The Evolution of

Management
Theory and Practice

Why study Management History ?

Management is the most used tool today in any

enterprise. History of its evolution helps us to
understand its metamorphosis to its current level.

Looking back
Organized endeavors directing people for
planning, organizing, executing, leading,
monitoring and controlling activities have existed
since the beginning of the civilization. (Pyramids,
Monuments, Mythology)
It has been only during the last century that this
subject has undergone systematic investigation,
acquired a common body of knowledge and has
become a formal discipline.
It has been the fastest growing discipline both in
content and application over the last 50 years

The run up to the formal theory. Literature review

Sun Tzu the Chinese General (6tn century BC) in
his The art of War recommends that the success
can be achieved by being aware of utilizing the
organizations strength to exploit the weakness of
rival the enemy. (Coordinated group effort)
Chanakyas Arthashastra (3rd century BC) It lays
down the principles that should be taken into
consideration by the leader while formulating
policies
Machiavelli (Discourses 1513) written for the
leadership of Florence, recommended that the ends
justifies means and that a leader should use fear,
not hatred, to maintain control.

The run up to the formal theory.

Adam Smith (The wealth of nations -1776). Economic
advantages organizations would gain by division of labor.
The Industrial Revolution and the mechanization of the
process (large volume outturn)
Coordination of tasks (Forecasting, supply chain, quality
control, monitoring, marketing) contributed by Elin
Whitney, James Watt and Mathew Boulton.
The modern management discipline evolved as an offshoot
of economics. John Stuart Mill, Leon Walras, Alfred
Marshall took forward the theory towards a more
comprehensive theoretical background.
Rapid expansion of the railroads brought down the costs.
No government control supported the development of large
corporations (J. Rockefeller- oil, Andrew Carnegie steel).

The run up to the formal theory.

This demanded formal managers and formalized management
practices.
In 1881, Joseph Wharton took the profession one step forward
by becoming the first management scholar to offer a tertiary
level course in management
Harvard became one of the first American Universities to offer a
graduate degree in business management in 1908. The first
textbook on management was written by J Duncan in 1911.
Around World War II, H. Dodge, Ronald Fisher and Thornton C.
Fry introduced mathematical and statistical techniques to give it
a scientific basis.
Peter Drucker published Concept of the Corporation in 1946
describing different facets of business organization. He also
developed the concept of MBO in 1950 as a comprehensive
system based approach to accomplish the organizational
objectives

Why Study Management Theory?

Theories are perspectives with which people make
sense of their world experiences
Theories provide a stable focus for understanding
what we experience (Henry Ford large and
compliant work force; Alfred Sloan of GM on
market strategy)
Theories enable us to communicate effectively and
thus move into more complex relationships with
other people (Ford / Sloan)
Theories make it possible to keep learning about
our world. Theories have boundaries. Triggers to
look beyond. (Cold war, Model T and GM)

Theories (guided by the perceptions of the researcher)

D e v e lo p m e n t o f M a n a g e m e n t th e o r ie s
P r e c la s s ic a l c o n tr ib u tio n s
( A d a m S m ith ,
T h e w e a lth o f N a tio n s , 1 7 7 6 )

T h e c la s s ic a l th e o r is ts

B e h a v io ra l S c h o o l
(H u m a n R e s o u rc e s A p p ro a c h )

Q u a lita tiv e a p p ro a c h

R e c e n t y e a rs In te g r a tiv e a p p r o a c h

S c ie n t ific M a n a g e m e n t
( F r e d e r ic T a y lo r )
( F r a n k a n d L ilia n G ilb e r t)
( H e n r y L G n a tt)

E a r ly a d v o c a te s
( R o b e r t O w e n , H u g o M u n s te rb e r g ,
M a r y P a r k e r F o lle tt,
C h e s te r B a r n a r d )

O p e ra tio n s r e s e a rc h o r
M a n a g e m e n t S c ie n c e
C h a r le s 'T e x ' T h o r n to n )
R o b e rt M c N a m a ra

P ro c e s s e s
( H a r o ld K o o n tz )

G e n e r a l a d m in i s tr a ti v e t h e o r ie s
( H e n r i F a y o l)
( M a x W e b e r)

H a w th r o n e s tu d ie s
( E lto n M a y o )

S y s te m s

H u m a n r e la tio n s m o v e m e n t
( D a le C a r n e g ie , A b r a h a m M a s lo w ,
D o u g la s M c G r e g o r)

C o n t in g e n c y

B e h a v io r a l s c ie n c e th e o r is t
( F r e d F ie d le r , V ic to r V r o o m ,
E d w in L o c k e e tc )

A. The Classical Theories

1.

