Introduction to Management

HAFIZ MUHAMMAD NADEEM

01 – Introduction to Management
Management and Organizations
In today’s tough and uncertain economy, a company needs strong managers to lead its staff toward
accomplishing business goals. But managers are more than just leaders – they are problem solvers,
cheerleaders, and planners as well. And managers don’t come in one-size-fits-all shapes or forms. Managers
fulfil many roles and have many different responsibilities at each level of management within an
organization.

Organizations abound in today’s society. Groups of individuals constantly join forces to accomplish
common goals. An organization is defined as a group of two or more people working together in a
predetermined fashion to attain a set of goals. These goals may include such things as profit (Unilever,
EABL, BAT, etc), spreading knowledge (Egerton, Kabarak, Moi, etc), national defence (Army, Navy, Air
Force, etc), social satisfaction (college social groups, clubs, etc) etc (Griffin).

Absence of organization means chaos, anarchy, and little or no productivity. Organized life requires
direction or management.

Management (from Old French ménagement “the art of conducting, directing”, from Latin manu agere “to
lead by the hand”) characterises the process of leading and directing all or part of an organization, often a
business, through the deployment and manipulation of resources (human, financial, material, intellectual or
intangible). Early twentieth-century management writer, Mary Parker Follett defined management as “the
art of getting things done through people.”

Management has further been defined as the process of planning, organizing, leading, and controlling an
organization’s human, financial, physical, and information resources to achieve organizational goals in an
efficient and effective manner (Griffin). Management then is the process of achieving an organization’s
goal through the coordinated performance of five specific functions: planning, organizing, staffing, directing
(leading), and controlling.

Managers appear in every organization – at least in organizations that want to succeed. These individuals
have the sometimes-unenviable task of making decisions, solving difficult problems, setting goals, planning
strategies, and rallying individuals. And those are just a few of their responsibilities! To be exact, managers
administer and coordinate resources effectively and efficiently to achieve the goals of an organization. In
essence, managers get the job done through other people. A manager, then, is someone whose primary
activities are a part of the management process. In particular, a manager is someone who plans, organizes,
leads, and controls human, financial, physical, and information resources.

Levels of management

Two leaders may serve as managers within the same company but have very different titles and purposes.
Large organizations, in particular, may break down management into different levels because so many more
people need to be managed. Typical management levels fall into the following categories:

 Top level: Managers at this level ensure that major performance objectives are established and
accomplished. Common job titles for top managers include chief executive officer (CEO), chief
operating officer (COO), managing director (MD), president, and vice president. These senior
managers are considered executives, responsible for the performance of an organization as a whole
or for one of its significant parts.

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 Middle level: Middle managers report to top managers and are in charge of relatively large
departments or divisions consisting of several smaller units. Examples of middle managers include
clinic directors in hospitals; deans in universities; and division managers, plant managers, and branch
sales managers in businesses. Middle managers develop and implement action plans consistent with
company objectives, such as increasing market presence.

Figure 1:
Levels of
Management

 Low level: The initial management job that most people attain is typically a first-line management
position, such as a team leader or supervisor – a person in charge of smaller work units composed of
hands-on workers. Job titles for these first-line managers vary greatly, but include such designations
as department head, group leader, and unit leader. First-line managers ensure that their work teams or
units meet performance objectives, such as producing a set number of items at a given quality, that are
consistent with the plans of middle and top management.

Figure 2: Kenya’s Vision 2030 and its pillars

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Functions of Managers

Managers just don’t go out and haphazardly perform their responsibilities. Good managers discover how to
master five basic functions: planning, organizing, staffing, leading, and controlling.

 Planning: This step involves mapping out exactly how to achieve a particular goal. Say, for example,
that the organization’s goal is to improve company sales. The manager first needs to decide which
steps are necessary to accomplish that goal. These steps may include increasing advertising, inventory,
and sales staff. These necessary steps are developed into a plan. When the plan is in place, the
manager can follow it to accomplish the goal of improving company sales.
 Organizing: After a plan is in place, a manager needs to organize her team and materials according
to her plan. Assigning work and granting authority are two important elements of organizing.
 Staffing: After a manager discerns his area’s needs, he may decide to beef up his staffing by recruiting,
selecting, training, and developing employees.
A manager in a large organization often works
with the company’s human resources
department to accomplish this goal.
 Leading: A manager needs to do more than
just plan, organize, and staff her team to
achieve a goal. She must also lead. Leading
involves motivating, communicating,
guiding, and encouraging. It requires the
manager to coach, assist, and problem solve
with employees.
 Controlling: After the other elements are in
place, a manager’s job is not finished. He
needs to continuously check results against
goals and
take any corrective actions necessary to Figure 3: The Functions of Management
make sure that his area’s plans remain on
track.

All managers at all levels of every organization perform these functions, but the amount of time a manager
spends on each one depends on both the level of management and the specific organization.

Managerial Roles
A manager wears many hats. Not only is a manager a team leader, but he or she is also a planner, organizer,
cheerleader, coach, problem solver, and decision maker – all rolled into one. And these are just a few of a
manager’s roles. A role is an organized set of behaviours. In his classic book, The Nature of Managerial
Work, Henry Mintzberg describes a set of ten roles that a manager fills.

