Learners’ Note

DEVELOPMENT OF
MANAGEMENT
AND BEHAVIORAL
THEORIES

MGT213: Management Practices and Organizational Behavior

Development of Management and Behavioral Theories

Topic 2 | Week 2

Instructor
Nadia Afroze Disha
Lecturer
BRAC Business School
BRAC University

BBA Program
Spring 2024
DEVELOPMENT OF MANAGEMENT AND BEHAVIORAL
THEORIES
Topic 2 | Week 2

THEORY AND ITS ROLE

Some people question the value of theory. Their arguments are usually based on the
assumptions that theory is abstract and of no practical use. In reality, however, theory is
important to all managers today.

Why Theory?
A theory is simply a conceptual framework for organizing knowledge and providing a blueprint
for action.

Although some theories seem abstract and irrelevant, others appear very simple and practical.
Management theories, used to build organizations and guide them toward their goals, are
grounded in reality. Practically any organization that uses assembly lines (such as Daimler
AG, Black & Decker, and Maytag) is drawing on what we describe as “scientific
management.” Many organizations, including Best Buy, Texas Instruments, and Seiko, use
concepts developed from the behavioral perspective to improve employee satisfaction and
motivation. And naming a large company that does not use one or more techniques from the
quantitative management perspective would be difficult. For example, retailers like
Kroger and Target routinely use operations management to determine how many checkout
lines they need to have open at any given time.

In addition, most managers develop and refine their own theories of how they should run
their organizations and manage the behavior of their employees.
For example, James Sinegal, founder and CEO of Costco Wholesale, believes that
paying his employees well but otherwise keeping prices as low as possible are the key
ingredients in success for his business. This belief is based essentially on his personal
theory of competition in the warehouse retailing industry.

FREDERICK W. TAYLOR’S PRINCIPLES OF SCIENTIFIC MANAGEMENT

If you had to pinpoint when modern management theory was born, 1911 might be a good
choice. That was when Frederick Winslow Taylor’s Principles of Scientific Management was
published. Its contents were widely embraced by managers around the world. Taylor’s book
described the theory of scientific management: the use of scientific methods to define
the “one best way” for a job to be done.

Taylor worked as a foreman at the Midvale and Bethlehem Steel Companies in Pennsylvania.
As a mechanical engineer with a Quaker and Puritan background, he was continually appalled
by workers’ inefficiencies. It was there that he observed what he called soldiering —
employees deliberately working at a pace slower than their capabilities. Employees
used vastly different techniques to do the same job. They often “took it easy” on the job, and
Taylor believed that worker output was only about one-third of what was possible. Virtually
no work standards existed, and workers were placed in jobs with little or no concern for
matching their abilities and aptitudes with the tasks they were required to do. Taylor set out
to remedy that by applying the scientific method to shop-floor jobs. He spent more than two
decades passionately pursuing the “one best way” for such jobs to be done.

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Taylor’s experiences at Midvale led him to define clear guidelines for improving production
efficiency. He argued that the following four principles of management (see Exhibit MH-2)
would result in prosperity for both workers and managers.

Exhibit MH-2. Taylor’s Scientific Management Principles

Develop a science for each element of an individual’s work to replace the old rule-
1.
of-thumb method.

2. Scientifically select and then train, teach, and develop the worker.

Heartily cooperate with the workers to ensure that all work is done in accordance
3.
with the principles of the science that has been developed.

Divide work and responsibility almost equally between management and workers.
4.
Management does all work for which it is better suited than the workers.

How did these scientific principles really work? Let’s look at an example.
Probably the best known example of Taylor’s scientific management efforts was the
pig iron experiment. Workers loaded “pigs” of iron (each weighing 92 lb.) onto rail
cars. Their daily average output was 12.5 tons. However, Taylor believed that by
scientifically analyzing the job to determine the “one best way” to load pig iron, output
could be increased to 47 or 48 tons per day. After scientifically applying different
combinations of procedures, techniques, and tools, Taylor succeeded in getting that
level of productivity.
How? By -
 putting the right person on the job with the correct tools and equipment,
 having the worker follow his instructions exactly, and
 motivating the worker with an economic incentive of a significantly higher daily
wage.

Using similar approaches for other jobs, Taylor was able to define the “one best way” for doing
each job. Overall, Taylor achieved consistent productivity improvements in the range of 200
percent or more. Based on his groundbreaking studies of manual work using scientific
principles, Taylor became known as the “father” of scientific management. His ideas
spread in the United States and to other countries and inspired others to study and develop
methods of scientific management.

