Unit 2 evolution of management thought

Unit 2- Evolution of Management
Thought

Contribution of FW Taylor
• Frederick Winslow Taylor (March 20, 1856 – March 21, 1915) was
an American mechanical engineer who sought to improve industrial
efficiency. He was one of the first management consultants.Taylor
was one of the intellectual leaders of the Efficiency Movement and
his ideas, broadly conceived, were highly influential in
the Progressive Era (1890s–1920s). Taylor summed up his efficiency
techniques in his book The Principles of Scientific
Management which, in 2001, Fellows of the Academy of
Managementvoted the most influential management book of the
twentieth century. His pioneering work in applying engineering
principles to the work done on the factory floor was instrumental in
the creation and development of the branch of engineering that is
now known as industrial engineering.

Essence of Scientific Management:
• Taylor advocated that principles of scientific management
could succeed only if there was ‘complete mental revolution’.
Rather than management and workers having conflict with
each other over sharing of organisational profits, mental
revolution aimed at fusion of interests of labour and
management.
• It calls for a complete change in the outlook of management
and workers towards each other. Both management and
workers should have complete understanding of the quantity
and quality of work to be achieved within a given time period
and try to achieve that target.

Significance of Scientific
Management
1. Better management:This theory gained wide popularity in the
managerial world, in both business and non-business
organisations. It introduced better management through
scientific methods such as work study, incentive plans, rest hours
etc.
2. Optimum allocation of resources:Scientific management
eliminates wasteful time and motions in performing various
activities. It introduced time and motion studies to increase
contribution to organisational goals. He discovered workers’ true
capacity and provided ‘a fair day’s work for a fair day’s wage’.

• 3. Scientific approach:It emphasised on
scientific selection, education and
development of workers so that problem-
solving is not based on random decision-
making. It advocated selection on the basis of
job requirements. Selection of right person for
the right job is the basis of this theory.
Training methods are also scientifically
designed to develop workers to perform the
jobs they are best suited for.

4. Work specialisation:He identified planning
and execution as two distinct jobs. People
responsible for planning and execution belong
to separate departments. Instructions are given
by foremen specialised in their areas. This
results in smooth business operations.
5. Mental revolution:He advocated mental
revolution on the part of both employers and
employees. This revolution changed the attitude
of management and workers towards their

• 6. Productivity:Better management and
optimum allocation of resources result in high
productivity, high profits and high wages. It,
thus, improves economic performance of both
management and workers.
• 7. Harmonious relationship-Since
management and workers cooperate with
each other, relationship between the two
tends to be harmonious. It reduces
interpersonal conflicts and promotes unity of

Limitations of Scientific
Management:
• Over-emphasis on economic needs:Taylor
focused only on physical and economic needs
of workers. He overlooked the importance of
social and ego needs that affect their
behaviour. Taylor viewed workers as mere
factors of production and not human beings
with social and emotional ties.

• Loss of jobs:His theory was opposed by
workers and labour unions as they felt that
scientific ways would increase production but
reduce the work force. Workers believed that
if they adopted Taylor’s work methods, they
would lose their jobs.
• Efficient methods of production will lead to
same work being performed by lesser number
of workers. The possible threat of lay offs
made workers and union suspicious about

• Monotony:Focus on scientific ways of
performing the job (standardisation), task
planning etc. can make work monotonous as
workers work along pre-defined lines of action
and lose interest in jobs. The work becomes so
routinized that workers do not use their
initiative and creativity in performing better.
• Discrimination amongst workers:Differential
wage rate system distinguishes between
efficient and inefficient workers on the basis

• Unsuitable for small firms:Scientific
management theory is unsuitable for small
firms because of their inability to invest huge
funds in developing scientific methods of
production. Small firms are, thus, deprived of
the benefits of scientific management.

Major Contributions
• Taylor- Scientific Management
• Fayol- 14 Management Principles
• Elton Mayo- Hawthorne Experiment
• Chester Barnard- Acceptance Theory
• Peter Drucker-Management by
Objectives(MBO)

Henri Fayol
• Henri Fayol (29 July 1841 – 19 November
1925) was a French mining engineer, mining
executive, author and director of mines who
developed general theory of business
administration that is often
called Fayolism. He and his colleagues
developed this theory independently
of scientific management .

