FUNDAMENTALS OF MANAGEMENT

CHAPTER 2 HANDOUT – THE EVOLUTION OF MANAGEMENT THEORY

Course: Fundamentals of Management

Textbook: Contemporary Management – Gareth R. Jones (9th ed.)
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1. LEARNING OUTCOMES OF CHAPTER 2

After completing Chapter 2 – The Evolution of Management Theory, you

will be able to:

1. Explain why it is useful to study the history and evolution of

management theories.

2. Describe the main ideas of classical approaches (scientific

management, administrative management, bureaucracy).

3. Describe the main ideas of the behavioral approach and the

Hawthorne studies.

4. Explain modern approaches such as management science

(quantitative), systems theory, contingency theory, and
organizational environment.

5. Recognize how old and new theories influence management practice

today.

Tip for study: Underline or highlight the outcomes you feel least
confident about.
Focus your revision on those parts.

2. CHAPTER INTRODUCTION & HOOK

Today, when we talk about “management,” we often think of:

 Planning, organizing, leading, controlling,

 Motivating people,
  Making decisions,

 Strategy and competition.

But management did not appear suddenly.

It has evolved over more than 100 years.

Imagine managing a factory in 1900:

– No computers, no Excel,
– Many workers with low education,
– Hard physical labor,
– Very basic safety and rights.

Managers at that time had questions like:

 “How can we make workers more efficient?”

 “How can we organize large factories logically?”

 “How can we motivate workers, not just control them?”

Different management theories appeared to answer these questions at

different times.

In this chapter, you will:

 See how classical theories focused on efficiency and structure,

 How behavioral theories focused on people and motivation,

 How modern theories connect systems, environment, and

contingency (“it depends”).

By the end, you should be able to say:

“I understand where modern management ideas come from

and when each approach is most useful.”

TOPIC 1 – THE EVOLUTION OF MANAGEMENT THOUGHT (CLASSICAL &

BEHAVIORAL)

3. LEARNING OUTCOMES OF TOPIC 1

After Topic 1, you will be able to:

 1. Explain why early managers developed scientific management and
administrative management theories.

2. Describe the main ideas of scientific management (Taylor,

Gilbreths).

3. Describe the main ideas of administrative management (Fayol) and

bureaucracy (Weber).

4. Explain the behavioral approach and the importance of the

Hawthorne studies.

4. CONTENT – TOPIC 1: CLASSICAL & BEHAVIORAL APPROACHES

4.1. Why Study Management History?

We study management history to:

 Understand why managers do things the way they do today.

 See which ideas are still useful and which are outdated.

 Learn from past successes and failures.

Management theories are tools.

Different tools may be useful in different times and situations.

4.2. Scientific Management

 Scientific management (early 1900s)

A classical approach that tries to improve efficiency by studying work

scientifically and finding the “one best way” to perform each task.

Key figure: Frederick W. Taylor

Main ideas:

1. Study tasks using time and motion studies.

2. Break jobs into small, simple steps.

3. Select and train workers scientifically.

4. Provide incentives (piece-rate pay) for higher performance.

5. Separate planning (by managers) and doing (by workers).

Example:

 In a factory, Taylor would:

o Observe workers shovelling coal,

o Measure how long each movement takes,

o Design the most efficient way to shovel (tool size, movements),

o Train workers to follow that method exactly.

Pros:

 Increased productivity,

 Helped create modern operations management.

Cons:

 Viewed workers as “machines,”

 Ignored human needs and motivation.

4.3. The Gilbreths and Motion Study

 Frank and Lillian Gilbreth

o Used motion study to reduce unnecessary movements.

o Interested in both efficiency and worker well-being (Lillian was

a psychologist).

Example:

 Analyzing how bricklayers worked, they reduced the number of

motions,
making the job less tiring and more productive.

4.4. Administrative Management – Henri Fayol

 Administrative management

Focuses on the organization as a whole and the principles that can be

used to manage it.