Frederick Taylor developed this system of scientific management, which he believed would
lead to a more efficient and productive workforce. Bethlehem Steel was among the first
organizations to profit from scientific management and still practices some parts of it today.

Taylor’s work had a major impact on U.S. industry. By applying his principles, many
organizations achieved major gains in efficiency. Taylor was not without his detractors,
however. Labor argued that scientific management was just a device to get more work from

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each employee and to reduce the total number of workers needed by a firm. There was a
congressional investigation into Taylor’s ideas, and evidence suggests that he falsified some
of his findings. Nevertheless, Taylor’s work left a lasting imprint on business.

HENRI FAYOL’S PRINCIPLES OF ADMINISTRATIVE MANAGEMENT

Whereas scientific management deals with the jobs of individual employees,
administrative management focuses on managing the total organization.

In other words, the general administrative theory focused more on what managers do and
what constituted good management practice.

Exhibit MH-3. Fayol’s 14 Principles of Management

Division of work. Specialization increases output by making employees more
1.
efficient.

Authority. Managers must be able to give orders, and authority gives them this
2.
right.

Discipline. Employees must obey and respect the rules that govern the
3.
organization.

4. Unity of command. Every employee should receive orders from only one superior.

Unity of direction. The organization should have a single plan of action to guide
5.
managers and workers.

Subordination of individual interests to the general interest. The interests of

6. any one employee or group of employees should not take precedence over the
interests of the organization as a whole.

7. Remuneration. Workers must be paid a fair wage for their services.

Centralization. This term refers to the degree to which subordinates are involved
8.
in decision making.

Scalar chain. The line of authority from top management to the lowest ranks is the
9.
scalar chain.

10. Order. People and materials should be in the right place at the right time.

11. Equity. Managers should be kind and fair to their subordinates.

Stability of tenure of personnel. Management should provide orderly personnel

12.
planning and ensure that replacements are available to fill vacancies.

Initiative. Employees allowed to originate and carry out plans will exert high levels
13.
of effort.

Esprit de corps. Promoting team spirit will build harmony and unity within the
14.
organization.

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One of the primary contributors to the principles of administrative management was Henri
Fayol (1841–1925).

Henri Fayol was administrative management’s most articulate spokesperson. A French

industrialist, Fayol was unknown to U.S. managers and scholars until his most important work,
General and Industrial Management, was translated into English in 1930. Drawing on his own
managerial experience as the managing director of a large French coal-mining firm, he
attempted to systematize the practice of management to provide guidance and direction to
other managers.
Fayol wrote during the same time period as Taylor. While Taylor was concerned
with first-line managers and the scientific method, Fayol’s attention was
directed at the activities of all managers.

Fayol also was the first to identify the specific managerial functions of planning, organizing,
commanding, coordinating, and controlling. He believed that these functions accurately reflect
the core of the management process. Fayol described the practice of management as
something distinct from accounting, finance, production, distribution, and other typical
business functions. He believed that management was an activity common to all business
endeavors, government, and even the home; this belief led him to develop 14 principles of
management — fundamental rules of management that could be applied to all organizational
situations and taught in schools. These principles are shown in Exhibit MH-3.

Most contemporary management books still use this framework, and practicing managers
agree that these functions are a critical part of their jobs.

MCGREGOR’S THEORY X AND THEORY Y

Andy Grove, cofounder of Intel Corporation and now a senior advisor to the company, was
known for being open with his employees. However, he was also known for his tendency to
yell. Intel’s current CEO, Paul Otellini, said, “When Andy was yelling at you, it wasn’t because
he didn’t care about you. He was yelling at you because he wanted you to do better.” Although
managers like Andy Grove want their employees to do better, that approach might not have
been the best way to motivate employees, as McGregor’s Theory X and Theory Y suggest.

Douglas McGregor is best known for proposing two assumptions about human nature:
Theory X and Theory Y.
 Very simply, Theory X is a relatively pessimistic and negative view of people that
assumes workers have little ambition, dislike work, want to avoid responsibility, and
need to be closely controlled to work effectively.
 Theory Y is a relatively optimistic and positive view that assumes employees enjoy
work, seek out and accept responsibility, and exercise self-direction.