Henry Mintzberg reduced to 10 roles the thousands of specific tasks that managers need to perform as they
plan, organize, staff, lead, and control organizational resources. Mintzberg grouped the 10 roles into three
broad categories: interpersonal, informational, and decisional. Managers often perform many of these
roles from minute to minute while engaged in the more general functions of planning, organizing, staffing,
leading, or controlling.

Interpersonal roles are assumed by managers to provide direction and supervision for both employees and
the organization as a whole. These roles arise from the manager’s formal authority, and include:

(i) The figurehead or ceremonial role: a large part of a chief executive’s time is spent representing
the company at dinners and conferences; he performs a number of routine duties of a legal or
social nature such as greeting visitors and signing legal documents.
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(ii) The leader role involves hiring, firing and training staff; motivating the employees of the organization,
that is, to help the employees reach their full potential; reconciling individual needs with the
requirements of the organization.
(iii) The liaison role is what managers perform when making contacts outside the vertical chain of
command. As a liaison, managers link and coordinate the activities of people and groups both
inside and outside the organization. Mintzberg says that the purpose of these contacts is to build up
an informal information system, but at the same time they are a means of extending influence both
within an organization and outside.

Figure 4:

Henry
Mintzberg’s
Managerial
Roles.

Informational roles are closely associated with the tasks necessary to obtain and transmit information. As a
leader, a manager has access to every member of staff, and is likely to have more external contacts than any
of them. A manager’s liaison contacts means that he or she is a channel of information from inside the
department to outside and vice versa. Mintzberg, in an article published in the Harvard Review in 1975
states:

“The manager does not leave meetings or hang up the telephone in order to get back to work. In a large part
communication is his work.” Mintzberg identifies three types of informational roles:

(i) The manager monitors the environment, and receives information from subordinates or peers in other
departments. Note that much of this information is of an informal nature, derived from his or her
network of contacts. It might be gossip or speculation. Managers monitor activities of consultants and
organize and control them on a global level.
(ii) As a disseminator, the manager disseminates information, which he or she has acquired both formally
through the vertical chain of command and informally through the network of contacts, to
subordinates in the department. He also makes memos and calls other personnel.
(iii) As a spokesman, the manager provides information to interested parties, either within or outside the
organization. He represents the company or division to the outside. This can be the media, other
companies, clients, or even to the supply chain.

Decisional roles: The manager’s formal authority and access to information means that no one else is in a
better position to take decisions relating to the work of the department. Decisional roles are closely
associated with the methods mangers use to plan strategy and utilize resources.
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(i) A manager acts as a sort of entrepreneur by initiating projects, quite possibly of a small scale, a
number of which may be on the go at any one time, to improve the department or to help it react to a
changed environment.
(ii) A manager has to respond to pressures over which the department has no control. A manager is
therefore a disturbance handler, taking decisions in unusual situations which are impossible to
predict. He is the one to contact when there are any disruptions. For example, when a production
line fails or when the supply chains fail to deliver on time.
(iii) A manager takes decisions relating to the allocation of scarce resources. As a resource allocator, the
manager determines the department’s direction, and authorizes decisions taken by subordinates. He
ensures that each process receives a fair and good number of resources in order to use for their sub
process of transformation.
(iv) Negotiation both inside and outside the organization takes up a great deal of management time, but is
a vital component of managerial work. Managers also act as a negotiator¸ reaching agreements with
other managers or groups claiming the first right to resources, or with the organization and outside
groups such as suppliers or customers.

The supervisor performs these managerial roles but with different emphasis than higher managers.
Supervisory management is more focused and short-term in outlook. Thus, the figurehead role becomes
less significant and the disturbance handler and negotiator roles increase in importance for the supervisor.
Since leadership permeates all activities, the leader role is among the most important of all roles at all levels
of management.

Skills Needed by Managers

Not everyone can be a manager. Certain skills, or abilities to translate knowledge into action that results in
desired performance, are required to help other employees become more productive. These skills fall under
the following categories:

 Technical: This skill requires the ability to use a special proficiency or expertise to perform particular
tasks. Accountants, engineers, market researchers, and computer scientists, as examples, possess
technical skills. Managers acquire these skills initially through formal education and then further
develop them through training and job experience. Technical skills are most important at lower levels
of management.

Figure 5: Skills Needed by Managers at Different Levels

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 Human: This skill demonstrates the ability to work well in cooperation with others. Human skills
emerge in the workplace as a spirit of trust, enthusiasm, and genuine involvement in interpersonal
relationships. A manager with good human skills has a high degree of self-awareness and a capacity to
understand or empathize with the feelings of others. Some managers are naturally born with great
human skills, while others improve their skills through classes or experience. No matter how human
skills are acquired, they are critical for all managers because of the highly interpersonal nature of
managerial work.
 Conceptual: This skill calls for the ability to think analytically. Analytical skills enable managers to
break down problems into smaller parts, to see the relations among the parts, and to recognize the
implications of any one problem for others. As managers assume ever-higher responsibilities in
organizations, they must deal with more ambiguous problems that have long-term consequences.
Again, managers may acquire these skills initially through formal education and then further
develop them by training and job experience. The higher the management level, the more important
conceptual skills.

