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CHAPTER 2

EVOLUTION OF MANAGEMENT THOUGHT

2.1 Introduction
For centuries scholars and business people alike have tried to understand the practice of
management. But as in most social sciences, management has no generally accepted theory. It
borrows principles from different fields as they best suit one’s needs. The present position of
management has evolved over a long period of time. In order to understand what management is and
what it involves today, we better look through its historical development.
Management as a theory is the result of the twentieth century, but management as a practice is as old
as the human civilization. Knowledge about management comes from the field of management itself
as well as many other fields. Most of the early writers were practicing executives who described
their own experience from which they developed broad principles. For the sake of convenience,
scholars generally group the development of management into four major stages as management in
antiquity, classical management theory, neo classical theory and modern approaches.
2.2 What is theory?
Plunkett, et al asserts that a theory is part of a science or an art that attempts to explain the
relationships between and among its underlying principles. Theories generally give people a reason
for doing things one way rather than another. Various management theories have arisen over past
decades; some aspects of each have failed the test of time, others have survived it and are used by
managers today.

What does theory contribute to the practice of management? The theory of relativity, for example,
helps physicists control the atom; through the laws of aerodynamics, engineers can predict the
effects of a proposed change in airplane design. Similarly, the theories and principles of
management make it easier for us to understand underlying processes and on that basis decide what
we must do to function most effectively as managers. Without theories all we have are intuition,
hunches and hope-all of which are of limited use in today’s increasingly complex organizations.
In essence, a theory is a principle or set of principles that explains or accounts for the relationship
between two or more observable facts or events. As managers we will have in our disposal many
ways of looking at organizations and at the activities, performance, and satisfaction of employees.
Each of these ways may be more useful in dealing with some problems than with others. For
example, a management theory that emphasizes the importance of a good work environment may be
more useful in dealing with a high employee turnover rate than with production delays. Because
there is no single universally accepted management theory, we must be familiar with each of the
major theories that currently coexist.

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2.3 Pre -Classical Management concepts (management in

antiquity)
This stage of management covers the time between the beginnings of man’s cooperative effort to the
start of his attempts to approach the study of management scientifically about 1880. Management as
a theory is the results of the twentieth century, but as practice it is as old as the human civilization.
When people could not achieve their needs independently, they started to organize themselves into
groups and as the groups become large, things become complex and application of management
become inevitable. The groups elected an individual who had the skills to set objectives, group and
assign activities, coordinate members and control their performance, all of which are management
practices- the so called functions of management. Through these groups even in ancient time, people
accomplished surprising events. Generally, had there not been considerable skills in the various
management functions, those wonderful accomplishments like the Obelisk of Axum, the Great Wall
of China, the Pyramids of Egypt, the Temple of Lalibela, the Castle of Gondar, and many others
would not have been possible.
During that time, the contribution given by religious and military groups to management thought
were significant and undeniable. Introduction of mass production, large scale industry, the use of
complex and expensive machines, extended market, etc. made things very complex. In addition,
maintaining harmonious relationships between the employer and the employees was a problem.
These factors brought the need to more thoughtful, resourceful, and dynamic management.
Management on traditional lines became useless. Rule of thumb could no longer exist and gave way
to logical and rational principles and scientific approaches. That is, industrial revolution brought
about changes of management practices employed during that period.

Below some of the major scholars of the time and their contributions are discussed.
1)Robert Owen (1771-1858): he was a successful copartner and manager of the cotton
mills of New Lanark, Scotland. He was one of those individuals who developed approaches for
how to increase productivity by making the work easier to perform and how to motivate the
workers to take advantage of their new methods. He disliked the process of industrialization in
England that was built on tough, cheap and brutal exploitation of labor in unsatisfactory working
conditions. He recognized human resources as valuable as financial and material resources. He
focused on rewards rather than punishment to increase output. He experimented in the field of
management and recommended the following techniques:
 Prohibited employment of children whose age was under ten and recommended sending them
to school
 Reduced the length of work day
 Provided housing and marketing facilities to the employees
 improved working conditions within the factory through the provision of meal, bath and others
services
 Proposed that the basic managerial philosophy and formula for success should be combining
the production and people side of an organization. That is, attention should be paid not only to
productivity but also to employees.

