Management Theory

MANAGEMENT THEORY Introduction
Classical Approach To Management
The history and theory of management are important to managers for various reasons:
They help managers understand current developments and avoid mistakes of the past They foster an understanding and appreciation of current situations and developments and facilitates the prediction of future conditions They help managers organize information and approach problems systematically. Without knowledge of theory, managers would be using guess work, hunches, intuition and hopes which may not be useful in the present complex and dynamic organization.
The practice of management can be traced to the beginning of man.  Egyptian, Greek, Roman and Chinese civilizations all have records indicating the importance of management. (The writings of Sun Tzu on the ‘Art of War’, written 2500 years ago are a lesson on strategic management) In Greece, Socrates the famous philosopher observed that “the management of private affairs such as households is not different from the conduct of public affairs except in magnitude”  The biblical Moses used the Principle of delegation and hierarchy of command to manage the Israelites during the exodus. (Exodus 18: 1-27). Joshua used the management techniques to recruit soldiers for war. The Roman Catholic Church over the centuries has effectively used the principles of division of labor and hierarchy of authority. The Roman empire colonized many parts of the world for many centuries by effectively using basic management ideas such as scalar principle and delegation of authority.  Niccolo Machiavelli in ‘The Prince’ gives relevant ideas on how to develop and use management skills.  He suggests to ‘The Prince’ ideas on – consent of the majority, inspiration of people to greater achievement, offer of rewards and incentives and taking advantage of all opportunities. The above early influences on management, however, do not give much insight into the principles of management as they are not organized and the relationships among various variables are not explained.  The knowledge is based on trial and error and experience rather than organized scientific knowledge. It was only in the late 19th century that large business organizations requiring systematic administration started to emerge.  We shall focus on two early schools of management.
Classical management theory Human  relations neo-classical theory
Classical Management Theory Classical theory is divided into scientific management and administrative management. Scientific management theory: Changes in economic and production patterns during the industrial revolution led a few practicing managers to examine the causes of inefficiency in production.  It is these basic studies that led to a system of management known as scientific management. Scientific management has been defined as the application of scientific method of study, analysis and problem solving in organizations. The Thoughts of Frederick Taylor (1856-1917) Taylor, an engineer in an American steel firm was concerned about the best methods of doing jobs.  He saw the main problem to be that of efficiency of workers in relation to existing property relationships between workers and owners of organizations. He suggested the development of a true science of management where methods for performing each task could be determined. He advocated a mental revolution by both management and workers. His findings were:
Workers deliberately restricted production in their daily work due to fear of unemployment and lack of piece rate system. Lack of work rationalization, hence overlapping of jobs. The method of working was also too complicated. Due to poor remuneration, workers formed themselves into groups and labour unions to press for better wages. Management left the initiative of working methods to the ingenuity of workers (rule of thumb).
To solve the above problems, Taylor suggested the following principles to guide management.
Each worker should have a clearly defined daily task. Establish standard conditions to ensure the task is more easily accomplished e.g. work-study and motion studies. High payment for successful completion of tasks and none or lower payment when standards are down.  He believed money was a major motivator.
For management, he suggested: -
The scientific selection, education and development of workers. Friendly, close cooperation between management and workers. Managers should take more supervisory responsibility, arguing that workers preferred to be given a definite task with clear-cut standards.
The concepts/ideas advanced by Taylor are not far from the fundamental beliefs of the modern manager. A number of post Taylor studies are found in the literature e.g. The Hilbreths, Gault, Emerson, and Filene.  They all attempted to improve on Taylor’s ideas. The basic assumptions of scientific management were:
Improved results in organizations will come from the application of scientific methods of analysis to organizational problems. This implies that scientific approach to problems is superior to other methods eg informal sector The focus is on the work itself and not the particular person doing the work Each worker is assumed to be a classical economic man hence interested only in maximization of his monetary income
Evaluation of Scientific management
While Taylor’s ideas of scientific management contributed to modern management, there were also a number of limitations.
Limitations
The revolutionary ideas advocated by Taylor increased productivity but led to layoffs It assumed people were rational and therefore motivated only by material gains. Taylor and his followers overlooked the social needs of workers. They assumed that one had only to tell workers what to do to increase their earnings and they would do it. However, people have needs other than money e.g. recognition and acceptance They also overlooked the human desire for job satisfaction and workers became more willing to go out on strike over job conditions rather than salary. The assumption that human beings are rational creatures who base their decisions on rationality and logical analysis of their needs is not universally applicable to all human beings.
Benefits of the Scientific Management Thoughts.
Its rational approach to organization of work enabled tasks to be measured with accuracy. Tasks measurement and processes provided useful information on which to base improvement on working methods. Improvement of working methods brought enormous increases in productivity. Enabled employees to be paid by results and to take advantage of incentive schemes. Stimulated management into adopting a more positive role in leadership at the factory level. Contributed to major improvements in physical working conditions. It provided the foundations on which modern work study and other quantitative techniques are based.
