Unit 2 Management Theories

8/22/2019 Unit 2 Management Theories

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Unit 2


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Scientific Management School Administrative Management School

Behavioral School

Management Process School Management science School

System Approach

Contingency Approach


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It is a conceptual frame work for organizingknowledge and providing the blue print foractions.

It used to build organization and guide themtoward their goals are grounded in reality.

Most managers develop and refine their owntheories of how they should run their

organization and manage the behavior oftheir organization.


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It has two distinct Branches which are given belowA. Scientific Management:

It is defined as that kind of management which conducts abusiness by standard established by facts or truth gainedthrough systematic observation and experiment. It means to

advocated the application of scientific methods to analyzework and to determine how to complete production tasksefficiently.

Frederick W. Taylor Was the father of scientific management.

Frank Gilbreth, Lillian Gilbreth, Henry Gantt, Henry Emersionwas the followers of Taylor.

Taylors first jobs was as a foreman at the Midvale SteelCompany in Philadelphia. He observed employees theirdeliberately working at a pace slower than their capabilities.


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He designed the most efficient way of doing eachpart of the overall tasks through a piecework paysystem.

After Taylor left Midvale, he work as a consultantfor several companies where he studied andredesigned jobs, introduced rest periods toreduced fatigue, and implemented a piece workpay system.

He was expected the results were higher quality,

and quantity of output and improved morale. Taylor believed that Managers who followed his

given guidelines would improve the efficiency oftheir workers.


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Guidelines:1. Develop a science for each element of thejob to replace old rule of thumb methods.

2. Scientifically select employees and than trainthem to do the job.

3. Supervise employee to make sure theyfollowed the prescribed methods for

performing their jobs.4. Continue to plan the work but use workers

to get the work done.


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The main principles of Taylors scientificManagement:1. Replacing rule of thumb with science

(standardization)2. Time and task study.

3. Systematic selection and training and development.4. Pay incentives ( differential payment system )5. Close cooperation between managers and

employees.6. Mental revolution

7. Economy8. Reorganization of supervision( seperation of

planning and doing )


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Contribution of scientific management:1. Foundation of modern management

2. Production efficiency

3. Improved working condition4. It develops many management tools

( time study, motion study, fatigue study andflow charts )


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Limitation: It is Mechanistic ( It consider man as a

machine ) It neglects Human aspects There is no one best method of doing job in

all work situations. Works become monotonous. Only concern with" shop level" It didn't favor groups


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Limitation:Although Taylor's methods led to dramaticincreases in productivity and to higher pay ina number of instances, workers and unionsbegan to oppose his approach because theyfeared that working harder or faster wouldexhaust whatever work was available causinglayoffs.


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Moreover, Taylors system clearly meant thattime was of the essence. His critics objectedto the speed up conditions that placed unduepressures on employees to perform at faster

and faster levels. The emphasis onproductivity and by extension, profitabilityled some managers to exploit both workersand customers. As a result more workers

joined unions and thus reinforced a patternof suspicion and mistrust that shaded labormanagement relations for decades.


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B. Administrative Management School ortheory: Scientific Management theory deals with thejob of individual or productivity of

individual but Administrative managementschool deals with managing the totalorganization and its problems. Four authorities like Henri fayol, Max

Weber, Chester Barnard and Mary P. Folletthad major contributions to the developmentof this administrative management theory.


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Henry Foyal (1841-1925) is considered tobe the father of this theory. He was aFrench Mining Engineer and becomeManaging Director and SuccessfulIndustrialist. His already published bookGeneral and industrial managementdeveloped a broad frame work of

Administration management. He was thefirst management author to state a series ofmanagement principles.


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Foyal looked upon the elements of management asits functions. He divided a manager's job into fivefunctions like:

Planning, Organizing, Commanding, Coordinating,and Controlling.

He considers these functions as essential tomanagerial success. His basic idea was that sinceall enterprises require management. He identified14 different principle of management. These

principles provide modern day managers withgeneral guidelines on how a supervisor shouldorganize her or his department and manage herstaff. 14 principles are given below.


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Division of Work: Specialization of labor isnecessary for organizational success.

Authority: The right to give orders mustaccompany responsibility.

Discipline: Obedience and respect help an

organization run smoothly. Unity of Command: Each employee should

receive orders from only one superior. Unity of Direction: The effort of every one in the

organization should be coordinated and focused

in the same direction. Organizational activitiesmust have one central authority and one plan ofaction.


