EVOLUTION of Management THOUGHT Classical Vs Neo Classical Thoughts Handout

Dr.
M Manjunath Shettigar
EVOLUTION OF MANAGEMENT THOUGHT
STRUCTURE:
I. Learning Objectives
II. Historical Background
III. Classification of Management Theories
A. Classical Management Theory
a. Scientific Management
b. Administrative Management
c. Bureaucratic Organization
d. Limitations and Criticisms
B. Neo-Classical Management Theory
a. Human-Relations School
b. Behavioural Schools
c. Limitations and Criticisms
Learning Objectives:
to have a historical insight on the development
of management thought
to outline the classical and neo-classical

management theories
to identify the limitations or criticisms of the

different theories
to check if such ideas are still applicable and

evident nowadays
Historical Background
the concept and practice of management is manifested
as early as 5000BC military; church; etc.
management is characterized as authoritative (fear of

punishment; fear of God; merit system)

Acknowledgement of human worth and individual

knowledge, ability and skill during the Enlightenment
and Renaissance periods

Acknowledgement of human worth and individual

knowledge, ability and skill during the Enlightenment
and Renaissance periods
Maximization of production (industrial revolution)

CLASSIFICATION OF
MANAGEMENT
THEORIES
Classical Management
1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
Neo-Classical
Classical Management
Management
1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
Neo-Classical
Classical Management Modern Management
Management
1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
Scientific Management
Neo-Classical
Management
1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
Administrative
Management
Neo-Classical
Management
1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
Administrative
Management
Bureaucratic
Organization
Neo-Classical
Management
1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
Scientific Management Human Relations

School
Administrative
Management
Bureaucratic
Organization
Neo-Classical
Management
1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

School
Administrative
Management
Behavioural
Bureaucratic School
Organization
Neo-Classical
Management
1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

School Quantitative Approach
Administrative
Management
Behavioural
Bureaucratic School
Organization
Neo-Classical
Management
1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Administrative
Management Systems Approach
Behavioural
Bureaucratic School
Organization
Neo-Classical
Management
1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

Administrative
Management Systems Approach
Behavioural
Bureaucratic School
Contingency Approach
Organization
Neo-Classical
Management
1880 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
CLASSICAL MANAGEMENT THEORY
formative period: 1880 s 1930s

traditional management thought
evolved as a result of the Industrial Revolution
emphasis on the economic rationality of management and
organization
includes 3 well-established theories:

organization

organization
Administrative Management

organization
Bureaucratic Organization

organization
primary contributions:

organization
Application of science to the practice of management

organization
Development of basic management functions

organization
Development of basic management functions
Articulation and application of specific management principles
SCIENTIFIC MANAGEMENT
founded by Frederick Winslow Taylor (other

contributors/supporters: Henry Gantt; Frank
and Lillian Gilbreth

based on the concept of planning of work to
achieve efficiency, standardization,
specialization, and simplification (one best
way)

way)
time-motion study

way)
time-motion study
soldiering phenomenon of workers
purposely doing their job below their capacity
BASIC PRINCIPLES OF SCIENTIFIC MANAGEMENT:
1. Development of a true science of

management rather than following the rule
of thumb
2. Scientific selection and training of workers
3. Proper remuneration for fast and high-

quality work
4. Equal division of work and responsibility

between manager and worker
LIMITATIONS AND CRITICISMS OF SCIENTIFIC

MANAGEMENT:
1. ignoring human aspects of employment
2. working harder and faster would exhaust

whatever work was available, causing lay-
offs
3. With the speed up condition, constant

undue pressures are on
ADMINISTRATIVE MANAGEMENT:
founded by Henry Fayol

concept based on several principles of

management
concept based on several principles of

management
emphasis on the role of administrative

management
ACTIVITIES OF A BUSINESS ORGANIZATION:
1. Technical (production; manufacturing)

2. Commercial (buying; selling; exchange)
3. Financial (obtaining and using capital)
4. Security (protection of property and persons)
5. Accounting (balance sheet; stocktaking;
statistics; controlling)
6. Managerial (planning; organizing;
commanding; coordinating; controlling)
FAYOLS 14 PRINCIPLES OF MANAGEMENT:

1. Division of Labor. The more people specialize, the more
efficiently they can perform their work. This principle is
epitomized by the modern assembly line.
2. Authority. Managers must give orders so that they can get
things done. While their formal authority gives them the
right to command, managers will not always compel
obedience unless they have personal authority (such as
relevant expertise) as well.
3. Discipline. Members in an organization need to respect the
rules and agreements that govern the organization. To
Fayol, discipline results from good leadership at all levels of
the organization, fair agreements (such as provisions for
rewarding superior performance), and judiciously enforced
penalties for infractions.
4. Unity of Command. Each employee must receive
instructions from only one person. Fayol believed that when
an employee reported to more than one manager, conflicts
in instructions and confusion of authority would result.