Fayol divided general and industrial management into
following six groups:
• 1. Technical activities (production, manufacture, adaptation).
• 2. Commercial activities (buying, selling and exchange).
• 3. Financial activities (search for and optimum use of capital).
• 4. Security activities (protection of property and persons).
• 5. Accounting activities (stock taking, balance sheet, cost, and
statistics).
• 6. Managerial activities (planning, organising, command,
coordination and control).

1) Division of work-Applicable for firms which have many
employees as well as few employees, the principle of division of
work says, that the work should be divided between
all people who are capable of doing it and should not be
overloaded to a concentrated few. It should not be diluted by
giving the same work to many people. This ensures proper
utilization of labour and keeps them focused and productive.
• In the long term, this same targeted division of work helps the
labour in specializing in the work they are doing, thereby
ensuring there are far fewer mistakes. In a factory, the
problem solver is always someone who has worked on the
machinery for years on end.

2) Authority-The power and responsibility to
give orders should reside with only a few people
and should not be diluted. One of the common
errors of large companies is that the
management comprises of too many people,
thereby creating conflicts. When a few hand
selected people have the power to vote, then
this authority is carried down the chain and the
process gets implemented.With such authority
comes responsibility

3) Discipline
• It goes without saying, that management is responsible for
the way discipline is maintained in an organization. And this
discipline percolates down the line, to the end of the
employee chain as well.
• A best example will be ad agencies, who encourage informal
meetings and conversations so as to build better
relationships with the customers. However, even these ad
agencies are known to maintain discipline in the way the ad
executive interacts with the customers or the way they carry
out their work. Discipline is a part of the mission and values of
the organization itself.

4) Unity of command
• When we discussed authority in the above point, we said that
authority should lie with only certain people. Similarly, the
authority flows down the chain only when there are a limited
number of people associated with the authoritative person. If
all the people in a political party were directly reporting to the
prime minister, he will soon be admitted in the hospital due
to stress.
• So to maintain command, there is a hierarchy. One person
should report only to one leader and not to 3-4 people

5) Unity of direction
• Once unity of command is achieved and you have a complete
hierarchy, where everyone knows who they are reporting to,
and they are ready to do the leaders bidding, then it is time to
implement unity of direction. The company, from the CEO
level to the executive level should be moving towards one
direction. If growth is the direction you are moving to, then a
single executive to the CEO of the company should be
performing in a manner which brings growth for the company.
And this executive should be trained and managed
accordingly by his managers.

6) Subordinate interests-To control people, you
have to understand their interests first. And in
the end, you have to ensure that the interest of
the company lies above the interest of
the individual. Many a time, a person is
removed from the company when he is moon
lighting or doing his own sideline jobs. This is
because the company wants to ensure, that the
person who is working in the company is giving
his 100% to the company.

7) Remuneration -Now, naturally when you are expecting your employees to
be disciplined, you want unity of direction and command, then you have to
remunerate the employees so that they are less likely to shift to the
competition and more likely to concentrate on the jobs they have in hand.
• As per Henri fayol’s 14 principles of management, employees should be
remunerated fairly to keep their motivation levels high. This remuneration
may be monetary or non monetary. The monetary compensation includes
incentives, bonus or other financial compensation. The non monetary
compensation may include rewards or recognition.

8) Centralization-Centralization is the amount of control that is lying with
people in an organization. If there are select group of people who have
control (for example – in large corporates), then this is known as
centralization. On the other hand, if there are a higher percentage of people
in the organization having control (for example – in small businesses), then
this is known as decentralization.
• Organizations have to balance centralization and decentralization both.
Most top companies have strategic business units which are also a form of
decentralization.

9) Scalar chain-Scalar chain is confusing for many people, but let me break it
down simply for you. When mentioning the unity of command, i said that one
person should report to a single manager higher up the chain only. So an
executive should report to a team manager, who should report to the regional
manager who will report to the national manager, so on and so forth.
• Scalar chain says that there should be a clear line of authority in the
company so that when you have to “Escalate things” then you know the
line of authority. When you are facing emergencies or calamities, you
should know who to go to, if your immediate boss doesn’t resolve your
queries.
• Popular companies like Samsung and others have the scalar chain set to a
dot. In such companies, for customer service, if your complaint is not
resolved in 3 days, it goes to the local manager, if not resolve in 5 days, it
goes to regional head, and if not resolved in 7 days it goes to national
heads

10) Order-This order does not mean that
someone sitting on top is ordering the people. It
is the order of “Order vs chaos”. Simply said, if
an organization does not work in an orderly
manner, there will be chaos. So to work in an
orderly manner, employees need the right
equipment and the right procedure to ensure
order is maintained at all times.Hence, most
large companies have specific ways that they
calculate the attendance of their labour. Specific

11) Equity-Everyone should be treated equally
and no preference should be given in an
organization. Many a times, the most common
complaint of employees is that a different
employee was preferred over them for
promotion or better remuneration.