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Subordination of individual interest thegeneral interest

Remuneration: Employees should be paidfairly in accordance with their contribution.

Centralization: The relationship betweencentralization and decentralization is a matterof proportion, the optimum balance must be

found for each organization. Scalar Chain: Subordinate should observe the

formal chain of command unless expresslyauthorized by their respective superiors to

communicate with each other.


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Order: Both material thing and people should bein their proper placed.

Equity: Fairness that results from a combinationof kindliness and justice will lead to devoted andloyal service.

Stability and tenure of personnel: People needtime to learn their jobs. To attain the maximumproductivity of personnel, a stable work force isneeded.

Initiative: One of the greatest satisfactions is

formulating and carrying out a plan. Esprit de corps: Harmonious effort among

individuals is the key to organizational success.


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Skills: Physical

Mental

Moral

Education Technical

Experience

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The Weber Bureaucracy Approach:Max Weber was a German sociologist. He madesignificant contribution to managementthought and development . He developed the

principle of bureaucracy a formal system oforganization and administration designed toensure efficiency and effectiveness as well asperformance . Bureaucracy is a systemcharacterized by division of labor, clearlydefined hierarchy, detailed rules andregulations and impersonal relationship.


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The important 6 contents of Weber's theory ofbureaucracy are as follows: Job specialization ( simple, and well defined

tasks)

Authority Hierarchy Formal selection ( Training, education, formal

examination) Formal rules and regulations.

Impersonality ( No personal preference ofemployees ) Career Orientation.


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So Weber believed that organization thatimplement six principles would establish abureaucratic system that will improveorganizational performance.


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This theory prescribed universal procedures that

arenot appropriate in some settings. Most classical theorists emphasized the structureand the formal relationship and ignored the human

element. They viewed employees as tools ratherthan resources for organizations.

The theory ignored the dynamism and complexityof organizations. Organizations are considered tobefunctioning in a stable and simple environment,the modern day organizations operate in very

unstable and fast changing environments.


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The stability and efficiency, which areexpected to be achieved throughfixed rulesand system, becomes a hurdle fordevelopment, flexibility and adaptability.

At times, following the rules andfunctions becomes more important thanserving the purpose for which the rules

were made. The end result of the activitiesis forgotten.


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A management research continued in the 20thcentury, questions began to come up regardingthe interactions and motivations of the individualwithin organizations. The classical organization

theory as explained above did not fully explainthe organizational phenomena. And could notexplain the behavior of individual employees. Inshort classical theory ignored employee

motivation and behavior. As a result thebehavioral school was a natural outgrowth of thisrevolutionary management experiment.


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It is concerned with importance of humanelement in management. They focus onpeople. They stress people part ofmanagement. Group dynamics, participativemanagement, communication, personality,motivation and leadership are importantaspects of these theories. They focus onemployee satisfaction and humancapabilities.


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The theorists who contributed to this schoolviewed employees as individuals, resourcesand assets to be developed and worked with,not as machines as in the past.

Several individuals and experimentscontributed to this theory are given below.


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1. Human relation Theory: Hawthorn Studies ( Elton Mayo ): Self respect

influence worker behavior which improve theiremployees performance. Productivity is not only a

technical but also social phenomenon. Workers aremotivated by social needs. Money is not the onlymotivator. Workers are social man so it focusesgroup efforts. Team work improves efficiency.


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Theory of Participatory Management (Mary ParkerFollet): Management should achieve integrative unitythrough coordination. Cooperation, unity and selfcontrol serve as keys to better human relations.2. Behavioral Theory:Abraham Maslow, a practicing psychologist,developed one of the most widelyrecognized need theories. A theory ofmotivation based upon a consideration of

human needs. His theory of human needshad three assumptions:


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Human needs are never completely satisfied. Human behavior is purposeful and is

motivated by the need for satisfaction.

Needs can be classified according to ahierarchical structure of importance from thelowest to highest.

Physiological, Safety, Social, Ego, Selfactualization.


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General exampleOrganizational example

Achievements Self actualization Challengingjob

Status Ego needs Job title

Friendship Social needs Friends atwork

Stability Security needsPension plan

Food Physiological needs Basicsalary


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3. Theory X and Theory Y ( Douglas McGregor ): He was heavily influenced by both the

Hawthorne studies and Maslow. He believedthat two basic kinds of managers exist. One

type, the theory X managers has a negativeview of employees and assumes that they arelazy, untrustworthy and incapable of assumingresponsibility. On the other hand the theory Ymanager assumes that employees are not only

trustworthy and capable of assumingresponsibility but also have high levels ofmotivation.