McGregor believed that Theory Y assumptions should guide management practice and
proposed that participation in decision making, responsible and challenging jobs, and good
group relations would maximize employee motivation.
For example, Walmart gives workers a significant role in decision making. Store
associates can provide input into what is sold locally. The company relies on associates’
judgment because they interact with customers. Walmart’s U.S. CEO stated: “There is
nothing I like better than hearing about your [associates’] jobs, your ideas, your hopes
and dreams, and frustrations, and listening to how we can make your lives easier.”
Clearly, this is an example of Walmart putting the philosophy of Theory Y management
into practice.

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Unfortunately, no evidence confirms that either set of assumptions is valid or that being a
Theory Y manager is the only way to motivate employees. For instance, JenHsunHuang,
founder of Nvidia Corporation, an innovative and successful microchip manufacturer, has been
known to use both reassuring hugs and tough love in motivating employees. He also has little
tolerance for screw-ups. In one meeting, he supposedly screamed at a project team for its
tendency to repeat mistakes. “Do you suck?” he asked the stunned employees. “Because if
you suck, just get up and say you suck.” His message, delivered in classic Theory X style, was
that if you need help, ask for it. It’s a harsh approach, but in this case, it worked as employees
knew they had to own up to their mistakes and find ways to address them.

Table 2.2 Theory X and Theory Y

Douglas McGregor developed Theory X and Theory Y. He argued that Theory X best
represented the views of scientific management and Theory Y represented the human
relations approach. McGregor believed that Theory Y was the best philosophy for all
managers.

1. People do not like work and try to avoid it.

2. People do not like work, so managers have to control, direct,
Theory X coerce, and threaten employees to get them to work toward
Assumptions organizational goals.
3. People prefer to be directed, to avoid responsibility, and to want
security; they have little ambition.

1. People do not naturally dislike work; work is a natural part of

their lives.
2. People are internally motivated to reach objectives to which they
are committed.
3. People are committed to goals to the degree that they receive
Theory Y personal rewards when they reach their objectives.
Assumptions 4. People will both seek and accept responsibility under favorable
conditions.
5. People have the capacity to be innovative in solving
organizational problems.
6. People are bright, but under most organizational conditions their
potential is underutilized.

Story to Put McGregor’s Theory X and Theory Y into Perspective

Once upon a time in a bustling corporate environment, there were two managers named
Chowdhury and Rahman. Each embodied a different managerial philosophy – Chowdhury
adhered staunchly to Theory X, while Rahman embraced the principles of Theory Y.

Chowdhury, a seasoned manager, firmly believed in Theory X. He viewed employees as

inherently lazy, unmotivated, and requiring strict supervision. Chowdhury implemented rigid
control mechanisms, closely monitoring every aspect of the team's work. Fear of punishment
and the promise of rewards were his primary motivational tools. He assumed that employees
needed constant direction and could not be trusted to work independently.

One day, a challenging project came up, and Chowdhury assigned tasks with detailed
instructions, closely overseeing every step. The team felt the pressure, and morale
plummeted. Despite achieving short-term results, the atmosphere became increasingly tense,
and turnover rates rose.

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Rahman, on the other hand, embraced Theory Y. Rahman believed that employees were
inherently motivated, creative, and could thrive in an environment that encouraged autonomy
and personal growth. Rahman focused on creating a positive work culture, fostering open
communication, and empowering team members to contribute ideas.

When faced with a similar challenging project, Rahman gathered the team for a collaborative
brainstorming session. Encouraging each member to showcase their strengths, Rahman
believed in the power of intrinsic motivation. The team felt a sense of ownership and
responsibility, leading to increased engagement and a shared commitment to success.

As time went on, it became evident that Rahman's team consistently outperformed
Chowdhury's. The positive work environment cultivated by Theory Y principles resulted in
higher job satisfaction, creativity, and a lower turnover rate. Chowdhury, observing the
success of Rahman's approach, began to question the effectiveness of Theory X.

One day, a crucial project required collaboration between Chowdhury and Rahman's teams.
Despite initial resistance from Chowdhury, the intermingling of Theory X and Theory Y
perspectives created a dynamic synergy. Chowdhury witnessed firsthand the benefits of
fostering a positive work culture, where employees felt valued, empowered, and motivated to
contribute their best.

In the end, inspired by the success of Theory Y, Chowdhury underwent a transformation.

Recognizing the limitations of Theory X, Chowdhury began to adopt a more open and
collaborative management style. The workplace culture shifted, and employees responded
positively to the newfound trust and autonomy.

