CHAPTER TWO


MANAGEMENT THEORIES AND THEIR
APPLICATION
 Objectives

Students should be able to:

 Know the importance of the study of management theories

 Grasp the various management theories and their

contributors

 Know the implications of the various theories

 Introduction

The study of how management emerged as a formal
discipline and why there is the need to understand the
historical developments of management thought is one of the
most debated issues in management literature.

Many students wonder why a contemporary manager instead

of committing to new ideas, new strategies, new technology
and new kinds of employees, tend to concentrate on the past
that cannot be influenced by the decisions managers take
today or tomorrow?
 Introduction cont’d…

However, the legacy of past efforts, triumphs, and failures
serve as benchmarks for guiding future management
practices.

According to Mullins (1999), the study of management

history or theory is important for the following four reasons:

i. What leading writers say is an important part of the study

of management.
 
ii. It is necessary to view the interrelationships between the
development of theory, behaviour in organizations and management
practice.

iii. An understanding of the development of management thinking

helps in understanding the principles underlying the process of
management.

iv. Many of the earlier ideas are of importance to the manager; and
latter ideas of management tend to incorporate earlier ideas and
conclusions.
 Theory of Management

The changing phenomenon in management over time, has
resulted in the creation of several bodies of management
literature called the schools of management thinking.

These are classified into classical, neo-classical and the

modern approach to management.
 Theory of Management cont’d…

The Classical Management Approach:
This is the very first body of management literature.
The classical approach evolved in an effort to uncover those
techniques that would solve problems associated with
efficiency in the production of goods and services.

Proponents held the view that managers basically operate in

organizations, and that these organizations should be designed
and managed according to principles and practices that stress
efficiency and productivity.
 
This approach emerged in the era of industrial revolution,
with revolutionaries such as Robert Owen (1771-1858) and
Charles Babbage (1792-1871).

The classical period extended from mid-19th century through

to the early 1950s.

The main premise was that there is always the one best way
to do a job.
 
The most common issues that were tackled classical theorists
included control, order, specialization, structure, authority,
formality, coordination and continuity.

The classical approach still has modern-day application

because of its central concern for increasing productivity.

This approach has been categorized into three perspectives:

 Classical approach
cont’d…

The Scientific Management Theory
The study of management can be traced to the early
1911, when Frederick Winslow Taylor published the first
well-developed framework of management.

The rapid growth in factories as a result of the industrial

revolution, posed different managerial problems.
The manpower need increased. Literacy was however
very low.
 
The Scientific Management Theory cont’d…
As a result, trained managers were short supply, and they had to focus on directing workers,
than on coordinating and controlling the workforce. In effect, production efficiency was
lost.

Prior to this period however:

 Managerial decision were based on intuition, feelings, and traditional past experience
 Jobs were performed by the “rule of thumb” rather than standard time method or motion
 Prevalent practices were assumed to be correct, and new techniques were not introduced
 Training was informal. The apprentice system was used.
 Management was viewed as a group of overall supervisors rather than a group
performing unique duties.
 
The proponents of scientific management believed managers
should take scientific and objective approach to achieve work
efficiency.

The motions required for each job, tools utilized and the time
required are determined to set performance standards – the
“one best way”
With the use of this, work was routine, and productivity
improved.
 
Advocates of scientific management included:

Frederick Winslow Taylor

At age 28, he became a self-taught engineer in 1878, and is described in
most books as the father of scientific management.

He discovered that inefficiency and waste was prevalent. He then advocated

for a more systematic approach in management-the one best way.

Taylor’s ideas were collectively called the principles of scientific

management:
 
1. Determining the one best way: a science for each element of the
subordinate’s work
2. Scientific selection of personnel: qualified individuals are selected
to fill job openings, trained and developed
3. Cooperation between management and workers: managers are to
cooperate with workers to ensure work is done according to
principles
4. Functional foremanship: equal division of work and responsibility

Another contribution of Taylor was the institution of the differential

piece-rate pay system
 
Frank and Lillian Gilbreth
Frank, a bricklayer married Lillian who had a background in
management and psychology in 1904. Their work was
consistent with the teachings of Frederick W. Taylor.

They developed numerous strategies for work simplification.

They invented a device called the micro chronometer that was
used for recording a body motion in brick layering and the
amount of time spent in each motion. This was nicknamed the
“Motion Study”. It massively increased productivity in this area.
 
