CHAPTER 2

MANAGEMENT
HISTORY

HISTORY OF MANAGEMENT
DEVELOPMENT OF MAJOR MANAGEMENT
THEORIES
HISTORICAL BACK GROUND
1.
EARLY EXAMPLES OF MANAGEMENT
Egyptians pyramids, Great wall of China,
Qila Rohtaas.
2.
DIVISION OF LABOR, ADAM SMITH
He introduced job specialization, break
down of jobs in to specific repetitive tasks.
3.
INDUSTRIAL REVOLUTION
The advent of machine power, mass
production, and efficient transportation.

SIX MAJOR THEORIES OF

MANAGEMENT

Scientific Management
General Administrative Theorists
Quantitative Approach
Organizational Behavior (Early
Advocates, Hawthorne studies)
System Approach
Contingency Approach

Theory of Scientific
Management
Fredrick W Taylor (1856-1915)

Principles of Scientific Management by Frederick

Taylor in 1911.
He is considered to be the father of
Management.
He elaborated the use of scientific Methods to
determine the one best way for a job to be done.
Working At a Steel Company He witnessed many
inefficiencies. He sought to create mental
revolutions among the workers and management
by defining clear guidelines for improving
production efficiency.

Theory of Scientific
Management
contribution by Frank & Lilan
Frank was a contractor and gave up his career to
Gilbreth
study the scientific management.

Lilan his wife was a psychologist.

They studied to eliminate the wasteful activities.
They also worked on optimizing the work
performance by designing the tools.
They designed a device called microchronometer,
which recorded the workers motion and amount of
time. With the help of device wasted motion
missed by the naked eye could be eliminated.
Therbligs: A classification scheme for labeling 17
basic hand motions.

TODAYS MANAGER AND USE OF

SCIENTIFIC MANAGEMNT

Managers analyze the basic work and

tasks that must be performed.
They use time and motion study to
eliminate the wasteful activities.
They hire, train best qualified workers
for the job and design incentive
systems based on the out put. Thus
they are using the scientific
management.

TAYLORS FOUR PRINCIPLES OF

MANAGEMENT

Develop a science for each element of an individuals

work, which will replace the old rule of thumb method
Scientifically select and then train, teach and develop
the worker.
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.
Divide work and responsibility almost equally between
management and workers. Management takes over all
work for which it is better fitted than the worker.

GENERAL ADMINISTRATIVE
THEORY

HENRY FAYOL AND MAX

WEBER
The general Administrative theorists
Writers who developed general theories
of what managers do and what
constitutes good management practice.

HENRY FAYOL
Principles of Management

Famous for his functions of Management.

Taylor was concerned with first line managers
and scientific methods while Fayol was
concerned with activities of all the managers.
His belief was that management is distinct
from other typical business functions like
accounting, production etc. and that the
management was an activity common to all
human endeavors in business, government
and even at home. This led him to devise 14
principles of management.

FAYOLS 14 PRINCIPLES OF
MANAGEMENT
1.

2.

3.

4.

5.

Division of Work: Specialization increases out put

by making employees more efficient.
Authority: Manager must be able to give the
orders and authority gives them this right.
Discipline: Every one must obey the rules that
governs the organization.
Unity of Command: Every employee should
receive orders from one superior.
Unity of Direction: The organization should have
a single plan of action to guide managers and
workers.

FAYOLS 14 PRINCIPLES OF
MANAGEMENT
6.

7.

8.

9.

Subordination of individual interests to the general

interests.
Remuneration: Workers must be paid a fair wage for
their services.
Centralization: A degree to which the workers are
involved in decision making.
Scalar Chain: The line of authority from top
management to lowest rank is called the scalar
chain.

FAYOLS 14 PRINCIPLES OF
MANAGEMENT
10.

11.

12.

Order: People and material should be at right place

at the right time.
Equity: Managers should be kind and fair to their
subordinates.
Stability of tenure of personnel: Management should
provide orderly personnel planning and ensure that
replacements are available to fill the vacancies.

FAYOLS 14 PRINCIPLES OF
MANAGEMENT
13.

14.

Initiative: Employees who are allowed to

originate and carry out plans will exert high level
of efforts.
Esprit De corps: Promoting team spirit will build
harmony and unity within the organization.

MAX
WEBER

A German sociologist who studied

organizational activity. In early 1900s he
developed a theory of authority, structure and
relations.
Bureaucracy: He described an ideal form of
organization as bureaucracy. A form of
organization characterized by division of
labor, a clearly defined hierarchy, detailed
rules and regulations, and impersonal
relationship.

How do Managers practice the

General administrative theory

The functional view of Henry Fayol and 14

principles of management serve as frame
reference of many management concepts.
Weber theory didnt got the much popularity.
Although his attempt to BUREAUCRACY was an
attempt to formulate an ideal prototype for
organizations, his model is not as popular today as
it was in 20th century.
The strict division of labor, impersonal application
of rules takes away the creativity of employee
and organization ability to change according to
the dynamic environment.