Disadvantages of the Scientific Management.
Reduced the role of workers to that of rigid adherence to methods and procedures over which they have no discretion. Led to fragmentation of work because of emphasis on analysis and organization of individual operations, hence boring, repetitive jobs. Generated a carrot and stick approach to the motivation of employees enabling pay to be geared tightly to output. It put the planning and control of workplace activities exclusively in the hands of management, alienating workers. Ruled out any realistic bargaining about wage rates since every job was measured, timed and rated scientifically.
Fayol, Taylor and their followers have attempted to find rational principles that can be applied to the development and management of organizations.  However while most have been adopted, some are difficult to implement in practice because of changes in organizations and environmental conditions.          Administrative Theory This theory came out of a need to find guidelines on how to manage complex organizations such as factories. Henry Fayol is recognized as the father of classical organization theory since he was the first person to systematize managerial behaviour. Another contributor is Max Weber (1864-1920) with his bureaucratic model. HENRI FAYOL (1841-1925). Fayol was an engineer in a large French Company.  Fayol, unlike Taylor started in management and his ideas therefore are more concerned with the science of management.  As such he drew up a list of principles of management. Fayol believed that sound managerial practice fell into patterns that could be identified and analyzed. He also believed that management is not a personal talent but a skill that can be taught and learnt. It is notable that Fayol’s observations fit well into the currently developing management theory. He defined management in terms of: (i)         Technical activities     -           production. (ii)        Commercial  “             -           buying and selling. (iii)       Financial       “             -           securing capital. (iv)       Security         “                        -           safeguarding financial information. (v)        Managerial    “             -           planning, organizing, controlling and directing.
He noted that of all these activities, it is managerial activities that have not been given much attention and he dealt more with it. Based on his experience, Fayol listed 14 principles of management.
Division of work - Necessary to efficiency of labour as it reduces span of attention or effort hence increasing specialization. Authority and Responsibility - The right to give orders. Discipline         -Respect for formal and informal agreements between firm and workers and obedience to rules and regulations. Unity of command - One person, one superior, employees should receive orders from one superior only to reduce confusion. Unity of Direction  - One head, one plan for a group of activities with the same objective. Subordination of the individual interest to general interest -The interests of one individual or one group should not prevail over the general good. Remuneration - Pay should be fair to both worker and firm. Centralization - Refers to the extent to which authority is concentrated or dispersed.  Circumstances of organization e.g. size will determine the extent to which an organization is centralized Scalar Chain - “Chain of Superiors” or line of authority from top to bottom. Order - A place for everything i.e. the right person in the right job or place. Equity - Refers to loyalty and devotion from personnel by use of kindliness and justice on the part of managers. Stability or Tenure of Personnel -       Refers to the costs and dangers of turnover due to bad management. Initiative -         All levels of personnel should be encouraged to show initiative as it is a source of satisfaction. Espirit de corps -         “In union there is strength”.  This is an emphasis on teamwork, harmony and communication.
MAX WEBER (1864-1920)
Max Weber advocated for a bureaucratic approach to management to reduce abuse of power by people in managerial positions. This is an approach that runs on rules and regulations. The concept of bureaucracy is attributed to Max Weber (1864-1920), a German sociologist. He lived in the period of history as the early pioneers of management thought such as Fredrick Taylor and Henri Fayol. Weber however, was an academic and not a practicing manager. His interest in organizations was from the sociological perspective of why people obeyed those in authority and why those in authority abused power. He published “the theory of social and economic organization” which was translated into English in 1947. He used the term bureaucracy to describe the structure of organizations. Bureaucracy
Is a term that has been used to mean: Red tape – an excess of paper work and rules leading to gross inefficieny Officialdom – all the apparatus of local and central government An organizational form made up of rules and hierarchy of authority.
Characteristics of Bureaucracies
Specialization – have a high degree of labour division thus ability and not personal loyalty is the condition for employment Rational – official jurisdictional areas are rationally determined by a clear hierarchy of authority; duties and measures of performance are established and positions are well defined and formalized in writing. Professional - follows formal impersonal procedures of the organization. Organizational structures are well defined and exist prior to filling positions with people. Impersonal - authority is impersonal and amount of authority corresponds with rank of office Autonomous – officials, because of their expertise and technical competence are recognized and rarely questioned within their areas of  expertise. Stable – performance is encouraged by rewards in form of stable careers, regular salary, promotion and pensions.
A bureaucratic organization has a functional structure, clear lines of authority and obedience is owed to established rules and regulations. It has hierarchical levels of authority with firmly ordered superior-subordinate relationships. Terms of employment are based on rank of office rather than amount of work (performance) Bureaucracy is common in large complex organizations which depend on specialization, rules and procedures for efficiency
Weaknesses
Works well only in stable environments where the work and information handled are highly predictable, recurrent, routine and familiar. Rules become so important that they become an obstacle to efficiency Decision making processes are programmed hence discouraging search for other alternatives (is rigid) Rigid behaviour damages relations with clients or customers as they are unable to get tailor made services but have to accept the standard provided within the rules. Difficult to change and adapt to new circumstances It undervalues the human element by assuming that people are passive and respond only to rules and incentives. It failed to see the fact that people are capable of going against rules.
