Chapter 2Management Theories.ppt

Chapter Two
MANAGEMENT THEORIES/ THE
DEVELOPMENT OF
MANAGEMENT THOUGHT

The 4 broad categories of Management
Theories/ Schools of Thought
1. Pre-classical Management Thought= Early
Management Theory (reading assignment)
2. Classical Management Theories
3. Neo-Classical Theories
4. Modern Management Theories
CHAPTER 1, NANCY LANGTON AND STEPHEN P. ROBBINS,
FUNDAMENTALS OF ORGANIZATIONAL BEHAVIOUR, THIRD CANADIAN
EDITION 1-2

Start up discussion point
What factors do you think shape and
reshape management thought and
practice?
FUNDAMENTALS OF ORGANIZATIONAL BEHAVIOUR, THIRD
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PEST/STEP/SEPT
External Environmental factors
influencing Management/business
etc….
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Factors Shaping Management Thought
 Management thought has been shaped over
a period of centuries by three major sets of
forces:
1) Social forces
 Refer to those aspects of a culture that guide and influence relationships
among people.
2) Political forces
 political and legal institutions influence on people and organizations
3) Economic forces
 Pertain to the availability, production and distribution of resources in a society.

Early Management Practices/Pre-classical
Management Thought

Early Management Practices/Pre-
classical Management Thought
1. Overview of Early Management Practices
2. The Industrial Revolution’s Influence on Management
Practices
3. Some examples of early management practices:
Egypt, Roman Empire, Roman Catholic church &
Greece
4. Principal pre-classical/early management
contributors – Robert Owen, Charles Babbage, and
Adam Smith

Class activity – discuss the
following points in your small
team
1 - Do you agree with the motion/notion/idea that the
practice of management is older than its theory or vice
versa?
2 - How do you think or in what ways does the Industrial
revolution contributed to the development of
management?
3 – What can you say about early management practices
that were observed in Egypt, Roman Empire, and Roman
Catholic church etc?
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Early Management Practices
 the inception of management thought dates
back to the days when people first attempted to
accomplish goals by working together in groups
 However, attempts to develop theories and
principles of management are relatively recent.
 In particular, the industrial revolution of the 19th
century gave rise to the need for a systematic
approach to management

The Industrial Revolution’s Influence On
Management Practices
 Machine power began to substitute for human
power
 Lead to mass production of economical goods –
machine and labour combination, and more of machines
and less of labor
 Improved and less costly transportation systems
became available
 Created larger markets for goods – marketing
management
 Larger organizations developed to serve larger
markets
 Created the need for formalized management
practices – authority and responsibility

Early Management Practices Cont’d
 Some examples of early management practices:
1. Egypt - The construction of the Egyptian pyramid
(500-525 BC) is a testimony of the ancient Egyptian
organization and managerial abilities
 The ancient Egyptians constructed the pyramid by
100,000 labor forces for 20 years
 This construction shows how extensively Egyptians
used the management functions of planning,
organizing, staffing, directing and controlling.
“The best managers in history are the ones who managed the building of
the pyramids." Peter Drucker

2. Romans
 the most famous is the Emperor Diocletian's
reorganization of his empire.
 Establish management level
 Delegation of authority
3. Roman Catholic Church
Use of job descriptions for its priests, presbyters, and
other religious workers - specialization of activities
The chain of command (hierarchy of authority) that
extended from the pope to the laity was created
Staff Authority - advisors to key church officials

4. Greece – ancient Greece were known for
organized trading activities.
 Exhibited a real skill and capacity for
management in the operation of trading
companies.
 Use of uniform methods and motion study
as the means to maximize output

Class Activity
1 – first, in your small team identify the three
main/principal pre-classical contributors;
2 – then, discuss what their contributions were.
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Early Management Pioneers/Contributors
 Principal pre-classical contributors:
 Robert Owen
 Adam Smith, and
 Charles Babbage

Robert Owen (1771 - 1858)
 British industrialist and an owner-manager of several successful
cotton mills in Scotland
the first managers to recognize the importance of human resource
in an organization. Because of this he was considered as ‘father of
modern personnel management’.
 His ideas laid the groundwork for human relations movement
In his organization, Owen :
 Reduce working hours
 Set a minimum hiring age
 Provide meal, housing, and shopping facilities for employees
 Improved working conditions in the factory
 He argued, "Improving the condition of employees would
inevitability lead to increased production and profits".

Charles Babbage (1792-1871)
 Built the first practical mechanical calculator and a prototype of
modern computers
 known as "the father of modern computing".
He was an avid proponent of:
 Division of labor
 Economies of scale in manufacturing
 Incentive pay
 Profit sharing
 Application of mathematical concepts in production
 Harmonious relationship between management and workers
Babbage laid the ground work for much of the work that later became
known as Scientific Management.

Adam Smith
 Published The Wealth of Nations in 1776
 Advocated the economic advantages that
organizations and society would reap from the
division of labor (job specialization):
• Increased productivity by increasing each
worker’s skill and dexterity.
• As a result, Time saved that is commonly lost in
changing tasks.
• The creation of labor-saving inventions and
machinery.

Classical Management Theory
What does classical mean?
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Class Activity
1.What was the focus of classical management theory?
2. What were the two broad perspectives/branches of
classical management theory?
3. What was the focus of Scientific management?
4. What was the focus of classical Organization theory
5. What are the two branches of Classical Organization
theory?