2)Charles Babbage (1792-1871): he was a British professor of mathematics. In 1832 he

published on ‘the economy of machinery and manufacturers’, a study that presented the fruit of

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his observations of the factory floor. He became convinced that the application of scientific
principles to work processes would both increase productivity and lower expense. He was an
early advocator of division of labor, profit sharing plans and bonus systems as ways to achieve
better relations between management and labor. By division of labor Babbage meant the division
of work into discreet processes that could be mastered quickly by one person.
He was interested in:
 Division of labor
 Development of scientific principles
 Sought ways to analyze and control manufacturing costs
 Advocated dividing work into mental and physical activities
 Determining the price and costs for all tasks to be done

3) James watt and Bolton

 They developed many management techniques
 They were interceded in market research, costing, planned machine layout in terms of work
flow
 Attempted production planning
 Developed methods of calculation of cost and profits
 Training and development of workers and managers
 Studied payment by results
 Welfare programs

4)Adam Smith (1723 - 1790): in his book titled ‘Wealth of Nations’ advocated the
concept of specialization.
Despite the suggestion given by early theories, owners and managers did not begin to raise the
concern of the problem of material and human efficiency. They raised the issue when market was
becoming saturated, demand for greater profits and when competition was becoming keen. Their
emphasis on cutting costing costs and increasing efficiency led to the emergency of the classical
school of management thought.
However, the study of how managers achieve the results is predominantly a 20 th century
phenomenon. In the early stages, management study could not develop because of
 Low esteem to business in society
 The different approaches of economists, political scientists, sociologist, etc towards business
organizations
 Treatment of management as an art and not as a science
 The attitudes that successful managers are born not made

The situation in the 20th century changed due to the following factors:
i. The development of capitalism and the emergence of industries forced originations to be
efficient or to find ways for efficiency
ii. The complexities of organizations increased due to:
 The increasing size of organizations
 High degree of division of labor and specialization
 Increase in government regulations and controls
 Organized trade unions
 Pressure of various conflicting interest groups in society

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2.4 Classical Management Theory

Serious attention to management was given in the early 20 th century. One of the most critical
problems facing managers at that time was how to increase the efficiency and productivity of the
workforce. This theory includes the work of different individuals during the late 19 th century. The
works are probably known as scientific management, classical administrative and organizational
theories and bureaucracy.

2.4.1 Scientific Management Theory: this theory is mainly sought to determine

scientifically the best methods for performing any task. It applies scientific methods in the work
place and in other managerial activities. It concentrated on the problems of lower level managers.
This period was characterized by:
 The need to expand productivity
 Expanding business and readily available capital
 Shortage of skilled labor

Management’s primary goal and responsibility was to find ways to increase the efficiency of
workers. They basically sought ways of increasing productivity by using existing labor more
efficiently. Fredric Winslow Taylor and his associates such as the Gilberths, Henry Lawrence and
Gantt, and Harrington Emerson built a body of principles that now constitute the essence of
scientific management.
 Fredric Winslow Taylor (1985-1915): the birth of scientific management is
generally credited to Fredric Winslow Taylor. His main concern was to improve productivity in
scientific methods. For his concern on scientific methods, Taylor is known as the “father of
scientific management”. According to Taylor, scientific management focused on discovering
‘one best way’ of doing jobs, determining the optimum work pace, training people to do the job
properly and rewarding successful workers.. He began developing his ideas after he joined
Midvale Steel Company in Philadelphia-USA. While working in different positions for a total of
eight years, he observed certain problems in factory operations like the following:
- No effective work standards were applied
- Managerial decisions were made based on hunches or guess work, intuition (without
conscious reasoning), inefficient rule of thumb methods
- Ignorance in both management and employee sides as to what constitutes fair day’s work and
fair day’s pay. No one had ever bothered to find out how much a worker would be able to
produce in a day.
- No incentive was introduced to improve employee’s performance
- Lack of systematic selection and training of employees. Workers were unwisely placed at
tasks for which they had little or no ability or aptitude.
- He also observed a defective system which led employees to restrict output. The reason for
this was a practice called ‘soldiering’ whereby workers deliberately work slowly while at the
same time trying to make their supervisors believe as if they working fast.
- The fallacious belief of workers that increased output would lead some of them out of work.
The workers feared that if they worked faster, they would complete their jobs early and be laid
off.
Cognizant of these problems, Taylor conducted a study and developed some principles so as to
mitigate them. In 1909, he published principles of scientific management The principles were
considered as the principles of scientific management/ Taylor’s principles. They are:

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- Development of a science of work (beat methods of work) for each element with clearly stated
laws, rules and principles to replace the old guess work and rule of thumb methods.
- Scientific selection, training and development of workers. Workers must be studied just like
machines and be developed so that each worker can be given responsibility for the task that best
suited him/her.
- Relating together the best methods of work and the scientifically selected, trained, and
developed worker, ensuring ability-job- fit.
- Establishing heartily/close cooperation or harmony between management and labor regardless of
the need for division of labor and assignment of tasks and responsibility.
- Introducing differential piece rate system of pay to improve worker’s performance. Workers
who surpass their previous performance standards should earn more with the differential piece
rate plan. The greater the output an individual produces, the greater the pay would be. He
thought that an incentive system rewarding fast workers and penalizing slow workers would
encourage them to adopt the new working methods.
- The need of complete mental revolution with the view that exact knowledge about every step is
essential to both parties. Both workers and managers must be developed to the fullest extent
possible and there must be mutual interest towards a common goal. Both parties must reach on
consensus with regard to fair day’s work and fair day’s pay. He believed that both parties must
strive for maximizing output.
- Emphasizing the importance of functional foremanship, that is, people can bear/accept dual
command. According to this principle, a worker is to receive orders from a number of functional
foremen.

 Henry L. Gantt (1861-1919): was a contemporary and colleague of Taylor at

Bethlehem steel Company, and he strongly supported the ideas of scientific management
propounded by Taylor. He also emphasized the concept of mutuality of interest between
management and employees. He stressed the need to appreciate that “in all problems of
management, the human element is the most important”.
Gantt made improvements in Taylor’s incentive system and developed what is known as the task
and bonus plan. This is the foundation of many incentive plans in our times. Under this
incentive plan, the worker is paid a guaranteed day wage whether or not he completes the
standard work. But if he completes four hour’s work in three hours, he is paid for four hours. In
remunerating employees, he believed that Taylor’s differential piece rate system (if no
performance, no payment) of payment is inhuman and provided a guaranteed minimum daily
wage and workers receive a bonus for completing their daily tasks and performing above the
standards.
He also emphasized on the social responsibility of managers, that is, manages should not only be
responsible to the owner’s interest but also to the needs of the society at large. They should
concentrate in providing services rather than profits as the ultimate goal.
Gantt is perhaps best known for his development of graphic methods of describing plans and
making possible better managerial control. He emphasized the importance of time, as well as
cost in planning and controlling work. This led eventually to the famous Gantt chart-a chart used
for planning and following up work progress against time. The Gantt chart is regarded by some
social historians as the most important social invention of the 20th century.