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Theory X and Theory Y ( Douglas McGregor ): Factors Theory XTheory Y Work Disliked and avoided Liked and accepted Control Managerial Control Self control

Direction Formal by Supervisors Self direction Responsibility Avoided Learn to accept Ambition Security oriented Creativity oriented Change Rejected Accepted Needs Lower order needs Higher order needs


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Theory of X' and Y' ( Douglas Mc Gragor )Theory X: Employees are lazy Employees need to be controlled and threatened to get the job done. Employees avoid responsibility. They display little ambition and initiative Most employees have little capacity for solving the organization

problems.Theory x' is pessimistic, static, rigid and control oriented. It presentsnegative view of people.Theory Y:

Employees view work as a natural activity like play and rest. Employees exercise self direction and control The average employee can learn to accept responsibilities

Creativity is not the monopoly of managers Greater freedom in doing work. So this theory y' is optimistic, dynamic and flexible, It presents a positive

view of people. There fore management should adopt theory y,assumptions to get people's commitment to work

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4. Frederick Hertzberg: ( Two factor theory ) Actually the behavior theory emerged partlybecause the classical approach did not the achievesufficient production efficiency and work placeharmony. He proposed a theory of job motivation.

According to him people work in theenvironment where two kinds of factors arepresent.

Hygiene Factor Motivator


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For motivation of people he focuses two factors like: Hygiene factors: Motivator

Hygiene Factors: Pay \ working conditions \ supervision \ organizational policies etc.

When the hygiene factors are felt to be inadequate by workers, They

functions as dissatisfiers. When these factors are present do notnecessarily motivate employees to greater productivity.

Motivator; Recognition, achievement, desires to take more responsibility etc. When

these factors are present they create the condition for motivation. So the task of every managers is to increase the presence of such

motivator factors.


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Limitation of Behavior School: The assumptions of the theory are simple and vague. The

analyses if human religionists and behavioral scientists areinadequate. Human behavior is a complex issue, which isnot easy to explain.

This theory is only a partial view of an organization. It fails

to analyze the wider aspects of organization. Hence theholistic view of organization missing. The application of these views is doubtful to bring that

anticipated behavioral outcomes. The complexities of thehuman factor and the organizational setting make exactpredictions impossible.

Many of the finding of the behavioral science they aretentative and require further investigation. For instance, insome situation, the economic rewards may equally beeffective as non economic rewards.


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It is also known as mathematical or quantitative approach. At the beginning of World War 11, Great Britain

desperately needed to solve a number of new complexproblems in warfare. With their survival at stake, the

British formed the first operational research teams, bypooling the expertise of mathematicians, physicists and

other scientists in operational research teams, The Britishwere able to achieve significant technological and tacticalbreakthrough When the Americans entered the war theyformed what they called operations research teams basedon the successful British model to solve similar problems.The teams used early computers to perform the thousandsof calculation involved in mathematical modeling. Whenthe war was over, the applicability of operations researchto problems in industry gradually became apparent.


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It makes use of mathematical and quantitativemodes to solve complex problems.

This theory has its origin in military science.

Information technology have extended the

application of management science approach tomany others areas of business except panning,production, operations, transportation problemsetc.

This theory has opened new frontiers formanagers. It has provided managers with plentyof decision making tools and techniques.


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Management science means the mathematicaltechniques for modeling, analysis andsolution of management problems.

It concerned with helping the organization

more efficiently produce its products orservices. Today there are three main branches of

management science:

1. Quantitative management2. Operation management3. MIS


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Contributions and limitation:1. It emphasis on only the aspect of organization that

can be computed in numbers. It ignores theimportance of people relationships, and other nonquantifiable factors.

2. It is useful for solving physical problems of theorganization. But it cannot fully account forindividual behaviours and attitudes.

3. It can not be substitute for sound judgment and

other skills of managers.4. It ignores environmental factors

5. Many aspects of management cannot be modeled


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In another words we can say integratingprospective. This theory is developed by Chester Bernard, R.A.Johnson. Etc. The system theory of managementis a relatively new approach to the continually

expanding body of management thoughts. Asystem is a group of interrelated andinterdependent part working towards a commongoal. It is a combination of several parts forminga complex whole. It tries to give the manager a

way of looking the organization as a whole. Ittells us that the activity of any part of anorganization affects the activity of other parts.


