21-01-2023

Principles of Management
Day - 4

Recap

• Evolution of Management process

 Pre Scientific Management Period
 Classical Management Theory
 Neo Classical Management
 Modern management

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14 Principles of Henri Fayol

• Division of Labor
• Work of all kinds must be divided & subdivided and allotted to various persons
according to their expertise in a particular area.

• Authority & Responsibility

• Authority refers to the right of superiors to get exactness from their sub-ordinates.
• A manager may exercise formal authority and also personal power.
• A manager must be prepared to bear responsibility to perform the work in the manner
desired.

• Unity of Command
• A sub-ordinate should receive orders and be accountable to one and only one boss
at a time.
• He should not receive instructions from more than one person

14 Principles of Henri Fayol

• Unity of Direction
• People engaged in the same kind of business or same kind of activities must have the
same objectives in a single plan.
• Without unity of direction, unity of action cannot be achieved.

• Equity
• Equity means combination of fairness, kindness & justice.
• The employees should be treated with kindness & equity if devotion is expected of
them.

• Order
• This principle is concerned with proper & systematic arrangement of things and
people.
• Arrangement of things is called material order and placement of people is called
social order.

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14 Principles of Henri Fayol

• Discipline
• Discipline means sincerity, obedience, respect of authority & observance of rules and
regulations of the enterprise.
• Subordinate should respect their superiors and obey their order.
• Initiative
• Initiative means eagerness to initiate actions without being asked to do so.
• Management should provide opportunity to its employees to suggest ideas,
experiences & new method of work.
• Remuneration
• Remuneration to be paid to the workers should be fair, reasonable, satisfactory &
rewarding of the efforts.
• It should accord satisfaction to both employer and the employees.

14 Principles of Henri Fayol

• Stability of Tenure
• Employees should not be moved frequently from one job position to another i.e. the
period of service in a job should be fixed.

• Scalar Chain
• Scalar chain is the chain of superiors ranging from the ultimate authority to the lowest.
• Communications should follow this chain.
• However, if following the chain creates delays, cross-communications can be allowed if
agreed by all parties and superiors are kept informed.

• Sub-ordination of Individual Interest to common goal

• An organization is much bigger than the individual it constitutes, therefore interest of the
undertaking should prevail in all circumstances.
• The interests of any one employee or group of employees should not take precedence
over the interests of the organization as a whole.

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14 Principles of Henri Fayol

• Espirit De’ Corps/team spirit

• Harmony in the work groups and mutual understanding among the members.
• Espirit De’ Corps inspires workers to work harder.

• Centralization
• Centralization refers to the degree to which subordinates are involved in decision
making. Whether decision making is centralized (to management) or decentralized (to
subordinates) is a question of proper proportion. The task is to find the optimum degree
of centralization for each situation.

Criticism against Administrative Management

Theory
• The administrative management theory is management oriented. It does not
give much attention to the problems of the workers.

• Some of the concepts of administrative management theory were borrowed

from military science. For e.g. Henri Fayol gave importance to
“commanding” and not “directing” the workers.

• The administrative management theory has a mechanical approach. It does

not deal with some of the important aspects of management such as
motivation, communication and leading.

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Evolution of Management

Neo-Classical Management Theory

• Classical approach did not achieve complete production efficiency and workplace
harmony.

• Managers still encountered difficulties and frustrations because people did not
always follow predicted or rational patterns of behavior.

• Thus, there was increased interest in helping managers deal more effectively with the
‘people side’ of their organization.

• The neo-classical theory reflects a modification over classical theories.

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Neo-Classical Management Theory

• The neo-classical approach recognizes the importance of psychological and social
aspects of the workers as an individual and his relations within and among groups
and the organization.

• It gained importance after the World War I, particularly in the wake of the
“Hawthorne experiments” at Western Electric Company by Elton Mayo during 1924 to
1932.

• Elton Mayo is generally recognized as the father of the Human Relations Movement.

