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Principle of

Management
BBA/BBA-BI First
Semester
Bharat Ram
Dhungana
Lecturer

Unit 2
Management Theories
6 hours
Scientific management school
Administrative management
Behavioral School
Management science school
Systems approach
Contingency approach

Understanding

the
historical context of
management provides a
sense of heritage and
can help managers avoid
the mistakes of others.
Ricky W. Griffin

The Emergence of Modern


Management Perspectives
The Classical Perspective
The Behavioral Perspective
The Quantitative Perspective
The Systems Perspective
The Contingency Perspective

1890

1900

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

2010

24

What is Scientific
Management School?

It is one of the classical theories

propounded by F.W.Taylor.

Scientific management is an attitude &


philosophy which discards the traditional
methods of "hit & miss", "rule of thumb"&
"trial & error" of managing works &
workers.

It is concerned with the development &


application of scientific problem solving
approach.

F.W. Taylor (1856-1915) is a" father of scientific

management.
He started job as a worker in Midvale steel
company (1878) at first & later became
supervisor & chief engineer through his
continuous hard work & efforts.
Afterwards he joined Bethlehem steel
company & worked as a consultant.
He developed a scientific management theory
through the long experiences, investigations, &
study while working in different companies as
a worker, chief engineer & manager.

Principles of Scientific
Management
Replacing the rule of thumb with

science: Scientific management requires


scientific study & analysis of each job in
order to replace the old rule of thumb
approach.
Scientific selection, training, &
development of workers: This principle
suggests that workers should be selected &
trained in accordance with the requirement
of job that can be performed in the best way.

Close cooperation between

management & workers: There should


be close & harmonious relationship
between management & workers that may
create unity in the organization.
Maximum output: This theory is more
concerned with the continuous increase in
production & productivity.
Mental revolution: The workers &
management should create a suitable
working environment & resolve all
problems scientifically. Both should try to
increase production rather than quarrel

Steps in Scientific
Management
1
Develop a science
for each element of
the job to replace old
rule-of-thumb methods

2
Scientifically select
employees and then
train them to do the job
as described in step 1

3
Supervise employees
to make sure they
follow the prescribed
methods for performing
their jobs

4
Continue to plan
the work, but use
workers to get the
work done

Contributions
This theory is the foundation for other theories
It has focused to Increase productivity and

efficiency of the organization.


It seeks to minimizes the cost of production which

enables business firms to increase to increase


profit.
It gives them the capability to think in analytical ,
conceptual & multidimensional ways.
This approach is now widely adopted in planning,
organizing, leading & motivating functions of
management.

Limitations
1. It fails to enlist all contingency

variables.
2. It focuses on mere situations but
which tools should be used in what
situation is not specified.
3. It ignores human behavior aspects.

Example Bethlehem Steel


Studies the layout of the
plant
Studies activities of
workers
Specifically looks at
loading & unloading of steel

Findings
Productivity

increased
Incentive pay was a
factor
Jobs simplified

Administrative
Management Theory
Henry Fayol (1840-1925), a French

industrialist & mining engineer by


profession, propounded the theory of
administrative management.
He published a book called "General &
Industrial Management" in 1916 in French
& later on it was translated into English.
He developed the fourteen principles of
management that are universally applied.

14 Principles
Division of work
Authority & responsibility
Discipline
Unity of command
Unity of direction
Subordination of individual interest
to general interest
7. Remuneration of personnel
1.
2.
3.
4.
5.
6.

8. Centralization & decentralization


9. Scalar chain
10. Order
11. Equity
12. Stability of tenure of personnel
13. Initiative
14. Espirit de corps cooperation

Industrial Activities
Technical activities
Commercial activities
Financial activities
Security activities
Accounting activities
Managerial activities

According to Henry

Fayol , management is a
distinct process involving
many managerial activities
like planning, forecasting,
organizing, commanding,
coordinating & controlling.

Limitations
It does not give proper attention to

the human behavioural aspects in an


organization.
It ignores the situational factors.
This principle is based on the
personal experience & little
observation.