Frank and Gilbreth also devised another tool for studying, modifying and eliminating
unnecessary elemental motion ( basic hand motions)- the “micro-motion study”

It must be recognized however, that while Frank was more interested in the efficiency of
work methods, Lillian was rather interested in the human aspect of work.

Benefits:
1. Enormous increase in productivity
2. Deserving pay for workers coupled with incentives
3. Provided the foundation for modern work study
4. It is a rational approach to the organization of work, enabling a considerably
accurate measure of tasks and processes.
 
Drawbacks:
 Workers were viewed as part of machines
 Relationship between organization and the external
environment was neglected
 It did not acknowledge individual difference among
employees
 It ruled out any realistic bargaining about wage rate since
every job was measured, timed and rated scientifically
 The General Administrative Management
Theory


This focuses on the total organization, and attempts to develop
principles that can increase probability that managerial action
may result in an efficiently performing organization.

Administrative theorists focused attention on how managers

can manage organizations on the same basis as they managed
work. The focus was on efficient operations.

The primary contributors of administrative management are:

 The General Administrative Management
Theory cont’d…

Henry Fayol
He was a French mining engineer and executive of a major coal
mining firm called “Commambault”, now known as “ Le
Creust-Loire”
Fayol’s attention was drawn to the practice of management that
could provide ‘guidelines’ and ‘direction’ to managers to
ensure their efficiency in managing the total organization.

He published his first work on management in a book titled “

Administration Industrielle et generale” in 1916.
 
It was later translated to English in 1930, under the title, “ General and Industrial
Management”
The book made mention of the five basic managerial functions: planning, organizing,
commanding, coordinating and controlling, which have now been reduced to four
(planning organizing, leading and controlling.

Fayol also identified six key activities of any industrial undertaking as:
1. Technical activities eg. Production
2. Commercial activities eg. Buying and selling
3. Financial activities eg. Obtaining funds
4. Security activities eg. Safekeeping property
5. Accounting activities eg. Providing accounting information
6. Managerial activities eg. Planning and leading
 
The fourteen principles of management for practicing managers:

 Division of work. Having labour specialized units would lead

to advantages.
 Authority. The right to give orders and the right to exact
obedience.
 Discipline. Good discipline exists when workers and
managers respect rules governing organizational activities
 Unity of Command. Derived from military codes, principle
states that no individual should have more than one supervisor.
 
 Unity of Direction. Similar tasks with a singular goal are grouped
under one manager.
 Subordination of Interests. The goals of organization should take
precedence over individual goals
 Remuneration. Rewards should be fair for all.
 Centralization. Concentration of power and authority at the upper
levels of the organization. The opposite is known as
decentralization.
 Scalar Chain. Also known as chain of command, stipulates that
communication should be routed through positions from top to
bottom in the organization.
 
 Order. Human and material resources should be well-
coordinated.
 Equity. Justice and kindliness should be pursued
 Stability of Tenure. Staffing must be well-planned to
avoid high employee turnover
 Initiative. Problem solving ability of employees must be
encouraged.
 Esprit de Corps. Managers must emphasize teamwork
and harmony
 
Fayol identified five qualities as being responding for differentiating between
efficient and inefficient management: mental, moral, education, technical,
experience.

Mary Parker Follet

She was trained in Philosophy and Political Science at a college now known
as Radcliffe College.
In her book, The Dynamic Organization, published in 1942, the work group
was the primary block of organizations and managers can only ensure
harmony and coordination by jointly developing organizational goals and
sharing power with subordinates.
 
She said coordination:
1. Requires that employees get in contact with one another
2. Is essential during the initial stages of any endeavour
3. Must address all factors in each phase of any endeavours.
4. Is a continuous, ongoing process

Her speech delivered in 1920 on the “ Law of the Situation”,

laid the foundation for the modern contingency approach.
 
Chester Bernard
Born on a farm in Massachusetts, he attended Harvard but failed to
obtain a degree. Despite this, he had a successful management career.
His landmark book entitled, “ The Functions of the Executives” in 1938.
He made mention of four useful managerial concepts: the acceptance
theory of authority, the zone of difference, the informal organization,
and the cooperate system.

According to him, the source of authority resides in subordinates, who

choose to follow managers’ orders - the acceptance theory of authority.
It was as significant.
 
