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Chapter Two
The Evolution of
Management Thought
Chapter Objectives
• Identify two key assumptions supporting the universal
process approach, and briefly describe Henri Fayol’s
contribution.
• Discuss Frederick W. Taylor’s approach to improving the
practice of industrial management.
• Identify at least four key quality improvement ideas from
W. Edwards Deming and the other quality advocates.
• Describe the general aim of the human relations
movement and explain the circumstances in which it
arose.
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Chapter Two | 2
Chapter Objectives (cont’d)
• Explain the significance of applying open-system
thinking to management.
• Explain the practical significance of adopting a
contingency perspective.
• Describe what “management by best seller”
involves and explain what managers can do to
avoid it.
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Chapter Two | 3
Figure 2.1: Management Is a Global Affair
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Chapter Two | 4
The Practice and Study of Management
• The systematic study of management did not
begin in earnest until after 1900.
• The practice of management is much older,
stretching as far back as the construction of the
pyramids.
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The Practice and Study of Management
(cont’d)
• Information Overload
– Management has not had a systematically recorded
body of knowledge until recently.
– Today, vast amounts of relevant information are readily
available in print and electronic media.
• An Interdisciplinary Field
– The manifold increase in management theory
information is due largely to its interdisciplinary nature
in drawing from several fields (e.g., psychology,
mathematics, economics, history, and engineering).
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Chapter Two | 6
No Universally Accepted Theory of
Management
• There are several approaches to the theory and
practice of management.
–
–
–
–
–
–
The universal process approach
The operational approach
The behavioral approach
The systems approach
The contingency approach
The attributes of excellence approach
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The Universal Process Approach
• Universal Process Approach
– Assumes all organizations require the same
rational management process
• Core management process remains the same
regardless of the purpose of the organization.
• The management process can be reduced to a set
of separate functions and related principles.
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Chapter Two | 8
Henri Fayol’s Universal
Management Process
• Fayol published Administration Industrielle et
Générale in 1916.
– He divided a manager’s job into five functions:
1.
2.
3.
4.
5.
Planning
Organizing
Command
Coordination
Control
– He developed 14 universal principles of management.
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Henri Fayol’s Universal
Management Process (cont’d)
• Lessons from the Universal Process Approach
– The management process can be separated into
interdependent functions.
– Management is a continuous process.
– Management is a largely, though not an entirely,
rational process.
– The functional approach is useful because it specifies
what managers should do.
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The Operational Approach
• Frederick W. Taylor’s Scientific Management
– Developing performance standards on the basis of
systematic observations and experimentation
• Standardization of work practices and methods to reduce
waste and increase productivity
• Time and task study of workers’ efforts to maximize productivity
and output
• Systematic selection and training of workers to increase
efficiency and productivity
• Differential pay incentives based on established work
standards
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Figure 2.2: Taylor’s Differential
Piece-Rate Plan
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Taylor’s Followers
• Frank and Lillian Gilbreth
– Refined time and motion study methods for use in work
simplification
• Henry L. Gantt
– Refined production control and cost-control techniques
– Developed the Gantt chart for work scheduling of
projects
– Early advocate of the importance of the human factor
and the importance of customer service over profits
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The Quality Advocates
• Walter A. Shewhart
– Introduced the concept of statistical quality control
• Kaoru Ishikawa
– Proposed a preventive approach to quality
– Developed fishbone diagram approach to problem
solving
• W. Edwards Deming
– Based his 14 principles on reformed management style,
employee participation, and striving for continuous
improvement
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The Quality Advocates (cont’d)
• Joseph M. Juran
– Proposed the concept of internal customers, teamwork,
partnerships with suppliers, and brainstorming
– Developed Pareto analysis (the 80/20 rule) as a tool for
separating major problems from minor ones
• Armand V. Feigenbaum
– Developed the concept of total quality control
• Philip B. Crosby
– Promoted the idea of zero defects (doing it right the first
time)
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The Operational Approach
• Lessons from the Operational Approach
– A dedication to finding a better way is still important.
– Using scientific management doesn’t dehumanize
workers.
– Quality advocates, inspired by the scientific approach,
have been right all along about the importance of
quality and continuous improvement.
– The operational approach fostered the development of
operations management.
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The Behavioral Approach
• The Human Relations Movement
– An effort to make managers more sensitive to their
employees’ needs
– Arose out of the influences of
• The threat of unionization
• The Hawthorne studies
• The philosophy of industrial humanism
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Figure 2.3: The Human Relations
Movement Pyramid
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The Behavioral Approach (cont’d)
• The Threat of Unionization
– The Wagner Act of 1935 legalized union-management
collective bargaining, promoting the growth of unions
and union avoidance by firms.
• The Hawthorne Studies (1924)
– The study’s results that productivity was strongly
affected by workers’ attitudes turned management
toward the humanistic and realistic viewpoint of the
“social man” model.