Bureaucratic Theory
Max Weber (1864-1920) was a German

sociologist & developed this theory on the


basis of authority & relationship.
Bureaucracy is a form of organization having
the major attributes like division of work,
clearly defined hierarchy, clear rules &
regulations & impersonal relations.
He offered a bureaucratic model for
management of any large & complex
organization in any branch of human activity.

Major Characteristics
There should be hierarchy of authority

involving superior-subordinate relationship &


chain of command.
Division of work on the basis of competence &
function specialization.
System of rules, regulation & procedures.
Interpersonal relationship based on position.
Selection & promotion of employees based on
technical competence.

Behavioral School
/Behavioural Science
Approach

It is concerned with scientific

investigation, analysis &


understanding human behaviour in
organization.
It is the modified, enlarged
&extended forms of classical
theory(i.e. scientific management
theory, administrative management
theory & bureaucratic theory).

The classical theory focused on

structure, order, formal organization,


economic factors etc. where as
behavioural science theory emphasized
on social & psychological factors at
work.
A large number of behavioral scientists
have made notable contributions to the
management theory. Abraham Maslow,
Douglas McGregor, Fredric Herzberg
etc. contributed in behavioral school.

Abraham Maslow
Abraham

Maslow is a popular
American psychologist who
developed a theory of human
needs in 1943.
He classified human needs into five
categories in a hierarchical basis.
People have unlimited needs &
once one need is relatively fulfilled,
other needs automatically emerge.

Maslows Hierarchy of Needs


NEEDS

General Examples

Organizational Examples

Achievement

Selfactualization

Status

Esteem

Friendship
Stability
Food

Belongingness
Security
Physiology

Challenging
job
Job
title
Friends
at work
Pension
plan
Base
salary

Douglas McGregor:
Theory X & Theory Y
He proposed two distinct views of

human beings: negative theory X


& positive Theory Y.
Theory X is a set of pessimistic &
traditional assumption about the
worker & Theory Y is a set of
optimistic assumption about
human nature.

The General
Assumptions of Theory
X
Employees generally dislike work &

whenever possible will attempt to


avoid it.
Employees will avoid responsibility &
seek formal direction whenever
possible.
Since employees dislike work, they
must be corrected, controlled or
threatened with punishment to

The General Assumptions of


Theory Y
Work is natural activity like play or rest.
People will become committed to

organizational objectives if they are rewarded


for doing so.
People will exercise self-direction & self control
if they are committed to objectives.
The average person can learn to accept &
seek responsibility.
Many people in the general population have
imagination, ingenuity & creativity

Fredrick Herzberg:
Two Factor Model
Herzberg & his associates found that there are

two factors that may affect human behaviour


i.e. hygiene factor & motivating factor.
This theory is based on the contents of
interviews conducted on 200 engineers &
accountants.
He asked participants to describe job
experience that produced good & bad feeling
about their job & finally he conducted two sets
of needs or factors called hygiene factors &
motivating factors.

The TwoFactor
Theory of
Motivation

Motivation Factors
Achievement
Recognition
The work itself
Responsibility
Advancement
and growth
Satisfaction

No satisfaction

Hygiene Factors
Supervisors
Working conditions
Interpersonal relations
Pay and security
Company policies and
administration
Dissatisfaction

No dissatisfaction

Hygiene factors
This factor is also known as dissatisfiers or

maintenance factors.
The presences of these factors do not
motivate employees (no dissatisfaction) but
their absence causes dissatisfaction
It includes company policy, relationship with
supervisors & peers, working conditions, job
security etc.
When the hygiene factors are felt to be
inadequate by workers, the factors function
as dissatisfiers.

Motivating factors
This factor is also known as motivators,

satisfiers or job content factors.


The presence of these factors creates high
level of motivation, job satisfaction & higher
productivity. The absence of these factors
creates no motivation(no satisfaction).
It includes achievement, recognition,
advancement, possibility of personal growth,
responsibility & authority etc.
The task of managers is to increase the
presence of such motivating factors.

