Topic 2:
THEORIES OF MANAGEMENT
Chapter 2 in Text Book
Pages: 28 - 59
Key topics in this chapter :
Ñ What is Theory
Ñ Why Study Management Theory
Ñ Evolution of Management Theory
Ñ The Scientific Management Theory
Ñ The Classical Management Theory
Ñ The Behavioural Theory
Ñ Quantitative Theory
Ñ Systems Theory
Ñ Contingency Theory
Ñ Modern Management Thinking
What is Theory
A theory is a set of assumptions and principles that explain the relationship between two or more facts and provide a basis for predicting the future events.
Why Study Management Theory
· It improves the understanding and insight of managers and helps managers to accomplish tasks and handle situations rightly without having to rely on trial and error.
· It helps in identifying areas of management in which present and future managers can be trained for them to manage rightly.
· Management theories and principles acts as a ready reference for managers to check whether their decisions are appropriate.
· They serves as focal points for useful research both to ascertain their validity and to improve their applicability.
Evolution of Management Theory
Human beings have been making plans and pursuing goals through organizations, and accomplishing all kinds of feats, for thousands of years. Management theory, however, is generally considered a relatively recent phenomenon that emerged with the industrialization of Western Europe and the United States in the nineteenth century.
Scientific Management Theory
It was formulated mainly by Frederick Winslow Taylor and sought to determine scientifically the best methods for performing any task and for selecting, training and motivating workers. F.W. Taylor rested his philosophy on the following principles:
+ The work assigned to any worker should be observed and analyzed with respect to each part, and the best way of doing the job should be determined after time study, motion study and fatigue study.
+ The employees should be selected after matching their skills and experience with the requirements of the job they are to perform, and adequate training and opportunities for growth and development should be provided to them.
+ There should be close cooperation between workers and management.
+ Planning of work should be the responsibility of management and execution of the planned work the responsibility of the workers.
+ Create suitable working conditions, workers should be devoted and should not waste the organization's resources, management should resolve problems scientifically.
+ Aim of management should be to increase productivity so that organization earns surplus profits and productive workers can earn more wages through differential rate system.
Other contributors to the scientific management theory were
· Henry L. Gantt (he developed various scientific techniques like the Gantt Chart)
· The Gilberths (they conducted various fatigue and motion studies on workers)
Example: The ideas of Taylor and the Gilbeth's are evident at United Parcel Service (UPS), where workers are guided by carefully calibrated productivity standards. At regional sorting centres, sorters are timed according to strict task requirements and are expected to load vans at a set number of packages per hour. Delivery stops on regular van routes are studied and carefully timed, and supervisors generally know within a few minutes how long a driver's pickup and deliveries will take. Industrial engineers devise precise routine for drivers, who are trained to knock on customer's doors rather than spend even a few seconds looking for the doorbell. Handheld computers further enhance delivery efficiencies. At UPS, savings of seconds in individual stops add up to significant increases in productivity.
Classical Management Theory
This theory was pioneered by Henri Fayol and it grew out of the need to find guidelines for managing such complex organizations as factories. Henri Fayol gave the following fourteen principles of management :
+ Division of labour : all work should be subdivided and allocated to a number of persons so that by repeating the same work they acquire speed and accuracy in the job.
+ Parity of authority and responsibility: if an employee is given some responsibility he should be given equal authority to help him meet his responsibility.
+ Discipline: everyone in the organization should comply with the rules and regulations , rules should be clear and penalties should be imposed with fairness.
+ Unity of command: every employee should receive orders from only one superior to avoid confusion and conflict.
+ Unity of direction: ensure unity of action., coordination of strength and focussing of effort to achieve the groups goals.
+ Subordination of individual to general interest :individuals must sacrifice in the interest of the whole organization.
+ Fair remuneration: adequate salaries/wages to all considering costs of living, average wages, and the work assigned.
+ Centralization and decentralization: depends on the size of the organization, experience of the manager and ability of subordinates
+ Scalar chain: the line of authority from the top management to the lower levels (scalar chain) also serves as the communication chain.
+ Order: there should be a place for every thing/person and every thing/person should be in it's place.
+ Equity: managers should be fair & impartial, no favours to some & neglect to other.
+ Stability of tenure of personnel: employees should be given some time to prove themselves and their position shouldn’t be changed frequently.
+ Initiative: employees should be encouraged to take action without being asked to do so.