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The Philosophy of Industrial Humanism
• Elton Mayo
– Emotional factors were more important determinants of
productive efficiency than were physical and logical
factors.
• Mary Parker Follett
– Managers should be aware of how complex each
employee is and how to motivate employees to
cooperate rather than to demand performance from
them.
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Chapter Two | 21
The Philosophy of Industrial Humanism
(cont’d)
• Douglas McGregor
– Developed Theory X and Theory Y
• Theory X: Management’s traditionally negative view
of employees as unmotivated and unwilling workers
• Theory Y: The positive view of employees as
energetic, creative, and willing workers
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Organizational Behavior
• Organizational Behavior
– A modern research-oriented approach seeking to
discover the causes of work behavior and to develop
better management techniques
• Lessons from the Behavioral Approach
– People are the key to productivity.
– Success depends on motivated and skilled individuals
committed to the organization.
– Managerial sensitivity to employees is necessary to
foster the cooperation needed for high productivity.
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Chapter Two | 24
The Systems Approach
• What Is a System?
– A collection of parts operating interdependently to
achieve a common purpose
• Systems Approach
– Posits that the performance of the whole is greater than
the sum of the performance of its parts
• Analytic versus synthetic thinking: Outside-in thinking versus
inside-out thinking
• Seeks to identify all parts of an organized activity and how they
interact
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The Systems Approach
• Chester I. Barnard’s Early Systems Perspective
– Wrote Functions of the Executive
– Characterized all organizations as cooperative systems
– Defined principal elements in an organization as
• Willingness to serve
• Common purpose
• Communication
– Strong advocate of business ethics
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Figure 2.4: Barnard’s Cooperative
System
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General Systems Theory
• General Systems Theory
– An area of study based on the assumptions that
everything is part of a larger, interdependent
arrangement
• Levels of systems
– Each system is a subsystem of the system above it.
– Identification of systems at various levels helps
translate abstract systems theory into more concrete
terms.
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Figure 2.5: Levels of Living Systems
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General Systems Theory (cont’d)
• Closed Versus Open Systems
– Closed system: A self-sufficient entity
– Open system: Something that depends on its
surrounding environment for survival
• Systems are classified as open (closed) by how
much (how little) they interact with their
environments.
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General Systems Theory (cont’d)
• New Directions in Systems Thinking
– Organizational learning and knowledge management
• Organizations are living and thinking open systems that learn
from experience and engage in complex mental processes.
– Chaos theory
• Every complex system has a life of its own, with its own rule
book.
– Complex adaptive systems
• Complex systems are self-organizing.
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The Contingency Approach
• Contingency Approach
– A research effort to determine which managerial
practices and techniques are appropriate in specific
situations
• Different situations require different managerial responses.
• It deals with intercultural feelings in which custom and habits
cannot be taken for granted.
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Chapter Two | 33
Figure 2.6: The Contingency View:
Compromise
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A
Chapter Two | 34
The Contingency Approach (cont’d)
• Contingency Characteristics
– An open-system perspective
• How subsystems combine to interact with outside
systems
– A practical research orientation
• Translating research findings into tools and
situational refinements for more effective
management
– A multivariate approach
• Many variables collectively account for variations in
performance.
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Chapter Two | 35
The Contingency Approach (cont’d)
• Lessons from the Contingency Approach
– Approach emphasizes situational
appropriateness rather than rigid adherence to
universal principles
– Approach creates the impression that an
organization is captive to its environment
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Chapter Two | 36
The Era of Management by Best Seller:
Proceed with Caution
• Management in the Mainstream
– Gurus and Best Sellers
• Peter Drucker—author and first management guru
• Peters and Waterman’s bestseller In Search of Excellence
• Donald Trump’s hit show “The Apprentice”
– What’s Wrong with Management by Best Seller?
• Academics point to shoddy research and selective inclusion of
anecdotal evidence.
• It encourages simplistic thinking: Upper management assumes
that there is a one-size-fits-all solution that’s a magic bullet
quick-fix to solve the organization’s problems.
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Summary
• Management is an interdisciplinary and
international field that has evolved over the years.
• The operational approach has evolved from
scientific management to operations
management.
• Quality advocates teach the strategic importance
of high-quality goods and services.
• Management has turned to the human factor in
the human relations movement and organizational
behavior approach.
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Chapter Two | 39
Summary (cont’d)
• Under the systems approach, modern
organizations are viewed as open systems.
• The contingency approach stresses situational
appropriateness rather than universal principles.
• A quick-fix is unlikely to solve an organization’s
unique problems.
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Chapter Two | 40
Terms to Understand
• Universal process
approach
• Operational approach
• Scientific approach
• Operations
management
• Human relations
movement
• Theory Y
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• Organizational
behavior
• System
• General systems
theory
• Closed system
• Open system
• Contingency approach
• Multivariate analysis
Chapter Two | 41