Contributions of
Behavioural Science
Theory

This theory has identified the role of human

elements in the organizations.


It has emphasized the role of individual
psychology & group behaviour for
organizational effectiveness.
It has focused the self direction of
subordinates through workers' participation in
planning & decision making.
It has emphasized on non-financial rewards.
It has considered people as the key players for
organizational productivity.

Limitations of Behavioural
Science Theory
This theory has not considered the

situational variables.
It has neglected the economic
dimension of job satisfaction.
Human behaviour is a complex issue
which is not easy to explain.
This theory is only a partial view of an
organization. It fails to analyze the wider
aspects of organization.

Human Relation Approach


Earlier, human beings were not

considered as an important factor


for organizations.
Elton Mayo & his colleagues
realized the importance of people in
an organization.
Workers should not be treated as
mere factor of production but
should be considered as human
beings.

Workers' attitudes, feelings, needs,

aspiration, behaviour etc are


extremely important on the job.
Elton Mayo conducted a series of
experiments in 1924 to 1932 at the
Hawthrone plant of Western Electric
Company in Chicago & the study
was conducted in four phases.

1.Illumination Experiment
This experiment was made in the

Hawthrone plant in 1924 & continued for


three years.
The study was primarily conducted to
measure the effects of lighting on the
productivity of the workers in different
departments of the organization.
It was concluded from the experiments
that improved productivity could be gained
not only by improved working conditions
but also by promoting social relationships
among workers as group members.

2.Relay Assembly Test


Room Experiment
Frequent changes were made in their working

condition such as hours of work, rest periods, wage


incentives, nature of supervision etc in one room & no
changes was made in the other room.
In spite of the frequent changes being made in
working conditions over a period of several years,
productivity tended to increase. Even when the
improvement in physical working conditions was
withdrawn, the productivity & morale of group
remained constant.
The researchers concluded that socio- psychological
factors such as feelings of importance, recognition,
participation & non- directive supervision etc are the
key for high worker productivity.

3.Mass Interviewing
Program
A group of 20,000 workers were interviewed

to collect information on their perceptions on


working conditions.
The focus on interview program was on
human relations rather than on physical
working conditions.
It was concluded that the importance of
informal relations, social & psychological
needs influence workers' behaviour & their
productivity.

4.Bank Wiring
Observation Room
Experiment

14 male workers were formed into a small

work group & intensively observed for seven


months in the bank wiring room.
The researcher concluded that employees
would labour hard if they believe that
management was concerned about their
welfare & supervisors paid special attention &
care to them.
The productivity of employees can be
improved by social factors as moral &
satisfactory relationship between
management & workers.

Contributions of
Human Relation Theory
Effective supervision plays an important

role in maintaining employees' morale &


productivity.
Employees are not motivated only by
money. Personal & social factors are
important to motivate employees' attitudes
towards their work.
Informal leaders play an important role in
setting & enforcing group norms.
Management must understand &
recognize interpersonal & group relation on

Limitations of
Human Relation
Theory
This

theory lacks adequate focus


on work. It gives more emphasis
on interpersonal relations &
informal groups.
Human relations tend to be
neglected the economic
dimensions of work satisfactions.
It ignores the situational factors.

Management Science School


It is also called mathematical, quantitative &

operational research approach.


This theory is highly applicable to solve complex
business problems through the mathematical &
quantitative models.
It is widely used in solving planning, production,
operations, inventory & transportation related
problems.
Linear programming, game theory, sampling
theory, probability theory, simulation , EOQ etc are
the techniques that managers apply to solve
resource allocation problems.

This theory focuses on solving the technical rather

than human behaviour problems.


Computer programs are used to analyze the problems.
The operation research team (consisting the members
from any field) is formed to solve complex
management problems.
Joel Dean & PMS Blackett is the main contributors of
this theory.
Operation research proves to be the best technique for
solving complex management problems.
Today, there are three main branches of management
science i.e. quantitative management, operation
management & management information system
(MIS).

