks with possible mitigating measures to ensure smooth operation?

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