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The importance elements for a system theory areas follows: Goal orientation: Every system is goal oriented.

Subsystems: Each subsystem interacts with othersub systems.

Open and closed system: closed is internal andopen is external systems.

Synergy: It means that the whole is greater then thesum of its parts. Two or more sub system working

together.

System boundary: Closed system is rigid and opensystem is flexible.

Flow of information

Feed back


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Environment Inputs Process Outputs Material Technology Products/ services Human Operation system Profits / Losses Financial Administrative system Employees Behavior Information Control system Information

Management

Feed BackEnvironment


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Limitation: This theory doesn't offer specific tools and techniques for

the practicing manager. It is criticized as being too vague. So it cannot be applied

to practical problems. It fails to specify the nature of interactions and

interdependence between and organization and itsexternal environment.

It tries to give the manager: Group of interdependent parts. Combination of several part.

Way to looking the organization as a whole A change in one system can affects other system No single parts exist and operate in isolation from the

others.


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Another milestone in management theory was thedevelopment of contingency theory in 1960s by TomBurns and G.M. Stalker in Britain and Paul Lawrenceand Jay Lorsch in the U.S.A. This theory emergedfrom the experience of many other managers andpractitioners. They found that the management

concept don't produce the same result acrosssituations. The concepts, tools and techniques which

are highly effective in one situation are notat all effective in another situation. Thereforetheir conclusion was that management concepts arecontingent on a particular situation. Results differbecause situations differ. The situationalcharacteristics are called contingencies. This theorydoesn't agree with universalism.


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This theory suggests that the applicability ofmanagement concepts depends on the variablesinvolved in the view of the contingency theory isthat the manager should be realistic in theirapproaches. Their task is to study the

management situation first and then select thetechniques of management which ca be used inthat situation. If the result is positive, that wouldbe the most effective technique for that kind of

situation. This theory represents an importantturn in modern management theory although thistheory fails to identify all the importantcontingencies. So this theory may not beapplicable to all managerial issues.


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The four major contingency variables are: Size of the organization

Task technology

Environmental uncertainty

Individual differences

The geographical spread of the organization

The type of work being done


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Steps in contingency Theory of Managementare: Analyze and understand the situation

case by case.

Examine the validity and applicability ofmanagement approaches to the situationat hand.

Match the management approach to thesituation and Implement the choice


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Contribution: It is an integrative approach. / Situations are

regarded important for managementdecisions.

This theory is widely used in practice ofmanagement.

Various theories of management have

situational applications in the practices


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Limitation: The theory is complex. It is difficult to

identify relevant contingency variables andto determine their interrelationships.

Every situation is unique. Managers may notbe able to analyze each and every situation.

This theory is not applicable for all types of

managerial issues.


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Conclusion: Their earlier thinker tried to find universal

answers to organizational and managerialproblems. This view is being rejected by the

contingency theory. It suggest that themanager should be realistic in theirapproaches. Their task is to study themanagement situation first and then select

the techniques of management which can beused in that situation.


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We can say in another word OperationManagement

It is less Mathematical and Static thanManagement science.

It is a form of applied management science. It is concerned with the helping the

organization more efficiently product itsproducts or services.

For example inventory management, Linearprogramming, Queuing theory, BEP Analysis,Simulation etc.


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1. As a practicing manager, which of the twoapproaches ( System or Contingency ) Would youadopt? Give reasons for your selection?

2. Discuss the contribution of F.W. TaylorsScientific Management in the development of

Management Thought. 3. The behavioral management prospective

places much more emphasis on individualattitudes and behaviors and on group processesand recognize the importance of behavioral

processes in the work place. Explain thisstatement. 4. Explain the Fayols Fourteen Principles of

management?


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Functioning of Rastriya Banijya Bank Suppose you have gotan assignment to study the management system of this bank.Which employs about 2900 employees and has a network 128branches throughout the country. You are required to analyzethe functioning of the bank from the following perspective.

1. Model the bank from an open systems perspective. Identifyits inputs, conversion, and output processes?2. Identify forces in the external environment that help thebanks ability to obtain inputs and provide banking services?3. Use the principles of Maxweber and Fayol to decide on thesystem of organization and management that you think willbe most effective for the bank. Which of their principles doyou think would not be relevant and appicable taday?4. In a view of growing competition in the banking businesswhich management approaches would you recommended forthe banks effective performance and competitiveadvantages?


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Unit 2 Management Theories

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