5. Unity of Direction. Those operations within the organization
that have the same objective should be directed by only one
manager using one plan. For example, the personnel
department in a company should not have two directors, each
with a different hiring policy.
6. Subordination of Individual Interest to the Common Good. In
any undertaking, the interests of employees should not take
precedence over the interests of the organization as a whole.
7. Remuneration. Compensation for work done should be fair to
both employees and employers.
8. Centralization. Decreasing the role of subordinates in decision
making is centralization; increasing their role in
decentralization. Fayol believed that managers should retain
final responsibility, but should at the same time give their
subordinates enough authority to do their jobs properly. The
problem is to find the proper degree of centralization in each
case.

9. The Hierarchy. The line of authority in an organizationoften
represented today by the neat boxes and lines of the
organization chartruns in order of rank from top
management to the lowest level of the enterprise.
10. Order. Materials and people should be in the right place at the
right time. People, in particular, should be in the jobs or
positions they are most suited to.
11. Equity. Managers should be both friendly and fair to
subordinates.
12. Stability of Staff. A high employee turnover rate undermines
the efficient functioning of an organization.
13. Initiative. Subordinates should be given the freedom to
conceive and carry out their plans, even though some
mistakes may result.
14. Espirit de Corps. Promoting team spirit will give the
organization a sense of unity. To Fayol, even small factors
should help to develop the spirit. He suggested, for example,
the use of verbal communications instead of formal, written
communication whenever possible.
LIMITATIONS AND CRITICISMS OF

some of the principles are contradictory (ex.
unity of command vs. division of labor; limited
span of control vs. Number of organizational
levels should be kept at minimum)
Fayols principles are not empirically tested
Fayols principles may result to the formation
of mechanistic organization structures, thus
being insensitive to employees social and
psychological needs
BUREAUCRATIC ORGANIZATION:
most influential contributor: Max Weber
this is based on the concept that the structure

and design of an organization is characterized
by a hierarchy of authority, and formalized rules
and regulations that serve to guide the
coordinated functioning of an organization
devoted to the principle of efficiency:

maximizing output whilst minimizing inputs
BASIC PRINCIPLES OF BUREAUCRATIC

ORGANIZATION:
1. Structure
2. Specialization
3. Predictability and stability
4. Rationality
5. Democracy
LIMITATIONS AND CRITICISMS OF BUREAUCRATIC

ORGANIZATION:
1. Hierarchical relationships becomes important

(senior level loose the power to govern) since
decisions are pre-determined
2. due to impersonal nature of decision making
(problems might not be given a concrete and
applicable solution since an outside party is
the one handling
3. Elimination of opportunity for bargaining and
negotiations, thus people are pressured or
required to follow to the norms regardless of
individual differences
4. creation of parallel power structure
NEO-CLASSICAL MANAGEMENT THEORY

evolved as a reaction to Classical
Management Theory
human oriented approach (with emphasis on
time needs, drives, behaviours and
individuals attitudes
give birth to the concept of industrial
psychology:

Management Theory
psychology:
Human Relations School

Management Theory
psychology:
Human Relations School
Behavioural School
BASIC PRINCIPLES OF NEO-CLASSICAL

MANAGEMENT:
1. the individual as a distinct social being
2. the work group as an informal

organization
3. The management as a participative

management
Human Relations School:
founded by Elton Mayo (supported by F.J.

