Management Theories

Scientific Management Theory by F.W. Taylor

Fredrick Winslow Taylor (March 20, 1856 – March 21, 1915) commonly known as ’Father of Scientific Management’ started his career as an operator and rose to the position of chief engineer. He conducted various experiments during this process which forms the basis of scientific management. It implies application of scientific principles for studying & identifying management problems.

According to Taylor, “Scientific Management is an art of knowing exactly what you want your men to do and seeing that they do it in the best and cheapest way”. In Taylors view, if a work is analyzed scientifically it will be possible to find one best way to do it. The main intention of scientific management theory is to enhance economic efficiency, specifically labour productivity. This theory was considered as one of the best and initial efforts where science was applied to management and engineering of process.

Hence scientific management is a thoughtful, organized, dual approach towards the job of management against hit or miss or Rule of Thumb.

PRINCIPLES OF SCIENTIFIC MANAGEMENT

Development of Science for each part of men’s job (replacement of rule of thumb)

This principle suggests that work assigned to any employee should be observed, analyzed with respect to each and every element and part and time involved in it.
This means replacement of odd rule of thumb by the use of method of enquiry, investigation, data collection, analysis and framing of rules.
Under scientific management, decisions are made on the basis of facts and by the application of scientific decisions.

Scientific Selection, Training & Development of Workers

There should be scientifically designed procedure for the selection of workers.
Physical, mental & other requirement should be specified for each and every job.
Workers should be selected & trained to make them fit for the job.
The management has to provide opportunities for development of workers having better capabilities.
According to Taylor efforts should be made to develop each employee to his greatest level and efficiency & prosperity.

èCo-operation between Management & workers or Harmony not discord

Taylor believed in co-operation and not individualism.
It is only through co-operation that the goals of the enterprise can be achieved efficiently.
There should be no conflict between managers & workers.
Taylor believed that interest of employer & employees should be fully harmonized so as to secure mutually understanding relations between them.

Division of Responsibility

This principle determines the concrete nature of roles to be played by different level of managers & workers.
The management should assume the responsibility of planning the work whereas workers should be concerned with execution of task.
Thus planning is to be separated from execution.

Mental Revolution

The workers and managers should have a complete change of outlook towards their mutual relation and work effort.
It requires that management should create suitable working condition and solve all problems scientifically.
Similarly workers should attend their jobs with utmost attention, devotion and carefulness. They should not waste the resources of enterprise.
Handsome remuneration should be provided to workers to boost up their moral.
It will create a sense of belongingness among worker.
They will be disciplined, loyal and sincere in fulfilling the task assigned to them.
There will be more production and economic growth at a faster rate.

Maximum Prosperity for Employer & Employees

The aim of scientific management is to see maximum prosperity for employer and employees.
It is important only when there is opportunity for each worker to attain his highest efficiency.
Maximum output & optimum utilization of resources will bring higher profits for the employer & better wages for the workers.
There should be maximum output in place of restricted output.
Both managers & workers should be paid handsomely.

Contributions

Promotes mass production
Facilitates job design
Gives importance to proper selection
Introduce rational method to solve mgmt. problem
Foundation for modern mgmt. theory
Differential payment

Limitations

Mechanistic (less useful for large org.)
Neglects human aspect
No one best method for doing job
Work becomes monotonous
Mainly applicable for labor intensive work
Does not favor group work

Administrative Theory of Management

Henry Fayol (1841-1925) the first foundations were laid for modern scientific management. These first concepts, also called principles of management are the underlying factors for successful management. He explored this comprehensively and, as a result, he synthesized the 14 principles of management. His principles of management and research were published in the book ‘General and Industrial Management’ (1916).

14 Principles of Management

Division of work. By having employees specialize in just a few tasks, they can become much more efficient than having employees engage in every possible task. Though quite correct, this principle resulted in deeply uninteresting jobs; employers have subsequently added back tasks to make jobs more interesting.

Authority. Managers must be vested with authority, which gives them the right to give orders. This principle has held up, though a general trend toward pushing decision making deep down in the organization has shifted authority to more and more people.

Discipline. Employees must obey the governing rules of the organization. This principle is still true and remains relevant.