QUANTITAVE APPROACH TO
MANAGEMENT

This refers to use of quantitative techniques to

improve decision making.
It involves applications of statistics, optimization
models, information models and computer
simulations to management activities.
Linear programming is a technique used by the
managers to improve the resource allocation
decisions.
Work schedule can be more efficient by using
critical path scheduling analysis.

IMPORTANT CONTRIBUTION TO
QUANTITATIVE APPROACH TO
MANAGEMENT

Quantitative approach evolved out the

development of mathematical and statistical
solutions to military problems during world
war-II.
After the war many techniques used to solve
military problems were used in businesses.
The group of military men who introduced
this technique were called Whiz Kid.
Famous are ROBERT McNAMARA and Charles
Tex Thornton.

HOW DO MANAGERS USE

QUANTITATIVE TECHNIQUES

It directly contributes to the area of planning and

control.
It is used in budgeting, scheduling and quality
control.
They use statistical techniques, computers to
build models and make analysis.
However behavioral problems are more evident
and widespread and it is easier for the Managers
to relate day to day people problem than to
constructing abstract quantitative models.

ORGANIZATIONAL BEHAVIOR
APPROACH

This field of study is concerned with the actions

(behavior) of people at work.
This study provides the basis for human resource
management as well as contemporary view of
motivation, leadership, trust, teamwork and conflict
management.
The early advocates of this study believed that people
were the most important asset of the organization and
should be managed accordingly.
This provided foundation of such management
practices like employee selection procedures,
employee motivation programs, employee work
teams and organization management techniques.

HAWTHRONE STUDIES

A series of studies during 1920s and 1930s that provided new

insights into individual and group behavior.
The studies were designed by electrical engineers at Western
Electric Company as scientific management.
They wanted to examine effects of different light level at workers
productivity.
The experimental group was exposed to different light levels and the
control group worked under constant light levels.
The productivity increased in both groups even when the light level
was decreased. The productivity decreased of the experimental
group when the level of light was decreased to moonlit night.
They concluded that the productivity was not related to light level, it
was something else they did not know.
They invited Prof Mayo of Harvard to study as consultant. Mayo
concluded that behavior and attitudes are closely related, that group
influences significantly individual behavior. The group standards
affect the individual output.
Money is less a factor in determining output than group standards,
group attitude and group security.

HOW TODAYS MANAGERS USE THE

BEHAVIORAL APPROACH

This approach has largely shaped

todays organization.
This provided the foundation of
motivation, leadership, group
behavior and developments.

THE SYSTEM APPROACH

SYSTEM: is a set of interrelated and

interdependent parts arranged in a manner
that produces a unified whole.
CLOSED SYSTEMS: The system which are not
influenced by or do not interact with their
environment.
OPEN SYSTEMS: The systems which
dynamically interact with their environment.

EXAMPLE OF AN OPEN SYSTEM

An organization from an open system

perspective, takes inputs (Raw
Material, Human resources, Capital,
Technology, information) from the
environment.
Then it transforms or processes these
inputs into outputs which are again
distributed into environment.

The system approach and

Managers

The system researchers envisioned the

organization as being made of interdependent
and interrelated factors.
The Managers coordinate the work activities of
the various parts of the organization and ensure
that all the interdependent parts are working
together.
Each department performance depends the
performance of other.
An organization is not self contained in system
approach, it has to interact with its environment.

CONTINGENCY APPROACH

An approach (also called situation

approach) which says that
organizations are different face,
different situations (contingencies) and
require different ways of managing.
Different and changing situations
require managers to use different
approaches and techniques.

POPULAR CONTINGENCY
VARIABLES.

Organization size: As size increases so the problems

of coordination.
Routineness of Task technology: To achieve its
goals, an organization uses technology. Routine
technologies require organizational structures,
leadership style and control systems that differs from
those required by customized or no routine
technologies.
Environmental uncertainty: The dynamic
environments influence the management process.
Individual differences: Individual differs in terms of
desire, expectation, autonomy, tolerance of ambiguity.
These factors are important when managers select
motivation techniques and leadership style.

The contingency approach and

Managers

Organizations and even units within the

organizations are diverse in the size,
work and goals. It is surprising to find
universally applicable management
rules that would work in all situations.

CURRENT TRENDS AND ISSUES

Changing the way managers do their
jobs

GLOBLIZATION
ETHICS
WORKFORCE DIVERSITY
ENTERPRENEURSHIP
E-BUSINESS
KNOWLEDGE MANGEMENT
LEARNING ORGANIZATION
QUALITY MANAGEMENT

GLOBALIZATION

Management is no longer constrained by National

borders.
German firm Mercedes building their cars in Pakistan
and India. McDonalds sell their hamburgers in China and
south Asia.
There are significant from globalization and the world
has become a global village.
The Globalization can be controversial. The openness of
globalization has made countries more vulnerable to
conflicts over political and cultural issues.
Regardless of all the problems the managers of all sizes
of organizations and types around the world have to
face the challenges of operating in the global market.