Classical Management Theory -
Focus
Its focus was on finding
ways/methods to manage Work
and Organizations more efficiently

Two broad perspectives/branches of
classical management theory
1. SCIENTIFIC MANAGEMENT
2. CLASSICAL ORGANIZATION THEORY
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The focus of Scientific
management
Its focus was improving
employees productivity
it focused on what lower level
management must do to improve
workers’ efficiency )
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Focus of Classical Organization
theory
Its focus was improving the
performance of the whole
organization by concentrating on
what top level managers must do
to improve overall performance
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Branches of Classical
management Theory
Bureaucratic management
Administrative management
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Classical Management Theory –
perspectives/branches
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Classical Management
Theory
SCIENTIFIC MANAGEMENT CLASSICAL ORGANIZATION THEORY
BUREAUCRATIC
MANAGEMENT
ADMINISTRATIVE
MANAGEMENT

Classical Management Theory –
perspectives/branches
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Class Activity
Ongoing topics for discussion – class activity
1. Who were the chief proponents/contributors to scientific
management?
2. What did they contribute to the field of management?
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Scientific Management
 The theory of scientific management Presupposes
using scientific methods to define the “one best
way” for a job to be done:
Putting the right person on the job with the correct
tools and equipment.
 Having a standardized method of doing the job
 Providing an economic incentive to the worker

The chief proponents of scientific
management:
 Frederick W. Taylor
 Frank and Lillian Gilbreth
 Henry Gantt
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Frederick W. Taylor Cont’d
 known as "the father of scientific management.”
 Laborer to Chief Engineer in 6 Years
 Introduced the “piece-rate pay system” - the
differential rate system - instead of paying similar
amount of wage

Frederick W. Taylor Cont’d
 Taylor conducted the following studies in order to maximizing
efficiency in an organization:
1. Time and motion study
The objective is to standardize activities for workers/determine a
full-day’s work
2. Uniform method of routine tasks
 The objective is to adjust worker with work
3. Functional foremanship study - which man for which work
the objective is to scientifically select the best worker for a given
job
4. Individual Incentive
the objective is to determine the appropriate wage or salary
After conducting these studies Taylor Published a book: Principles of
Scientific Management (1911)

Taylor’s Scientific Management Principles
1. Perform tasks Scientifically - Study of each part of a task scientifically, and
develop a best method to perform it to replace the old rule of thumb method
2. Scientifically select and then train, teach, and develop the worker - Carefully
select workers and train them to perform a task using the scientifically
developed method-
3. Cooperate fully with workers to ensure they use the proper method- Heartily
cooperate with the workers so as to ensure that all work is done in accordance
with the principles of the science that has been developed.
4. Divide work and responsibility almost equally between management and
workers - Management does all work for which it is better suited than the
workers.Divide work and responsibility so management is responsible for
planning work method using scientific principles and workers are responsible
for executing work accordingly.

Frank and Lillian Gilbreth
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Frank and Lillian Gilbreth
The first dual career couple
• Frank and his wife Lillian, a psychologist, studied
work to eliminate inefficient hand-and body
motions.
• The Gilbreths also experimented with the design
and use of the proper tools and equipment for
optimizing work performance
• Focused on increasing worker productivity through
the reduction of wasted motion
They were interested in ELIMINATING
UNNECESSARY MOTION

Frank and Lillian
• Frank identified 17 on-the-job motions and called
them ‘THERBLIGS’. (The Gilbreths devised a
classification scheme to label 17 basic hand
motions (such as search, grasp, hold), which they
called therbligs (Gilbreth spelled backward with
the th transposed). This scheme gave the
Gilbreths a more precise way of analyzing a
worker’s exact hand movements.)
For his work, Frank was named as ‘The Father of
Motion Study’.
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Frank and Lillian Gilbreth Cont’d
 After he died, Lillian was determined to continue his
work.
 She pioneered the field of personnel administration.
 She argued that the purpose of scientific
management is to help people reach their maximum
potential by developing their skills and abilities.
 For her contribution to the field of management,
Lillian was known as ‘The First Lady of Management’.

Henry L. Gantt (1861-1919)
 Henry Gantt developed the famous - Gant Chart
 The Gantt chart – It is a simple chart that
compares actual and planned performances
 It is a chart that shows what to do when (and can
also be used to measure progress, achievement
etc)
 Well known for Task – and - bonus system
 If the worker completed the work fast, i.e., in less
than the standard time, he received a bonus.

Ongoing topics for discussion – class activity
1. What was the limitation of scientific management?
2. How Do Today’s Managers Use Scientific Management??
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Limitations of Scientific
Management
1. Disregard the human element
 equated people (worker) with machine;
 Taylor said workers are extensions of machines,
cogs of machines
2. Taylor saw only money as a motivator
3. Taylor failed to recognize the complex nature of
human behavior

How Do Today’s Managers Use Scientific
Management?
Use time and motion studies to increase
productivity
 Hire the best qualified employees
 Design incentive systems based on output

Class Activity
Well, so far we have discussed the one of the two components of
classical management theory, i.e Scientific management.
Now, we will see the second branch – Classical organizational theory,
which has two components:
1. Administrative Management
2. Bureaucratic Management and
Discussion Questions –
1- What is the focus of Administrative Management?
2 - Who is the well-known contributor to the administrative
management theory? And what were his 3 main contributions to the
field of management?
3- Who was the contributor to Bureacratic Management, and what was
his contribution?
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Administrative Management
•General administrative theory focused more on
what managers do and what constituted good
management practice
Henri Fayol is a well-known contributor to
the administrative management theory
 Father of modern management

Henry Fayol’s 3 main
contributions
 Fayol identified/contributed 3 main issues
for management:
1. Rules of Management
2. The major activities of an industry or a
business
3. General management principles (14
principles of management)
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Henry Fayol’s - Rules of
Management (1st contribution)
1. Rules of management:
Foresight — to complete a plan of action for the future
Organization — to provide and mobilize resources to implement the plan
Command — to lead, select, and evaluate workers to get the best work
toward the plan
Coordination — to fit diverse efforts together and ensure information is
shared and problems solved
Control — to make sure things happen according to plan and to take
necessary corrective action.
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Henry Fayol’s - The major activities of an industry or
a business (2nd contribution):
•Technical - producing and manning/handling products
•Commercial - buying raw materials and selling products
•Security- protecting employees and property
•Financial – search for and optimum use of capital
•Accounting - recording and taking stock of costs, profits,
and liabilities, keeping balance sheets, profit and loss
statements, etc
•Managerial – planning, organizing, commanding,
coordinating and controlling

Henry Fayol’s General prnciples of
Management (3rd contribution
3. general management principles
1. Division of Labor: allows for job specialization.
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. Scalar chain/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 or this term refers to the degree to which subordinates
are involved in decision making.
6. Unity of Direction: having one plan of action to guide the
organization.
7. Equity: Treat all employees fairly in justice and respect.