Unity of command. Each employee should only receive orders from one supervisor. This principle has largely held up, though matrix organizations the use of two supervisors. Also, teams are more likely to operate with reduced levels of supervision, instead tackling issues as a group.

Unity of direction. There should be one plan of action to guide employees. This principle is inherently obvious; there cannot be multiple, possibly conflicting plans tugging employees in different directions.

Subordination of individuals to mutual interest. The interests of a single employee do not override those of the entire organization. If this principle were to be violated, employees could refuse to work on essential but uninteresting tasks.

Remuneration. Employees must be paid a fair wage. Though obvious, this principle points out that employees will work harder if they are properly compensated for their work. Subsequent research has found that remuneration only forms a part of the rewards that employees tend to value.

Centralization. The amount of decision making should be properly balanced throughout the organization, and not just at the top. This was a quite forward-thinking principle, and foreshadowed the ongoing trend to empower employees well down in the organizational structure.

Scalar chain. There should be a direct line of authority from the top of the corporate hierarchy to the bottom, so that any employee can contact a manager in the line of authority if an issue arises that needs a decision. This concept is still largely operable.

Order. Employees must have the correct resources available to complete their jobs properly, which includes a safe and clean workplace. Managers still spend an enormous amount of their time ensuring that resources are properly organized.

Equity. Employees should be treated fairly and well. This statement was forward-thinking when it was first promulgated, and has become more relevant as the value of retaining top-grade employees has become more of a concern.

Stability of tenure. There should be minimal employee turnover, which can be assisted by proper personnel planning, so that new hires can be brought in in an orderly manner.

Initiative. Employees should be allowed to express their ideas, which make them more involved in the organization and increase the competitiveness of the business.

Esprit de corps. Managers should continually try to improve employee morale, which enhances the mutual trust of employees and creates a more harmonious workplace.

Contributions

Focuses on efficiency of organizations
Lays down universal principles of management
Identifies skills needs of management
Regarded management as profession

Limitations

Limited applicability in complex organizations.
Not applicable in all situations
Importance of behavior in organization is ignored

BUREAUCRATIC THEORY OF MANAGEMENT BY MAX WEBER

Bureaucratic Theory was developed by a German Sociologist and political economist Max Weber (1864-1920). According to him, bureaucracy is the most efficient form of organization. The organization has a well-defined line of authority. It has clear rules and regulations which are strictly followed. It has strictly defined hierarchy and is the most efficient model to manage complex organization.

Features of bureaucratic management

The characteristics or features of Bureaucratic Organization are as follows:-

There is a high degree of Division of Labour and Specialization.
There is a well-defined Hierarchy of Authority.
It follows the principle of Rationality, Objectively and Consistency.
There are Formal and Impersonal relations among the member of the organization.
Interpersonal relations are based on positions and not on personalities.
There are well defined Rules and Regulations. There rules cover all the duties and rights of the employees. These rules must be strictly followed.
There are well defined Methods for all types of work.
Selection and Promotion is based on Technical qualifications.
Only Bureaucratic or legal power is given importance.

Contribution

Useful to manage big and complex organizations
Decision making is rational based on rules and regulations
Technical competence in employees facilitates specialization

Limitations

Too much emphasis on formal rules and procedures ignores the social needs, desires and sentiments of human beings.
It hampers human creativity and innovativeness as there is impersonal approach in dealing with people.
It ignores the role of ‘informal organisation’ which both supplements and complements formal organizations in achieving the formal goals.
The hierarchy of authority denies the benefits of open communication. This may not bring the desired level of efficiency.
Strict adherence to rules, regulations and procedures makes the rules an end. The organisation structures tend to become procedure-oriented rather than goal-oriented.
Putting rules and regulations in writing delays processing of work.
It leads to conflict between the organisation and individuals.

Behavioral Science Perspective

HUMAN RELATION THEORY

It emphasizes individual but ignores group.
The human relations movement, which grew out of “Hawthorne studies” and was a popular approach to management for many years, proposed that workers respond primarily to the social context of the workplace, including social conditioning, group norms, and interpersonal dynamics.
A basic assumption of the human relations movement was that the manager’s concern for workers would lead to increased satisfaction, which would in turn result in improved performance.
It advocates the need for management to promote & maintain a good work relation with its employees as a means to stimulating more and better works, boosting their morale, efficiency & productivity/performance.
Poor performance & problems indicate absence of human relation on the part of management.
It assumes that “a satisfied worker will be productive”.