2.
3.

The classical management focused on attainment of

efficiency and productivity in an organizational setting.
The predominant characteristics are:
Emphasis was placed on economic rationality of the
individual employee. Advocated the provision of
monetary incentives to encourage to work hard to realize
their true potential.
They are based on the negative views about human
nature with respect to performance of role &
responsibility in an organizational setting.
They recognized that humans have emotions, but felt the
emotions could be controlled by logical and rational
structuring of jobs
Can be classified in three main branches: 1. Scientific,
2. Administrative and 3.Bureaucratic Management

1. Four pillars of Scientific Management

Scientific Management arose from the need to
increase productivity.
Breakdown the work into elements and develop
science for each (re-look into the conventional
mode) Scientific job analysis
Select, train and deploy appropriate worker
(workers will not choose where they would work)
Division of work and responsibilities.- Functional
supervision and standardization
Establish synergic relationship with workers.
Management cooperation and financial incentives

Major Contributors to Scientific Management

Frederick Taylor (mechanical engineer) published
Principles of Scientific Management (1911)
one best way, appropriate selection of workers,
training, deployment and environment.
(experiments with loading iron blocks and shovel
sizes, financial incentives). The fundamentals are:
1. Find the best practice and use as benchmarking
2. Decompose the task into its constituents now
called business process redesign
3. Get rid of things that dont add value

Major Contributors contd.

Frank and Lillian Gilbreth (used camera and microchronometer to analyze the motions of brick laying;
fatigue and motion studies). They defined time and motion
studies as the science of eliminating wastefulness resulting
from unnecessary, ill directed and inefficient motion
Henry L Gantt (charts for planning and monitoring, and
the concept of group incentives) Formed the basis of CPM,
PERT (project evaluation and review technique) and Gantt
Charts. He focused on the importance of motivational
schemes by laying emphasis on rewards for good work
rather than penalties for poor work. He advocated that
provisions of rewards is relatively more effective than
threat of penalties

Scientific Management Era In Perspective

The era was characterized by low standard of
living, labor intensive working pattern, and
financially cheap environment
Scientific management attempted to raise the
standard of living by way of making workers more
efficient and productive and consequently adding
to their income.

2. The General Administrative Management

Grew out of need to find guidelines for managing
complex organizations to prescribe the interventions
in Management. The two most prominent contributor
was:
Henry Fayol (MD of a French Coal Company) described
management as the designated set of functions, and unlike
Taylor, concentrated on the managerial level. Fayol was
the first thinker to outline the desirable qualities of a
manager. They are physical qualities, mental qualities,
moral qualities, proper education qualities, specialized
knowledge about some function and experiential
knowledge from past work

Fayols 14 Principles of Management- busted the myth that

Managers are Born and not made. He insisted that
management is a skill which can be taught
Division of work
(training)
Authority / responsibility
Discipline (obey rules)
Unity of Command
Unity of Direction (one
plan)
Individuals interest
subordinate to
organizations interest.
Fair Remuneration

Centralization
Hierarchy
Orderliness (right people
and right material at right
place)

Equity (principle of hot

stove)

Stability of Tenure
Initiative
Esprit de corps

3. Bureaucratic Management
Max Weber (German Sociologist) described goal
oriented large organization as bureaucracy -- defined as
an administrative system which is deliberately designed
for accomplishment of large scale tasks through
coordination of individual efforts in a rule bound, fair
and efficient manner. It is characterized by clear division
of labor, well trained personnel appointed on the basis of
their competence, hierarchy (clear career path), rules and
regulations, rational power (traditional / charismatic)
and impersonal relationships.
Although the term bureaucracy has been popularized for
referring to government organizations, it is being
practiced in virtually every large and formal
organization

Webers ideal Bureaucracy

Division of labor
Authority / Hierarchy
Formal Selection
Formal rules and regulations
Impersonality
Career Orientation
Webers concepts (bureaucracy) are a lot similar
to Taylors (scientific management). Both
emphasize rationality, predictability,
impersonality, technical competence and
authoritarianism.

General Admin / Bureaucratic Theories

In Perspective
Fayols theory can be benchmarked as the starting
point of the many current management ideas. He
was the first to systemize managerial
interventions.
Webers idea of bureaucracy was the model
prototype of large organizations, bereft of
inefficiencies, ambiguity and patronage.
Though Bureaucracy is not a very fancied term
today, it still provides the steel frame to most large
organizations

B. Human Relations School: Why?

1.