Administrative Management Cont’d
8. Order: Each employee is put where they have the most
value. The right person at the right place or People and
materials should be in the right place at the right time.
9. Initiative: Encourage innovation.
10. Discipline: obedient, applied, respectful employees needed.
11. Remuneration of Personnel: Workers must be paid a fair
wage for their services.
12. Stability of Tenure: Long-term employment is important.
•13. Subordination of individual interests to the general interest. The interests of any
one employee or group of employees should not take precedence over the interests of
the organization as a whole (.General interest over individual interest: The organization
takes precedence over the individual.)
14. Esprit de corps: Promoting team spirit will build harmony and
unity within the organization

Class Activity
It is now time to discuss the second and last component of classical
management theory, which is Bureaucratic management
Discussion questions
1. What is bureaucracy?
2. Who was the main proponent/contributor to Bureaucratic
management theory?
3. What are the features and/or characteristics of bureaucratic
management theory?
4. Do you have any idea about dysfunctional bureaucracy?
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Bureaucratic Management
Max Weber developed the concept of bureaucracy
Bureaucracy:
 An ideal, intentionally rational, and very efficient form of organization.
 Based on principles of logic, order, and legitimate authority.
•bureaucracy—a form of organization characterized by division of labor, a clearly
defined hierarchy, detailed rules and regulations, and impersonal relationships.
 Features of Weber’s ideal bureaucracy:
 Clear division of labor
 Clear hierarchy of authority
 Formal rules and procedures
 Impersonality
 Career advancement based on merit

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Dysfunctions of bureaucracy
 Excessive paperwork or “red tape” (rigid
conformity to formal rules)
 Slowness in handling problems
 Rigidity in the face of shifting needs
 Resistance to change
 Employee apathy (lack of interest, passion)

Limitations of Classical Organization Theory
 Not universally applicable to today’s complex
organizations.
 Classical theorists ignored the problems of
leadership, motivation, power or information
relations.

Neo –Classical Theories: Humanistic Perspectives
- Human Relations Movement
- Human Resource perspective
- Behavioral Sciences approach

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Neo-Classic Theories – Humanistic
Perspectives
Human Relations
Human Resources
Perspective
Behavioral Science Approach
Hawthorne Studies - Elton Mayo
Illumination Experiment, Relay Assembly Room
Experiment, Massive Interview Program, Bank
wiring Observation room study etc.. (Reading
assignment)

Class Activity
What is the focus of Neo classical
approach, AKA Humanistic
Perspective?
What are the three main branches
of Neo classical approach?
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Humanistic Perspective – Neo
classical approach
 Emphasized understanding human behavior, needs, and attitudes in
the workplace
 Encompasses:
● Human Relations Movement
● Human Resources Perspective
● Behavioral Sciences Approach

Class Activity
1. What was the focus of Human Relations
Movement?
2. What can you say about the Hawthorne study –
(a) how many experiments were undertaken – please
name the experiments,
b) what was the chief/leader of the Hawthorne
study? and
(c) what were the conclusions from the Hawthorne
study?
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Human Relations Movement
 An effort to make managers more sensitive
to their employees’ needs
 Arose out of the influences of:
•The threat of unionization
•The Hawthorne studies
•The philosophy of industrial humanism

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.
A series of studies done during the 1920s and
1930s that provided new insights into group norms
and behaviors
 Hawthorne research conclusion:
• Social norms or standards of the group are the key determinants of
individual work behavior regardless of changes in physical
settings/surroundings of workers.

Hawthorne studies Cont’d
Changed the prevalent view of the time that
people were no different than machines.
 Elton Mayo was the founder of Hawthorne
studies
The Hawthorne studies consist of four major
experiments:
1.Illumination Experiments
2.Relay Assembly Test Room Experiment
3. The Massive Interviewing Program
4. The Bank Wiring Observation Room Study

Illumination Experiments
 The intention was to learn correlation between
intensity of light and productivity.
 two groups of women were taken:
1. The experiment group - one subjected to variety in the
intensity of light
2. Controlled group which was exposed to constant
illumination intensity.
 regardless of whether the light levels were raised or
lowered, productivity rose in both groups

Illumination Experiments Cont’d
 Conclusions:
Light intensity has no conclusive effect on output
Productivity has a psychological component –
Researchers interaction with the workers influenced
higher performance

Relay Assembly Test Room Experiment
 Designed to minimize the “psychological factors” of
previous experiment
 Group of 6 Women – (5) Assemblers and (1) Layout
Operator
 One Observer – Explained every incremental change
and recorded results
 Management visits / special attention
 Manipulated physical work conditions to assess impact
on output :
 Pay incentives
 Length of work day & work week
 Use of rest periods
 Company sponsored meals

Relay Assembly Cont’d
 changes in working conditions were later terminated and original
conditions reestablished
 output still remained high, indicating that the
change in conditions was not the only reason for
the increase in output
 Conclusions:
 supervisory management was the major reason
for the increase in productivity
 Strong social bonds were created within the test
group. Workers are influenced by need for
recognition, security and sense of belonging

