Because learning changes everything.

Chapter 2
The Evolution of
Management Thought

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 Learning Objectives 1

1. Describe how the need to increase organizational

efficiency and effectiveness has guided the
evolution of management theory.
2. Explain the principle of job specialization and
division of labor and tell why the study of
person⎼task relationships is central to the pursuit
of increased efficiency.
3. Identify the principles of administration and
organization that underlie effective organizations.

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 Learning Objectives 2

4. Trace the change in theories about how

managers should behave to motivate and control
employees.
5. Explain the contributions of management science
to the efficient use of organizational resources.
6. Explain why the study of the external environment
and its impact on an organization has become a
central issue in management thought.

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 Evolution of Management Theory
• In the 19th century’s new economic climate,
managers of all types of organizations—political,
educational, and economic—were trying to find
better ways to satisfy customers’ needs.

• Many major economic, technical, and cultural

changes were taking place at this time.

• The introduction of steam power and the

development of sophisticated machinery and
equipment changed how goods were produced.
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 Evolution of Management Theory
• Owners and managers of the new factories found
themselves unprepared for the challenges accompanying
the change.

• They were unprepared for the social problems that occur

when people work together in large groups in a factory or
shop system.

• Managers began to search for new techniques to manage

their organizations’ resources, and soon they began to
focus on ways to increase the efficiency of the worker–task
mix.

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 Figure 2.1 The Evolution of Management
Theory

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 F.W. Taylor and Scientific Management
Scientific management:
• The systematic study of the relationships between
people and tasks for the purpose of redesigning
the work process to increase efficiency.
• Taylor believed that if the amount of time and
effort that each worker expends to produce a unit
of output (a finished good or service) can be
reduced by increasing specialization and the
division of labor, the production process will
become more efficient.

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 F.W. Taylor and Scientific Management
Taylor’s four principles:
1. Study the way workers perform their tasks, gather all the
informal job knowledge that workers possess, and
experiment with ways of improving how tasks are
performed.
• To discover the most efficient method of performing specific
tasks, Taylor studied in great detail and measured the ways
different workers went about performing their tasks.
• One of the main tools he used was a time-and-motion study.
He sought to find ways to improve each worker’s ability to
perform a particular task (e.g., by reducing the number of
motions workers made to complete the task, by changing the
layout of the work area or the type of tools workers used, or by
experimenting with tools of different sizes.
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 F.W. Taylor and Scientific Management
Taylor’s four principles:
2- Codify the new methods of performing tasks into written
rules and standard operating procedures.
• Once the method of performing a particular task was
determined, Taylor specified that it should be recorded so
this procedure could be taught to all workers performing
the same task.
• These new methods further standardized and simplified
jobs--essentially making jobs even more routine and
increasing efficiency throughout an organization.

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 F.W. Taylor and Scientific Management

Taylor’s four principles:

3- Carefully select workers who possess skills and abilities
that match the needs of the task, and train them to perform
the task according to the established rules and procedures.
• To increase specialization, Taylor believed workers had to
understand the tasks that were required and be thoroughly
trained to perform the tasks at the required level.
• Workers who could not be trained to this level were to be
transferred to a job where they were able to reach the
minimum required level of proficiency,

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 F.W. Taylor and Scientific Management
Taylor’s four principles:
4- Establish a fair or acceptable level of performance for a
task, and then develop a pay system that provides a reward
for performance above the acceptable level.
• To encourage workers to perform at a high level of
efficiency, and to give them an incentive to reveal the most
efficient techniques for performing a task, Taylor
advocated that workers benefit from any gains in
performance.
• They should be paid a bonus and receive some
percentage of the performance gains achieved through the
more efficient work process.

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 From a performance perspective, the combination
of the two management practices:
(1) achieving the right worker–task specialization
(2) linking people and tasks by the speed of the
production line
produces the huge cost savings and dramatic output
increases that occur in large organized work
settings.

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 Problems with Scientific Management
Managers in many organizations chose to implement the new
principles of scientific management selectively. This decision
ultimately resulted in problems:
• Some managers using scientific management obtained
performance increases, but rather than sharing performance
gains with workers through bonuses as Taylor had advocated,
they simply increased the amount of work that each worker was
expected to do.
• Workers also learned that performance increases often meant
fewer jobs and a greater threat of layoffs, because fewer
workers were needed.
• The specialized, simplified jobs were often monotonous and
repetitive, and many workers became dissatisfied with their
jobs.
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 Problems with Scientific Management
Scientific management brought many workers more
hardship than gain and a distrust of managers who did
not seem to care about workers’ well-being.
• These dissatisfied workers resisted attempts to use the
new scientific management techniques and at times even
withheld their job knowledge from managers to protect
their jobs and pay.
• Unable to inspire workers to accept the new scientific
management techniques for performing tasks, some
organizations increased the mechanization of the work
process.

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 Administrative Management Theory 1

Administrative management:
The study of how to create an organizational
structure and control system that leads to high
efficiency and effectiveness. (coordination of the
working of an entire org, not just organize work or
an individual worker)
Organizational structure: system of task and
authority relationships that control how employees
use resources to achieve the organization’s goals.
• Max Weber.
• Henri Fayol.
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 Administrative Management Theory 2

Max Weber:
• To help Germany manage its growing industrial
enterprises while it was striving to become a world
power, Weber developed the principles of
bureaucracy –
• bureaucracy is a formal system of organization
and administration designed to ensure efficiency
and effectiveness.
• A bureaucratic system of administration is based
on the 5 principles summarized in Figure 2.2.

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 Figure 2.2 Weber’s Principles of
Bureaucracy

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 Weber’s Principles of Bureaucracy
1- A manager’s formal authority derives from the position he
holds in the organization.