Importance of Management
 It helps in Achieving Group Goals – It arranges the factors of production, assembles and organizes
the resources, integrates the resources in effective manner to achieve goals. It directs group efforts
towards achievement of pre-determined goals. By defining objective of organization clearly there
would be no wastage of time, money and effort. Management converts disorganized resources of men,
machines, money etc. into useful enterprise. These resources are coordinated, directed and controlled
in such a manner that enterprise work towards attainment of goals.
 Optimum Utilization of Resources – Management utilizes all the physical & human resources
productively. This leads to efficacy in management. Management provides maximum utilization of
scarce resources by selecting its best possible alternate use in industry from out of various uses. It
makes use of experts, professional and these services leads to use of their skills, knowledge, and
proper utilization and avoids wastage. If employees and machines are producing its maximum there is
no under employment of any resources.
 Reduces Costs – It gets maximum results through minimum input by proper planning and by using
minimum input & getting maximum output. Management uses physical, human and financial
resources in such a manner which results in best combination. This helps in cost reduction.
Establishes Sound Organization – No overlapping of efforts (smooth and coordinated functions). To
establish sound organizational structure is one of the objective of management which is in tune with
objective of organization and for fulfilment of this, it establishes effective authority & responsibility
relationship i.e. who is accountable to whom, who can give instructions to whom, who are superiors &
who are subordinates. Management fills up various positions with right persons, having right skills,
training and qualification. All jobs should be cleared to everyone.
 Establishes Equilibrium – It enables the organization to survive in changing environment. It keeps in
touch with the changing environment. With the change is external environment, the initial co-
ordination of organization must be changed. So it adapts organization to changing demand of market /
changing needs of societies. It is responsible for growth and survival of organization.
 Essentials for Prosperity of Society – Efficient management leads to better economical production
which helps in turn to increase the welfare of people. Good management makes a difficult task easier
by avoiding wastage of scarce resource. It improves standard of living. It increases the profit which is
beneficial to business and society will get maximum output at minimum cost by creating employment
opportunities which generate income in hands. Organization comes with new products and researches
beneficial for society.

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The Evolution of Management Thought

The schools of management thought are theoretical frameworks for the study of management. Each of the
schools of management thought are based on somewhat different assumptions about human beings and the
organizations for which they work. Since the formal study of management began late in the 19th century,
the study of management has progressed through several stages as scholars and practitioners working in
different eras focused on what they
believed to be important aspects of
good management practice. Over time,
management thinkers have sought
ways to organize and classify the
voluminous information about
management that has been collected
and disseminated. These attempts at
classification have resulted in the
identification of management schools.

Disagreement exists as to the

exact number of management
schools.
Different writers have identified as
few as three and as many as twelve. Table 1: Five Major Schools of Management Thought
Those discussed below include (1)
the
classical school, (2) the behavioural school, (3) the quantitative or management science school, (4) the
systems school, (5) and the contingency school. The formal study of management is largely a twentieth-
century phenomenon, and to some degree the relatively large number of management schools of thought
reflect a lack of consensus among management scholars about basic questions of theory and practice.

Table 1 provides a brief summary of five major schools of management thought, their approximate dates of
origin, and their relative areas of emphasis. The following sections discuss each of the management.

Classical Schools of Management

The classical school is the oldest formal school of management thought. Its roots pre-date the twentieth
century. It developed during the Industrial Revolution when new problems related to the factory system
began to appear. Managers were unsure of how to train employees or deal with increased labour
dissatisfaction, so they began to test solutions. As a result, the classical management theory developed from
efforts to find the “one best way” to perform and manage tasks. The classical school of thought generally
concerns ways to manage work and organizations more efficiently. Three areas of study that can be grouped
under the classical school are scientific management, administrative management, and bureaucratic
management.

Classical scientific school

In the late 19th century, management decisions were often arbitrary and workers often worked at an
intentionally slow pace. There was little in the way of systematic management and workers and management
were often in conflict. Scientific management was introduced in an attempt to create a mental revolution in
the workplace. It can be defined as the systematic study of work methods in order to improve efficiency.
Frederick W. Taylor was its main proponent. Other major contributors were Frank Gilbreth, Lillian Gilbreth,
and Henry Gantt.

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The classical scientific branch arose because of the need to increase productivity and efficiency. The
emphasis was on trying to find the best way to get the most work done by examining how the work process
was actually accomplished and by scrutinizing the skills of the workforce.

Frederick Winslow Taylor (1856 - 1915) is often called the “father of scientific management”. Born
in Boston Massachusetts, he spent the greater part of his life working on the problems of achieving
greater efficiency on the shop-floor.

The solutions he came up with were based directly on his own experience at
work, initially as a shop-floor worker himself and later as a manager. His
career began as an apprentice in engineering. He later moved to Midvale
Steel Company where, in the course of 11 years, he rose from labourer to
shop Superintendent (Chief Engineer). It was during this time that Taylor’s
ideas of ‘scientific management’ were born. He retired at age 45 and spent
the remaining 14 years of his life as an unpaid consultant and lecturer,
promoting his ideas.

In 1911, Frederick Taylor published his work, The Principles of Scientific

Management, in which he described how the application of the scientific
method to the management of workers greatly could improve
productivity. Scientific management methods called for optimizing the Fredrick Winslow Taylor
way that tasks
were performed and simplifying the jobs enough so that workers could be trained to perform their
specialized sequence of motions in the one “best” way.

Prior to scientific management, work was performed by skilled craftsmen who had learned their jobs in
lengthy apprenticeships. They made their own decisions about how their job was to be performed. Scientific
management took away much of this autonomy and converted skilled crafts into a series of simplified jobs
that could be performed by unskilled workers who easily could be trained for the tasks.