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 Frank and Lillian Gilbreth : were husband & wife and regarded as important
contributors to scientific management. Frank Gilbreth (1868-1924) became interested in motion
study and reduced the number of movements in bricklaying from eighteen to five. This increased
productivity of bricklayers from 120 to 250 bricks per hour. Frank emphasized the need for
developing or discovering the “one best way of doing a given task”. Whereas Lillian (1887-
1972) held that the most important cause of workers’ dissatisfaction was the lack of
management’s interest in them. They emphasized that management should understand their
needs and personality.
Frank Gilbreth’s system became known as speed of work and the speed came not from rushing the
workers to work faster but from cutting down unnecessary motions. He identified eighteen on the
job motions and called them THERBLIGS - Gilbreth spelt backwards with the transposition of one
letter, T&H. the on the job motions are:
i. Search x. Load transport
ii. Find xi. Pre-position
iii. Select xii. Release load
iv. Grasp xiii. Transport empty
v. Position xiv. Wait when avoidable
vi. Assemble xv. Avoidable delay
vii. Use xvi. Rest for overcoming fatigue
viii. Disassemble xvii. Plan and
ix. Inspect xviii. hold
Frank Gilbreth also invented a flow chart which showed the progress of an entire operation through
time and various tasks involved in it. Every operation is broken down into tasks which enable the
identification and elimination of unnecessary motions. Lillian assisted her husband and expended on
his work after his death.
 Harrington Emerson (1853-1931): Emerson was one of the famous managers who
believed in the adoption of scientific management principles as a means of achieving efficiency.
Emerson’s major concepts were set forth in his book titled “The Principles of Efficiency”. His
principles of efficiency cover good human relations as well as work methods. When reviewed as
a whole, these principles formed basis for building today’s sound management system.

2.4.2Classical Administrative and Organizational Theories

This theory is another body of ideas developed at the same time as scientific management. These
ideas focused on the problems faced by top managers of large corporations. Since this branch of the
classical approach focused on the management of an organization as a whole while scientific
management focused on the management of work, it was labeled classical organization theory. Its
two major purposes were to 1) develop basic principles that could guide the design, creation and
maintenance of large corporations and 2) identifying the basic functions of managing organizations.
Engineers were the prime contributors to scientific management; practicing executives were the
major contributors to classical organization theory. As with scientific management, there were many
contributors to the classical organization theory. Henry Fayol, Mary Parker Pollet and Chester
Bernard are among the major contributors.
a) Henry Fayol (1841-1925): is perhaps the greatest contributor to the field of classical
administrative and organizational theory. He began his work life as engineer at the age of 19. He
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spent his entire working life with the same company, rising to managing director at the age of 47
and retired after his 77th birthday. Under his leadership the company prospered despite near bankrupt
state when he took over.
He published a book titled “Administration Industrielle et Generale” in 1916 and that
brought to light the distillation of his lifetime’s experience of managerial work.
Fayol found that activities of an industrial undertaking could be divided into six groups as follows:
1) Technical- production
2) Commercial-buying, selling, and exchanging
3) Financial-search for and optimum use of capital
4) Security-protection of property and persons
5) Accounting-including statistics
6) Managerial-planning, organizing, commanding, coordinating and control.