The Massive Interviewing
Program
 Objective Questions -Yes/No Answers
 Work Conditions
 Work Relationships
 Conversational/Non-directive:
 Attentive Sympathetic Listening
 Concern for personal needs
 Increased in time from 30-90 minutes

The Massive Interviewing Cont’d
 Result – Remarkable positive employee
perceptions:
 Conclusions:
 New supervisory style improved worker morale
 Complaints reflected personal and/or social
barriers that needed attention in order to raise
productivity

The Bank Wiring Observation Room Study
 to determine peers effect on individual performance
 focused on the effect of a group piecework incentive pay
 14 Male Workers
 Few Special Conditions
 Segregated work area
 No Management Visits
 Supervision would remain the same
 Observer would record data only – no
interaction with workers
 New incentive pay rate was established for the small group

The Bank Wiring Observation
Cont’d
 Result – No appreciable changes in output
 Conclusions:
 Well established performance norms existed in
the group
 Informal Social Organization dictated little
deviation from established production
standards
 Informal Social Organizations protect workers
from managers who:
• Raise production standards
• Cut pay rates
• Challenge workplace norms

Lessons from the Hawthorne
Studies
Social and human concerns are keys to
productivity
Hawthorne effect — people who are singled
out for special attention perform as
expected

Hawthorne
Experiments
(elaborated slides )

INTRODUCTION
The Hawthorne studies were conducted in
order to find out the role of human resource in
increasing the production of an organization.
The Hawthorne studies included the following
experiments..

Experiments Conducted
Illumination Experiment
Relay Assembly Test Experiments
Relay Assembly Room #2
Mica Splitting Test Group
Plant Interview Group
Bank Wiring Observation Group

HAWTHORNE EXPERIMENT
Conducted between 1924-1932
Conducted at WESTERN ELECTRIC
COMPANY, Chicago, USA
Conducted by,
 Elton Mayo
White Head
Roethlisberger

George Elton Mayo
He was an Australian Psychologist, Sociologist
and Organization Theorist.
Lectured at University of Queensland before
moving to the University of Pennsylvania
Spent most of his career at Harvard Business
School and was the Professor of Industrial
Research
Known as the founder of Human Relations
Movement
Also known for his research including
Hawthorne Studies

Fritz Roethlisberger
*He was a Social Scientist and Management Theorist
*He was also the Professor of Harvard Business
School
WhiteHead
He was the Industrial Worker

Western Electric Company
•Gray and Barton, a telephone industry supply
company founded in 1869 by Elisha Gray and Enos
Barton
•In 1872, the company changed its name to the
Western Electric Manufacturing Company
•In 1881, when the annual sales had already grown
to nearly $1 million, the firm was purchased by the
American Bell Telephone Company, it was renamed
the Western Electric Company and became Bells
manufacturing arm

Airplane View of Hawthorne Works.

Magnetic Wire Insulating
Department

Research on productivity at massive manufacturing complexes like
the Hawthorne Works was made possible through partnerships
among industries, universities, and government. In the 1920s, with
support from the National Research Council, the Rockefeller
Foundation, and eventually Harvard Business School, Western
Electric undertook a series of behavioral experiments. The first, a
sequence of illumination tests from 1924 to 1927, set out to
determine the effects of lighting on worker efficiency in three
separate manufacturing departments. Accounts of the study
revealed no significant correlation between productivity and light
levels. The results prompted researchers to investigate other factors
affecting worker output.

Hawthorne Experiment
The Hawthorne experiment were first conducted in
November, 1924 at Western Electric Company’s Hawthorne
plant in Chicago
The initial tests were sponsored by The National Research
Council (NRC) of the National Academy of Sciences
In 1927, a research team from Harvard Business School
was invited to join the studies after the illumination test drew
unanticipated results
A team of researchers led by George Elton Mayo from the
Harvard Business School carried out the studies
(General Electric originally contributed funding, but they
withdrew after the first trial was completed)

Illumination Studies
1924-1927
Funded by General Electric
Conducted by The National Research Council (NRC) of the National Academy of Sciences with
engineers from MIT
Measured Light Intensity vs. Worker Output
Result :
◦ Higher worker productivity and satisfaction at all light levels
◦ Worker productivity was stopped with the light levels reached moonlight intensity.
Conclusions:
◦ Light intensity has no conclusive effect on output
◦ Productivity has a psychological component
Concept of “Hawthorne Effect” was created

The next experiments beginning in 1927 focused on the
relay assembly department, where the electromagnetic
switches that made telephone connections possible were
produced. The manufacture of relays required the repetitive
assembly of pins, springs, insulators, coils, and screws.
Western Electric produced over 7 million relays annually.
As the speed of individual workers determined overall
production levels, the effects of factors like rest periods and
work hours in this department were of particular interest to
the company.

Relay Assembly Test Experiments
•1927-1929
•Experiments were conducted by Elton Mayo
•Manipulated factors of production to measure effect on output:
– Pay Incentives (Each Girls pay was based on the other 5 in the group)
– Length of Work Day & Work Week (5pm, 4:30 pm, 4pm)
– Use of Rest Periods (Two 5 minutes break)
– Company Sponsored Meals (Morning Coffee & soup along with sandwich)
•Results:
– Higher output and greater employee satisfaction
•Conclusions:
– Positive effects even with negative influences – workers’ output will increase as a
response to attention

Chapter 2Management Theories.ppt

Relay Assembly Room #2
1928-1929
Measured effect on output with compensation rates
◦ Special observation room
◦ 1st Session- Relay Assemblers changed from departmental
incentive to small group incentive
◦ 2nd Session - Adjusted back to large group incentive
Results:
◦ ‘Small group incentives’ resulted in highest sustained level of production –Output
dropped in 2nd session
Conclusion:
◦ Pay relevant to output but not the only factor