What common features do you see between Fayol’s principles of management and Weber’s description of bureaucracy? Discuss the advantages and disadvantages of bureaucratic structures. Why do you think such structures may not be suitable for organizations that operate in highly unstable environments? Discuss the situations in which bureaucratic systems are desirable
Neo-Classical Theory Of Management
Human relations school of thought
While the scientific management theorists were more concerned with the mechanics and structure of organization, the human relations school of thought was more concerned with the human factor i.e. people and their relationship with the organization, fellow workers and the job.  The emergence of industrial psychology in 1913 provided the impetus in the studies on human problems in organizations. The works of Elton Mayo (1880 – 1949). Elton was an Australian practicing psychologist at Harvard University.  He carried out experiments at the Hawthorne Plant of Western Electric over a period of time and his findings can be summarized as follows:-
Individual workers cannot be treated in isolation but must be seen as members of a group. The need to belong to a group and have status within it is more important than monetary incentives or good working conditions. Informal groups at work exercise a strong influence over the behaviour of workers. Supervisors need to be aware of these social needs and cater for them if workers are to collaborate with the official/formal organization rather than work against it.
The studies proved that interpersonal and group values are superior to managerial and individual values.  Managers who do not have the enthusiastic support of the groups they supervise will be unable to motivate individual members to a significant degree.
Weaknesses of the human relations school of thought
In viewing people as the most important organizational variable it committed the mistakes of earlier theories of suggesting one best way of managing It saw workers as social beings motivated by social needs but this is too simplistic as human beings are complex and motivated by many variables It assumed satisfied workers are highly productive but this is not always true
Assumptions about people.
To understand the human factor in organizations, assumptions made about people need to be understood especially in the superior-subordinate relationship.  The major theories of motivation and leadership were developed after the Hawthorne studies of Elton Mayo. Edgar Schein (1965) Schein was an American academic who published a classification of assumptions about people.  Implicit in management ideas is what motivates people. (i)         Rational – Economic Man This view or assumption has its roots in the economic theories of Adam Smith (1776).  It states that self-interest and the maximization of gain are the prime motivators of people.  It stresses man’s rational calculation of self-interest especially in relation to economic needs.  Hence people are either untrustworthy and money-motivated or trustworthy and motivated by broader issues.  This appears to have been an important assumption in the mind of Taylor and his followers.  (ii)       Social Man This assumption draws from the conclusions of Elton-Mayo.  This view sees people as dominated by social needs.  Acceptance of this view means managers need to pay more attention to people’s needs rather than tasks, groups and a change of role for manager from organizer and controller to guide and supporter. (iii)       Self-actualizing man   This view is based on Maslows theory of human needs.  It sees self-fulfillment needs as the main driving force behind individuals.  The managerial strategy should be one that provides challenging work, delegation, responsibility and autonomy of work.  While this view is true for managers and professional staff, it is less clear for lower grade employees. (vi)       Complex Man This view sees human beings as complex and variable.  People’s motives vary depending on tasks, work groups or organizational climate.  Managers must therefore be able to also adapt and vary their own behaviour in accordance with the motivational needs of particular individuals and teams.  Schein sees motivation in terms of psychological contract based on the expectations that employers and employees have of each other.  Hence the relationship between an individual and his organization is an interactive one.
Douglas McGregor (1967)
Like Schein’s classifications, McGregor’s theory X and theory Y are a set of assumptions about people.  After observing the actual practice of managers, he proposed that they were operating on two levels.
(a)        Theory X
i.          The average person has an inherent dislike for work and will avoid it if possible. ii.          Because of dislike for work, people must be coerced, controlled, directed and threatened with punishment to get them to work. iii.         The average human being prefers to be directed, wishes to avoid responsibility, has limited ambition and wants security above all else.
(b)        Theory Y
The use of physical and mental effort in work is as natural as play or rest. People will exercise self-direction and self control in the service of objectives to which they are committed. Commitment to objectives is a function of the rewards associated with achievement. The average human being learns under proper conditions not only to accept but to seek responsibility. The capacity to exercise a relatively high degree of imagination, ingenuity and creativity in the solution of organizational problems is widely and not narrowly distributed. Under conditions of modern industrial life, the intellectual potentialities of the average human being are only partially utilized.
Conclusions
Attitudes and behaviour towards other people are a reflection of the assumptions we make about people. McGregor’s theory X corresponds closely to Schein’s rational-economic man, while theory Y corresponds to self-actualizing man. McGregor’s assumptions have found wide application in issues of leadership than in general management. Based on these assumptions, managers should consider seriously practices such as flexibility in working time, job enrichment, performance appraisal, participation etc. In real life, a blend of the two assumptions can be observed.