Moral of the Story

Managers should believe in the transformative power of embracing a human-centric approach
to management, which –
 emphasizes the importance of recognizing and adapting to the unique strengths and
motivations of each individual and
 ultimately leads to a more productive and fulfilling work environment.

MASLOW’S HIERARCHY OF NEEDS THEORY

Having a car to get to work is a necessity for many workers. When two crucial employees of
Vurv Technology in Jacksonville, Florida, had trouble getting to work, owner Derek Mercer
decided to buy two inexpensive used cars for the employees. One of the employees who got
one of the cars said it wasn’t the nicest or prettiest car, but it gave him such a sense of relief
to know that he had a reliable way to get to work. So when the company needed him to work
hard, he was willing to do so. Derek Mercer understands employee needs and their impact on
motivation.

The best-known theory of motivation is probably Abraham Maslow’s hierarchy of needs

theory.

Maslow was a psychologist who proposed that within every person is a hierarchy of five
needs:
1. Physiological Needs: A person’s needs for food, drink, shelter, sex, and other
physical requirements.
2. Safety Needs: A person’s needs for security and protection from physical and
emotional harm as well as assurance that physical needs will continue to be met.

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 3. Social Needs: A person’s needs for affection, belongingness, acceptance, and
friendship.
4. Esteem Needs: A person’s needs for internal esteem factors such as self-respect,
autonomy, and achievement and external esteem factors such as status, recognition,
and attention.
5. Self-Actualization Needs: A person’s needs for growth, achieving one’s potential,
and self-fulfillment; the drive to become what one is capable of becoming.

Maslow argued that each level in the needs hierarchy must be substantially satisfied before
the next need becomes dominant. An individual moves up the needs hierarchy from one level
to the next.

In addition, Maslow separated the five needs into higher and lower levels.
 Physiological and safety needs were considered lower-order needs;
 Social, esteem, and self-actualization needs were considered higher-order needs.
Lower-order needs are predominantly satisfied externally while higher-order needs
are satisfied internally.

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How does Maslow’s theory explain motivation? Managers using Maslow’s hierarchy to motivate
employees do things to satisfy employees’ needs. But the theory also says that once a need
is substantially satisfied, an individual is no longer motivated to satisfy that need. Therefore,
to motivate someone, you need to understand at what need level that person is on in the
hierarchy and focus on satisfying needs at or above that level.

Maslow’s needs theory was widely recognized during the 1960s and 1970s, especially among
practicing managers, probably because it was intuitively logical and easy to understand. But
Maslow provided no empirical support for his theory, and several studies that sought to
validate it could not.

From Roots to Canvas: Sarah's Artistic Legacy

Once upon a time in a small village nestled between rolling hills and lush meadows, there
lived a young woman named Sarah. Sarah was an aspiring artist who spent her days
sketching the beauty that surrounded her.

She lived in a modest cottage and worked in the village market, selling fresh vegetables.
She toiled under the sun, earning enough to put food on her table and a roof over her head.
The aroma of freshly baked bread filled her kitchen, satisfying her hunger and providing
her with the energy to pursue her passion for art.

One day, a sudden storm struck the village, threatening the safety of its residents. Sarah,
realizing the importance of safety, helped her neighbors secure their homes and livestock.
In the face of adversity, the community came together, providing a sense of security and
camaraderie.

As Sarah continued to pursue her art, she found herself longing for companionship. She
befriended fellow artists in the village, sharing ideas and inspirations. Soon, a sense of
belongingness blossomed, and Sarah discovered the joy of collaboration. The bonds she
formed with her new friends fulfilled her need for love and belongingness, creating a
supportive network that fueled her creative spirit.

Sarah's talent as an artist began to gain recognition in the village. Her paintings adorned
the walls of local galleries, and her work inspired others. The validation she received from
her community and the growing esteem for her art fueled Sarah's confidence. As she
continued to hone her skills, she realized the importance of self-respect and the fulfillment
of her esteem needs.

Sarah immersed herself in her art, pushing boundaries and experimenting with new
techniques. Sarah's paintings became a reflection of her innermost self, expressing the
depths of her creativity. Through her artistic journey, she not only fulfilled her own potential
but also inspired others in the village to pursue their passions.

In the small village surrounded by hills and meadows, Sarah continued to create, her art
becoming a source of inspiration, spreading joy and fulfillment throughout the community.
And so, Sarah's journey of self-discovery and creativity flourished, leaving an enduring
mark on the tapestry of the village's collective soul.

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