Taylor became interested in improving worker productivity early in his career when he observed gross
inefficiencies during his contact with steel workers. He argued that even the most basic, mindless tasks
could be planned in a way that dramatically would increase productivity, and that scientific management of
the work was more effective than the “initiative and incentive” method of motivating workers. The
initiative and incentive method offered an incentive to increase productivity but placed the responsibility on
the worker to figure out how to do it.

To scientifically determine the optimal way to perform a job, Taylor performed experiments that he called
time studies, (also known as time and motion studies). These studies were characterized by the use of a
stopwatch to time a worker’s sequence of motions, with the goal of determining the one best way to perform
a job.

As an example, in 1898, Taylor calculated how much iron, from rail cars, Bethlehem Steel plant workers
could be offloading if they were using the correct movements, tools, and steps. The result was an amazing
47.5 tons per day instead of the mere 12.5 tons each worker had been averaging. In addition, by redesigning
the shovels the workers used, Taylor was able to increase the length of work time and therefore decrease the
number of people shovelling from 500 to 140. Lastly, he developed an incentive system that paid workers
more money for meeting the new standard. Productivity at Bethlehem Steel shot up overnight. As a result,
many theorists followed Taylor’s philosophy when developing their own principles of management.

Like Taylor, Henry Gantt was an engineer and worked with him (Taylor) at Midvale Steel Company until
1901 when he formed his own consulting engineering firm. He developed the Gantt chart, which is used for
scheduling multiple overlapping tasks over a time period. He focused on motivational schemes, emphasizing
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the greater effectiveness of rewards for good work (rather than penalties for poor work). He developed a pay
incentive system with a guaranteed minimum wage and bonus systems for people on fixed wages. Also,
Gantt focused on the importance of the qualities of leadership and management skills in building effective
industrial organizations.

Frank and Lillian Gilbreth, a husband-and-wife team, studied job motions. In Frank’s early career as an
apprentice bricklayer, he was interested in standardization and method study. He watched bricklayers and
saw that some workers were slow and inefficient, while others were very productive. He discovered that
each bricklayer used a different set of motions to lay bricks. From his observations, Frank isolated the basic
movements necessary to do the job and eliminated unnecessary motions. Workers using these movements
raised their output from 1,000 to 2,700 bricks per day. This was the first motion study designed to isolate
the best possible method of performing a given job. Later, Frank and his wife Lillian studied job motions
using a motion-picture camera and a split-second clock. When her husband died at the age of 56, Lillian
continued their work.

Principles of Scientific Management

Taylor evolved following principles of scientific management:

1. Replacing Rule of Thumb with Science. Rule-of-Thumb was the technique of pre-scientific
management era. Taylor maintained that the rule of thumb should be replaced by organised knowledge.
While rule of thumb emphasises estimation, scientific method denotes precision in determining any aspect
of work. This should be done with the help of careful scientific investigation. Exactness of various aspects
of work like day’s fair work, standardisation in work, differential piece rate for payment etc, is the basic care
of scientific management. Therefore it is essential that these should be measured precisely and not on mere
estimates.

2. Harmony in Group Action. Taylor emphasised that harmony rather than discord should be obtained
in group action. Harmony means that a group should work as a unit and contribute to the maximum.
Within it there should be mutual give and take situation and proper understanding.

3. Co-operation. Scientific management requires that parts of industrial body co-operate with each other.
Scientific management is based on mutual confidence, co-operation and goodwill. It requires a complete
mental revolution on the part of both workers and management as to their attitude and outlook towards one
another and also towards their work. Taylor suggested, “substitution of war for peace, heartly and brotherly
co-operation for contentment and strife, replacement of suspicious watchfulness with mutual confidence, of
becoming friends instead of enemies.”

4. Maximum Output. Scientific management involves continuous increase in production and productivity
instead of restricted production either by management or by worker. Taylor hated inefficiency and deliberate
curtailment of production. His concern was with the large size of the cake. In his opinion, “there is hardly
any worse crime to my mind than that of deliberately restricting output.” He decried quarrel over production
but welcomed quarrel over distribution, provided the product to be distributed had outgrown the size.
Therefore, he advised the management and workers to “turn their attention towards increasing the size of the
surplus until the size of the surplus becomes so large that it is necessary to quarrel over how it shall be
divided.”

5. Development of Workers. In scientific management, all workers should be developed to the fullest
extent possible for their own and for the company’s highest prosperity. Development of workers
requires their scientific selection and providing them training at the workplace. Training should be
provided to workers to keep them fully fit according to the requirement of new methods of working
which may be different from the non-scientific methods.
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But opposition to scientific management was so grave that Taylor had to defend it before a special
Congressional Committee in 1912. However, Taylor’s thinking had created awareness among various
managers and thinkers to bring changes in old methods of working.

Scientific management had a tremendous influence on management practice in the early twentieth century.
Although it does not represent a complete theory of management, it has contributed to the study of
management and organizations in many areas, including human resource management and industrial
engineering. Many of the tenets of scientific management are still valid today.

Classical administrative school

Whereas scientific management focused on the productivity of individuals, the classical administrative
approach concentrates on the total organization. The emphasis is on the development of managerial
principles rather than work methods.

Contributors to this school of thought include Henri Fayol, Mary Parker Follett, and Chester I. Barnard.
These theorists studied the flow of information within an organization and emphasized the importance of
understanding how an organization operated.

