Course Content
Definition and importance of management Functions of management Managerial roles Evolution of management thought Types of management environment
Meaning and importance of planning Principles of planning Purpose of planning Types of plans Planning tools Process of planning Planning challenges Making plans effective Management by objectives
Meaning and Importance of Organizing Structure and Designs of Organizations Principles of Organizing Process of Organizing Delegation Coordination Centralization and Decentralization Informal Organizations
Meaning and Importance of Staffing Human Resource Planning Recruitment and Selection Training and Development Performance Management Reward Management Separation
Meaning and Importance of Directing Leadership Motivation Communication Group Dynamics Conflict Management
Meaning and Importance of Controlling Elements of Control Characteristics of Effective Controls Control Process Role of Control in an Organization Tools of Controlling
Overview of Strategic Management SWOT Analysis Strategy Formulation Strategy Implementation Strategy Evaluation
Organization Culture Ethics and Social Responsibility Managing Innovation and Change Diversity and Inclusion Corporate Governance Globalization
Principles and Practices of Management
About Lesson

Evolution management began when man began living in groups. Strong men divided the masses into groups based on their intelligence, physical, and mental abilities. The topic of management thought evolution is divided into four major stages:-

1. Pre-scientific management period.

2. Classical Theory:-

  • Scientific Management of Taylor
  • Administrative Management of Fayol
  • Bureaucratic Model of Max Weber

3. Neo-classical Theory or Behavior Approach

4. Modern Theory

1. Pre-Scientific management period

The 18th-century` industrial revolution had a big impact on management. Affecting how businesses and individuals raise capital, organized labor, and produce goods. Entrepreneurs had access to land, labor, and capital. Their task was to successfully combine these elements to achieve a goal. Following the industrial revolution, some pioneers tried to change the traditional, conventional, or customary ideas of management by introducing new ideas and approaches in favor of scientific principles

However, the new dimension that management took following the industrial revolution cannot be discussed without mentioning notable personalities who contributed their quarter. They were able to introduce useful ideas and approaches to give management a precise and universally acceptable direction. Here are some of them:-

  1. Professor Charles Babbage (1729–1871):  He taught mathematics at Cambridge. Prof. Babbage discovered that manufacturers relied on opinions suggestions and guesswork rather than investigations and accurate knowledge. He believed that scientific and mathematical methods could be used to solve business problems instead of guesswork. He urged making business decisions based on precise observations, measurements, and knowledge.
  2. Robert Owens – United Kingdom (1771 – 1858): Robert Owens, an English co-operative and trade union activist, emphasized the recognition of the human element in the industry. He was convinced that working conditions and worker treatment influenced industrial performance. His innovations in human relations included shorter working hours, housing, worker training, education of children, and a canteen. Robert was known as the father of personnel management due to his approach and emphasis on employee welfare

Other contributors were:-

  • Henry Robson Towne – USA
  • James Watt Junior – United Kingdom
  • Seebohm Rowntree – United Kingdom

2. Classical theory

Prof. Charles Babbage, James Watt Junior and Mathew Robinson Boulton, Robert Owen, Henry Robinson Towne, and Rowntree were, no doubt, pioneers of management thought. Their impact on the industry as a whole was minimal. Management science began in the last decade of the 19th century. A number of key figures from this era, such as Frank and Lillian Gilberth and F.W. Taylor laid the groundwork for what would become known as scientific management. This era in management history will be remembered for challenging traditional management practices, scientifically systematizing past management experience, and distilling and propagating management principles. The contributions of this generation’s pioneers have enriched management knowledge and principles.

F.W. Taylor and Henry Fayol are widely regarded as the founders of scientific and administrative management, respectively.

Features of Management in the Classical Period

  • It was linked to the industrial revolution and the rise of big business.
  • Classical organization and management theory draw on a variety of sources. They are administrative management theory, bureaucratic model, microeconomics, and public administration.
  • It emphasized job content division of labor and a scientific approach to organization.

The classical theory had three categories as follows:-

a) F.W Taylor’s Scientific Management

From Philadelphia, USA, as an apprentice machinist. He became chief engineer at Midvale Engineering Works and then worked at Bethlehem Works, where he tested his theories and contributed to management theory. Winslow, Fredrick Taylor, the founder of scientific management, was the first to emphasize the need for a scientific approach to managing an enterprise. He tried to diagnose the causes of low industrial efficiency and concluded that much of the waste and inefficiency is due to poor management methods. He found that management was usually unaware of the amount of work that a worker could do in a day and the best way to do it. As a result, it was largely at the mercy of workers who chose not to work. He advised managers to take a scientific approach to their work and use the “scientific method” to improve efficiency. The scientific method consists essentially of

  • Observation
  • Measurement
  • Experimentation and
  • Inference.