WOMEN IN THE RELAY TEST ASSEMBLY ROOM

Theresa Layman Zajac’s
Paycheck, August 13, 1927

Mica Splitting Test Group
1928-1931
Measured output with changes to work conditions only:
◦ Special Observation Room
◦ Length of Work Day
◦ Use of Rest Periods
◦ Workers stayed on established Piece-rate compensation
Result:
◦ Productivity increased by 15% over standard output base
Conclusions:
◦ Productivity is affected by non-pay considerations

Mass Interview Program
Conducted 20,000 interviews.
Objective was to explore information, which could be used to improve supervisory training.
Initially used the method of Direct Questioning and changed to Non Directive.
Results
- Giving an opportunity to talk and express grievances would increase the morale.
- Complaints were symptoms of deep-rooted disturbances.
-Workers are governed by experience obtained from both inside and outside the company.

Mass Interview Program
(Contd)
- The workers were satisfied or dissatisfied depending upon how they regarded their
social status in the company.
- Social groups created big impact on work.
- Production was restricted by workers regardless all financial incentives offered as
group pressure are on individual workers.

Bank Wiring Observation Group
1931-1932
Limited changes to work conditions
◦ Segregated work area
◦ No Management Visits
◦ Supervision would remain the same
◦ Observer would record data only – no interaction with workers
Small group pay incentive
Result:
◦ No appreciable changes in output
Conclusions:

CONCLUSION
•The Hawthorne studies have had a remarkable impact on
management in organizations and how workers react to various
situations.
•The research carried out at the Western Electrics Hawthorne plant
during the 1920’s and early 1930’s helped to initiate a whole new
approach to human behaviour studies.
•The final result was “the organization of teamwork-that is, of
sustained cooperation leads to success”.

Human Relations Movement Cont’d
 The Threat of Unionization
 The Wagner Act of 1935 legalized union-management collective
bargaining, promoting the growth of unions and union avoidance by firms.
 The Philosophy of Industrial Humanism
 Emotional factors were more important
determinants of productive efficiency
than were physical and logical factors.

Class Activity
So, far we discussed just one of the three components of the Neo
classical approach (i.e Human Relations).
We are left with two more Human Resources Perspective and
Behavioral Sciences Approach
1. Human resources perspective – what is its focus, and who are the
contributors?
CANADIAN EDITION
1-100
100

Human Resource Perspective
 Suggests jobs should be designed to meet
higher-level needs by allowing workers to
use their full potential
 Contributors:
 Robert Owen
 Claimed that a concern for employees was profitable for management
and would relieve human misery.
Hugo Munsterberg
 Created the field of industrial psychology—the scientific study of
individuals at work to maximize their productivity and adjustment.

Human Resource Perspective Cont’d
Mary Parker Follett
 Concerned that Taylor ignored the human side of
the organization
◦ Suggested workers help in analyzing their jobs
◦ If workers have relevant knowledge of the task, then
they should control the task
 Recognized that organizations could be viewed
from the perspective of individual and group
behavior.

Human Resource Perspective Cont’d
Chester Barnard
 Saw organizations as social systems that require
human cooperation.
 Expressed his views in his book The Functions of
the Executive (1938).
Abraham Maslow’s : Needs Hierarchy
Douglas McGregor: Theory X & Y
Herzberg’s Two factor theory
 The later three are considered as early
motivation theories

CANADIAN EDITION
1-105

CANADIAN EDITION
1-106

Herzberg’s two-factor theory –
hygiene factors and motivators
• Frederick Herzberg’s two-factor theory (also called motivation-hygiene
theory) proposes that intrinsic factors are related to job satisfaction,
while extrinsic factors are associated with job dissatisfaction.
•The extrinsic factors that create job dissatisfaction were called hygiene
factors. When these factors are adequate, people won’t be dissatisfied,
but they won’t be satisfied (or motivated) either. To motivate people,
Herzberg suggested emphasizing motivators, the intrinsic factors having
to do with the job itself.
CANADIAN EDITION
1-107

CANADIAN EDITION
1-108

CANADIAN EDITION
1-109

Behavioral Sciences Approach
Applies social science in an organizational context
relies on scientific research for developing theories about human behavior
that can be used to provide practical tools for managers
draws from sociology, psychology, anthropology, economics and other
disciplines to understand employee behavior and interaction in an
organizational setting

Contemporary Management Theories – Modern
management Theories
1. Management Science Approach
2. System approach
3. Contingency approach
4. Quality Management

Contemporary Management
Theories – Modern management
theories
 Management Science Approach
 System approach
 Contingency approach
 Quality Management

CANADIAN EDITION
1-113
113

Modern management theories
1. MANAGEMENT SCIENCE
APPROACH - uses mathematics,
statistics, and other quantitative
techniques to solve managerial
problems
2. System Approach
- System is a collection of parts
that operate interdependently to
achieve a common purpose.
- Types of system – open vs
closed
- The concept of synergy – the
whole is greater than the sum of
its parts
3. Contingency theory – also
known as the situational theory.
It means it all depends!
4- Quality Management – it
focuses on continuous
improvement.
Continuously improving and
enhancing quality, which is also
known as TQM – Total quality
management
CANADIAN EDITION
1-114
114

Management science approach
 Emerged after WW II
 Applied mathematics, statistics, and other quantitative techniques to
managerial problems
 It encompasses:
1. Operation Research— utilizes linear programming, modeling, simulation
systems and chaos theory.
2. Operations management —techniques used to analyze all aspects of the
production system.
3. Management Information Systems (MIS) - Management information systems
focuses on designing and implementing computer-based information systems
for business organizations

System approach
 Posits that the performance of the whole is greater than the
sum of the performance of its parts.
• Analytic versus synthetic thinking: outside-in thinking versus inside-
out thinking.
• Seeks to identify all parts of an organized activity and how they
interact.
• regards the organization as a system of interrelated parts
 System - A collection of parts that operate interdependently to
achieve a common purpose.
 Synergy - performance gains of the whole surpass the
components
 Look at your organization in two ways:
1. A collection of subsystems—parts making up the whole system
2. A part of the larger environment

Contemporary Theories Cont’dC
117

General Systems Theory
 General Systems Theory
 An area of study based on the assumptions that everything is part of a larger,
interdependent arrangement.
 Levels of systems
 Each system is a subsystem of the system above it.
 Identification of systems at various levels helps translate abstract systems
theory into more concrete terms.