Bernard believed that employees follow orders when they;
1. Understand directives
2. See consistency of directive with organizational purpose
3. Believe it is in line with their personal interests
4. Are mentally and physically able to comply

His other contributions were the concept of “informal

organization “ and the need to see the organization as a
“cooperate system”
 
Benefits/contributions:
1. Management was viewed as a profession that can be learnt and
developed.
2. Offering of many principles and direction to top management
3. Has recognized the important of the informal organization
4. Foundation for the contingency approach to management
5. Has identified the basic functions of the manager

Drawbacks:
6. Difficulty to determine when to use which principle
7. The human factor was not considered
 
The Bureaucratic Management Theory
It views management on an impersonal, rational basis through division
of labour, a well defined authority and responsibility, formal rules and
regulations and the separation of management from ownership.
It focuses on ensuring efficiency through consistency.

Power can only be exercised within the limits set, so that personalized
relationships and non-rational, emotional considerations do not get into
the system.

Its major contributor was Max Weber (1864- 1920)

Max Weber

Max was a German sociologist born in 1864. He read law, history, economics and philosophy at Heidelberg
University.

Through research, Max observed most European organizations were managed on a personal, family-like basis.
Weber believed that such organizations would be more efficient and rational when structured around specific
guidelines.

He described his bureaucracy as having the following features:

 Hierarchical structure
 Division of labour
 Formal rules and regulations
 Separation of ownership from management
 Technical competence
 Position power
 Record keeping
 
These were outlined in his book, The Theory of Social and
Economic Organizations, published in 1947.

Max referred to bureaucratic management as an “ideal type of

organization”

He also identified three types of legitimate authority, namely;

i. Traditional authority
ii. Charismatic authority
iii. Rational-legal authority
 
Lyndal F. Urwick
Urwick’s contribution to bureaucratic management was based very much on getting universally
accepted rules and principles of controlling organizations.

He identified ten principles by which managers can be guided in achieving their objectives effectively.
1. The principle of objective
2. The principle of specialization
3. The principle of coordination
4. The principle of authority
5. The principle of responsibility
6. The principle of definition
7. The principle of correspondence
8. The principle of span of control
9. The principle of balance
10. The principle of continuity
 
Alvin Gouldner
Gouldner was an American sociologist who followed some of the teachings of Max
Weber.

He identified three patterns of bureaucracy within an organization:

1. The Mock- Centered Bureaucracy. This is one in which the rules and principles
established at the head unit are ignored by employees, because employees have
rather established their own governing rules.
2. The Representative- Centered Bureaucracy. Both management and employees
establish the bureaucratic rules. As a result, employees tend to follow them to
the letter.
3. The Punishment- Centered Bureaucracy. Occurs when either management or
employees try to impose rules on one another.
 
Benefits/ contributions:
1. Promote efficient performance of routine organizational activities
2. Eliminates subjective judgments by employees and management alike
3. Recognizes the importance of specialization

Drawbacks:
4. Too rigid
5. Overlooks employee initiatives
6. Rules may become ends in themselves and may not be used to meet stipulated
goals
7. An accumulation of power may lead to authoritarian management
8. Decision-making is very slow
 The Neo-Classical Management Theory

Classical theorists perceived organizations from a mechanistic point
of view and essentially sought to conceptualize the organization as if
it were a “machine”. The situation inspired a number of theoretical
movements called the Neo-classical management thought.

The Neo-classical theorists contended that increased worker

satisfaction was the answer to organizational efficiency and
productivity.
Managers were required to understand the needs, behaviours,
attitudes, social interactions and group processes of their employees.
 
The two main subdivisions of the Neo-classical theory are the
Human Relations approach and the Behavioural Science
approach.

Although both the classical and neo-classical theories are

distinct, they commonly believe that people are the most
important and strategic assets of the organization and must
be managed effectively for increased productivity.
 
The Human Relations School of Management
This is a movement in management thinking and practice
which is based on the view that the satisfaction of employees’
basic needs was the key requirement for increased worker
efficiency and productivity.

The various theorists under this approach focused on the

understanding of how such psychological and social factors
may interact with the mechanistic work situation to influence
employee performance and organizational productivity.
 
Elton Mayor and human relations management
An Australian psychologist who concentrated much on the relation between
worker motivation, job satisfaction and organizational performance.
He carried out a study which came to be known as the “Hawthorne Studies”.