He emphasized the need for perfect understanding and cooperation between management and workers, both for increased profits and the use of scientific research and knowledge in industrial work.

Elements of Scientific Management

1. Scientific Task and Rate Setting: In order to improve an activity’s operational efficiency, a work-study examines all relevant factors in a systematic and objective manner.

2. Planning the Task: To ensure that there are no bottlenecks and that the work is done efficiently, the task must be planned thoroughly.

3. Selection and Training: Scientific management necessitates a radical change in worker selection procedures. A selection must therefore be delegated to a central personnel department. The selection process must also be systematized. Workers must also be properly trained in proper work methods.

4. Standardization: Standardization may be introduced in the following areas:-

  • Tools and equipment: Standardization is the process of bringing uniformity. So the management must select and store standard equipment that is near the best of its kind.
  • Speed: Every machine has an optimal speed. If it is exceeded, machinery may be damaged.
  • Conditions of Work: Standard conditions of ventilation, heating, cooling, humidity, floor space, safety, etc. are essential for standard performance.
  • Materials: A worker’s efficiency is dependent on the quality and handling of materials.

5. Specialization: Specialization is required for scientific management. As a result of this plan, the plant is organized to separate the planning and execution functions. Experts who plan and execute operations in the workshop.

Benefits of Scientific Management:

Taylor’s ideas, research, and recommendations centered on technological, human, and organizational issues. In Taylor’s scientific management the following benefits are realized:-

  1. Better quality,
  2.  Lower costs,
  3.  Less waste of materials, time, and energy,
  4.  Good management-worker relations.
  5.  Scientific techniques replace the traditional rule of thumb methods.
  6. Proper worker selection and training.
  7. Wages that encourage workers to produce more.
  8. Waste reduction and control system rationalization.
  9. Common tools, materials and work methods.
  10. Detailed instructions and constant worker guidance.
  11. Creating a harmonious workplace.
  12. Better use of resources.
  13. Customer satisfaction by providing better products at lower prices.

Criticism of Scientific Management

  1. Speeding up of workers:
  2. The problem of monotony:
  3. Heavy Investment:
  4. Loss due to re-organization
  5. Unsuitable for small scale firms: 

Contributions of Scientific Management:

  1. Management emphasizes rational thinking
  2. Improve industrial work methods through systematic research.
  3. Planned and controlled production is emphasized
  4. Cost Accounting’s development
  5. Studying work to develop incentive pay plans.
  6. Emphasize the need for a separate HR Department.
  7. Pay attention to industrial work-related fatigue and rest.

b) Henry Fayol’s Administrative Management Theory

Henry Fayol was the most important exponent of this theory. The pyramidal form, scalar principle, unity of command, exception principle, span of control, and departmentalization are some of the important concepts set forth by Fayol and his followers like Mooney and Reiley, Simon, Urwick, Gullick etc.

Henry Fayol was born in 1941 in France. In 1860, he graduated from the National School of Mining. After graduation, he worked as an engineer for a French coal mining firm. He was promoted to manager after a few years. He became General Manager in 1888. The company had suffered heavy losses and was near bankruptcy. Henry Fayol succeeded in converting his company from near bankruptcy to long-term profitability and dividends.

Concept of Management by Fayol

To run a successful business, these six functions had to be performed. However, he stressed that the ability to manage was the most important function for upper management. The management cycle of planning, organizing, directing, co-coordinating, and controlling is based on Fayol’s analysis of general management. Thus, Fayol is said to have established management thought and practice. Even today, the management process is acknowledged. Henry Fayol divided general and industrial management into six groups:

  • Technical activities – Production, manufacture, adaptation.
  • Commercial activities – buying, selling, and exchange.
  • Financial activities – search for and optimum use of capital.
  • Security activities – protection of property and persons.
  • Accounting activities – stock-taking, balance sheet, cost, and statistics.
  • Managerial activities – planning, organization, command, coordination, and control.