Elton Mayo (1880-1949)

Elton Mayo and his associates from Harvard, F.J. Roethlisberger, W.J. Dickson concluded that, the concept of “rational man” motivated by personal economic needs was not complete but the concept of “social man” motivated by social needs and reward in the form of on-the-job relationship, work group pressures, social environment, and attention of management/researchers influenced productivity.
So management should attempt to have sound & cordial relation with employees and recognize their presence & performance to promote their performance.

Theory of Human Need

Maslow’s hierarchy of needs is a motivational theory in psychology comprising a five-tier model of human needs, often depicted as hierarchical levels within a pyramid.

Needs lower down in the hierarchy must be satisfied before individuals can attend to needs higher up. From the bottom of the hierarchy upwards, the needs are: physiological, safety, love and belonging, esteem and self-actualization.

1. Physiological needs – these are biological requirements for human survival, e.g. air, food, drink, shelter, clothing, warmth, sex, sleep.

If these needs are not satisfied the human body cannot function optimally. Maslow considered physiological needs the most important as all the other needs become secondary until these needs are met.

2. Safety needs – protection from elements, security, order, law, stability, freedom from fear.

3. Love and belongingness needs – after physiological and safety needs have been fulfilled, the third level of human needs is social and involves feelings of belongingness. The need for interpersonal relationships motivates behavior

Examples include friendship, intimacy, trust, and acceptance, receiving and giving affection and love. Affiliating, being part of a group (family, friends, work).

4. Esteem needs – which Maslow classified into two categories: (i) esteem for oneself (dignity, achievement, mastery, independence) and (ii) the desire for reputation or respect from others (e.g., status, prestige).

Maslow indicated that the need for respect or reputation is most important for children and adolescents and precedes real self-esteem or dignity.

5. Self-actualization needs – realizing personal potential, self-fulfillment, seeking personal growth and peak experiences. A desire “to become everything one is capable of becoming”.

Theory X and Y

Theory X and Theory Y are the theories of motivation given by Douglas McGregor in 1960’s. These theories are based on the premise that management has to assemble all the factors of production, including human beings, to get the work done. McGregor believed that management can use either of the needs to motivate his employees, as grouped under theory X and theory Y. But however, the theory Y yields better results than the theory X.

Theory X: Theory X relies on the authoritarian style of management, where the managers are required to give instructions and keep a close check on each employee. As it is assumed, the employees are not motivated, and they dislike working.

Theory Y: Theory Y relies on the participative style of management, where the managers assume that the employees are self-directed and self- motivated to accomplish the organizational objectives. Thus, here the management attempts to get the maximum output with least efforts on their part.

Contributions

Emphasizes understanding of human behavior at work.
Gave importance to non-financial rewards like recognition, appreciation, respect etc.
Advocates needs influence behavior
Theory Y assumptions are more important for employee’s commitment

Limitations

Further investigation is required.
No consideration was given to situational factors.
Human behavior is complex and can’t be predicted
It’s only a partial view of organization.
Limits the practical application.

Quantitative Perspective of Management

The quantitative management perspective, a more recent development than the other two major perspectives, uses applied mathematics to address logistical problems of organizations. The focus is on analytical processes of decision-making, economic effectiveness, mathematical modeling and the use of information technology. Management science uses mathematical modeling to represent and analyze systems, processes and relationships. Operations management is concerned with the efficient production of goods and services of the organization, The quantitative management approach provides very powerful tools for understanding and managing organizations. It does not fully explain or predict the behaviors of individuals or groups of people within an organization.

Decision Theory of Management

It was propounded by Herbert Simon. Decisions are made through rationale choice among different alternatives available. It is a choice making activity and choice determines our activity. Decision theories have expanded their area of theory building in the decision making process to the study of decision, decision-maker, and the environment of decision-maker. Managerial decisions in the past were based on common sense, intuition, educated guesses. Managerial decisions in the modern time are based on decision science, i.e. precise mathematical calculation, use of decision models, decision trees, matrices, management information system (MIS), decision support system(DSS), information science, computer programs probability & sampling, linear programming, queuing/waiting line model, game theory. Hence, decisions based on them are more precise, accurate, and scientific.