Closed Versus Open Systems
 Systems are classified open (closed) by how much (how little) they
interact with their environments
 Closed system
• A self-sufficient entity.
• Closed systems often undergo entropy and
lose the ability to control itself, and fails.
 Open system
• Something that depends on its surrounding environment for survival.

New Directions in Systems
Thinking
 Organizational learning and knowledge
management
 Organizations are living and thinking open systems that
learn from experience and engage in complex mental
processes
 Chaos theory
 Every complex system has a life of its own, with its own
rule book
 Complex adaptive systems
 Complex systems are self-organizing.

Contingency approach
 Also sometimes called the situational approach.
 Tries to match managerial responses with problems and
opportunities unique to different situations.
 No “one best way” to manage.
 Draws on all past theories in attempting to analyze and
solve problems
 Is integrative
 Summarized as “it all depends” device
 Tells managers to look to their experiences
and the past and to consider many options before choosing
 Encourages managers to stay flexible

Quality Management Perspective
A philosophy of management driven by continual improvement in the
quality of work processes and responding to customer needs and
expectations
 Inspired by the total quality management (TQM) ideas of Deming and
Juran

Quality Mgt Perspective Cont’d
Includes quality control, quality assurance, and total quality management
(TQM).
Quality – refers to the total ability of a product or service to meet
customer needs.
Quality Control – the strategy for minimizing errors by managing each
stage of production.
Quality Assurance – focuses on the performance of workers, urging
employees to strive for “zero defects.”

The Four Pillars of Schools of
Quality
Pillar 1: A Customer-Supplier Focus
 The organization and its people must focus,
first and foremost, on their customers and
suppliers.
Pillar 2: Constant Dedication to Continuous
Improvement
 Everyone in the organization must be
dedicated to continuous improvement -
personally and collectively - at work, at
home, and in the community

Pillars of Schools of Quality Cont’d
Pillar 3: A Process-Systems Approach
 The organization must be viewed as a
system, and the work people do within the
system must be seen as ongoing processes.
Pillar 4: Consistent Quality Leadership
 The success of the Quality Transformation is
the responsibility of top management, and
can only be achieved over time though
constant dedication to the principles and
practices of TQM

Total quality management (TQM)
 A management concept coined by
W. Edwards Deming
Four components of TQM:
 Make continuous improvement a priority.
 Get every employee involved.
Listen to and learn from customers and
employees.
Use accurate standards to identify and
eliminate problems.

Emerging viewpoints
 Kaizen
 BPR
 Theory Z
 The Learning Organization Approach

Emerging Views Cont’d
 Kaizen- A Japanese term used to mean
incremental, continuous improvement for people,
products, and processes
 BPR- Businesses processes are redesigned to
achieve improvements in performance

Theory Z
 William Ouchi, a management researcher
developed this new theory of management in
the 1980s
 Theory Z is a business management theory
that integrates Japanese and American
business practices.
 The Japanese business emphasis is on
collective decision making
 The American emphasis is on individual
responsibility

Theory Z Type Organization
1. Long-term employment
2. Consentual, participative decision-making
3. Individual responsibility
4. Slow evaluation and promotion
5. Implicit, informal control with explicit,
formalized measures
6. Moderately specialized career path
7. Holistic concern, including family

The Learning Organization
Approach
 The management approach based on an
organization anticipating change faster
than its counterparts to have an advantage
in the market over its competitors.

Managerial Approach to Learning Organization
 Managers must create an environment conducive to learning
Managers encourage the exchange or information among organization
members
 Managers promote
systematic problem solving
Experimentation
learning from experiences and past history
learning from experience of others
transferring knowledge rapidly throughout the organization

FUNDAMENTALS OF ORGANIZATIONAL BEHAVIOUR, THIRD CANADIAN
EDITION 1-134

Chapter 2
– Chapter 2: The Development of Management Thought
A) Pre-classical Management Thought
B) Classical Management Theories
(1) the universal process approach and
(2) the operational approach
C) Neo-Classical Theories
(3) the behavioral approach
D) Modern Management Theories
(4) the systems approach, and
(5) the contingency approach.
Management Theories
135

The Practice and Study of
Management
– The systemic study of management is relatively new.
– As an area of academic study, management is essentially a
product of the twentieth century.
– Only three universities— Pennsylvania, Chicago, and
California— offered business management courses before
1900.
Management Theories
136

Management Practice
preceded the Theory
– But the actual practice of management has been around
for thousands of years.
– The pyramids of Egypt, for example, stand as tangible
evidence of the ancient world’s ability to manage. It
reportedly took more than 100,000 individuals 20 years to
construct the great pyramid
Management Theories
137

Management theory
– No single theory of management is universally accepted
today
– To provide a useful historical perspective that will guide our
study of modern management, we shall discuss five
different approaches to management:
(1) the universal process approach,
(2) the operational approach,
(3) the behavioral approach,
(4) the systems approach, and
(5) the contingency approach.
Management Theories
138

