Principles and Practices

of Management

Working alonedo everything

yourself

MODULE 2

Principles of Management
Historical Evolution of
Management Theory & Practice
Scientific Management, Fayols 14 Principles,
Hawthorne Experiment, Systems Approach,
Contingency Approach

Principle?
Fundamental Statement or truth
providing a guide to thought or
action.

Early Thoughts about Management

Adam Smith (1776)
Economic Advantages from Division of Labor
Example: Pin Factory

Henry Ford: introduced assembly line to

the manufacture of car
Example: General Motors can produce
automobiles at a lower cost by breaking jobs up
into a number of smaller tasks.

Evolution ...
School of Scientific Management
Frederick W. Taylor & 4 Principles of
Scientific Management.
Henri Fayol & 14 Principles of
Organization
Henry L. Gantt, and Frank and Lillian
Gilbreth
Max Weber and Bureaucracy
Ralf Davis and Rational Planning
6

Evolution of
Scientific Management Theory
This theory arose in part from the need to
increase productivity.

In the US especially, skilled labour was in short

supply at the beginning of the 20th century.

The only way to expand productivity was to raise

the efficiency of workers.

Frederick W. Taylor (1856-1915)

1911-published Principles of Scientific
Management
Beginning of serious theory building in the
field of management & organization
Created the foundation for Industrial
Engineering or Production Management

Frederick W. Taylor: Four Basic Principles:

1. The development of a true science of
management, so that the best method for
performing each task could be determined.
2. The scientific selection of workers, so that
each worker would be given responsibility for
the task for which he or she was best suited.
3. The scientific education and development of
the worker.
4. Intimate,
friendly
cooperation
management and labour.

between
9

Frederick W. Taylor (contd.)

He asserted that the success of these
principles required a complete mental
revolution on the part of management and
labour.
He believed that management and labour
had a common interest in increasing
productivity.
He also devised a compensation system
called
the
differential
rate
system
involving the Payment of higher wages to
more efficient workers.
10

Limitation
His research work focused on
organizing work at the lowest
level of organization onlyappropriate to the managerial
job of a supervisor

11

Henri Fayol (1841-1925)

The
founder
of
the
Classical
Management School not because he
was
the
first
to
investigate
managerial behaviour, but because
he was the first to systematize it.

12

Henri Fayols Contributions

Fayol
wrote
principles
of
organisations
based
on
his
experience, at the same time Taylor
wrote his research based principles.
Fayols principles are applicable to
all managers where as Taylor
focused on shop level management
13

Fayols 14 Principles of Management

1. Division of Labour: The more
people specialize, the more efficiently
they can perform their work, e.g.,
modern assembly line.
2. Authority: Besides formal authority,
managers
must
have
personal
authority to compel obedience.
3. Discipline:
Members
in
an
organization need to respect the
rules and agreements that govern
the organization
14

4. Unity of Command: Each employee

must receive instructions from only
one person.
5. Unity of Direction: Operations within
the organization having the same
objective should be directed by only
one manager.
6. Subordination
of
individual
interest to the common good.
7. Remuneration:
Compensation
for
work done should be fair to both
employees and employers.
15

8. Centralization: Managers should retain

final responsibility but at the same time

give the subordinates enough authority to
do their jobs properly. The problem is to
find the proper degree of centralization in
each case.
9. Hierarchy: The line of authority in an
organization runs in order of rank from
top management to the lowest level of
the enterprise.
10. Order: Materials and people should be in
the right place at the right time.

16

11. Equity: Managers should be both

friendly and fair to their subordinates.
12. Stability of Staff: A high employee
turnover rate undermines the efficient
functioning of an organization
13. Initiative: Subordinates should be
given the freedom to conceive and carry
out their plans, even though some
mistakes may result.
14. Esprit de Corps: Promoting team spirit
will give the organization a sense of
unity.
17

Max Webers contribution:

Bureaucracy
German Sociologist
Ideal-type Organization structure
Characteristics of Bureaucracy

Division of labor
A clear authority hierarchy
Formal selection procedures
Detailed rules and regulations
Impersonal relationships

It is a design prototype for the

structure of most of todays large
organizations
18

Henry L. Gantt (contd.)

He also originated a charting system for
production scheduling: the Gantt chart,
still in use today.
It also formed the basis for two charting
devices which were developed to assist in
planning,
managing
and
controlling
complex organizations:
Critical Path Method (CPM), originated by Du
Pont
Program Evaluation and Review Technique
(PERT), developed by the Navy
19

Henry L. Gantt (1861-1919)

He worked with Taylor but began to reconsider
Taylor's incentive system as having too little
motivational impact.

He came up with a new idea:

Every worker who finished a days
assigned workload would win a 50cent bonus.
Further, the supervisor would earn a
bonus for each worker who reached
the daily standard, plus an extra
bonus if all the workers reached the
standard.
20

The Gilbreths: Frank B. & Lillian M.