12) Stability of tenure-One of the critical things in Henri fayol’s 14 principles
of management was stability of tenure, or attrition of employees. In essence,
Henri fayol said that an organization has a better chance to grow faster if its
employees are stable. Naturally, if there is high attrition in the organization,
then there will be a lot of time wasted in training and development, costs will
go up and stability of tenure will not be observed.
• If you look at most large companies, they take attrition and employee
turnover very seriously. There are various procedures set to ensure that
employees do not leave the company, and even if they do, then the
management should know why they are leaving.

13) Initiative-It sounds too good when we think
that a company has innovated and brought a
new product to the market. But many a times,
we question, why companies are not regularly
innovating. If you look at it, the most innovative
companies are the ones which encourage young
and old talent to bring out their own ideas. They
also show interest and involvement to
encourage such professionals.

14) Esprit de corps-Esprit de corp is defined as a
feeling of pride and mutual loyalty shared by the
members of a group. And that’s exactly what
you have to target for if you want to achieve
success while applying the 14 principles of
management.Esprit de corps is the ultimate
union of the management and employees within
an organization, which leads to an organization
which is proud of what it does, and which has
garnered a lot of loyalty from its employees and

Elton Mayo
George Elton Mayo (26 December 1880 – 7 September
1949) was
an Australian born psychologist,[1][2][3] industrial
researcher, and organizational theorist. Mayo was
formally trained at the University of Adelaide, acquiring
a Bachelor of Arts Degree graduating with First Class
Honours, majoring in philosophy and psychology,and
was later awarded an honorary Master of Arts Degree
from the University of Queensland (UQ).

Hawthorne Experiment by Elton
Mayo
• In 1927, a group of researchers led by Elton Mayo and Fritz
Roethlisberger of the Harvard Business School were invited to join in the
studies at the Hawthorne Works of Western Electric Company, Chicago.
The experiment lasted up to 1932. The Hawthorne Experiment brought
out that the productivity of the employees is not the function of only
physical conditions of work and money wages paid to them. Productivity
of employees depends heavily upon the satisfaction of the employees in
their work situation. Mayo’s idea was that logical factors were far less
important than emotional factors in determining productivity efficiency.
Furthermore, of all the human factors influencing employee behavior, the
most powerful were those emanating from the worker’s participation in
social groups. Thus, Mayo concluded that work arrangements in addition
to meeting the objective requirements of production must at the same
time satisfy the employee’s subjective requirement of social satisfaction at
his work place.

The Hawthorne experiment consists of four
parts. These parts are briefly described below:-
• Illumination Experiment.
• Relay Assembly Test Room Experiment.
• Interviewing Programme.
• Bank Wiring Test Room Experiment.

Illumination Experiment:
This experiment was conducted to establish
relationship between output and illumination.
When the intensity of light was increased, the
output also increased. The output showed an
upward trend even when the illumination was
gradually brought down to the normal level.
Therefore, it was concluded that there is no
consistent relationship between output of
workers and illumination in the factory. There
must be some other factor which affected

Relay Assembly Test Room
Experiment:
• This phase aimed at knowing not only the impact of illumination on
production but also other factors like length of the working day, rest
hours, and other physical conditions. In this experiment, a small
homogeneous work-group of six girls was constituted. These girls were
friendly to each other and were asked to work in a very informal
atmosphere under the supervision of a researcher. Productivity and
morale increased considerably during the period of the experiment.
Productivity went on increasing and stabilized at a high level even when all
the improvements were taken away and the pre-test conditions were
reintroduced. The researchers concluded that socio-psychological factors
such as feeling of being important, recognition, attention, participation,
cohesive work-group, and non-directive supervision held the key for
higher productivity.