Authority: the power to hold people accountable for their

actions and to make decisions concerning the use of
organizational resources.
Authority gives manager the right to direct and control their
employees’ behavior to achieve organizational goals.

Obedience is owed to a manager not because of any

personal qualities – such as personality, wealth, or social
status- but because the manager occupies a position that is
associated with a certain level of authority and responsibility.

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 Weber’s Principles of Bureaucracy
2- People should occupy positions because of their
performance, not because of their social standing or
personal contacts
Some organizations and industries are still affected by social
networks in which personal contacts and relations, not job-
related skills, influence hiring and promotional decisions.

3- The extent of each position’s formal authority and task

responsibilities and its relationship to other positions should
be clearly specified.
Managers and workers know what is expected of them and
what to expect from each other; the organization can hold all
its employees strictly accountable for their actions.

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 Weber’s Principles of Bureaucracy

4- Authority can be exercised effectively when positions are

arranged hierarchically, so employees know whom to report
to and who reports to them.

Important in the armed forces, FBI, CIA and other

organizations that deal with sensitive issues involving
possible major repercussions.

5- Managers must create a well-defined system of rules,

standard operating procedures, and norms so they can
effectively control behavior.

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 Administrative Management Theory 5

• Rules and norms provide behavioral guidelines

that increase the performance of a bureaucratic
system because they specify the best ways to
accomplish organizational tasks.

• Weber believed organizations that implement all 5

principles establish a bureaucratic system that
improves organizational performance.

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 Administrative Management Theory 5

• If bureaucracies are not managed well, however,

many problems can result.

• Sometimes managers allow rules and SOPs, so-

called “bureaucratic red tape” to become so
cumbersome that decision making is slow and
inefficient, and organizations cannot change.

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 Behavioral Management Theory 1

Behavioral management:
• The study of how managers should behave to
motivate employees and encourage them to
perform at high levels and be committed to the
achievement of organizational goals.

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 The Hawthorne Studies and
Human Relations 1

The Hawthorne studies looked at how the

characteristics of the work setting affected
worker fatigue and performance at the
Hawthorne Works of the Western Electric
Company from 1924 to 1932.
• Worker productivity was measured at various
levels of light illumination.
• Mayo’s relay assembly test experiments.

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 The Hawthorne Studies and
Human Relations 2

Hawthorne effect:
• Workers’ performance affected by their attitudes
about their managers.
• Led to the human relations movement.

• (The researchers discovered that their presence was

affecting the results, because the workers enjoyed
receiving attention and being the subject of study and were
willing to cooperate with the researchers to produce the
results they believed the researchers desired).

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 The Hawthorne Studies and
Human Relations 4

The importance of behavioral or human

relations training became even clearer to its
supporters after the bank wiring room
experiments.
In a study of workers making telephone
switching equipment, researchers discovered
that workers, as a group, had deliberately
adopted a norm of output restriction to protect
their jobs.

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 The Hawthorne Studies and
Human Relations 4

Workers who violated this informal production norm

were subjected to sanctions by other group members.
Those who violated group performance norms and
performed above the norm were called “ratebusters.”
Those who performed below the norm were called
“chiselers.”
A works group’s influence over output can be as
great as the supervisor’s influence.
Supervisors should be trained to behave in ways that
gain the goodwill and cooperation of workers so that
supervisors, not workers, control the level of work group
performance.
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 The Hawthorne Studies and
Human Relations 4

Behavior of managers and workers in the

work setting is as important in explaining the
level of performance as the technical
aspects of the task.
Demonstrated the importance of
understanding how the feelings, thoughts,
and behavior of work-group members and
managers affect performance.

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 The Hawthorne Studies and
Human Relations 5

Informal organization:
• The system of behavioral rules and norms that
emerge in a group.

Organizational behavior:
• The study of the factors that have an impact on
how individuals and groups respond to and act in
organizations.

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 Management Science Theory 1

Management science theory:

• Contemporary approach to management that
focuses on the use of rigorous quantitative
techniques to help managers make maximum use
of organizational resources to produce goods and
services.

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 Management Science Theory 2

Quantitative management:
Utilizes mathematical techniques, like linear
programming, modeling, simulation.
• Inventory management practices. New factory locations.

Operations management:
Gives managers a set of techniques they can use to
analyze any aspect of an organization’s production
system to increase efficiency.
• How to acquire raw materials and distribute finished
products more efficiently.

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 Management Science Theory 3

Management information systems:

Give managers information about events occurring
inside the organization as well as in its external
environment—information that is vital for effective
decision making.
• Toyota Production System (TPS).

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 The Open-Systems View 1

Open system:
• A system that takes resources for its external
environment and transforms them into goods and
services that are then sent back to that
environment where they are bought by
customers.

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 The Open-Systems View 2

Figure 2.4 The Organization as an Open System

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 The Open-Systems View 3

Input stage:
• The organization acquires resources such as raw
materials, money, and skilled workers to produce
goods and services.
Conversion stage:
• Inputs are transformed into outputs of finished goods
and services.
Output stage:
• Finished goods are released to the external
environment.

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 The Open-Systems View 4

Closed system:
A self-contained system that is not affected by
changes in its external environment.
Likely to experience entropy:
• The tendency to lose its ability to control itself and, thus,
dissolve and disintegrate.

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 Contingency Theory
• Contingency theory is the idea that the
organizational structures and control systems
managers choose depend on characteristics of the
external environment in which the organization
operates.
• “There is no one best way to organize.”
• Rapidly changing environments create a greater
need for managers to respond quickly and
effectively.

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 Figure 2.5 Contingency Theory of
Organizational Design

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