ETHICS

RULES AND PRINCIPLES THAT DEFINE THE

RIGHT OR WRONG CONDUCT.
As managers our decisions affect others or
some one is likely to be affected from our
decisions.
In todays changing work place, managers need
an approach to deal with complexities
associated with the ethical dilemmas that arise.

A PROCESS OF ADDRESSING
THE ETHICAL DILEMMAS
1.

2.
3.
4.

5.

WHAT IS THE ETHICAL DILEMMA: The Managers should

make sure that they understand the ethical dilemma that
arise. They need to step back and think about what issue is
at stake here.
WHO ARE THE AFFECTED STAKE HOLDERS. Who are
the people likely to be impacted by my decision.
IMPORTANT FACTORS: What Personal, organizational
factors are important to my decision.
POSSIBLE ALTERNATIVES: Managers has to identify and
evaluate different course of actions keeping in mind that
each have different effects on the stake holder.
MAKE A DECISION AND ACT ON IT: This process can
help the managers to help to assess the ethical dilemma
and seek the best possible course of action.

WORK FORCE
DIVERSITY

A work force that is more

heterogeneous in terms of gender, race,
ethnicity, age and other characteristics
that reflect differences.
An other problem of 21st century for the
managers to coordinate the work efforts
of diverse organizational members in
accomplishing the organizational goals.

ENTERPRENEURSHI
P

1.
2.
3.

A process whereby an individual or group of

individuals uses organized efforts to pursue
opportunities to create value and grow by
fulfilling wants and needs through innovation
and uniqueness, no matter what resources the
entrepreneur currently has.
It involves in discovering the opportunities and
resources to exploit them.
Three important dimensions of
entrepreneurship
Pursuit of opportunities (Jeff Bezos of
Amazon.com).
Innovation: Introducing the new things and
services.
Growth: Continuous growth through pursuit of
opportunities and innovations.

Managing in E-Business
World

E-Business: A comprehensive term describing the

way an organization does its work by using electronics

(internet based) linkages with its key
constituencies( employees, managers, customers,
clients, suppliers, and partners) in order to efficiently
and effectively achieve it goals.
E -Commerce:- Basically sale and marketing
components of E-Business. Like Dell are engaged in ecommerce because they sell items over the internet.
Intranet: An internal organizational communication
system that uses internet technology and is accessible
only by organizational employees.

CATEGORIES OF E-BUSINESS
INVOLVEMENT
E-Business Enhanced
Organization
E-Business within Traditional
Organization

E-Business Enabled
Organization.
E-Business tools and
applications used within
traditional organization.

Total Business Organization

Organizations entire work
processes revolve around ebusiness model.

E-Business Enhanced
Organization

A traditional organization that sets up ebusiness capabilities usually e-commerce,

while maintaining traditional structure.
They use internet to enhance traditional
ways of doing business. Sears a chain of
physical retail stores world wide uses also
internet division to expand business not to
replace the traditional way of generating
revenue.

E-Business enabled
organization

Type of organization uses internet to

perform its traditional business functions
better but not to sell any thing.
They use intranet for internal
communication system and is only
available to the employees of the
organization.
They use websites to interact with
customers, suppliers and employees etc.

Total E-Business Organization

Amazon. Com, Yahoo.com, Their whole

existence revolves around internet

Knowledge management
and Learning Organizations

Organizations of 21st century must be able to learn

and respond quickly. These organizations will be
lead by managers who can effectively challenge
conventional wisdom, manage the organizations
knowledge base and make needed changes. Part of
managers responsibilities is to learning capabilities
throughout the organization from lowest level to
highest level and in all areas.
Learning Organization: An organization that
has developed the capacity to continuously learn,
adapt and change.

TRADITIONAL
LEARNING
ORGANIZATION
ORGANIZATION
ATTITUDE TOWARD
CHANGE

If its is working
dont change it.

If you are not changing it

wont be working for
long.

ATTITUDE TOWARD If it was invented

NEW IDEAS
here, reject it.

If it was invented or
reinvented here, reject it.

WHOS
RESPONSIBLE
FOR
INNOVATION?

Traditional are such

as R&D

Every one in organization

MAIN FEAR
COMPETETIVE
ADVANTAGE

Making Mistakes

Not learning , Not adapting.

Products and services.

Ability to learn, knowledge and

expertise.

MANAGERS JOB

Control Others

Enable others.

KNOWLEDGE
MANAGEMENT

Cultivating a learning culture

where organizational members
systematically gather knowledge
and share it with others in the
organization so as to achieve
better performance.

QUALITY MANAGEMENT

A philosophy of management that

is driven by continual
improvement and responding to
customer needs and
expectations.

WHAT IS TQM (TOTAL

QUALITY MANAGEMENT)
1.
2.
3.
4.

5.
6.

INTENSE FOCUS ON THE CUSTOMER.

CONCERN FOR CONTINUAL IMPROVEMENT.
PROCESSED FOCUSED.
IMPROVEMENT IN THE QUALITY OF
EVERYTHING THAT THE ORGANIZATION DOES.
ACCURATE MEASUREMENT.
EMPOWERMENT OF EMPLOYEES.