Mass Interview Programme:
• The objective of this programme was to make a systematic
study of the employees attitudes which would reveal the
meaning which their “working situation” has for them. The
researchers interviewed a large number of workers with
regard to their opinions on work, working conditions and
supervision. Initially, a direct approach was used whereby
interviews asked questions considered important by
managers and researchers. The researchers observed that the
replies of the workmen were guarded. Therefore, this
approach was replaced by an indirect technique, where the
interviewer simply listened to what the workmen had to say.
The findings confirmed the importance of social factors at
work in the total work environment.

Bank Wiring Test Room
Experiment:
• This experiment was conducted by Roethlisberger and Dickson with a view
to develop a new method of observation and obtaining more exact
information about social groups within a company and also finding out the
causes which restrict output. The experiment was conducted to study a
group of workers under conditions which were as close as possible to
normal. This group comprised of 14 workers. After the experiment, the
production records of this group were compared with their earlier
production records. It was observed that the group evolved its own
production norms for each individual worker, which was made lower than
those set by the management. Because of this, workers would produce
only that much, thereby defeating the incentive system. Those workers
who tried to produce more than the group norms were isolated, harassed
or punished by the group. The findings of the study are:-
• Each individual was restricting output.
• The group had its own “unofficial” standards of performance.
• Individual output remained fairly constant over a period of time.

Contributions of the Hawthorne
Experiment to Management
• The important features of the Hawthorne Experiment are:
• A business organization is basically a social system. It is not just a techno-economic
system.
• The employer can be motivated by psychological and social wants because his
behavior is also influenced by feelings, emotions and attitudes. Thus economic
incentives are not the only method to motivate people.
• Management must learn to develop co-operative attitudes and not rely merely on
command.
• Participation becomes an important instrument in human relations movement. In
order to achieve participation, effective two-way communication network is
essential.
• Productivity is linked with employee satisfaction in any business organization.
Therefore management must take greater interest in employee satisfaction.

• Group psychology plays an important role in
any business organization. We must therefore
rely more on informal group effort.
• The neo-classical theory emphasizes that man
is a living machine and he is far more
important than the inanimate machine.
Hence, the key to higher productivity lies in
employee morale. High morale results in
higher output.

Chester Barnard
• Chester Irving Barnard (November 7, 1886 –
June 7, 1961) was
an American business executive, public
administrator, and the author of pioneering
work in management theory
and organizational studies. His landmark 1938
book, The Functions of the Executive, sets out
a theory of organization and of the functions
of executives in organizations.

Acceptance Theory to Authority
• Chester Barnard believed that formal
organizations are made up of informal groups.
These informal groups evolve to become the
informal organization. The group's beliefs and
values establish the organizational culture and
determine, to a large extent, formal
acceptance of authority.

Acceptance Theory of Authority
• Management theorist Chester Barnard believed organizations
need to be both effective and efficient. Effective means
meeting organizational goals in a timely way. Efficient, in his
opinion, means the degree to which the organization can
satisfy the motives of its employees. In other words, the
organizational goals will be accomplished and authority will
be accepted when workers feel satisfied that their individual
needs are being met. This is known as the acceptance theory
of authority.

• Acceptance theory of authority states that a manager's
authority rests on workers' acceptance of his right to give
orders and to expect compliance. Workers have to believe
that the manager can legitimately give orders and there is a
legitimate expectation that the orders will be carried out.
There are a few reasons for this expectation:
• Workers will be rewarded for compliance
• There will be discipline for non-compliance
• Workers respect the manager for his experience

Peter Drucker
• Peter Ferdinand Drucker November 19,
1909 – November 11, 2005) was an Austrian-
born American management consultant,
educator, and author, whose writings
contributed to the philosophical and practical
foundations of the modern
business corporation. He invented the concept
known as management by objectives and self-
control.

What is Management By
Objectives?
• Management By Objectives (MBO) is
an performance management approach in which a
balance is sought between the objectives of
employees and the objectives of an organization. The
essence of Peter Drucker ’s basic principle:
Management By Objectives is to determine joint
objectives and to provide feedback on the results.
Setting challenging but attainable objectives
promotes motivation and empowermentof
employees. By increasing commitment, managers are
given the opportunity to focus on new ideas and
innovation that contribute to the development and

• However, Peter Drucker sets a number of
conditions that must be met:
• Objectives are determined with the
employees;
• Objectives are formulated at both quantitative
and qualitative levels;
• Objectives must be challenging and
motivating;

• Daily feedback on the state of affairs at the
level of coaching and development instead of
static management reports;
• Rewards (recognition, appreciation and/or
performance-related pay) for achieving the
intended objectives is a requirement;
• The basic principle is growth and development
not punishments.