Fayol’s Principles of Management

  1. Division of work: Only work division or specialization can maximize efficiency and productivity. Diversification of labor and specialization are the only ways to perform technical and managerial tasks efficiently.
  2. Authority and Responsibility: An authority is a right to command. Responsibility means the duty to perform. Management is about authority and responsibility. They co-exist. They are mutually dependent and complementary.
  3. Discipline: Each member of an organization must follow the organization’s objectives, rules, regulations, policies, and procedures. Rules, objectives, policies, and procedures must be agreed upon in a clear and fair fashion. Non-compliance or indiscipline must be punished. No organization can function properly without voluntary discipline.
  4. Unity of Command: Orders and instructions must come from only one superior to avoid confusion and conflict (boss).
  5. Unity of Direction: Teamwork is required to achieve common goals.
  6. This is also known as the cooperation principle. All must work for each. In any joint venture, the common good must trump individual gain.
  7. Remuneration: Good performance can be rewarded with fair pay and non-monetary rewards. Employees must not be exploited in any way. Financial and nonfinancial incentives are part of a good compensation scheme.
  8. Centralization: Decentralization of authority and power must be balanced. Extreme centralization and decentralization are prohibited.
  9. Scalar Chain: From the top to the bottom, the unity of command creates a chain of command. Steps are a scalar.
  10. Order: Everything has its place, according to Fayol. Only order and system can create effective management.
  11. Equity: A group of people working together is an organization. So there must be equity (or justice). We can’t work together effectively unless we’re equal.
  12. Stability of Tenure: Maintaining tenure requires time to adjust to new tasks and show efficiency. Determining job security for employees and managers Sound organization and management requires job security.
  13. Esprit of Co-operation: A strong organization’s spirit of teamwork. Unity is power. But unity necessitates help. Good performance is based on pride, loyalty, and belongingness.
  14. Initiative: Creative thinking and initiative can help us plan and execute our plans effectively.

c) Max Weber’s Bureaucratic Model

The bureaucratic model was created by Max Weber. His bureaucracy includes:-

  • Hierarchical structure.
  • Discipline by functional specialization.
  • A set of rules and regulations
  • Interpersonal impersonality
  • A work procedure system.
  • Employee placement based on technical skills.
  • Legal authority and power.

 Features of Bureaucracy

  • Bureaucracy imposes a rigid organizational structure. It misses key human elements. Bureaucracy’s traits include:-
  • Controls are more rigid, impersonal, and expensive.
  • Anxiety caused by rule and procedure compliance.
  • Dependence on superior.
  • The tendency of forgetting the organization’s long-term objectives

3 Neo-classical Theory or Behavioral Approach

Classical theory underpins Neo-classical theory. It is an improved, enhanced and extended version of classical theory. Classical theory focused on job content and resource management, whereas neoclassical theory focused on an individual group and employee relationships. The Neo-classical theory highlighted the importance of psychology and sociology in understanding individual and group behavior. The theory was supported by Elton Mayo with his Hawthorne effect experiment.

George Elton Mayo (Australia, 1880 – 1949):

Elton Mayo is Australian. St. Peter’s College, Adelaide, taught him Logic and Philosophy. He led a Harvard University research team investigating human issues at Western Electric’s Hawthorne plant in Chicago. They conducted experiments (Hawthorne Experiments) on informal groupings, relationships, communication, and leadership. Elton Mayo is the father of the Human Relations School. Other notable contributors to this school include: – Roethlisberger, Dickson, Dewey, and Lewin.

Hawthorne Experiment:

In 1927, Elton Mayo and Fritz Roethlisberger of the Harvard Business School were invited to join the studies at Western Electric’s Hawthorne Works in Chicago. It lasted until 1932. The Hawthorne Experiments revealed that employee productivity is not solely dependent on physical and financial conditions. Employees’ productivity is heavily reliant on their job satisfaction. Mayo believed that emotional factors superseded logical factors in determining productivity efficiency. Moreover, among all human factors influencing employee behavior, social group membership and participation was the most powerful. Mayo concluded that in addition to meeting the objective requirements of production, work arrangements must also meet the employee’s subjective requirement of social satisfaction.

Features of the Hawthorne Experiment

The important features of the Hawthorne Experiment are:-

A company is a social system. It is a socio-economic system.

  • The employer’s behavior is influenced by feelings, emotions, and attitudes. So economic incentives are not the only method.
  • It is time for management to learn to collaborate rather than command.
  • Participation becomes a key tool in human relations. A two-way communication network is required to achieve participation.
  • In any business, productivity is linked to employee satisfaction. So management must care more about employee satisfaction.
  • Group psychology is vital in any business setting. So we need more informal group effort.
  • It emphasizes that man is a living machine, far more important than inanimate machines. Employee morale is the key to increased productivity. High morale boosts output.

Elements of Behavioral Theory

  • Individual: Individual differences were emphasized in neoclassical theory. A person has emotions, perception, and attitude. Everyone is unique. He brings to the job certain attitudes, beliefs, and ways of life. His job, supervisor, and working conditions are important to him. In determining productivity, the worker’s inner world trumps the external reality. Thus, workplace human relations determine productivity. People are motivated by economic, individual, and social factors, according to human relationists.
  • Work groups: Management should treat workers as social beings, not as isolated individuals. Informal organization is natural. Group psychology and behavior affect motivation and productivity, according to classical theory.
  • Participative management: When individuals and work groups are prioritized, participative management emerges. Allowing workers to make decisions was a new form of supervision. Worker input is now encouraged in job planning and execution. The neoclassical theory focuses its attention on workers. The plant layout, machinery, and tools must be employee friendly. Thus, neoclassical approach tries to meet workers’ personal and social needs.