+ Esprit de corps: develop feelings of team spirit , build unity within the organization.
Other contributors to the classical management theory were:
· Max Weber (Bureaucracy) : a bureaucracy should have clear written rules, the hierarchy of authority should be well defined and everyone's work should be decided in advance with a fair evaluation and remuneration for the work.
· Mary Parker Follett : she suggested that an organization is also influenced by various forces external to the organization such as social, legal, economic, political, technological.
· Chester Barnard : according to him management should try to use the informal groups in the organization to help workers willingly accept their responsibilities which they can perform as a team.
Behavioural Management Theory
Both scientific and classical theories viewed employees as machines and the managers as engineers. The behavioural management theory viewed organization as a group of people. This school of management thought grew out of insights from sociology and psychology and valued human relations. Human relations indicated the way managers interact with other employees or recruits.
The contributors of this theory included:
· Elton Mayo (Hawthorne Studies/Effect): worker productivity was measured at various levels of light illumination, but regardless of whether light levels were raised or lowered productivity rose. Elton Mayo suggested that workers enjoyed the attention they received as part of the study and were therefore more productive.
· Abraham Maslow: he suggested that workers have various levels of needs and these needs should be met so that they can feel satisfied and only then will they give their best to the organization.
· McGregor's Theory X and Theory Y: Theory X states that employees are lazy, and managers must closely supervise them by creating strict rules. Theory Y states that employees are willing to work, the management should motivate them to work by building the worker's initiative and by providing them adequate authority.
Quantitative Management Theory
Uses scientific techniques like statistics, MIS (management information systems), computers, CPA (critical path analysis), forecasting, simulation etc.
Example: Motorola uses an intranet to maintain and update complex assembly instructions for use where they are most needed - on the factory floor. When instructions change they are updated on the web server and become immediately available at every terminal on the production floor. Such "cyber instructions" have passed ISO quality audits without any problems.
Systems Theory:
All modern organisations should be open systems and they should continuously collect feedback from the environment to ensure that the organisation's (system's) output are as planned. This will help them achieve synergy in the organisation. Synergy is a situation in which the whole is greater than it's parts.
Example: 3M is saving hundreds of thousands of dollars annually by making use of the new RP or rapid prototyping machines. The technology turns CAD drawings into working prototypes and parts for a variety of 3M production systems. The firm even has a rapid prototype centre that adds to competitive advantage. They achieve success by viewing their whole organisation as part of system which incorporates their customers and their employees too. Receiving feedback from all sources they effectively make use of the information gathered to make the system work even more better.
Contingency Theory
The early theories suggested using the same principles in all situations, but according to the contingency theory management should appropriate action according to the situation being faced by the organisation. They should consider all relevant factors and then decide what best action should be taken.
Modern Management Thinking
Traditional theories are being challenged by the increasing dynamics of the modern world. Today managers have to be considered of various issues like
+ the culture that exists within an organisation,
+ the issues of being socially and ethically responsible and of being a 'Green' (environment friendly ) organisation.
+ Acceptance of a multi cultural working environment
+ Being aware of the opportunities and threats brought about by globalisation of businesses.
+ Predicting the popularity and entering the realm of ecommerce and virtual business thereby ultimately leading to the development of newer models of "boundaryless mangement".
Test Your Knowledge
& A _______ explains the relationship between two or more facts. (True or False)
& Understanding management theories help managers prepare better for the future. (True or False).
& The _______________ theory provides the best methods for performing any task and for selecting, training and motivating workers.
& _____________ developed various scientific techniques including the Gantt chart.
& Henri Fayol pioneered the classical management theory.
& __________theory grew out of the need to manage complex organisations like factories.
& The father of scientific management is _____________.
& Max Weber suggested an approach of _____________
& Other main contributors to the classical theory were _________, ________ and __________.
& ________________ theory grew out of insights from sociology and psychology and valued human relations.
& Human relations indicates the way managers interact with other employees (True or False)
& The Hawthorne experiments were interpreted by ___________
& ____________ suggested that workers have various levels of needs.
& Theory ___ states that employees are lazy and managers must closely supervise them.
& Theory ___ states that employees are willing to work and managers should motivate them
& _____________ theory involves the use of various scientific techniques like forecasting, statistics etc.
& __________ is an integral element of an open management system.
& When two or more subsystems working together produce more than what could have been produced individually, it is called _________
& The _________ theory views that the management approach applicable in different situations may vary.