Henri Fayol (1841-1925), a French engineer and director of mines, was little known outside France until
1949 when Constance Storrs published “General and Industrial Management”, her translation of Fayol’s
1916 “Administration Industrielle et Generale”. He graduated from the mining academy of St. Etienne
(École des Mines de Saint-Étienne) in 1860. The nineteen-year old engineer started at the mining company
Compagnie de Commentry-Fourchambeau-Decazeville, ultimately acting as its managing director from
1888 to 1918. Based largely on his own management experience, he developed his concept of administration.

The company was in difficulty but Fayol turned the operation round.
On retirement he published his work – a comprehensive theory of
administration – described and classified administrative management
roles and processes then became recognised and referenced by others in
the growing discourse about management. He is frequently seen as a
key, early contributor to a classical or administrative management
school of thought (even though he himself would never have
recognised such a “school”).

His theorising about administration was built on personal observation

and experience of what worked well in terms of organisation. His
aspiration for an “administrative science” sought a consistent set of
principles that all organizations must apply in order to run properly. Henri Fayol

Both Fayol and Taylor argued that principles existed which all organisations – in order to operate and be
administered efficiently – could implement. This type of assertion typifies a “one best way” approach to
management thinking. Fayol’s five functions are still relevant to discussion today about management roles
and action.
1. to forecast and plan
examine the future and draw up plans of action
2. to organise
build up the structure, material and human of the undertaking
3. to command
maintain activity among the personnel

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4. to co-ordinate
bind together, unify and harmonise activity and effort
5. to control
see that everything occurs in conformity with policy and practise

Based on his management experiences, Fayol also synthesised 14 principles for organisational design and
effective administration. These principles provide modern-day managers with general guidelines on how a
supervisor should organize her department and manage her staff. Although later research has created
controversy over many of the following principles, they are still widely used in management theories. The
14 principles are:

 Specialisation/division of labour
A principle of work allocation and specialisation in order to concentrate activities to enable
specialisation of skills and understandings, more work focus and efficiency.
 Authority with corresponding responsibility
If responsibilities are allocated then the post holder needs the requisite authority to carry these out
including the right to require others in the area of responsibility to undertake duties. A manager should
never be given authority without responsibility--and also should never be given responsibility without
the associated authority to get the work done.
 Discipline
Obedience and respect within an organization are absolutely essential. Good discipline requires
managers to apply sanctions whenever violations become apparent. Without it – standards, consistency
of action, adherence to rules and values – no enterprise could prosper.
 Unity of command
The idea is that an employee should receive instructions from one superior only. This generalisation
still holds – even where we are involved with team and matrix structures which involve reporting to
more than one boss – or being accountable to several clients. The basic concern is that tensions and
dilemmas arise where we report to two or more bosses. One boss may want X, the other Y and the
subordinate is caught between the devil and the deep blue sea.
 Unity of direction
The unity of command idea of having one head (chief executive, cabinet consensus) with agreed
purposes and objectives and one plan for a group of activities is clear.
 Subordination of individual interest to the general interest
Fayol’s line was that one employee’s interests or those of one group should not prevail over the
organisation as a whole. Fayol’s work assumes a shared set of values by people in the organisation – a
unitarism where the reasons for organisational activities and decisions are in some way neutral and
reasonable.
 Remuneration of staff
The general principle is that levels of compensation should be “fair” and as far as possible afford
satisfaction both to the staff and the firm (in terms of its cost structures and desire for
profitability/surplus).
 Centralisation
Centralisation is essential to the organisation and a natural consequence of organising. This issue does
not go away even where flatter, devolved organisations occur. Decentralisation – is frequently
centralised-decentralisation! The modes of control over the actions and results of devolved
organisations are still matters requiring considerable attention.
 Scalar chain/line of authority
The scalar chain of command of reporting relationships from top executive to the ordinary shop
operative or driver needs to be sensible, clear and understood.
 Order
Basically an organisation “should” provide an orderly place for each individual member – who needs
to see how their role fits into the organisation and be confident, able to predict the organisations
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behaviour towards them. Thus policies, rules, instructions and actions should be understandable
and understood. Orderliness implies steady evolutionary movement rather than wild, anxiety
provoking, unpredictable movement.
 Equity
In organizations, equity is a combination of kindliness and justice. Both equity and equality
of treatment should be considered when dealing with employees.
 Stability of tenure
Time is needed for the employee to adapt to his/her work and perform it effectively. Stability of
tenure promotes loyalty to the organisation, its purposes and values.
 Initiative
Thinking out a plan and ensuring its success is an extremely strong motivator. Zeal, energy,
and initiative are desired at all levels of the organizational ladder.
 Esprit de corps
These French words mean team spirit. The principle roughly translates to “in union there is strength”.
Teamwork is fundamentally important to an organization. Work teams and extensive face-to-face
verbal communication encourages teamwork.

Mary Parker Follett stressed the importance of an organization establishing common goals for its
employees. However, she also began to think somewhat differently than the other theorists of her day,
discarding command-style hierarchical organizations where employees were treated like robots. She began
to talk about such things as ethics, power, and leadership. She encouraged managers to allow employees to
participate in decision making. She stressed the importance of people rather than techniques – a concept
very much before her time. As a result, she was a pioneer and often not taken seriously by management
scholars of her time. But times change, and innovative ideas from the past suddenly take on new meanings.
Much of what managers do today is based on the fundamentals that Follett established more than 80 years
ago.