The Universal Process
Approach
– Henri Fayol’s universal process approach assumes that all organizations,
regardless of purpose or size, require the same management process.
– Furthermore, it assumes that this rational process can be reduced to separate
functions and principles of management.
– The universal approach, the oldest of the various approaches, is still popular
today.
– A remarkable contribution of Henry Fayol- the 14 principles of management
explain the Universal Process approach
Management Theories
139

The Operational Approach
– This is a production-oriented field of management
dedicated to improving efficiency and cutting waste.
– Dedicated to promoting production efficiency and
reducing waste, the operational approach has evolved
from scientific management to operations management.
– Frederick W. Taylor, the father of scientific management,
and his followers revolutionized industrial management
through the use of standardization (e.g units of products to
produce a day per employee), time-and-motion study,
selection and training, and pay incentives.
Management Theories
141

The Operational Approach
– Some contributors to this approach
Fredrick W. Taylor
Frank and Lillian Gilberths
Henry Gant, and
The quality advocate - Edwards Deming (TQM)
Management Theories
142

The Behavioral Approach
– Advocates of the behavioral approach to management point out
that people deserve to be the central focus of organized activity.
– This approach insists that the success of management depends
largely on a manager’s ability to understand and work with people
who have a variety of backgrounds, needs, perceptions, and
aspirations.
– The progress of this humanistic approach from the human relations
movement to modern organizational behavior has greatly
influenced management theory and practice.
Management Theories
143

The Behavioral Approach
– Earlier contributors to this field
- Elton Mayo (Hawthorne studies) – psychological/emotional
factors are a more important determinant of productive efficiency than
physical and logical factors.
- Mary Parker Follet (promoted the importance of motivating
employees than merely demanding high performance)
- Douglas McGregor – (Theory X and Theory Y)
Theory Y - Work is a natural activity, like play or rest.
Theory X - Most people dislike work, and they will avoid it when they can.
144

The Systems Approach
– Advocates of the systems approach recommend that modern
organizations be viewed as open systems.
– Open systems depend on the outside environment for survival,
whereas closed systems do not.
– Chester I. Barnard stirred early interest in systems thinking in 1938 by
suggesting that organizations are cooperative systems energized by
communication.
– General systems theory, an interdisciplinary field based on the
assumption that everything is systematically related, has identified a
hierarchy of systems and has differentiated between closed and open
systems.
– New directions in systems thinking are organizational learning and
chaos theory.
Management Theories
145

– Class activity
What is organizational learning?
What is the chaos theory?
Management Theories
146

Organizational learning and
Chaos Theory
– Organizational learning is a concept which states that organizations
are like humans that can learn from experience.
An organization is a living and thinking open system.
Like the human mind organizations depend on feedback to adjust
to changing environmental conditions?
– Chaos theory – being open for surprises, being open for the
unexpected (sometimes results may be nonlinear)
Management Theories
147

ORGANIZATIONAL LEARNING
An organizational learning perspective portrays the
organization as a living and thinking open system.
- Like the human mind, organizations rely on feedback to
adjust to changing environmental conditions.
- In short, organizations are said to learn from experience,
just as humans and higher animals do.
Management Theories
148

– Chaos theory has one idea in common with organizational learning:
systems are influenced by feedback.
– Chaos theory is based on the notion that change should be
encouraged through embracing tension
– Chaos theory is about surprises
– It is expecting the unexpected
– As opposed to the conventional/classical management theory, Chaos
theory upholds that Organizational behavior is inherently nonlinear,
and results may be nonproportional to corresponding actions. New
models and methods are needed to understand change
– Clssical/conventional view: Organizational behavior is essentially linear
and predictable, and results are proportional to causes. Thus linear
regression models explain most of the variance of organizational
change.Management Theories
149

Linear vs non linear
– A simple example?
Suppose you used to deny a two days wage for an employee who happened to
be absent from his job. Suppose his daily wage is 200 birr? You punished him this
way three times in the past a year ago?
Questions
a. How much did you deduct so far from his salary?
b. The employee get used to your rule, he knows it well, but is absent one
more time today. Your rule does not change, so how much will you deduct from his
next month salary?
Management Theories
150

Important Theories (mostly
leadership and motivation
theories)
–To be lectured after the
book review and before
the article review
Management Theories
151

1) The contingency/Situational theory/
2) Management by Objectives (MBO)
3) Span of Control
4) Line vs staff authority
5) Expectancy Theory – expected outcomes have impact on p
6) Reinforcement Theory – rewards impact Pc/motivation
7) Goal Setting Theory
8) Path Goal Model
9) Management Grid-----show slide
10) Likert’s Leadership Styles----”
11) Lewin’s Leadership styles ---”
12) Transactional leadership
13) Transformational leadership
152

Leadership Theories – Broad
categories
– Leadership Theories are broadly classified into 3
categories
1. Trait Theory – leaders are born
2. Contingency/situational theory – the situation
creates a leader
3. Behavioral Theory - focuses on what leaders do than
their trait. The behavioral theory states that there
are two distinct types of leadership: task
(production) oriented vs Employee (People)
Oriented)
Management Theories
153

The Contingency
Approach/Theory
– A comparatively new approach to management thought is the contingency
approach, which stresses situational appropriateness rather than universal
principles.
– the contingency approach is an effort to determine through research which
managerial practices and techniques are appropriate in specific situations
– contingency approach: research effort to determine which managerial
practices and techniques are appropriate in specific situations
– The idea is you better do some research first before considering a
managerial intervention
One of the prominent contributors to this field - Fred Luthans
Management Theories
154

Management By Objectives
(MBO)
–A process of setting mutually
agreed-upon goals and using
those goals to evaluate
employee performance
Management Theories
155

Span of Control
–The number of employees a
manager can efficiently and
effectively manage
Wide span vs Narrow Span
Management Theories
156

Line Authority vs Staff Authority
–LA - Authority that entitles a
manager to direct the work of an
employee
–SA - Positions with some
Authority that have been created
to support, assist, and advise
those holding line authority,
Management Theories
157

