CHAPTER - 3

Evolution of Management Thought

Contents
1. INTRODUCTION ......................................................................................................................... 2
2. CLASSICAL THEORY ................................................................................................................ 2
3. HUMAN RELATIONS AND BEHAVIOURAL SCIENCE THEORIES ...................................... 2
4. SYSTEM THEORY ...................................................................................................................... 3
5. DECISION THEORY ................................................................................................................... 4
6. MANAGEMENT SCIENCE THEORY ........................................................................................ 5
7. CONTINGENCY THEORY ......................................................................................................... 5
8. EMERGING MANAGEMENT CONCEPTS ................................................................................ 6
WORKFORCE DIVERSITY ..................................................................................................................... 6
OUTSOURCING ....................................................................................................................................... 6
KNOWLEDGE MANAGEMENT ............................................................................................................. 7
LEARNING ORGANIZATION ................................................................................................................ 7

Kiran Sah, Faculty Member, Faculty of Management, R.R.M. Campus, Janakpurdham. // [email protected]
 Page 3.2 Principles of Management
INTRODUCTION
Management was developed along with human civilization. Once people started to live in family unit and society,
they required management. Family is taken as a basis of development of management principles and techniques in
traditional era. Even today we are using such principles in the organizations. Many scholars and practitioners have
contributed to the development of different management perspectives in recent years.
CLASSICAL THEORY
The Classical Management Theory, which emerged in the late 19th and early 20th centuries, focused on efficiency
and productivity. It emphasized the use of scientific methods to study, work and develop standardized procedures
for performing tasks.
Some of the key Contributions include:
i) The development of scientific management principles: The theory emphasized the use of scientific methods
to study, work and develop standardized procedures for performing tasks. This led to the development of time -and-
motion studies and other techniques that are still used today to improve efficiency and productivity in organizations.
ii) The emphasis on efficiency: The theory placed a strong emphasis on the importance of efficiency in
achieving organizational goals. This led to the development of new management techniques and tools, such as the
use of time-and-motion studies, that are designed to improve efficiency and reduce waste.
iii) The focus on the "one best way": The theory proposed that there is a single, optimal way to perform a task
or manage an organization. This idea led to the development of standardized procedures and management systems
that are still used today in many organizations.
Some Limitations of Classical Theory:
i) Over-simplification of human behavior: The theory assumes that workers are motivated solely by financial
incentives and that they can be managed and controlled like machines. However, this ignores the complexity of
human behavior and the role that factors such as motivation, emotions, and attitudes play in the workplace.
ii) Lack of attention to social and political factors: The theory focuses on the technical aspects of management
and ignores the social and political factors that influence organizational behavior.
iii) Lack of attention to environmental factors: The theory also ignores the environmental factors that can affect
organizational performance.
iv) Lack of attention to individual differences: The theory assumes that all workers are the same and can be
managed using the same techniques. However, this ignores the importance of individual differences, such as
personality, skills, and experience, in shaping behavior and performance.
HUMAN RELATIONS AND BEHAVIOURAL SCIENCE THEORIES
The Behavioral Management Theory, also known as the Human Relations Theory, emerged in the 1930s and 1940s
as a response to the limitations of the Classical Management Theory. This theory focuses on understanding human
behavior in the workplace and emphasizes the importance of motivation, communication, and leadership in
achieving organizational goals.
Some of the key Contributions include:

Kiran Sah, Faculty Member, Faculty of Management, R.R.M. Campus, Janakpurdham. // [email protected]
 Evolution of Management Thought Page 3.3
i) The recognition of the importance of human behavior: The theory recognized that workers are not just
machines, but complex individuals with their own needs, desires, and motivations.
ii) The emphasis on motivation: The theory proposed that workers are motivated by a variety of factors, such
as pay, recognition, and job satisfaction, and that managers should strive to understand and meet these needs in
order to improve performance.
iii) The focus on teamwork and communication: The theory emphasized the importance of teamwork and
effective communication in achieving organizational goals. It proposed that managers should create an environment
that encourages collaboration and open communication among employees.
iv) The emphasis on leadership: The theory recognized that effective leadership is crucial for achieving
organizational goals and proposed that managers should strive to be effective leaders who can inspire and guide
their employees.
Some Limitations include:
i) Lack of attention to technical aspects of management: The theory focuses on the human aspect of
management and ignores the technical aspects of management.
ii) Lack of attention to external factors: The theory focuses on internal factors that shape organizational
behavior, such as motivation and communication, and ignores external factors such as the economy, politics, and
technology.
iii) Lack of attention to individual differences: The theory assumes that all workers are the same and can be
motivated and managed using the same techniques.
SYSTEM THEORY
The Systems Theory, which emerged in the 1960s and 1970s, is an important perspective in the field of management
that focuses on viewing organizations as complex systems made up of interrelated parts. The theory emphasizes the
importance of understanding the relationships between different parts of the organization and how they affect the
overall performance of the organization.
Some of the key Contributions include:
i) The recognition of the complexity of organizations: The theory recognized that organizations are complex
systems made up of many different parts that interact with each other. It proposed that managers should strive to
understand these interactions in order to improve organizational performance.
ii) The emphasis on holistic approach: The theory emphasizes the need to take a