Gilbreth (1868-1924 & 1878-1972)
They collaborated on fatigue and motion studies
and focused on ways of promoting the individual
workers welfare.
To them, the ultimate aim of scientific management
was to help workers reach their full potential as
human beings.
In their conception, motion and fatigue were
intertwined - every motion that was eliminated
reduced fatigue.
They argued that motion study would raise worker
morale because of its obvious physical benefits and
because it demonstrated managements concern for
the worker.
21

Contributions of Scientific
Management Theory
The efficiency techniques of scientific
management
theory
have
been
applied to modern assembly line and
to many tasks in non-industrial
organizations (e.g., fast-food service)
and increased their efficiency.

22

Limitations of Scientific Management Theory

Workers and unions began to oppose this
approach because they feared that working
harder or faster would exhaust whatever
work was available causing layoffs.
His critics objected to the speed up
conditions that placed undue pressures on
employees to perform at faster and faster
levels.
The emphasis on productivity and by
extension profitability led some managers to
exploit both workers and customers.
23

Evolution ...
Human Relation/Behavioral
School
Elton Mayo and the Hawthorne Studies
Chester Barnard and Cooperative
Systems
Douglas McGregor and Theory X Theory Y

24

Elton Mayo: Harvard Psychologist

Hawthorne studies undertaken at Western Electric
Companys Hawthorne Works Plant near Chicago
from 1924 to 1933 examined:
Effect of various illumination levels on worker
productivity

Employees divided into two groups (test

group and control group) and the level of
lighting was manipulated.
Productivity decreased when illumination intensity
reduced to that of moonlight.

The results were ambiguous showing that

something other than lighting was influencing
the workers performance.
25

The Hawthorne Experiments

Effects of a Group piecework pay system on
group productivity
Wages and rest periods were increased;
performance tended to increase over time, but it
also rose and fell erratically.
Wage incentive plan was less of a determining
factor on a workers output than group
pressure and acceptance and the concomitant
security
Social
norms of the group were the key
determinants of individual work behavior
26

The Hawthorne Experiments (contd.)

It was inferred that workers who receive
special attention will perform better
simply
because
they
received
that
attention, which acted as a motivator. A
phenomenon labeled as the Hawthorne
effect.
The researchers also concluded that
informal work groups - the social
environment of employees - have a
positive influence on productivity .

27

Hawthorne studies
Ushered in an era of organizational
humanism
Organization design should include
effects on work groups, employee
attitudes, and manager-employee
relationships.

28

Chester Barnard:
Cooperative Systems
Merged the ideas of Taylor, Fayol and
Weber with the results from the
Hawthorne studies: Conclusion
Organizations are cooperative systems
(His book : Functions of the Executives)

Challenged the classical view that

authority flowed from the top down by
arguing that authority should be defined
in terms of the response of the
subordinate.
29

Chester Barnard:
Cooperative Systems
Introduced the role of informal organization
to organization theory
Major role of the manager to facilitate
communication
and
to
stimulate
subordinate to high levels of effort.

30

Chester I. Barnard (1886-1961)

According to him, people come together in
organizations
to
achieve
ends
they
accomplish working alone.

formal
cannot

An enterprise can operate efficiently and survive only

when the organizations goals are kept in balance
with the aims and needs of the individuals working
for it.
His recognition of the importance and universality of
the informal organization was a major contribution
to management thought.
He proposed the concept of zone of indifference,
i.e., what the employee would do without
questioning the managers authority. The more
activities that fell within this, the smoother and more
cooperative an organization would be.
31

Mary Parker Follett (1868-1933)

She introduced many new elements in the
classical school in the area of human relations
and organization structure.
She called management the art of getting
things done through people .
She was a great believer in the power of the
group, where individuals could combine their
diverse talents into something bigger.
Her holistic model of control took into account
not just individuals and groups, but the effects
of environmental factors also.
32

Douglas Mc Gregor: Theory X & Y

Theory X: 4 Assumptions by Managers
1. Employees inherently dislike work, and when
ever possible will attempt to avoid it.
2. They must be coerced, controlled or
threatened with punishment to achieve
desired goals.
3. They will shirk responsibilities and seek formal
direction whenever possible.
4. Most workers place security above all
other factors associated with work and
will display little ambition.
33

Douglas Mc Gregor: Theory X-Theory Y

Theory Y: 4 Assumptions:
1. Employees can view work as
being as natural as rest or play.
2. They will exercise self-direction
and self-control if they are
committed to the objectives
3. The average person can learn to
accept responsibility
4. Creativity-ability to make good
decisions-is widely dispersed
through out the population
34

Assess your human behaviour approach

1.
2.
3.
4.
5.
6.
7.
8.