Although Fayol’s assessment of the importance of management has considerable merits, his greatest
contribution to management theory is his 14 principles of management. Fayol considered the
principles to be flexible and adaptable-not rigid rules or immutable laws.
His 14 principles of management are discussed below:
1) Division of labor: this is about specialization that economists consider necessary for
efficiency in the use of labor. Fayol applied the principles to all kinds of work, managerial as
well as technical. Specialization allows workers and managers to acquire an ability, sureness,
and accuracy that will increase output. He noticed that too much specialization can cause
workers to be bored.
2) Authority and Responsibility: the right to give orders and the power to excat
obedience are the essence of authority. He found authority and responsibility to be related with
the latter arising from the former. When authority is exercised, responsibility arises. He saw
authority as a combination of official factors, driven from the manager’s position and personal
factors like intelligence, experience, morale, past service, etc.
3) Discipline: he emphasized respect for agreements which are desired at achieving obedience,
energy, and the outward marks of respect. Discipline requires good superiors at all levels.
Discipline is absolutely essential for the running of business and without discipline no
enterprise could prosper.
4) Unity of Command: it means that employees should receive orders from only one
superior and report to only one superior.
5) Unity of Direction: it holds that all activists geared towards achieving the same objective
should be directed and controlled by one person and one plan.
6) Subordination of Individual to General Interest: here Fayol emphasized
that employees must learn to subordinate their individual interest to general interest, that is, the
interest of any individual or group of employees should not take precedence over the interest of
the organization.
7) Remuneration of Personnel: wages and salaries should be fair and afford
satisfaction to both the workers and the employer. Fayol proposed that managers should
impartially use reward system including profit sharing and bonuses to acknowledge higher
performance.
8) Centralization: managers should decide how much authority to be centralized at the top
of the organization and how much to be delegated to workers. Managers should retain ultimate
authority but also give their subordinates enough authority to do their job.
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9) Scalar Chain: often called chain of command or line of authority, it points out the
importance of limiting the length of the chain of command extending from the top of the
organization to the bottom.
10)Order: both equipment and people must be well chosen, well placed and well organized for a
smooth running of the organization. That is, a place for everything and everything in its place.
11)Equity: workers need to be treated with respect and justice if they are expected to perform at
better. There should not be any sort of discrimination and managers should be fair and kind to
their subordinates.
12)Stability of Tenure of Personnel: long term employment helps employees
develop the skills they need to make significant contribution to the organization. Managers
must reduce employee turnover and must retain competent workers.
13)Initiative: subordinates should be given the freedom to conceive and carry out their plans
even though some mistakes may result. He defined initiative as the ability to think through,
develop a pan of action. The stated that most capable managers instill this attribute in their
subordinates.
14)Esprit de corps: this implies the principle that ‘in unity there is strength’. All members
of the organization should work together harmoniously to achieve a common goal. Promoting
tem spirit will build harmony and unit within the organization.

b) Mary parker Follett (1868-1933): another contributor to the administrative

school was American Political Scientist M.P. Follett. Her work in 1920’s focused on how
organizations cope with conflict and the importance of goal sharing among managers. She
emphasized the human elements in the organization and the need to discover and enlist individual
and group motivation. She believed that the first principle for both individual and group success is
the capacity of organized thinking. She believed that people could reach tier maximum potential
only through groups. She emphasized for the first time on the importance of individuals-managers
workers. No one can become a whole person except as members a group; human beings grow
through tier relationships with others in the organization.
c) Chester I. Bernard: was another American theorist of the administrative school. He
was president of New Jersey Bell Telephone Company. In his 1938 work, The Functions of the
Executives, Bernard argued that managers must gain acceptance for their authority. He advocated
the use basic management principles and cautioned managers to issue no order that could not or
would not be obeyed. According to Bernard, people come together in formal organization to
achieve ends that they cannot accomplish working alone. But as they pursue the organization’s
goals, they must also satisfy individual needs. An enterprise can operate efficiently and survive
only when the organization’s goals are kept in balance with the aims and needs of the individuals
working for it. To meet their personal goals within the confiners of the formal organization,
people come together in informal groups. To ensure its survival, the firm must use these informal
groups effectively.

2.4.3 Bureaucratic Theory

The chief advocate of the bureaucratic theory was Max Weber (1864-1920). Weber was a professor
of law and economics who wrote about social, political and economic issues. Weber was the first to
describe the principles of bureaucracies- rational organizations based on the control of knowledge.
Bureaucracy can be defined as management approach based on formal organizational structure with
a set of rules and regulations. The common features of bureaucracy are:
 Division of labor-specialization
 Authority hierarchy

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 Impersonality
 Immutable written rules and regulations
 Top down command control approach in which managers provide many directions and have
considerable control over their subordinates.
 Hierarchy with many management levels and so on.
 Promotion based on achievement
 Efficiency