Henri Fayol proposed principles of management such as:

  Division of work,

 Authority and responsibility,

 Unity of command (each person has one boss),

 Unity of direction (one plan for a group),

 Scalar chain (clear hierarchy),

 Equity (fairness),

 Esprit de corps (team spirit), etc.

He also identified functions of management very similar to P–O–L–C:

 Planning, organizing, commanding, coordinating, controlling.

4.5. Bureaucratic Management – Max Weber

 Bureaucracy (Max Weber)

An organizational form based on clear rules, hierarchy, and merit.

Main features of bureaucratic organization:

1. Clear division of labor.

2. Well-defined hierarchy (levels of authority).

3. Formal rules and procedures.

4. Impersonal relationships (decisions based on rules, not favoritism).

5. Employment and promotion based on technical qualifications.

Advantages:

 Predictability,

 Fairer decisions (in theory),

 Useful for large organizations.

Disadvantages:

 Can become rigid, slow, and inefficient (“too much paperwork”).

 Can reduce flexibility and creativity.

4.6. Behavioral Approach & Hawthorne Studies

Classical approaches focused mainly on efficiency, structure, and rules.

Later, researchers saw that people and their feelings are also crucial.

 Behavioral approach (human relations movement):

Emphasizes the importance of understanding motivation, group behavior,

and leadership in organizations.

Hawthorne Studies (1920s–1930s, at Western Electric Hawthorne Plant):

 Originally, researchers wanted to see how physical conditions (light,

breaks) affected productivity.

 They found something surprising:

o Productivity often increased just because workers felt

observed and special.

o Social relationships and attention from managers mattered a lot.

This led to the concept of the:

 Hawthorne effect:

People may change their behavior because they know they are being studied
or feel valued.

Main lessons from the behavioral approach:

 Workers are not just economic machines.

 Social needs, recognition, and group norms influence performance.

 Managers should consider motivation, communication, leadership,

and group dynamics.

TOPIC 2 – MODERN APPROACHES TO MANAGEMENT

5. LEARNING OUTCOMES OF TOPIC 2

After Topic 2, you will be able to:

1. Describe the main ideas of management science (quantitative)

approaches.
 2. Explain systems theory and the idea of organizations as open
systems.

3. Explain contingency theory (“it depends”) and why there is no one

best way to manage.

4. Understand the role of the organizational environment in modern

management thinking.

6. CONTENT – TOPIC 2: CONTEMPORARY APPROACHES

6.1. Management Science / Quantitative Approach

 Management science (quantitative approach):

Uses mathematical models, statistics, and quantitative techniques to

help managers make decisions.

Areas include:

 Operations research (optimizing schedules, inventory, logistics),

 Forecasting (sales predictions),

 Financial modeling,

 Risk analysis.

Example:

 An airline uses quantitative models to:

o Decide ticket prices,

o Optimize flight schedules,

o Manage seat inventory (overbooking).

This approach is powerful when:

 Problems can be expressed in numbers,

 Data is available,

 We need to find the most efficient solution.

6.2. Systems Theory and Open Systems

  System:

A set of interrelated parts that work together to achieve a common

purpose.

 Systems theory in management:

Views organizations as systems made of interdependent subsystems

(departments, teams, processes).

 Open system:

A system that interacts with its environment – it takes in inputs and produces
outputs.

In an organization:

 Inputs: resources (people, materials, money, information).

 Transformation process: production, services, operations.

 Outputs: products, services, results.

 Feedback: information from the environment (customer satisfaction,

sales data, complaints).

Key ideas:

 Changes in one part of the system affect other parts.

 Managers must consider the whole system, not only one

department.

 Organizations must adapt to their environment to survive.

6.3. Contingency Theory

Earlier approaches often looked for one best way to manage.

Contingency theory says:

“The best way to manage depends on the situation.”

 There is no universal best structure or style.