4. Modern Management Theories

Employees are only motivated by money, according to Classical Management Theory. Modern Management Theory was formed as a direct response to this theory. Workers are multifaceted, and they have various reasons for wanting to succeed in their jobs, according to Modern Management Theory. Modern Management Theory also argues that quickly evolving technology can both generate and solve a variety of workplace issues.

This theory combines mathematical analysis with a knowledge of human emotions and motivation in order to produce a highly productive working environment. A manager that employs the Modern Management Theory will utilize statistics to assess employee performance and productivity, as well as try to figure out what makes people happy at work. Quantitative Theory, Systems Theory, and Contingency Theory are the three management theories that make up Modern Management Theory.

a) Quantitative Theory

  • The quantitative approach to management uses statistics and mathematical techniques to solve complex problems.
  • Depending on the business area, managers may use techniques like computer simulations or information models to assess performance.
  • This analysis enables them to understand what is working and what is not within the business, then develop solutions to solve or improve the issues they find.
  • Managers can also use these techniques and data to determine the benefits or risks of different ideas.
  • This approach can help managers make objective decisions based on data and facts, rather than personal opinions or feelings, that support the business.
  • This modern management approach often consists of three branches:-
  1. Management science: Management science is the application of mathematical and statistical methods to business problems and goals. Program Evaluation Review Technique (PERT), Critical path project management (CPM), and sampling are examples of these tools. Managers can utilize these tools for project management, budgeting, and scheduling.
  2. Operations management: Operations management helps managers improve company and manufacturing processes. This strategy may require managers to restructure or redesign procedures. They use forecasting, quality control, and project planning systems. These managers often try to produce more or better products through more efficient methods.
  3. Management Information System: A management information system (MIS) is a database that organizes an organization’s data and helps managers make intelligent decisions. In addition to financial, schedule, personnel, and inventory reporting, this system collects and saves real-time data. Managers can then utilize this data to assess performance, make adjustments, or develop solutions.

b) Systems Theory

  • The systems approach of management states that organizations represent a complex collection of various components that work together to reach a common goal.
  • An organization is made up of numerous subsystems, such as different departments.
  • Managers using this theory examine how these subsystems interact with and affect one another, rather than analyzing them separately.
  • They must also consider their surrounding environment and external factors that influence or affect these systems.
  • The systems approach further defines an organization by dividing it into different components.
  • These components demonstrate how different parts of the organization work together toward a common goal:
  • This idea treats businesses as if they were living organisms, with all of the pieces required for survival.
  • This idea, developed by Ludwig von Bertalanffy, asserts that for a corporation to survive, all sections of the organization, from the CEO to the entry-level employee, must function in harmony.
  • Companies that follow this approach believe that departments and employees should function as a team rather than as individuals.
  • This paradigm emphasizes departmental synergy and interdependence.

c) Contingency Theory

  • According to the Contingency Management Theory, each scenario necessitates a unique leadership style, and hence no single theory can be applied to an entire office.
  •   This theory, developed in the 1960s by Fred Fiedler, asserts that it is up to a company’s executives to assess a situation and employ the optimal leadership strategy.
  • According to Fiedler, there are three primary factors to consider when deciding which leadership strategy to apply:-
  1. The size of the business,
  2. The technology in use, and
  3. The company’s overall leadership style.
  •  An effective manager understands these factors and how they may impact performance.
  • This notion places a great deal of responsibility on a company’s leaders.
  • Fiedler believed that a leader’s personality attributes had a direct impact on how they managed others.
  • This approach is also more applicable to modern workplaces since it recognizes that as technology and businesses evolve, so must leadership styles.
  • In simple words, the contingency management approach states that there is not just one management approach that fits every organization.
  • It believes that the optimal management style depends on the situation.
  • Leaders who utilize this theory do not adopt a single management style and instead must identify and use different styles for different situations.
  • As a result, these leaders also develop additional traits and skills that ensure they can employ various management approaches effectively.
  • The use of diverse styles can help make these leaders more flexible and adaptable in the workplace.


Modern Management Theory’s Advantages

Present Management Theory is an excellent management theory for the modern world since it acknowledges and respects the changes brought on by technological advancements. This view recognizes that technology is changing the workplace, and that leaders must be able to effectively accommodate these changes.
This two-pronged management strategy provides for both hard statistical facts and a more introspective and personal approach to leadership. This view recognizes employees as complicated individuals who are concerned about more than simply their pay, while simultaneously allowing for rational and statistical analysis to be used in some firm choices.

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