2.

3.

This school of thought emerged in 1920 in reaction to

the limitations of the classical theories that ignored the
human aspects in organizations. The main
characteristics are:
Employees are social beings and hence could not
respond to purely rational rules, chain of authority and
economic incentives.
Employees bring their social needs along with them to
the organization; consequently, effective management
required a more human oriented approach.
Emphasis is required on the social needs, drives and
attitudes of individuals to motivate them to perform to
their true potential

Outcome of Human Relations Movement

Following fundamentals of human behavior highlighted:
1. Individuals desire to continuously associate with his
fellow workers significantly affects performance
2. Scientific management in its original form (Robotization of
the work force) not accepted. Social understanding and
social skills are equally important.
3. The working group informally determines the output level
(dependent upon fair days work) that an individual worker
would produce in a given timeframe.
4. Fair and transparent management can foster collaborative
and cooperative atmosphere.
5. Rather than just adding to the overall compensation
through production linked incentives, management needs
to improve the overall quality of life of the workers

Major contributors to the approach

1.

2.

The proponents recognized the importance of human

factor in success of organizations. Four individuals stand
out:
Robert Owen: Scottish businessman, committed to
releasing the suffering of the working class; banned
child labor, regulated work hours and improved working
conditions; showing concern for labor welfare was a
profitable management initiative.
Hugo Munsterberg: Created the discipline of industrial
psychology; substantially contributed to our current
knowledge of selection technique, training, job design
and motivation.

Major contributors contd.

3.

4.

Mary Parker Follett: Propounded that no one could

become a whole person except as a member of a group.
Defined Management as the art of getting things
done. Her holistic model took into account not only
individuals and groups but also politics, economics and
biology. It was forerunner of the idea that management
was not internally focused and is affected by external
environment.
Chester Barnard:President of New Jersey Bell
Telephone Co. viewed organizations as social systems
that require nurturing. People come to join the
organization to achieve the objectives they can not
accomplish alone. There needs to be sync between the
organization and individual goals. Adjustments need to be
made to attain equilibrium; managers need to understand
employees zone of indifference.

Hawthorne Studies.(Western Electric Co. 1924 33)

Elton Mayo established relationship between social
environment (redesign of job, changes in work day and
work week length, rest periods, individual versus group pay
etc) and work output through a series of experiments
known as Hawthorne Studies (Illumination experiment,
Relay assembly test room study, Bank wiring room study
etc). He concluded that behavior and sentiments were
closely related, that group influences significantly affected
individual behavior, group standards established individual
worker output and money was less a factor in determining
output than were group standards, group sentiments and
security. These studies established that employees were
different from the machines and would need to be
treated differently and deferentially.

HR Approach - Human Relations Movement

1.
2.

3.

The members had unshakable optimism about peoples

capabilities and strongly believed that a satisfied worker
was more productive. Three stalwarts of this group are:
Dale Carnegie : Believed that way to success was
through winning the cooperation of the people.
Abraham Maslow : Propounded the theory of need
hierarchy (physiological, safety, social, esteem, and self
actualization; lower level needs must be satisfied first).
Douglas McGregor: Best known for his two sets of
assumptions about human nature. (Theory X - motivated
by external stimuli, Theory Y inherently motivated;
manager replacing the boss)

HR Approach - Behavioral Science Theorists

A group of psychologists and sociologists (Fred
Fiedler, Victor Vroom, Richard Hackman etc),
carefully attempted to keep their personal beliefs
out of their work and relied on the scientific
methods for the study of organizational behavior.
They have made significant contributions to our
current understanding of leadership, employee
motivation, job design etc.

Behavioral Sciences Approach - In Perspective

The classical theorists viewed employees as
machines and managers as engineers. Any failure
of the employees to generate desired output was
viewed as an engineering problem. Contributors to
the human resource approach forced managers to
reassess this simplistic model view.
However, this approach takes a myopic view of
the discipline of management. It ignores
managerial concepts. In any case, psychological
training alone is not enough to become an
effective manager.