holistic approach to management, considering the organization as a whole rather than just focusing on individual
parts.
iii) The focus on interdependence: The theory proposed that different parts of the organization are
interdependent and that changes in one part of the organization can have ripple effects throughout the entire system.

Kiran Sah, Faculty Member, Faculty of Management, R.R.M. Campus, Janakpurdham. // [email protected]
 Page 3.4 Principles of Management
iv) The emphasis on feedback: The theory emphasized the importance of feedback loops in organizational
systems, recognizing that information flows both within the organization and between the organization and its
external environment.
Some Limitations include:
i) The complexity of the theory: The theory is complex and difficult to understand, making it challenging for
managers to apply in practice.
ii) The lack of attention to individual parts: The theory focuses on the organization as a whole and may neglect
the importance of individual parts of the organization.
iii) The lack of attention to human behavior: The theory focuses on the technical aspects of management and
may neglect the human aspect of management, such as motivation and communication.
DECISION THEORY
Decision theory is a branch of management that deals with how managers make decisions in organizations. It uses
mathematical and statistical techniques to help managers identify and evaluate potential courses of action, and make
the best decision possible based on the available information.
Some of the key Contributions include:
i) The use of formal methods: Decision theory uses formal methods, such as mathematical models and
statistical techniques, to help managers make decisions. This helps managers to be more systematic and objective
in their decision-making process.
ii) The emphasis on rationality: Decision theory emphasizes the importance of rationality in decision-making.
It proposes that managers should strive to make decisions that are based on the best available information, and that
they should consider all possible options before making a decision.
iii) The use of probability and statistics: Decision theory uses probability and statistics to help managers
evaluate the potential outcomes of different options. This helps managers to make decisions that are based on the
best available evidence.
iv) The focus on risk management: Decision theory also focuses on risk management, and proposes methods
for evaluating and managing risk. This helps managers to make decisions that are based on the best available
information, while also considering the potential risks associated with different options.
Some Limitations include:
i) The complexity of the theory: Decision theory can be complex and difficult to understand, making it
challenging for managers to apply in practice.
ii) The lack of attention to human behavior: Decision theory focuses on the technical aspects of management
and may neglect the human aspect of management, such as motivation and communication.
iii) The lack of attention to the external environment: Decision theory focuses on the internal aspects of the
organization and may neglect the importance of external factors such as the economy, politics, and technology.

Kiran Sah, Faculty Member, Faculty of Management, R.R.M. Campus, Janakpurdham. // [email protected]
 Evolution of Management Thought Page 3.5

MANAGEMENT SCIENCE THEORY

Management Science Theory, also known as Operations Research, is an interdisciplinary field that applies advanced
mathematical and statistical techniques to help managers make better decisions in organizations. It emerged in the
1950s and 1960s as a way to bring a scientific approach to management decision making.
Some of the key Contributions include:
i) The use of formal methods: Management Science Theory uses formal methods, such as mathematical
models and statistical techniques, to help managers make decisions. This helps managers to be more systematic and
objective in their decision-making process.
ii) The focus on optimization: Management Science Theory focuses on finding the best solution to a problem,
or optimization, by using mathematical models and algorithms. This helps managers to make decisions that are
based on the best available information and that achieve the best possible outcomes.
iii) The use of computer-based tools: Management Science Theory uses computer-based tools, such as
spreadsheets and specialized software, to help managers solve complex problems and make better decisions.
iii) The emphasis on quantitative data: Management Science Theory emphasizes the importance of using
quantitative data, such as statistics and numerical information, to inform decision making.
Some Limitations include:
i) The complexity of the theory: Management Science Theory can be complex and difficult to understand,
making it challenging for managers to apply in practice.
ii) The lack of attention to human behavior: Management Science Theory focuses on the technical aspects of
management and may neglect the human aspect of management, such as motivation and communication.
iii) The lack of attention to the external environment: Management Science Theory focuses on the internal
aspects of the organization and may neglect the importance of external factors such as the economy, politics, and
technology.
CONTINGENCY THEORY
The Contingency Theory, which emerged in the 1970s and 1980s, is an important perspective in the field of
management that focuses on the idea that there is no one-size-fits-all approach to managing organizations. It
emphasizes the need to consider the unique characteristics of each organization and to develop management
strategies that are appropriate for the specific situation.
Some of the key Contributions include:

i) The recognition of the importance of context: The theory recognizes that different organizations have
different characteristics, such as size, structure, and goals, and that these characteristics can affect the way that the
organization should be managed.
ii) The emphasis on flexibility: The theory emphasizes the need for managers to be flexible and to adapt their
management strategies to the unique characteristics of the organization.

Kiran Sah, Faculty Member, Faculty of Management, R.R.M. Campus, Janakpurdham. // [email protected]
 Page 3.6 Principles of Management
iii) The focus on matching: The theory proposes that managers should match their management strategies to
the specific characteristics of the organization in order to achieve the best possible outcomes.
iv) The recognition of the dynamic nature of organizations: The theory recognizes that organizations are
constantly changing and evolving, and that managers need to be able to adapt to these changes in order to achieve
organizational goals.
Some Limitations include:
i) The complexity of the theory: The theory can be complex and difficult to understand, making it challenging
for managers to apply in practice.
ii) The lack of clear guidelines: The theory does not provide clear guidelines for managers on how to match
management strategies to the specific characteristics of the organization.
iii) The lack of attention to human behavior: The theory focuses on the technical aspects of management and
may neglect the human aspect of management, such as motivation and communication.
EMERGING MANAGEMENT CONCEPTS
Workforce Diversity
Workforce diversity is the diversity between workers in an organization. Workers in organizations are from various
environments. They represent different sex, age, religion, culture, and physical quality and so on.
Variety makes the work force varied. In current scenario, recruiting differentiated staffs is most significant things
for an organization. Workforce diversity is the big challenge for management.
Advantages:
• It is helpful for effective team performance
• Improvement in creativity of employee
• Decision making process would improve
• Effective customer service
• It is helpful for addressed market diversity etc
Disadvantages:
• Workforce diversity can lead to communication gap between employee
• It can increase conflict in an organization
• Morale of employee can be lower
• It could be difficult to retain employee in an organization

Outsourcing
Another ‘Emerging concept of management in Nepal’ is outsourcing. In the modern concept of management,
recruiting employee from outside of an organization is called outsourcing. In the era of the globalization, an
organization can recruit any person from around the globe. An organization can purchase raw material and experts
from various places. For example, various organizations from America, Europe, Asia, gulf, etc. are recruiting Nepali
employees.
Advantages of outsourcing

Kiran Sah, Faculty Member, Faculty of Management, R.R.M. Campus, Janakpurdham. // [email protected]
 Evolution of Management Thought Page 3.7

• Organization can focus on its strategies for betterment of an organization

• It gives an access to world class experts
• Quality products can be produced in efficient cost
• Sharing of risk
• Increase in product quality
Disadvantage of outsourcing
• Outsourcing company or person can know all of the company’s secret
• It can create competition between company
• There can be some hidden cost
• Data security can be breach

Knowledge Management
Knowledge management is the process of improvement of an organization’s efficiency by properly management of
knowledge within the company. It has five process to collect and use of knowledge. Here are five processes:
• Collecting of knowledge – knowledge from various sources like paper, file, computer storage, website,
newspaper etc. is collected.
• Organization of knowledge – collected knowledge is organized well by catalogue and coding.
• Refining of knowledge – Organized knowledge is stored in database for further use.
• Dissemination of knowledge – Knowledge would be disseminated to required party.
• Utilization of knowledge – Proper use of the knowledge in an organization leads company to advancement

Learning Organization
Nowadays organization is knowledgeable. Management of knowledge is a power of an organization. Learning
organizations are willing to learn new thing every time. It facilitates the learning of its members and continuously
transforms itself to advancement. Learning organization has some characteristic:
• Boundary less organization structure
• Systematic thinking
• Leadership with shared vision
• Knowledge management
If Any Notes:

Kiran Sah, Faculty Member, Faculty of Management, R.R.M. Campus, Janakpurdham. // [email protected]