Roethlisberger and William J. Dickson)
later became as Organizational Behaviour
believed that there is an interrelationships
among members of an organization (conflict-
free as possible)
satisfaction of members psychological needs
should be the primary concern of the
management
working environment has a significant effect
with workers productivity
The Hawthorne Experiment
conducted to determine the relationship

between working conditions and productivity
conclude that there is an existence of a
strong informal groups
also conclude that employees behaviour at
work is affected by non-economic factors
emergence of a social person
The SOCIAL PERSON
i. individuals are motivated by social needs

ii. individuals sense of identity is obtained
through interpersonal relationships
iii. work has become dissatisfying due to
industrial progress and routinization
iv. individuals are more responsive to social
forces of peer groups than management
controls and incentives
v. individuals respond to provisions with regards
to their social needs and acceptance offered
by management
LIMITATIONS AND CRITICISMS OF HUMAN RELATIONS

SCHOOL:
1. the weight of emphasis is directed to

human variables as the only critical and
ignoring other variables
2. undermines material rewards over symbolic
rewards
3. formation of informal groups is unrealistic
and not very common
4. still gearing towards production-oriented
approach and not as employee-oriented
Behavioural School:
contributors: A. Maslow; R. Likert; C. Barnard; K.

Lewin; D. McGregor; M.P. Follett; W. Bennis; G.
Homans; C. Argyris; F. Herzberg
modern evolvement of human relations approach
gives emphasis to psychological variables while
treating fulfilment of emotional needs as a way of
achieving other primary economic goals
suggesting a more flexible organization structures
with jobs match with the capabilities and aptitudes
of average employees
concerned with motivation
LIMITATIONS AND CRITICISMS OF BEHAVIOURAL

SCHOOL:
1. they are pushing that the design of work

must keep pace with employees
capabilities and aptitudes at the same time
believed that employee desires diverse and
challenging work
2. they preferred participative and group
decision-making, process of self-direction
and control instead of imposed control
END

EVOLUTION of Management THOUGHT Classical Vs Neo Classical Thoughts Handout

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EVOLUTION of Management THOUGHT Classical Vs Neo Classical Thoughts Handout

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Dr.

to outline the classical and neo-classical

to identify the limitations or criticisms of the

to check if such ideas are still applicable and

management is characterized as authoritative (fear of

management is characterized as authoritative (fear of

Acknowledgement of human worth and individual

management is characterized as authoritative (fear of

Acknowledgement of human worth and individual

Maximization of production (industrial revolution)

Scientific Management Human Relations

Scientific Management Human Relations

Scientific Management Human Relations

Scientific Management Human Relations

Scientific Management Human Relations

CLASSICAL MANAGEMENT THEORY

formative period: 1880 s 1930s

CLASSICAL MANAGEMENT THEORY

formative period: 1880 s 1920s

CLASSICAL MANAGEMENT THEORY

formative period: 1880 s 1920s

CLASSICAL MANAGEMENT THEORY

formative period: 1880 s 1920s

formative period: 1880 s 1920s

formative period: 1880 s 1920s

formative period: 1880 s 1920s

formative period: 1880 s 1930s

founded by Frederick Winslow Taylor (other

founded by Frederick Winslow Taylor (other

founded by Frederick Winslow Taylor (other

founded by Frederick Winslow Taylor (other

BASIC PRINCIPLES OF SCIENTIFIC MANAGEMENT:

1. Development of a true science of

3. Proper remuneration for fast and high-

4. Equal division of work and responsibility

LIMITATIONS AND CRITICISMS OF SCIENTIFIC

1. ignoring human aspects of employment

2. working harder and faster would exhaust

3. With the speed up condition, constant

founded by Henry Fayol

founded by Henry Fayol

concept based on several principles of

founded by Henry Fayol

concept based on several principles of

emphasis on the role of administrative

ACTIVITIES OF A BUSINESS ORGANIZATION:

1. Technical (production; manufacturing)

FAYOLS 14 PRINCIPLES OF MANAGEMENT:

FAYOLS 14 PRINCIPLES OF MANAGEMENT:

FAYOLS 14 PRINCIPLES OF MANAGEMENT:

LIMITATIONS AND CRITICISMS OF

most influential contributor: Max Weber

this is based on the concept that the structure

devoted to the principle of efficiency:

BASIC PRINCIPLES OF BUREAUCRATIC

LIMITATIONS AND CRITICISMS OF BUREAUCRATIC

1. Hierarchical relationships becomes important

NEO-CLASSICAL MANAGEMENT THEORY

formative period: 1930 s 1960s

NEO-CLASSICAL MANAGEMENT THEORY

formative period: 1920 s 1950s

NEO-CLASSICAL MANAGEMENT THEORY

formative period: 1920 s 1950s