SCHOOL OF MANAGEMENT THOUGHT

Based on the approaches of Organization, some authors have developed theories of

Organization. They are known as Classical theories, Neo-classical theories and Modern

Organizational theories.

Classical Theories

Classical theories are based on traditional thinking. These theories were first propounded in 1900 and incorporated origin and initial ideas of management. The classical theories were devoted mainly to the superiors’s authority, objectives, rules and economic activities. The theories are broadly divided into

1) Bureaucratic Management2) Scientific Management3) Process Management

Bureaucratic Management• The bureaucratic model developed because

some people wanted to dominate others in business and other activities.

• They organized men and materials for achieving objective for their personal benefits.

• This theory was given a formal shape by a German Sociologist Max Weber, who believed that bureaucracy was an ideal weapon to harness human and physical resources.

• It is a model of organization characterized by a large and complex atmosphere with impersonal detachment from human resources.

• Rules and regulations are important features of bureaucracy.

Bureaucratic ManagementFEATURES :- • The hierarchy of authority involving the superior-

subordinate relationship is the main feature of bureaucracy. The superior has more authority to control the subordinate.

• Impersonal attachment is always observed in this type of organization. Personal, interpersonal and mutual relations have no place in the bureaucracy.

• Rigidity and uniformity are basic principles of bureaucracy. Authority and power rest with the office.

Bureaucratic ManagementASSESSMENT OF BUREAUCRACY :-

• The bureaucratic model is unsuitable to the present requirements of management.

• Government and military organizations are adopting this principle because their main purposes are discipline and complete follow up of the rules.

• It is not suitable in a business organization because of rigidity, its impersonal nature and mechanical methods of control.

Scientific Management The scientific management theory was

propounded by F. W. Taylor. The management was based purely on individuals’ capacity. F. W. Taylor tried to find out the basic principles of management by using time and work study, detailed analysis, investigation and planning of work allocation. It is known as scientific management because systematized knowledge is used for work allocation and assignment of specific jobs. The salary and wages etc. are to be decided as per work performance of individuals.

Scientific ManagementFEATURES :-• Scientific Selection of Personnel : This theory

stresses on selecting suitable persons for the job. All persons cannot perform a particular job. People have different capacities and attitudes and therefore are selected for the job best suited to them.

• Incentives : Workers are inspired to perform the job if they are paid according to their contributions. Taylor has suggested a “differential piece rate system” for wage determination.

• Specialization : It is developed in scientific management.

Scientific ManagementASSESSMENT :-• Scientific management made contributions at the

production level. It created a revolution in the fields of engineering and production.

• It contributed efficiency, standardization, specialization and simplification.

• The management can achieve success through the use of science and technology. Industrial efficiency increased on account of scientific management.

• Scientific management fragments the whole work into small units which are allocated to individual employees.

Process ManagementProcess management was propounded by Henry Fayol,

wherein technical, commercial, financial security, accounting and managerial activities are well-defined. Henry Fayol in his book “General and Industrial Management”, published in 1916, described administration as the main component of management, having special features of the theory – hierarchy, formal organization and organized groups. He said that the manager has the right to carry out managerial functions and can exercise his discretion for getting things done through and with people. The employees are directed and controlled by managers. Process management was propagated by H. Simon, L.F. Luwick, L. Gulick, G. Terry and several others who pointed out that planning, organising, motivating, coordinating and controlling are important functions of management.

Process ManagementPRINCIPLES OF MANAGEMENT :• Authority and responsibility : The management has the

authority to issue orders. Subordinates will have to follow the orders of the supervisors who take on the responsibility of getting things done through the subordinates.

• Division of Work : The whole process is divided into small fragments which are performed by specialized persons.

• Discipline : Obedience and the following of rules and regulations are considered discipline. The leader has the maximum power to lead the employees as per the established practices of the organization.

• Unity of Command : Supervision is carried out by one man.• Unity of Order : The employees are directed toward a single

objective.

Process ManagementPRINCIPLES OF MANAGEMENT :• Scalar chain : The superior subordinates are in single vertical order.

The top management controls middle management who commands the lower management. The chain continues to the level of workers.

• Centralization : Centralization of power is preferred, but it does not have much scope for complete centralized power. Decentralization is also practiced to get the work done by people at different places.

• Order : Human activities are arranged in an orderly form, people and materials are available at the right place at the right time.

• Proper remuneration system : The employees are issued proper remuneration according to their contribution to the work.

• Equity and Fairness : There is enough scope for equity and fairness.

• Initiative: Managers offer sufficient opportunities for the development of employees.

• Team work : The espirit de corps is exercised for getting the objectives fulfilled efficiently and effectively.

NEO – CLASSICAL THEORIES• The human relations movement evolved as a reaction to the

tough, authoritarian structure of classical theory. It addressed many of the problems inherent in classical theory. The most serious objection to classical theory is that it created rigidity, thus suppressing creativity, individual growth, and motivation. Neoclassical theory displayed genuine concern for human needs.