Chester Barnard, who was president of New Jersey Bell Telephone Company, introduced the idea of the
informal organization – cliques (exclusive groups of people) that naturally form within a company. He felt
that these informal organizations provided necessary and vital communication functions for the overall
organization and that they could help the organization accomplish its goals.

Barnard felt that it was particularly important for managers to develop a sense of common purpose where a
willingness to cooperate is strongly encouraged. He is credited with developing the acceptance theory of
management, which emphasizes the willingness of employees to accept that managers have legitimate
authority to act. Barnard felt that four factors affected the willingness of employees to accept authority:

 The employees must understand the communication.

 The employees accept the communication as being consistent with the organization’s purposes.
 The employees feel that their actions will be consistent with the needs and desires of the other
employees.
 The employees feel that they are mentally and physically able to carry out the order.

Barnard’s sympathy for and understanding of employee needs positioned him as a bridge to the behavioural
school of management, the next school of thought to emerge.

Classical bureaucratic management school

Max Weber (1864 - 1920) was the major contributor to bureaucratic management. In the late 1800s, Max
Weber disliked that many European organizations were managed on a “personal” family-like basis and that
employees were loyal to individual supervisors rather than to the organization. He believed that
organizations should be managed impersonally and that a formal organizational structure, where specific
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rules were followed, was important. In other words, he didn’t think that authority should be based on a
person’s personality. He thought authority should be something that was part of a person’s job and passed
from individual to individual as one person left and another took over. This non-personal, objective form of
organization was called a bureaucracy.

Weber believed that all bureaucracies have the following characteristics:

 A well-defined hierarchy. All positions within a bureaucracy are structured in a way that permits the
higher positions to supervise and control the lower positions. This clear chain of command facilitates
control and order throughout the organization.
 Division of labour and specialization. All responsibilities in an organization are specialized so
that each employee has the necessary expertise to do a particular task.
 Rules and regulations. Standard operating procedures govern all
organizational activities to provide certainty and facilitate
coordination.
 Impersonal relationships between managers and employees.
Managers should maintain an impersonal relationship with employees so
that favouritism and personal prejudice do not influence decisions.
 Competence. Competence, not “who you know,” should be the basis for all
decisions made in hiring, job assignments, and promotions in order to foster
ability and merit as the primary characteristics of a bureaucratic
organization.
 Records. A bureaucracy needs to maintain complete files regarding all
its activities.
Marx Weber
Bureaucratic management focuses on the ideal form of organization. Based on
observation, Weber concluded that many early organizations were inefficiently managed, with decisions
based on personal relationships and loyalty. He proposed that a form of organization, called a bureaucracy,
characterized by division of labour, hierarchy, formalized rules, impersonality, and the selection and
promotion of employees based on ability, would lead to more efficient management. Weber also contended
that managers’ authority in an organization should be based not on tradition or charisma but on the position
held by managers in the organizational hierarchy.

Bureaucracy has come to stand for inflexibility and waste, but Weber did not advocate or favour the
excesses found in many bureaucratic organizations today. Weber’s ideas formed the basis for modern
organization theory and are still descriptive of some organizations.

Behavioural Management Theory

As management research continued in the 20th century, questions began to come up regarding the
interactions and motivations of the individual within organizations. Management principles developed
during the classical period were simply not useful in dealing with many management situations and could
not explain the behaviour of individual employees. In short, classical theory ignored employee motivation
and behaviour. As a result, the behavioural school was a natural outgrowth of this revolutionary
management experiment.

The behavioural management theory is often called the human relations movement because it
addresses the human dimension of work. Behavioural theorists believed that a better understanding of
human behaviour at work, such as motivation, conflict, expectations, and group dynamics, improved
productivity.

The theorists who contributed to this school viewed employees as individuals, resources, and assets to be
developed and worked with – not as machines, as in the past. Several individuals and experiments
contributed to this theory.
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Elton Mayo’s contributions came as part of the Hawthorne studies, a series of experiments that rigorously
applied classical management theory only to reveal its shortcomings. The Hawthorne experiments consisted
of two studies conducted at the Hawthorne Works of the Western Electric Company in Chicago from 1924
to 1932. The first study was conducted by a group of engineers seeking to determine the relationship of
lighting levels to worker productivity. Mayo’s team selected, as their experimental group, six female
workers from the Relay Assembly Department, placed them in a separate room with the same type of
production facilities as in the main department, and proceeded to vary their working conditions. Even under
moonlight conditions, workers could maintain their norm. To clinch this point scientifically, the researchers
set up two groups, a control group working under constant illumination and an experimental one working
under decreasing illumination. Surprisingly enough, they discovered that worker productivity increased as
the lighting levels decreased – that is, until the employees were unable to see what they were doing, after
which performance naturally declined.

A few years later, a second group of experiments began. Harvard researchers Elton Mayo, an Australian
anthropologist from Harvard, and F. J. Roethlisberger supervised a group of five women in a bank wiring
room. They gave the women special privileges, such as the right to leave their workstations without
permission, take rest periods, enjoy free lunches, and have variations in pay levels and workdays. This
experiment also resulted in significantly increased rates of productivity.