 Effective management depends on factors such as:

o Environment (stable or dynamic),

o Technology (routine or non-routine),

 o Size of the organization,

o People’s skills and motivation,

o Culture.

Examples:

 In a crisis, a more directive, centralized style may be needed.

 In a creative team, a more participative, decentralized style may

work better.

Contingency theory encourages managers to:

 Diagnose the situation,

 Choose flexible strategies, structures, and leadership styles.

6.4. Organizational Environment Approach

Modern management strongly emphasizes the environment:

 Internal and external forces that affect organizations (see Chapter 3 –

Managerial Environment).

 Organizations must constantly scan the environment and adapt.

This connects:

 Systems theory (organizations as open systems),

 Contingency theory (best way depends on environment),

 Strategic management (Chapter 4 – Planning).

6.5. Summary: From Classical to Contemporary

 Classical approaches:

o Focus on efficiency, structure, rules.

o Useful for stable, routine environments.

 Behavioral approach:

o Focus on people, motivation, groups.

 o Reminds managers that workers have social and psychological
needs.

 Modern approaches:

o Management science → use data and models.

o Systems theory → see organization as a system.

o Contingency theory → “it depends” on situation.

o Environment approach → adapt to changing environment.

Together, they form the toolbox of contemporary management.

7. KEY TERMS (GLOSSARY)

(Key terms are in bold + italics)

Term Short Explanation (EN)

Scientific Classical approach using scientific methods to find

management the one best way to work

Time and motion Careful study of tasks to eliminate wasted

study movements

Administrative Approach focusing on principles to manage the

management whole organization

Organization based on clear rules, hierarchy, and

Bureaucracy
merit

Behavioral approach Focus on motivation, group behavior, and leadership

People change behavior when they feel observed or

Hawthorne effect
special

Human relations
Emphasizes the importance of social factors at work
movement

Use of quantitative methods and models for

Management science
decision-making

System Set of interrelated parts working together

Systems theory Views organizations as systems with interdependent

Term Short Explanation (EN)

parts

System that interacts with its environment (inputs,

Open system
outputs, feedback)

Idea that the best way to manage depends on the

Contingency theory
situation

Organizational Internal and external forces affecting the

environment organization

Satisficing (from Choosing a good-enough solution, not necessarily

admin model) the best

Students can highlight or underline these terms for revision.

8. REVIEW QUESTIONS (FOR SELF-STUDY)

Part A – Classical & Behavioral Approaches

1. Why is it useful for managers and students to study the history of

management theories?

2. What is scientific management?

o Mention one main idea from Frederick W. Taylor.

o Give one advantage and one disadvantage of scientific

management.

3. What are the main ideas of administrative management according

to Henri Fayol?
Name at least two of his principles.

4. What is a bureaucratic organization according to Max Weber?

Give one benefit and one problem of bureaucracy.

5. What is the behavioral approach to management?

Why were the Hawthorne studies important?

Part B – Modern Approaches

 6. What is management science (quantitative approach)?
Give one example of how a business could use it.

7. Explain what a system is.

Why do we say organizations are open systems?

8. What is contingency theory?

Give an example of a situation where a different management style
might be needed.

9. How does the idea of the organizational environment influence

modern management?

Part C – Application / Short Scenarios

10. A factory manager in 1910 wants to increase productivity on a

production line.

o Which classical approach would he probably use?

o What specific steps might he take?

11. A modern software company wants to encourage creativity and

innovation.

o Which management approaches and ideas are most relevant

(classical, behavioral, contingency, etc.)?

o Why?

12. A hospital uses a computer system to schedule staff, manage

drug inventory, and plan patient beds.

o Which modern approach is this an example of?

o How does it help managers make decisions?

13. Think about a student club you know.

o Which ideas from classical management (structure, roles, rules)

can help the club?

o Which ideas from the behavioral approach (motivation, group

behavior) are also important?