He was mainly concerned with the issue of how organizations are structured. He believed in one
best organizational structure. Bureaucracy emerged out of the organization’s need for order,
precision and the workers’ demand for impartial treatment and rationality. Bureaucracy was
developed as a creation of personal subjugation, nepotism, cruelty, and the capricious and subjective
judgment which occurred during the early day of industrial revolutions. Rationality implies goal
directedness and impartiality implies objectivity in interpersonal relations.
However, bureaucracy is not free from defects, i.e., it has some ugly faces like the following:
 Bureaucratic organizational structure consists of hierarchies with many levels having
inflexible and routine procedures and rules. Night mares and red tapes, run around, ocean of
paper work, unhelpful clerks, and officials all combining to produce more frustration than
service for customers and clients.
 Bureaucracy tends to become rigid and unable to adjust to novelty in its environment.
Decision making tend to be categorized or choices are previously programmed. Workers are
expected to work to the prevailing rules nothing more, that is, employees are encouraged to
do only the work specified in their job description-no more no less. This condition prevents
spontaneous cooperation of people at work to solve unexpected problems.
 The insensitivity to people that comes from inflexible adherence to routine procedures and
rules is another bad reputation of bureaucracy.

Merits and Demerits of Classical Management Approach

Classical management theory has contributed a lot to development of management theories.
 The greatest contribution of this school of thought was that it identified management as an
important element of organized society. Management has increased in importance.
 It resulted in overall improvement in factory management by saving time, eliminating
unnecessary motions, and bringing the application of science in areas of management. Using
the scientific methods, workers became more efficient and productive as they learn new and
better methods of doing the work.
 The identification of management functions such as planning, organizing and controlling
provided the basis for training new managers.
 It has also resulted in many management techniques being used today such as time and motion
analysis, work simplification, incentive systems, production scheduling, personnel testing and
budgeting.
 This school opened the door for the next important school: the behavioral/ the human relations
school.
However, classical management theory has some limitations as discussed below:
 The theory viewed workers merely as an economic being focusing only on the improvement
of productivity. Advocators believed that workers are motivated primarily by a desire to earn

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money to satisfy their needs. In the real world, however, financial gain is not the only thing
that matters people and thus workers are likely to go out for strike over job conditions rather
than salary demands and leave the job if they are unhappy in it.
 The advocators failed to recognize that one method of doing things is less appropriate in a
dynamic environment. To be the fittest, as the working environment changes the way to
perform the task must be changed. Moreover, following only one method makes the work to
be repetitive and highly repetitive jobs often produce boredom and alienate employees from
their job.
 They overlooked social needs of the workers. They failed to consider informal groups in the
organization by stressing only on the formal relationships in the organization.

2.5 Neo Classical /Behavioral Management Theory

This theory consists of human relations and behavioral movements. It is built on the bases of
classical management theories. It modified, unproved, extended and the classical theory. Unlike
classical theory which emphasized on job content and management physical resources, behavioral
theory gave greater emphasis to the man behind the machine and stressed on the importance of
individual as well as group relationship in the workplace. Below the two branches of neo classical
theory are discussed.

2.5.1 Human Relations Movement

The term human relations refer to the manner in which managers interact with subordinates. To
develop good relations, followers of this approach believed, managers must know why their
subordinates behave as they do and what psychological and social factors influence them. This
branch emphasizes on the social environment of an organization.
The most profound contribution to the human relations school came from the studies of Professor
Elton Mayo, an Australian psychologist. He has conducted the studies at Western Electric Company
in Chicago, USA which spanned for eight years period and popularly known as “Hawthorne
Studies”. These studies were divided into five major phases as:
i. First sage iv. Forth stage
ii. Second stage v. Final stage
iii. Third stage
i. First stage (1924-1927): this stage was designed to prove the impact of physical
surroundings such as noise, light, etc on productivity. Two groups of comparable performance
were isolated from the rest and located in separate parts of the plant. One group, the control
group, had a consistent level of lighting; the other group, the experimental group, had its lighting
varied. To the surprise of the researchers, the output of both groups increased. Even when
lighting of the experimental groups was reduced to a very low level, they still produced more.
This stage is often called the illumination experiment.

ii. Second Stage (1927-1929): this stage became known as the Relay Assembly Test
Room. The objective was to make a closer and more detailed study of the effects of different
physical conditions on productivity. At this stage there was no deliberate intention to analyze
social relationships and employee attitudes. Six women workers in the relay assembly test section
were segregated from the rest in a room of their own. By discussing with the women, changes in
rest periods and lunch times were made in timing and length. Productivity increased whether the