In this case, Mayo and Roethlisberger concluded that the increase in productivity resulted from the
supervisory arrangement rather than the changes in lighting or other associated worker benefits. Because the
experimenters became the primary supervisors of the employees, the intense interest they displayed for the
workers was the basis for the increased motivation and resulting productivity. Essentially, the experimenters
became a part of the study and influenced its outcome. This is the origin of the term Hawthorne effect,
which describes the special attention researchers give to a study’s subjects and the impact that attention has
on the study’s findings. The Hawthorne effect is a psychological phenomenon that produces an
improvement in human behaviour or performance as a result of increased attention from superiors, clients
or colleagues. In a collaborative effort, the effect can enhance results by creating a sense of teamwork and
common purpose. Roethlisberger described “the Hawthorne effect” as the phenomenon in which subjects in
behavioural studies change their performance in response to being observed.

The general conclusion from the Hawthorne studies was that human relations and the social needs of
workers are crucial aspects of business management. This principle of human motivation helped
revolutionize theories and practices of management.

Abraham Maslow, a practicing psychologist, developed one of the most widely recognized need theories,
a theory of motivation based upon a consideration of human needs. His theory of human needs had three
assumptions:

 Human needs are never completely satisfied.

 Human behaviour is purposeful and is motivated by the need for satisfaction.
 Needs can be classified according to a hierarchical structure of importance, from the lowest to highest.

Maslow broke down the needs hierarchy into five specific areas:

 Physiological needs. Maslow grouped all physical needs necessary for maintaining basic human well-
being, such as food and drink, into this category. After the need is satisfied, however, it is no longer is
a motivator.
 Safety needs. These needs include the need for basic security, stability, protection, and freedom from
fear. A normal state exists for an individual to have all these needs generally satisfied. Otherwise, they
become primary motivators.

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 Belonging and love needs. After the physical and safety needs are satisfied and are no longer
motivators, the need for belonging and love emerges as a primary motivator. The individual strives
to establish meaningful relationships with significant others.
 Esteem needs. An individual must develop self-confidence and wants to achieve status, reputation,
fame, and glory.
 Self-actualization needs. Assuming that all the previous needs in the hierarchy are satisfied,
an individual feels a need to find himself.

Maslow’s hierarchy of needs theory helped managers visualize employee motivation.

Douglas McGregor was heavily influenced by both the Hawthorne studies and Maslow. He believed that
two basic kinds of managers exist. One type, the Theory X manager, has a negative view of employees and
assumes that they are lazy, untrustworthy, and incapable of assuming responsibility. On the other hand, the
Theory Y manager assumes that employees are not only trustworthy and capable of assuming
responsibility, but also have high levels of motivation.

An important aspect of McGregor’s idea was his belief that managers who hold either set of assumptions
can create self-fulfilling prophecies – that through their behaviour, these managers create situations where
subordinates act in ways that confirm the manager’s original expectations.

As a group, these theorists discovered that people worked for inner satisfaction and not materialistic rewards,
shifting the focus to the role of individuals in an organization’s performance.

Quantitative School of Management

During World War II, mathematicians, physicists, and other scientists joined together to solve military
problems. The quantitative approach to management involves the use of quantitative techniques, such as
statistics, information models, and computer simulations, to improve decision making. This school consists
of several branches, described in the following sections.

Management science

The management science school emerged to treat the problems associated with global warfare. The
quantitative school of management is a result of the research conducted during World War II. It developed
as strategists tried to apply scientific knowledge and methods to the complex problems of war. Industry
began to apply management science after the war. George Dantzig developed linear programming, an
algebraic method to determine the optimal allocation of scarce resources. Other tools used in industry
include inventory control theory, goal programming, queuing models, and simulation. The advent of the
computer made many management science tools and concepts more practical for industry. Today, this view
encourages managers to use mathematics, statistics, and other quantitative techniques to make management
decisions.

Managers can use computer models to figure out the best way to do something, saving both money and time.
Managers use several science applications.

 Mathematical forecasting helps make projections that are useful in the planning process.
 Inventory modelling helps control inventories by mathematically establishing how and when to order a
product.
 Queuing theory helps allocate service personnel or workstations to minimize customer waiting
and service cost.

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Operations management

Operations management focuses on managing the process of transforming materials, labour, and capital into
useful goods and/or services. It has its roots in scientific management but became an identifiable area of
management study after World War II. Effective operations management is a concern for both
manufacturing and service organizations. The resource inputs, or factors of production, include the wide
variety of raw materials, technologies, capital information, and people needed to create finished products.
The transformation process, in turn, is the actual set of operations or activities through which various
resources are utilized to produce finished goods or services of value to customers or clients.

Operations management today pays close attention to the demands of quality, customer service, and
competition. The process begins with attention to the needs of customers: What do they want? Where do
they want it? When do they want it? Based on the answers to these questions, managers line up resources
and take any action necessary to meet customer expectations.

Major areas of study within operations management include capacity planning, facilities location, facilities
layout, materials requirement planning, scheduling, purchasing and inventory control, quality control,
computer integrated manufacturing, just-in-time inventory systems, and flexible manufacturing systems.

Management information systems

Management information systems (MIS) is the most recent subfield of the quantitative school. A
management information system focuses on providing needed information to managers in a useful format
and at the proper time. MIS organizes past, present, and projected data from both internal and external
sources and processes it into usable information, which it then makes available to managers at all
organizational levels. The information systems are also able to organize data into usable and accessible
formats. As a result, managers can identify alternatives quickly, evaluate alternatives by using a spreadsheet
program, pose a series of “what-if” questions, and finally, select the best alternatives based on the answers
to these questions.

