Industrial Management

IEM - 4127

MANAGEMENT THOUGHTS
 Management
“Management is the process of designing and maintaining
the environment in which individual work together in
group, and efficiently and effectively accomplish the
selected aim”
-Basic definition
“Art of getting things done through people”
- Mary Parker Follett.
 Management Thoughts
(Ref: Organization and Management by R.D Agarwal; CHAPTER-2)

Management thought is classified in SIX “Schools of Management Theory”

1. The Classical School

I. The Scientific Management School
II. The Management Process School
III. The Bureaucracy Theory School
2. The Human Relations School
3. The Decision Theory School
4. The Management Science School
5. The Systems Theory School
6. The Contingency Theory School
1. The Classical School

The Classical School includes three theories. The theories are:

I. The Scientific Management Theory: Frederick W. Taylor aimed at

making management as science based on “Well recognized, clearly
defined and fixed principles instead of depending more or less on hazy
ideas”
II. The Management Process Theory: Henri Fayol focused on a
systematic understanding of the overall management process.
III. The Bureaucratic Theory: Max Weber has provided the point
Bureaucratic of for the study of organization structure and function for
over half a century
I. The Scientific Management School:

The use of measurement, experimentation, observation, analysis, rationality and reasoning

used as the chief instrument for developing managerial systems.
The basic components of scientific management as proposed by the Taylor are:

a) Determination of Standard of Performance: Previously, worker or foreman have no

idea about how much works need to be done in an hour or a day. An average number of
work was used as a rule of thumb without and specific scientific calculation. But later
on. Time and Motion study are introduced and analyzing the time and motion of each
work done by the worker, the manager or supervisor now determine a standard of
performance.
b) Functional Foremanship: Specialize worker will train the novice or intern worker. By
doing this, intern worker will know the exact technique of the work and he can perform
the work efficiently and productively without any hassle.
c) Responsibilities of Management: Managers should accept responsibility for
planning, directing and organizing. Managers should perform these functions
scientifically. Such as, Management should analyze all the operations and develop
scientific methods of operations. Workers should be scientifically selected and trained.

d) Differential Piecework System of Wage Payment: The worker should receive a

basic piece rate if the number of produced piece by the worker is below the pre
determined production pieces. If the worker produced more than the standard
production rate, then he/she need to be paid in a differential wage payment system so
that he/she can remain motivated towards more production.

e) Mental Revolution: A co-operative work culture need to introduce to both the worker
and the manager. It will involve a complete mental revolution in the attitudes of
manager towards their fellowmen, workers. Without this complete mental revolution
on both side this scientific management doesn’t exist.
2. The Management Process School:

The management process school regards management as the process of getting things done
through people as individual and as members of work groups. It holds that management is a
process which can best be understood by analyzing its functions.

Fayol identified 05 functions of Management:

a) Planning: Planning is the most crucial portion of the management as failure to plan causes
weakness or disaster to business.
b) Organizing: It is regarded as the problem of organizing man and material.
c) Command: Command requires –
• Thorough knowledge of personnel
• Elimination of incompetent
• Setting a good example
• Development of Unity, royalty among people
d) Control: Control aimed at identifying deviations from
standards and taking corrective actions. Control should not
lead to duality of command by separating it from operation.

e) Co-ordination: Taylor suggested that weekly meeting of

departmental head should be held in order to improve
co-ordination.
III) The Bureaucratic Theory School:

Weber viewed Bureaucracy as “the most efficient form that could be used most effectively for
complex organizations business, government, military.” It is characterized by:

a. Assignment of activities to individual as fixed duties

b. A hierarchy of authority and chain of command running throughout the organization, with a
regulated system of appeal
c. Administration through well defined rules.
d. Decision making on objective and rational criteria so that all decisions are impersonal.
e. Employment and promotion based on demonstrated competence and training of officials.
f. Fixed salary based on status or rank rather than work performed or guaranteed pension or
superannuation as security at old age.

Advantages: Precision, Speed, continuity, unity, discretion, strict subordination, reduction of

friction and of material personnel cost are raised to optimal point.
Disadvantages: Lie in red tape, rigidity and neglect of human factor.
2. The Human Relations School:

Howthrone conduct an experiment on the human dimensions of the organizations. This school of thought
termed as “neo-classical” rather than modern because it follows the theoretical form of classical theory and
emphasis on the human dimensions of the management as a counter point against the impersonality of classical
theory.
This theory lead to a new hypothesis : motivation to work, morale and productivity are related to the social
relations among the workers, and between the workers and supervisor; and not to the physical condition of the
work.
The researchers found that:
1. The worker perceived themselves as a work group.
2. The group has developed “norms” related to production as well as personal conduct among themselves and
with the supervisors.
3. Dexterity and Intelligence tests showed that output isn’t related to either of them. The key to the rate of
output was social membership in the clique.
These studies also revealed that an organization is more than a formal structure of position and authority
responsibility relationships.
3. The Decision Theory School:

The decision theory school of management is led by Simon and looks upon the management process as a
decision making process. According to this theory, the entire field of management can be studies from the
study of the process of decision making. They have expanded their theoretical study through the study of
1. The decision
2. The Decision maker, and
3. The social and Psychological environment of the decision maker.
The decision maker start with the small area of decision making and then look at the entire field of the
management through this keyhole.

Decision making is central to managing and whatever a manager do is done through making decisions. But
the totality of managing is something more than decision making. The most important task of modern
manager are:
1. Innovating, integrating organization with its external environment, and
2. Creation of an organization climate conductive to the optimum performance by its members.

Integrating the organization with the environment and integrating employees and their group with the
organization require the art of managing and leadership.
4. The Management Science School:

The management scientists led by operation researchers and system analyst, see management as “a system of
mathematical models and processes”. Since managing is a logical and rational process, it can be expressed in
terms of mathematical relationships and models. The basic assumption of management science is, an organization
is a system with its parts in interactional and interdependent relationships. These interactions and
interdependencies can be expressed in terms of models and equations.

Management science has made significant contributions by applying the tools of mathematics to the solution of
various complex problems of management. They have successfully build models in the area of:
Quality control, inventory control, production scheduling, machine loading, warehouse operations and
resource allocation.
5. The System Theory School:

The system theorists has viewed organization as an open and organic system, which is composed of
interacting and interdependent parts, called subsystems. (Showed in figure)
5. The System Theory School: (continue)

Organizations as an Open and Organic System

Organizations are open systems in that they are in continuous interaction relationship with other systems.
These other systems comprise markets, suppliers, bankers, trade unions, governments, educational
institutions and other similar enterprises, industry, economy etc., which constitutes its environment.

Organizations also organic systems or living systems as they must satisfy three conditions for their continuing
survival:
First: A organization should be stable in the sense that its various parts should be in balance with one
another.
Second: It should grow and mature like other entities.
Third: It should adapt to environmental changes. It is the constant adjustment in response to its changes in
environments.
6. The Contingency Theory School:

The contingency theories aims at integrating theory in a practice in a systems framework. When an
organization behaves in response to forces in its environment, its behavior is said to be contingent on these
forces. Hence a contingency approach is an approach where the behavior of the of one subunit is dependent on
its environmental relationship to other units or subunits that have some control over the consequences…
desired by that subunit.
Thus, behavior on an organization is contingent on situations, and if the manager wants to change the behavior
within an organization, he must attempt to change that part of its environment which is influencing it.
Organization system is not a matter of managerial choice, but contingent upon its external environment.