Contributions of
Management Science Theory
It encourages disciplined thinking while

defining problems & establishing


relations among variables in
management problems.
Complex relations among variables can
be expressed more efficiently.
It presents management with an
objective basis for making a decision.
It emphasizes on logical analysis in
decision making process.

Limitations of Management
Science Theory
It does not deal with the people

aspects of an organization.
All the required data may not be
accurate & updated.
This approach is not a substitute for
management. The technique is useful
but can not solve all problems.

System Theory

System theory is a new thinking in the field

of management.
A system is a set of interrelated &
interdependent parts arranged in a that
produce a unified whole.
The system is composed of a number of
subsystems & all the subsystems are
related to each other.
This theory was developed in the 1960s.
Main contributors were Bertalanffy, Wiener,
Kast, Rosenzwig etc.

The Systems
Perspective of
Organizations
Inputs from the
environment:
material inputs,
human inputs,
financial inputs, and
information inputs

Transformation
process: technology,
operating systems,
administrative
systems, and
control systems

Feedback

Outputs into
the environment:
products/services,
profits/losses,
employee behaviors,
and information
outputs

Key Features\ Basic Elements of


System Theory
Goal Oriented: A system theory is a goal directed.

Every system is purposeful.


Subsystem: The parts of systems are subsystems. All
the subsystems are mutually related to each other. An
organization may have production department, finance
department, human resource department, marketing
department etc which are the subsystem of an
organization.
Synergy: Synergy means that the whole is greater
than sum of its parts i.e. 2+2=5. It means that the
performance of the whole is dependent on how well its
parts are related.

Open or closed: A system may be

opened or closed. Opens system interacts


with the environment where as closed
system doesn't consider the environmental
factor.
Boundary: Every system has a certain
boundary that separates it from the
environment. Open system has flexible
boundary where as closed system has rigid
boundary.
Flow: A system has flow of materials,
information, money, human & other
resources. Generally, system has an input,
process & output.

Contributions
System

theory takes an integrative view


of organization. It considers
management in its totality.
This theory maintains the interrelation &
interaction among subsystems for
synergistic effects.
It provides a strong conceptual
framework for meaningful analysis &
understanding of organization.
This theory is useful for studying big &
complex organization.

Limitations
This theory is not relevant for small

organization.
It does not offer specific tools &
techniques for the practicing
manager.
This theory is too abstract & can not
be directly & easily applied to
practical problems.

Contingency Theory
This theory was developed by managers,

consultants & researchers who tried to apply the


concepts & techniques of earlier approaches to
real life situations.
Paul Lawrence, Jay Lorsch , Ton Burns, John
Woodward , James Thompson etc developed &
popularized this theory.
It is relatively new thinking among management
scholars & related to system approach.
This theory is also called situational approach
that believes there may be different forms of
management according to situations.

A particular method suitable in one

organization at a time may not necessarily be


suitable to another organization at other time.
The basic idea of contingency theory is that
there is no best way or model for managerial
work such as planning, organizing, decision
making, leading, controlling etc.
Different situations demand different
solutions.
This theory states that managerial practice
depends on situations. There is no one best
way in the world of management. Each
situation is unique & demands unique
managerial solutions.

Leadership styles, financial incentives,

organizations structure, motivational approaches,


communications & control systems etc should be
situation specific.
Management cannot have ready- made universally
applicable & acceptable principles to be applied to
all situations.
Managerial policies & practices must adjust to
changes in environment to be effectives.
Generally, there are four contingency variables
that determine management practices i.e.
organization size, routine's of task technology,
environmental uncertainty & individual differences.

Contributions
This theory doesn't in "one best way". So

many methods & principles may be used in


management of an organization according
to time & situation.
Managers are given more freedom & should
be more sensitive & alert.
It gives them the capability to think in
analytical, critical & multidimensional ways.
This approach is now widely adopted in
planning, organizing, leading & motivating
functions of management.

Limitations
1. It fails to enlist all contingency

variables.
2. It focuses on only situations but
which tools should be used in
what situation is not specified.
3. It ignores human behaviour
aspects.

Any Questions?
.