People do not dislike work; if they have been helped to establish

objectives, they will want to achieve these. (Y/N)
Most people can exercise a great deal of self-direction, self-control,
and creativity than are required by their current job. (Y/N)
A managers basic job is to use the untapped human potential for the
betterment of the organization. (Y/N)
The manager should create a healthy environment wherein all
subordinates can contribute to the best of their capacity. (Y/N)
The manager should provide opportunity for self direction to
subordinates. (Y/N)
The manager must encourage full participation on important matters
concerning subordinates job.
Efficiency can be improved by expanding subordinates influence, selfdirection, and self-control. (Y/N)
Job-satisfaction improves as a by-product of subordinates making full
use of their potential. (Y/N)
35

Contingency Movement
A synthesis of the conflict between
Classical school and Human Relation
School
Rationality based

Theorists argued that properly aligned

structure to its contingency variables would
facilitate
the
achievement
of
the
organization goals.
Implementation of the wrong structure
could threaten the organizations survival.
36

The Contingency Approach

Attainment of organizational goals might
vary in different types of situations or
circumstances;also called the situational
approach.
Organizations as vehicles for achieving
goals
Developed by managers, consultants and
researchers who tried to apply the concepts
of the major schools to real-life situations
37

Daniel Katz and Robert Kahn

Promoted Open system perspective to
organization theory in their book:
The Social Psychology of Organizations

Environment-Structure Relationship

38

Recent Developments in Management

Theory
The Systems Approach
Organization as a unified, directed system of
interrelated parts.
The activity of any segment of an organization
affects, in varying degrees, the activity of every
other segment.
Managers cannot function wholly within the
confines of the traditional organization chart.
They must mesh their department with the
whole enterprise
39

Some Key Concepts of Systems Approach:

Subsystems: Parts making up the whole
system
Synergy: Situation in which the whole is
greater than its parts. The departments that
interact cooperatively are more productive than
they would be if they operated in isolation.
System boundary: The boundary that
separates each system from its environment.
Flow: Components such as information,
material and energy that enter / leave a
system.
Feedback: The part of system control in which
the results of actions are returned to the
individual allowing work procedures to be
analyzed and corrected
40

Dynamic Engagement Approach

It emphasizes the intensity of modern
management
relationships
and
the
intensity of time pressures that govern
these relationships.
Todays most successful managers focus
on human relationships and quickly adjust
to changing conditions over time.

41

Dynamic Engagement Approach

New Organizational Environments:
An organizations environment is a complex
dynamic web of people interacting with
each other. Thus, managers must not only pay
attention to their own concerns but also understand what
is important to other managers both within their
organization and at other organizations.

Ethics and Social Responsibility: This

approach moves ethics from the fringe of
management theory to the heart of it.
42

 Globalization and Management:

Managers facing the 21st century must think of
themselves as global citizens.
It is a borderless world where managers treat all
customers as equidistant from their organizations.

Cultures and Multiculturalism :

Various perspectives and values that people of
different cultural backgrounds bring to their
organizations are not only a fact of life but a
significant source of contributions.
43

Inventing & Reinventing Organizations:

Ways to unleash the creative potential of their
employees
Reengineering the corporation, i.e. when an
organization conducts a significant reassessment of
what it is all about.
Quality: TQM should be in every managers
vocabulary.

44

Management Functions
Organizing
Determining what
needs to be done,
and who is to do it.
Leading
Directing and
motivating all
involved
parties
and resolving
conflicts

Achieving the
organizations
stated purpose
Controlling
Monitoring activities
to ensure that they
are accomplished
as planned

Planning
Defining goals,
establishing
strategy, and
developing
subplans to
coordinate
activities

45

PLANNING
Definition:
Planning encompasses defining the
organizations objectives or goals,
establishing an overall strategy for
achieving those goals and developing a
comprehensive hierarchy of plans to
integrate and coordinate activities .

46

Organizing
Allocating resources, assigning tasks,
establishing procedures
Preparing organization chart
Recruiting, selecting, training and
developing employees
Matching the job with employees:
effectiveness and efficiency
47

Directing/Leading
Guiding and motivating
Giving assignments
Explaining routines
Clarifying policies
Providing feedback

48

Controlling
Establishing standards
Measuring results
Monitoring performance
Taking corrective action

49

Integration of Management
Functions
Every function is important
4 functions must be co-coordinated
to achieve the optimum level of
performance.

50

Is the Managers Job Universal ?

* Different types of organizations?
* Different managerial levels?
* Different sized organizations?

Yes!
Differences are of degree and emphasis but
not of function.

51

Importance of Managerial Roles

Small
Small
Firms
Firms

High

Allocator
Allocator

Spokespers
Spokespers
on
on
Entrepreneur
Entrepreneur
Figurehead
Figurehead
Leader
Leader

Disseminator
Disseminator

Large
Large
Firms
Firms

Moderate

Low

Liaison
Liaison
Monitor
Monitor
Handler
Handler
Negotiator
Negotiator
Entrepreneur
Entrepreneur
52

Mintzbergs Managerial Roles

Interpersonal
Figurehead
Leader
Liaison

Informational
Monitor
Disseminator
Spokesperson

Decisional
Entrepreneur
Disturbance
Handler
Resource
Allocator
Negotiator

53

Are effective managers

also successful managers?

54