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Hawthorne Experiment

• A famous series of studies of human behaviour in work situations were

conducted at the Western Electric Company from 1924 to 1933
• In 1927 a group of researchers led by Elton Mayo, Fritz J. Roethlisberger and
Dickson at the Harvard Business School were invited to join at Western Electric’s
Hawthorne plant near Chicago

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Hawthorne Experiment
• The Hawthorne experiment consists of four parts. These parts are briefly described
below:-
• Illumination Experiment.
• Relay Assembly Test Room Experiment.
• Interviewing Programme.
• Bank Wiring Test Room Experiment.

https://www.library.hbs.edu/hc/hawthorne/anewvision.html#e

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Hawthorne Experiment
Illumination Experiment
• To determine the effects of lighting on worker efficiency in three separate
manufacturing departments.
• The study revealed no significant correlation between productivity and light levels.
When the test group’s lighting conditions were improved, productivity tended to
increase just as expected. But there was a tendency for productivity to continue to
increase when the lighting conditions were made worse.
• Not able to maintain relationship between illumination and productivity.
• Productivity has a psychological component

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Hawthorne Experiment
Relay Assembly Test Room Experiment
• The studies monitoring the output of relay assembly workers, which began in 1927,
continued until 1932, becoming the longest running Hawthorne experiments.
• In a separate test room, an operator prepared parts for five women to assemble. The
women dropped the completed relays into a holder where a recording device punched
a hole in a continuously moving paper tape. The number of holes revealed the
production rate for each worker.
• Frequent changes were made in working conditions such as hours of work, lunch
break, rest periods, etc.
• Again the results were ambiguous. Performance tended to increase even when the
improvements in working conditions were withdrawn
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Hawthorne Experiment
Relay Assembly Test Room Experiment

• It was found that socio-psychological factors exercised a greater influence on

productivity and working conditions

• The women noted that the intimate atmosphere of the test room gave them a sense
of freedom not experienced on the factory floor. They felt more at ease to talk and
over time developed strong friendships.
• Mayo and Roethlisberger’s concluded that mental attitudes, proper supervision, and
informal social relationships experienced in a group were key to productivity and job
satisfaction.

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Hawthorne Experiment
Interviewing Programme
• The researchers interviewed a large number of workers with regard to their opinions
on work, working conditions and supervision. From 1928 to 1930, more than 21,000
interviews were conducted.
• Initially, a direct approach was used whereby interviews asked questions considered
important by managers and researchers. The researchers observed that the replies of
the workmen were guarded.
• With an indirect technique, where the interviewer simply listened to what the
workmen had to say. Interviews grew from 30 minutes to 90 minutes in a process
meant to provide an emotional release.
• The findings confirmed the importance of social factors at work in the total work
environment.

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Hawthorne Experiment
Two things emerged from the initial studies:
(1) the experimenter effect, and (2) a social effect.
The experimenter effect was that making changes was interpreted by workers as a sign
that management cared, and more generally, it was just provided some mental
stimulation that was good for morale and productivity.
The social effect was that it seemed that by being separated from the rest and being
given special treatment, the experimentees developed a certain bond and camaraderie
that also increased productivity.
The second phase of the study, the Bank Wiring Room, was designed to study the
social effects.

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Hawthorne Experiment
Bank Wiring Test Room Experiment
• The experiment was conducted by Roethlisberger and Dickson. The Experiment
focused on social groups within a company and the causes which restrict output.
• The experiment was conducted to study a group of 14 workers under conditions
which were as close as possible to normal. After the experiment, the production
records of this group were compared with their earlier production records.
• The kind of work done was assembling telephone switching equipment. The process
was broken down into three tasks: wiring, soldering and inspection.
• The group evolved its own production norms for each individual worker, which was
made lower than those set by the management.
• Those workers who tried to produce more than the group norms were isolated,
harassed or punished by the group.
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Hawthorne Experiment
Bank Wiring Test Room Experiment
The findings of the study are:-
• Each individual was restricting output.
• The group had its own “unofficial” standards of performance.
• Individual output remained fairly constant over a period of time.
• Informal groups play an important role in the working of an organization.
Every group develops its own customs, habits and expectations for how things will be
done. These patterns and expectations, or group norms as they're sometimes called,
influence the ways team members communicate with each other. Norms can help or
hinder a group in achieving its goals
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Hawthorne Experiment
The Hawthorne studies showed that
people’s work performance is dependent on social issues and job satisfaction, and
that monetary incentives and good working conditions are generally less important in
improving employee productivity than meeting individuals’ need and desire.

Harvard Business School’s role in the experiments represented a milestone in

the dawn of the human relations movement and a shift in the study of
management from a scientific to a multi-disciplinary approach.

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