In 1927, a group of Harvard scholars headed by Elton Mayo and his assistant
Fritz Roethlisberger were consulted to assist in the interpretation of the results
Vernon and Wyatt (who were hired to identify factors other than “fatigue” that
might reduce worker productivity), and to conduct further experiments as and
when necessary to determine exactly what could be the most driving force for
increased worker productivity at the Hawthorne Works plant in Chicago.
 
On the whole, four experiments were conducted:

 The Illumination Experiment.

 The relay assembly test room experiment
 The mass employee interview
 The bank wiring observation

Abraham Maslow and Emile Durkheim

Maslow identified five needs of the worker.

Durkheim- groups formulate their own values of behaviour for each member.
 
Benefits:
 Recognized the importance of psychological and social processes
 Recognized the need for worker participation in decision-making

Drawbacks:
 Failed to recognize other employee motivation factors
 Failed to recognize individual differences
 Ignored worker’s rational side and formal organization’s
contribution to productivity
 
The Behavioural School of Management
A transitional stage of the human relations approach.
Focused on the complex nature of the individual, group and
organizational processes, noting how the they affect each
other.

Main advocates are Douglas McGregor (1906- 1964), Chris

Argyris (1957) and Rensis Likert (1961)
 
Douglas McGregor
 The X, Y theory.

Chris Argyris
 “Maturation process”, nicknamed “immaturity-maturity
theory”

Rensis Likert
 Participatory management
 
Contributions:
1. Foundation for the study of organizational behaviour
2. Increased employee participation and harmony

Drawbacks:
3. Over-emphasis
4. Assumption of employee independence too simplistic
 The Modern or Contemporary Approach to
Management

Emerged after World War II, and challenges the dominance
of the many management theories that preceded it.
It identifies two shortfalls of early writers:
 External environment was not considered
 Failure to recognize the complementary nature of schools.

The integration of the basic concepts were collectively called

contemporary school of management.
 The Systems Theory of Management

Assumes organization is a system with a set of interrelating subsystems that function as a whole to
achieve a common organizational goal.

 all organizational systems operate on the basis of five elements: input, process, output, environment
and feedback.

Concepts of the systems theory:

1. Open
2. Closed
3. Efficiency
4. Effectiveness
5. Synergy
6. Equifinality
7. Entropy
8. Subsystems
 
Major contributors:
Ludwig Von Bertalanffy
 Biologist
 Did not focus specifically on management

Katz and Kahm

 Focused on relationship, structure and interdependence.
 In his book, The Social Psychology of Organizations (1966), he distinguished between
four subsystems:
1. The maintenance subsystem
2. The boundary spanning subsystem
3. The adaptive subsystem
4. The managerial subsystem
 
West Churchman

Considered organization as a subsystem with the following

characteristics:
1. Larger environment
2. Systems consist of subsystems
3. Every system is part of a bigger one
4. Has a central purpose
5. May be classified as open or closed.
 
Benefits:
1. Recognizes the importance of organizational
environment
2. More than one best way to the same outcome.
3. Recognize the importance of interrelationships

Drawbacks:
4. Does not provide any specific guidance on how various
subsystems work together
 
The contingency approach to management
Has the general assumption that managerial behaviour in one
situation cannot be applied to other situations.

The ten most frequently mentioned contingencies are:

 Rate of change and complexity
 Internal strengths and weaknesses
 Values, goals, skills and attitude
 
There are three main contributors:
Burns and Stalker
 Identified two types of organizations- mechanistic and organic

Joan Woodward
 she discovered three different types of technology:
1. Small batch
2. Mass production
3. Continuous process

Lawrence and Lorsch

 Identified four factors fo assessing situations- organizational strategies, ownership
patterns, environmental conditions and leadership
 
Benefits:
1. Major influential contingencies have been identified
2. Creates the awareness that universal principles of
management do not exist

Drawbacks:
3. Not all critical contingencies are identified
4. Managerial approaches are not directly linked to specific
situations
 
The management science approach to management
A group of scientist called “Operations Research Team”, drawing
from Frederick Taylor and Henry Gantt’s work, they developed
mathematical methods and models for countering enemy.

Quantitative management helps a manager to make decisions by

developing formal mathematical models of the problems.

The common names associated with the introduction of quantitative

methods to industry are Robert McNamara and Charles Tex Thomton.
 
Benefits:
Enabled managers in formulating various mathematical models for
decision-making.

Drawbacks:
The complicated nature of some techniques.

Implications of the school of management thought

The most appropriate methods to use in management can be
decided, even in the face of changing trends.
Questions

THANK YOU!