Expectancy Theory
–Expectancy theory states that an
individual tends to act in a certain
way based on the expectation
that the act will be followed by a
given outcome and on the
attractiveness of that outcome to
the individual.
Management Theories
158

Reinforcement theory
– Reinforcement theory is seen in the model by
recognizing that the organization’s rewards reinforce
the individual’s performance
– rewarding a behavior with recognition immediately
following that behavior is likely to encourage its
repetition.
– Reinforcement theory says that behavior is a function
of its consequences. To motivate, use positive
reinforcers to reinforce desirable behaviors. Ignore
undesirable behavior rather than punishing it.
159

Goal Setting Theory
– Goal-setting theory says that specific goals increase
performance, and difficult goals, when accepted, result in
higher performance than do easy goals. Important points
in goalsetting theory include intention to work toward a
goal as a major source of job motivation; specific hard
goals that produce higher levels of output than
generalized goals; participation in setting goals as
preferable to assigning goals, but not always; feedback
that guides and motivates behavior, especially self-
generated feedback; and contingencies that affect goal
setting—goal commitment, self-efficacy, and national
culture.Management Theories
160

Fiedler contingency model –
leadership style depends on the
situation
– The Fiedler contingency model proposed that effective
group performance depended upon properly matching the
leader’s style and the amount of control and influence in
the situation.
– The model was based on the premise that a certain
leadership style would be most effective in different types
of situations.
– The keys were to (1) define those leadership styles and the
different types of situations, and then (2) identify the
appropriate combinations of style and situation.
Management Theories
161

Paul Hersey and Ken Blanchard’s
Situational Model – followers reediness
matters most
– Paul Hersey and Ken Blanchard developed a leadership
theory that has gained a strong following among
management development specialists.
– This model, called situational leadership theory (SLT), is a
contingency theory that focuses on followers’ readiness.
– Before we proceed, two points need clarification: Why a
leadership theory focuses on the followers, and what is
meant by the term readiness.
– readiness, as defined by Hersey and Blanchard, refers to
the extent to which people have the ability and willingness
– to accomplish a specific task.
Management Theories
162

Path-Goal Model
: Leaders’ job is to assist
followers
– Another approach to understanding leadership is
path-goal theory, which states that the leader’s job
is to assist followers in attaining their goals and to
provide direction or support needed to ensure that
their goals are compatible with the goals of the
group or organization.
Management Theories
163

Managerial Grid
– Leaders may be concerned for their people and they also
must also have some concern for the work to be done. The
question is, how much attention to they pay to one or the
other?
– This is a model defined by Blake and Mouton in the early
1960s.
Management Theories
164

Managerial Grid
Management Theories
165

Likert's leadership styles
– Rensis Likert identified four main styles of leadership, in particular
around decision-making and the degree to which people are involved
in the decision.
– Exploitive authoritative
– Benevolent authoritative
– Consultative
– Participative
Management Theories
166

Exploitive authoritative
– In this style, the leader has a low concern for people and
uses such methods as threats and other fear-based
methods to achieve conformance. Communication is
almost entirely downwards and the psychologically distant
concerns of people are ignored.
Management Theories
167

– Benevolent authoritative
– When the leader adds concern for people to an
authoritative position, a 'benevolent dictatorship' is
formed. The leader now uses rewards to encourage
appropriate performance and listens more to concerns
lower down the organization, although what they hear is
often rose-tinted, being limited to what their subordinates
think that the boss wants to hear. Although there may be
some delegation of decisions, almost all major decisions
are still made centrally.
Management Theories
168

– Consultative
– The upward flow of information here is still cautious and
rose-tinted to some degree, although the leader is making
genuine efforts to listen carefully to ideas. Nevertheless,
major decisions are still largely centrally made.
Management Theories
169

– Participative
– At this level, the leader makes maximum use of
participative methods, engaging people lower down the
organization in decision-making. People across the
organization are psychologically closer together and work
well together at all levels.
Management Theories
170

Lewin’s Leadership Styles
– Autocratic – Low participation, high centralization
– Democratic – high participation
– Laissez faire - Hands-off management
Management Theories
171

McClelland Theory of
Motivation
– McClelland says that, regardless of our gender, culture, or
age, we all have three motivating drivers, and one of these
will be our dominant motivating driver. This dominant
motivator is largely dependent on our culture and life
experiences.
– 3categories of needs
1. Achievement
2. Power
3. Affiliation
Management Theories
172

McClelland’s Need Theory:
Need for Achievement
[Need for Achievement]
a manifest (easily perceived)
need that concerns individuals’
issues of excellence, competition,
challenging goals, persistence,
and overcoming difficulties

Need for Power
[Need for Power]
need that concerns an
individual’s need to make an
impact on others, influence
others, change people or events,
and make a difference in life

Need for Affiliation
[Need for Affiliation]
need that concerns an
individual’s need to establish
and maintain warm, close,
intimate relationships with
other people

Organic Organization/Structure
– An organic organization is one that is
very flexible and is able to adapt well to
changes.
– Its structure is identified as having little
job specialization, few layers of
management (wide span), decentralized
decision-making, and not much direct
supervision.
Management Theories
176

Mechanistic (and also some
more on Organic)
– organic organization is characterized by “(1)
Flatness: communications and interactions are horizontal,
(2) Low specialization: knowledgeresides wherever it is
most useful, and (3) Decentralization:
great deal of formal and informal participation in decision
making. Organic structure is a decentralized approach,
whereas mechanistic structure is a centralized approach
– mechanistic organization is “the organization is
hierarchical and bureaucratic. It is characterized by its (1)
highly centralized authority, (2) formalized procedures and
practices, and (3) specialized functions.
Management Theories
177

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