Systems management theory

A system is an interrelated set of elements functioning as a whole. The systems school focuses on
understanding the organization as an open system that transforms inputs into outputs. It has had a significant
effect on management science. An organization as a system is composed of four elements:

 Inputs — material or human resources

 Transformation processes — technological and managerial processes
 Outputs — products or services
 Feedback — reactions from the environment

In relationship to an organization, inputs include resources such as raw materials, money, technologies, and
people. These inputs go through a transformation process where they are planned, organized, motivated, and
controlled to ultimately meet the organization’s goals. The outputs are the products or services designed to
enhance the quality of life or productivity for customers/clients. Feedback includes comments from
customers or clients using the products. This overall systems framework applies to any department or
program in the overall organization.

The systems school began to have a strong impact on management thought in the 1960s as a way of thinking
about managing techniques that would allow managers to relate different specialties and parts of the
company to one another, as well as to external environmental factors. The systems school focuses on the
organization as a whole, its interaction with the environment, and its need to achieve equilibrium. General
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systems theory received a great deal of attention in the 1960s, but its influence on management thought has
diminished somewhat. It has been criticized as too abstract and too complex. However, many of the ideas
inherent in the systems school formed the basis for the contingency school of management.

The systems theory encourages managers to look at the organization from a broader perspective. Managers
are beginning to recognize the various parts of the organization, and, in particular, the interrelations of the
parts.

Contemporary system theorists find it helpful to analyze the effectiveness of organizations according to the
degree that they are open or closed. The following terminology is important to your understanding of the
systems approach:

 An organization that interacts little with its external environment (outside environment) and
therefore receives little feedback from it is called a closed system.
 An open system, in contrast, interacts continually with its environment. Therefore, it is well informed
about changes within its surroundings and its position relative to these changes.
 A subsystem is any system that is part of a larger one.
 Entropy is the tendency of systems to deteriorate or break down over time.
 Synergy is the ability of the whole system to equal more than the sum of its parts.

Contingency School of Management

The contingency school of management can be summarized as an “it all depends” approach. The appropriate
management actions and approaches depend on the situation. Managers with a contingency view use a
flexible approach, draw on a variety of theories and experiences, and evaluate many options as they solve
problems.

Contingency management emphasizes that there is no one best way to manage and that it depends on
various situational factors, such as the external environment, technology, organizational characteristics,
characteristics of the manager, and characteristics of the subordinates. In the contingency perspective,
managers are faced with the task of determining which managerial approach is likely to be most effective in
a given situation. For example, the approach used to manage a group of teenagers working in a fast-food
restaurant would be very different from the approach used to manage a medical research team trying to find
a cure for a disease. Contingency theorists often implicitly or explicitly criticize the classical school for its
emphasis on the universality of management principles; however, most classical writers recognized the
need to consider aspects of the situation when applying management principles. Contingency thinking
avoids the classical “one best way” arguments and recognizes the need to understand situational differences
and respond appropriately to them.

The contingency school originated in the 1960s. It has been applied primarily to management issues such as
organizational design, job design, motivation, and leadership style. For example, optimal organizational
structure has been theorized to depend upon organizational size, technology, and environmental uncertainty;
optimal leadership style, meanwhile, has been theorized to depend upon a variety of factors, including task
structure, position power, characteristics of the work group, characteristics of individual subordinates,
quality requirements, and problem structure, to name a few. A few of the major contributors to this school
of management thought include Joan Woodward, Paul Lawrence, Jay Lorsch, and Fred Fiedler, among
many others.

Contemporary “Schools” of Management Thought

Management research and practice continues to evolve and new approaches to the study of management
continue to be advanced. This section briefly reviews two contemporary approaches: total quality
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management (TQM) and the learning organization. While neither of these management approaches offer a
complete theory of management, they do offer additional insights into the management field.

Total Quality Management

Total quality management (TQM) is a philosophy or approach to management that focuses on managing the
entire organization to deliver quality goods and services to customers. This approach to management was
implemented in Japan after World War II and was a major factor in their economic renaissance. TQM has at
least four major elements, including 1. Put customers first, 2. Make Continuous Improvement, 3. Aim for
zero defects, and 4. Training and development. Employee involvement is essential in preventing quality
problems before they occur. A customer focus means that the organization must attempt to determine
customer needs and wants and deliver products and services that address them.

Benchmarking means that the organization is always seeking out other organizations that perform a function
or process more effectively and using them as a standard, or benchmark, to judge their own performance.
The organization will also attempt to adapt or improve the processes used by other companies. Finally, a
philosophy of continuous improvement means that the organization is committed to incremental changes
and improvements over time in all areas of the organization. TQM has been implemented by many
companies worldwide and appears to have fostered performance improvements in many organizations.

Learning Organization

The contemporary organization faces unprecedented environmental and technological change. Thus, one of
the biggest challenges for organizations is to continuously change in a way that meets the demands of this
turbulent competitive environment. The learning organization can be defined as one in which all employees
are involved in identifying and solving problems, which allows the organization to continually increase its
ability to grow, learn, and achieve its purpose. The organizing principle of the learning organization is not
efficiency, but problem solving. Three key aspects of the learning organization are a team-based structure,
empowered employees, and open information. Peter Senge is one of the best-known experts on learning
organizations.

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