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conditions were made better or worse. Later, the working week was changed but once again
productivity increased. The women’s reaction to the changes, i.e., increased output regardless of
whether conditions improved or worsened, has come to be known as “the Hawthorne Effect”.
That is to say the women were responding not so much to the changes because they were the
center of attention- a special group.
iii. Third Stage (1928-1930): before the relay assembly test had come to an end, the
company had decided to implement an interview program designed to ascertain employee
attitudes towards working conditions, their supervision and their jobs. The interviews were
conducted by selected supervisors, first in structured basis and next in unstructured basis. Before
the program was conducted, about 20,000 employees were interviewed and the pool of material
amassed was used to improve several aspects of working conditions and supervision. It also
became clear from the responses that relationships with people were an important factor in the
attitudes of employees. This phase is referred to as massive interview program.

iv. Forth stage (1932): this was known as the bank wiring observation room. Here
fourteen men in the bank wiring were removed to a separate observation room where apart a few
differences their principal working conditions were the same as those in the main wiring area.
The aim was to observe a group working under more or less normal conditions over a period of
six months or so. The group was soon developing its own rules and behavior-it restricted
production in accordance with its own norms; it short circulated the company wade incentive
scheme and in general protected its own sectional interests against those of the company. The
supervisors concerned were powerless to prevent this situation. The group has developed its own
unofficial organization-run in such away that it was able to protect itself from outside influences
while controlling its internal life too.

v. Final stage (1936): this stage was based on the lessons learned from the earlier studies. It
was mainly employees’ relations and took the form of personnel counseling. The counselors
encouraged employees to discuss their problems at work and the results led to improvements in
personal adjustments, employee-supervisor relations and employee-management relations.

The main conclusions drawn from these studies are:

 Individual workers cannot be treated in isolation, but must be seen as members of a group.
 The need to belong to a group and have status within it is more important than monetary
incentives or good physical working conditions.
 Supervisors and managers need to be aware of these social needs and cater for them if workers
are to collaborate with the official organization rather than work against it.
2.5.2 The Behavioral Science Approach
The individuals in the behavioral science branch of the neo classical approach believed that man is
much more complex than “the economic man” description of classical approach and “the social
man” description of the human relations approach. The emphasis of the behavioral science approach
is on the nature of work itself and the degree to which it can fulfill the human need to use skills and
abilities. Behavioral scientists believe that an individual is motivated to work for many reasons in
addition to making money and forming social relationships. They also focused on communication,
motivation and leadership areas.

The behavioral management school brought the human dimensions of work firmly into the
mainstream of management thought. The results continue today. Many managers today work hard to
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discover what employees want from work, how to enlist their cooperation and commitment; and
how to unleash their talents, energy, and creativity. The behaviorists integrated, for the first time,
ideas from sociology, anthropology and psychology with management theory. One result of the
behavioral school was the creation of positions for professional resource managers. This theory
paved ways to modern day employee assistance programs.
The major limitation of behavioral management theory is its complexity. It does not yield quick or
simple conclusions, and it does not conclusively explain or predict the actions of individuals or
groups. Behavioral theory becomes even more complicated in light of the facts that people are
motivated by more than one need at any given time and that they must constantly reconcile
conflicting demands. No simple formula can always motivate all individuals in the work place.
What is more, people’s needs change with time, making the same person tough to manage one day
and a delight the next. Nevertheless, by considering psychology, managers can prepare themselves
to effectively manage their most important and complex resource-people.