C. The Quantitative Approach The

Management Science School (OR Procedures)
During the World War II, the British brought in the concept
of Operational Research.
Post World War II, management included applications of
Statistics, Optimization Models, Information Models and
Computer, Simulations Linear Programming etc. They
have been useful tools to decision making in planning and
control.
Use of such tools have added to the confidence limits to
the management planning and projections.
Important contributors were Robert McNamara (Ford
Motors) and Charles Tex Thornton

Management Science School In Perspective:

Management science school offered a whole new
way to think about time. With computer model
simulations, forecasting has become dependable.
At the same time, management science school pays
less attention to relationships in the organizations.
The emphasis is only on numbers, missing the
importance of people and relationships. It fails to
provide solution for all facets of management,
especially the areas with high level of human
element, like leadership, motivation etc.
management in not pure science and hence cannot
be modeled for all types of situations

D. Recent Years Towards Integration

Theories are powerful influences. The longer we
use a given theory, the more comfortable we
become with it and more we tend not to seek out
newer pastures unless forced. The days were
changing fast and regular efforts were made to
synthesize to customize requirements. This
explains why modern management theory is
really a rich mosaic of many theories that have
endured over the past century. Concern with
developing a unifying framework of management
began in right earnest in early 60s.

Recent Years:1.Process or Operational approach:

Harold Koontz in his article management theory jungle
advocated that each approach had something to offer to
the management theory and the actual practice should
synthesize various view points. The approach
recognizes that there is a central core of knowledge
about management that is pertinent only to the field
of management. The process approach, originally
introduced by Fayol, is based on the management
functions. The performance of these functions planning,
organizing, controlling and leading should be seen as a
seamless activity of management. In addition this
approach draws and absorbs knowledge from other
fields.

The interactive nature of Management process

Planning
Use logic &
methods to think through
goals & actions

Organizing

Controlling

Allocate work,
authority & resources
to achieve organizational
goals

Make sure the

organization is moving
towards its objectives

Leading
Direct, influence & motivate
employees to perform
essential tasks

Recent Years:2.Systems approach

An organized enterprise does not exist in vacuum and is
dependent on external environment. Open systems
recognize that no organization is self contained; they would
sink if they ignore external environment, goal inputs of
claimants (supplier relation, govt regulations).
Two basic types of systems are closed and open. Frederic
Taylors machine view of the organization refers to closed
while Christian Barnard proposed open system where it is
in constant interaction with its environment.
The job of the manager is to ensure that all parts of the
organization are internally coordinated. In addition open
system recognizes that organizations are not self contained
and can not survive if they ignore external environment

External environment

Planning
Organizing
Staffing
Leading
Controlling

To produce outputs
External environment

Facilitated by communication
Linking the organization with
External environment

Reenergizing the system

Managerial knowledge,
Goals of claimants
& use of inputs

Inputs:
Human, Capital
Managerial, Technological
others
Goal inputs of claimants:
Employees, consumers, suppliers,
Stockholders, governments,
Communities and others

External Environment

Systems approach to management

External variables &

Opportunities
Constraints
Others

Outputs:
Products, Services,
Profits, Satisfaction,
Goal integration & others

External (micro) customers, suppliers, creditors, distributors dealers; though outside

Influence of the 0organization, can be influenced by them

Global

Ecosystem

Global
External (macrobeyond influence of the org)
Competition
Labor

Money

Economic

Business
organization
Socio Cultural

Equipments

Materials

Technological

Internal
Demographic

Political /
Legal

Global

Constituents of Business Environment

Recent Years: 3.Contingency Approach

Early management contributors gave us principles of
management and organization that they generally assumed
to be universally acceptable. Later research have found
exceptions.
Management, like life itself, is not based on simplistic
principles. Contingency approach is a product of the
integration of various management theories modulated by
the situational variables. Since organizations are diverse,
one size does not fit all. Four important variables are,
Organization size, Routine-ness of Task Technology,
Environmental Uncertainty and individual differences.
A contingency approach to management is intuitively
logical.

Current Issues:
Workforce Diversity
Ethics
Stimulating Innovation and change
Total Quality Management
Re-engineering
Empowerment and teams
Bimodal Workforce
Downsizing
Contingent Workers

Conclusions:
In view of the discussions so far, management has
started to become less based on the
conceptualization of classical theory of
management and the typical military command
and control, and more on facilitation and support
of collaborative activity. Now management deals
with the complexities of human interaction to
achieve organizational or group goals in an
effective and efficient manner.

Suggested Reading
Management: P Stoner, Freeman and
Gilbert, Jr.
Management: Stephen P. Robbins and Mary
Coulter.
Management A Global Perspective: Heinz
Weihrich and Harold Koontz