1. Determine or revise the organizational
objectives
• Strategic organizational objectives are the
starting points of management by objectives.
These objectives stem from the mission and
vision of an organization. If an organization
has not formulated these yet, it does not
make sense to carry out the next steps.

2. Translating the organizational objectives to
employees
• In order to make organizational objectives organization-wide,
it is important that these are translated to employee level. For
efficiency reasons, Peter Drucker used the SMART
Goals acronym SMART (Specific, Measurable, Acceptable,
Realistic and Time-bound). The element Acceptable is crucial
in management by objectives as this is about agreement on
the objectives between the employees and the organization.
The management by objectives principle does not allow
management to determine the objectives by themselves.
According to management by objectives, objectives should be
clearly recognizable at all levels and everyone should know
what their responsibilities are in this. Communication is also
an important item for consideration when it comes to
expectations, feedback and to giving rewards for objectives

3. Stimulate the participation of employees in the determining
of the objectives
• The starting point is to have each employee participate in the
determining of personal objectives that are in line with the
objectives of the organization. This works best when the
objectives of the organization are discussed and shared
throughout all levels of the organization so that everyone will
understand why certain things are expected of them. In this
way, everyone can make their own translation of what their
contribution can be to the objectives. This approach increases
the involvement and commitment of the objectives. Instead
of simply following expectations of managers and executives,
everyone in an management by objectives approach will know
what is expected of them

4. Monitoring of progress
• Because the goals and objectives are SMART,
they are measurable. If they cannot be
measured, a system will have to be set up in
which a monitoring function is activated when
the objectives are deviated from. Detection
must be timely so that large problems can be
prevented. In Management By Objectives,
employees are not supported by their
management through annual performance
reviews. Management By Objectives is about

5. Evaluate and reward achievements
• Management By Objectives has been designed to
improve performance at all levels within an
organization. A comprehensive evaluation system is
therefore essential. As goals and objectives have
been SMART formulated, they make the evaluation
of processes very easy. Employees are evaluated and
rewarded for their achievements in relation to the
set goals and objectives. This also includes accurate
feedback. Management By Objectives is about about
why, when and how objectives can be achieved.

Business Ethics & Social Responsibility:
Business ethics are set of principles and standards that
determine acceptable conduct in business organizations.
Personal ethics, on the other hand, relates to an individual’s
values, principles, and standards of conduct. The acceptability of
behavior in business is determined by not only the organization
but also stakeholders such as customers, competitors,
government regulators, interest groups, and the public as well
as each individual’s personal principles and values.

We define social responsibility as a business’s obligation to maximize its
positive impact and minimize its negative impact on society. Business ethics
relates to an individual’s or a work group’s decisions that society evaluates as
right or wrong, whereas social responsibility is a broader concept that
concerns the impact of the entire business’s activities on
society.
Lets watch a video………………………..

Tools of Business Ethics
• VALUES:it is useful in this text to recognize
that business ethics can refer to several
different things. Most commonly it refers to
ethical conducts in and by business .In this
sense, its benefits to business include: doing
the right things, which typically promotes
achievement of business goals. While doing
the wrong things hinders the successive
pursuit of those goals.

LOYALTY:Steadfastness in allegiance to the
management of the business enterprise. This
implies the commitment on the part of set
objectives of the business organization.
FAIRNESS: The avoidance of discriminating
tendencies in dealing with people of diverse
background,endeavouring to treat all human
begins as equal and then give each person equal
opportunities.

• PRINCIPLED BEHAVIOUR: The demonstration of a consistent
behaviour in similar situations that makes one's behaviour
predictable and ensuring the same direction being made in
similar situations.
CONFIDENTIALITY:Beign discreet in dealing with the publics in
a manner that makes the employee to refuse to divulge
official information even in the face of financial inducement
or inspite of threats to his life.

Unit 2 evolution of management thought

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