• One of the first experiments that challenged the classical view was conducted by Mayo and Roethlisberger in the late 1920's at the Western Electric plant in Hawthorne, Illinois. While manipulating conditions in the work environment (e.g., intensity of lighting), they found that any change had a positive impact on productivity. The act of paying attention to employees in a friendly and non-threatening way was sufficient by itself to increase output. Nearly anything will improve productivity. "The implication is plain: intelligent action often delivers results".

NEO – CLASSICAL THEORIES The Hawthorne experiment is quite

disturbing because "The result is usually a lot of wheel spinning” . Pascal believes that the Hawthorne effect is often misinterpreted. It is a "parable about researchers (and managers) manipulating and 'playing tricks' on employees." Erroneous conclusions are drawn because it represents a controlling and manipulative attitude toward workers.

NEO – CLASSICAL THEORIES Writing in 1939, Barnard proposed one of the first modern

theories of organization by defining organization as a system of consciously coordinated activities. He stressed on the role of the executive in creating an atmosphere where there is coherence of values and purpose. Organizational success was linked to the ability of a leader to create a cohesive environment. He proposed that a manager's authority is derived from subordinates' acceptance, instead of the hierarchical power structure of the organization.

Barnard's theory contains elements of both classical and neoclassical approaches. Since there is no consensus among scholars, it might be most appropriate to think of Barnard as a transition theorist.

NEO – CLASSICAL THEORIES• Simon (1945) made an important contribution to the

study of organizations when he proposed a model of "limited rationality" to explain the Hawthorne experiments. The theory stated that workers could respond unpredictably to managerial attention. The most important aspect of Simon's work was the rigorous application of the scientific method. Reductionism, quantification were legitimized as the methods of studying organizations.

• Taylor, Weber, Barnard, Mayo, Roethlisberger, and Simon shared the belief that the goal of management was to maintain equilibrium. The emphasis was on being able to control and manipulate workers and their environment.

MODERN THEORIES Modern organizational behavior has become complex. It

synthesizes the classical and neo-classical theories, while incorporating technological development. Modern organization theories are classified into quantitative, system and contingency.

• Quantitative Theory :-

The quantitative theory includes operation research and quantification of the problem. It analyses the problems from quantifiable angles and provides solutions to complex problems only with the help of statistical and mathematical models such as linear and non-linear programming, game theory, decision tree, simulation and probability. Computers are used to solve management problems. A large number of problems are solved with the use of simulation equations and computers.

MODERN THEORIES

Operation research is conducted by diverse specialists and management experts. It is useful from the levels of planning, organizing and controlling etc. It is known that mathematical models do not provide the ultimate solutions. If they are used in a given environment with real assumptions, they can suggest appropriate measures which can be used for solving problems. The quantitative approach is merely a tool for finding a suitable solution, but is not a solution in itself.

MODERN THEORIES • System Theory :-

A system is a set of interconnected and inter-related elements of management activity. It is an arrangement of components of activities performed for achieving certain objectives. Thus, a system has three components : arrangement, objectives and a plan. The arrangement is designed and planned in an effective manner to achieve the objective. Men, materials and money are planned to achieve the objectives of the organization. Recently, it has been agreed that the organization is a system wherein operation, marketing, finance etc. are subsystems. Kenneth and Boulding have contributed to a systems theory to establish to single, self-contained and generalized theory for particular disciplines.

MODERN THEORIES The system is an organization wherein the various

components are subsystems which are managed and mobilized for attaining the organizational goals. It is an interconnected, interdependent and interacting arrangement of men and materials.

• Characteristics of the system theory :- A business or industrial organization has a system approach towards individuals, organization's status, role, process, resources and goals which are interlinked to attain objectives through a synergistic effect. The system approach is divided into closed and open systems. The open system consists of the input transformation process, output, feedback and environment. An organization is considered an open system because it continuously interacts with the external environment for survival. The closed system believes in internal management.

MODERN THEORIES It incorporates the elements of motivation which are important

moving forces in an organization. It depends on sociology, psychology, engineering, anthropology and so on for managing different activities of corporate units. It is the base of formulating organizational structure.

The theory has gained prominence because it has given due importance to interdependence, has synergism and feedback.

• Use of system theory in an organization :- An organization is considered a dynamic system which evaluates, acts and interacts with the environment. It is open and incorporates all the changes and challenges of the social setup. The organization consists of interacting and interdependent subsystems. Each subsystem is defined with its objectives, structure, processes. The interdependence of subsystems is so great that the success or failure of a subsystem will certainly influence other systems.

MODERN THEORIES The success of an organization depends on the process of

each subsystem and proper evaluation of the elements of the environment, namely men, materials, money and other factors.