Features of Decision Theory

Management is decision making. Decisions are the heart of management. Rational decisions should be made.
Members of organization are decision makers.
Decision making is control point of management.
Quality decision making is important for efficiency.
MIS is developed to facilitate decision making.

Decision Making Process

Contributions

Helps managers to discharge their decision making role effectively.
Tools and techniques are available to help managers to make decision.
Emphasizes on making rational decision.

Limitations

Does not take a total view of management.
Its scope is limited.
Limited to economic rationality.
It ignores behavioral aspect of people.

Management Science Theory

Management science theory focused on development of mathematical model. A mathematical model is a simplified representation of a system, process and relationship. Basically, management science theory focuses on model equation and representation of similar reality. This approach believes that most of the organizational and business problems can be better solved using different mathematical and statistical techniques. Complex problem relating to planning inventory operation and transportation are easily solved through models and other mathematical tools. Management science theory uses linear programming, critical path method, program evaluation and review technique, games theory and break even analysis to make decision.

Features of Management Science theory

Mgmt. regarded as a logical process.
It makes use of mathematical tools and techniques.
Mgmt. problems can be quantified and described in mathematical models.
Mgmt. should aim at optimizing performance and maximizing efficiency.

Contribution

Developed quantitative tools to aid decision making.
Useful for large and complex organization
Found to be widespread application in solving technical problems and forecasting.
Useful for planning and controlling activities.
It is widely used in production and operations management.

Limitations

Ignores people and relationships in organizations.
Cannot substitute sound judgments and skills of managers.
Assumptions used for quantifying decision making are not realistic in the real world situations.
Many aspects of management cannot be modeled.
It is not applicable where quantification is not possible.
It ignores environmental factors.

Integrative Perspective of Management

System Theory

System theory views the organization as unified, directed, purposeful system of interrelated parts/subsystems.
Rather than dealing separately with the various segments of an organization, system approach views the organization as a whole as well as a part of a larger external environment.
The parts/subsystem are interacting, interdependent and inter-related.
All parts integrate to function as a whole
Theory views an organization as a unified whole
Activities in one part of the organization affect the other parts.
The subsystems of the organization are: People, technology, structure, management etc.

Features

Goal directed: A system is goal-directed. It exists to achieve some desired end.
Subsystems: The parts of the systems are subsystems. All the subsystems are related to each other. They interact with each other.
Open or closed: Open system interacts with the environment. Closed system has no environment.
Synergy: System thinking means that the whole is greater than the sum of its parts (2+2=5). It leads to synergy. Working together produces more than working alone.
Boundary: Each system has a boundary that separates it from the environment. Open system has flexible boundary.
Feedback: It is getting information about actual performance. It is the key to system control. System corrections are based on feedback.
Entropy: It is the process of system decline. This happens when organizations fail to make corrections based on environmental feedback.

Contributions

Takes a integrative total view of organization.
Recognizes the interrelationships and interactions among subsystems.
It recognizes environmental influences.
Useful for complex organization.
Feedback facilitates change in the system

Limitations

Complex for practical application.
Useful for only large organization.
The theory is too abstract.

Contingency Theory

Each situation is unique so there is no best way of mgmt.
Recognizes the situational nature of mgmt.
Does not believe in universality of mgmt.
Believes the managerial practice depends on the situation.
Different situation requires for different mgmt approaches.

Steps in application of Contingency Theory of Mgmt

Analyze and understand the situation case by case.
Examine the validity and applicability of management approaches to the situation
Match the management approach to the situation.
Select choice of specific situations.
Implement the choice.

Contributions

It has a practical application.
Regarded as most important for management decisions.
Various theories of management have situational applications in practice.
Widely used in practice of management.

Limitations

Complex in nature.
Difficult to identify relevant contingency variables and to determine their interrelationships.
Every situation is unique. So all managers may not analyze in similar way.
Not applicable for all types of managerial issues.