2.6 Modern Approaches

Modern management theories indicate further refinement, extension and synthesis of all classical
and neo classical management approaches. Classical approach satisfied the basic economic needs of
the organization and the society. Neo classical approach tried to satisfy security and social needs of
employees. Modern management must have the twin primary objective of productivity (classical
approach) and employee’s satisfaction-neo classical approach. The earlier theorists considered their
respective views as best and universally applicable, that is, they were highly biased towards their
own view and they did not try to take even the good ideas from others. One simply criticizes the
other and rejects in its totality. They studied management by taking things independently. They
assumed that the whole is explained in terms of its parts.
Beginning from the World War II and some time in 1960’s modern management theorists have tried
to integrate the findings of the scientific, administrative, and human relation movements to solve
war time problems. Under the modern approach, we have the following streams:
a)The Management Science Approach
The management scientists, led by operations researchers and systems analysts see management as
“a system of mathematical models and processes”. They hold that since managing a logical and
rational process, it can be expressed in terms of mathematical relationships and models. New
mathematical and statistical tools are applied in the field of management. Particularly, it can be
employed in decision making with respect to complex problems such as resource allocation,
replacement of capital equipment, inventory control, production scheduling, and quality control and
so on. This will lend exactness to management process and substitute certainty for guesswork,
knowledge for judgment, hard facts for experience. Some of the quantitative techniques suggested
are liner programming, critical path method, economic order quantity, queuing theory, probability
theory and so forth.
b)Systems Approach
In this approach an organization was viewed as organic and open system which is composed of
interacting and interdependent parts, called subsystems. From the systems perspective, management
involves managing and solving problems in each part of the organization but doing so with the
understanding that actions taken in one part of the organization affect other parts as well. Each part
tightly linked to other organizational parts; no single part of an organization exists and operates in
isolation from the others. Thus, in solving problems, managers must view the organization as a
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dynamic whole and try to anticipate the unintended as well as the intended impacts of their
decisions.
The systems approach views the elements of an organization as interconnected. The approach also
views the organization as linked to its environment. Organizational effectiveness, even survival,
depends on the organization’s interaction with its environment. A system has the following features:
 System: a set of interrelated parts that work together to achieve common objective. A
company, a university, a human body are examples of a system.
 Subsystems: set of related parts those works together to achieve a common objective are
known as subsystems or components.
 Open and closed system: open systems interact freely with their environment. Closed
systems, on the contrary, do not interact with their environment.
 Input- transformation process-output system: an open system receives inputs from its
environment which it transforms into outputs.
 Synergy: this shows the fact that “the whole is greater than the sum of its parts”.
 System boundary: is the boundary that separates each system from its environment. It is
rigid in closed system and flexible in open system.
 Feedback: the part of system control in which the results of actions are returned to the
individual, allowing work procedure to be analyzed.

c) The Contingency Approach

The systems approach forces managers to recognize that organizations are systems made up of
interdependent parts and that the change in one part affects other parts. It seeks to identify the
characteristics of jobs, people and organization and allow managers to see the interdependence
among the various segments or units.
Contingency/situational management theory states that management actions and leadership styles
should be dependent up on the circumstance/situation confronting the manager. The contingency
approach can be summarized as “it all depends” device. Right and proper conduct under one set of
circumstances may totally fail under another set. Since no two problems possess identical details,
neither should any solution. Several solutions and approaches may be possible and might yield
equally good results. Supporters of this theory would acknowledge that many roads lead to a city
from several direction; they would also stress that the route that appears the shortest might not be the
best choice if it is undergoing repairs.

In short, this theory emphasizes that there is no one best of performing any managerial task and it all
depends on the confronting the managers. This theory tells managers look to their experience, the
past and consider many options before choosing alternatives. It also tells that intelligent choice
comes only adequate preliminary research.

d)The Decision Theory Approach

This approach looks upon management process as a decision making process. In the view of the
decisional theorists, since the performance of various management functions can be studied from the
study of the process of decision making, the entire field of management can be studied from the
process of decision making. They have expanded their area of theory building from the decision
making process to the study of the decision, the decision maker and the social and psychological
environment of the decision maker. The decision theorist started with a small area of decision
making and then looked at the entire field of management through this keyhole.

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Though every task of a manager involves decision making, the totality of management is, however,
something more than decision making. The most important tasks of a modern manager are
innovating, integrating the organization with its external environment and creation of an
organizational climate that is conducive to the optimum performance by its members. Such things
and others, though the involve decision making, they also require the art of management and
leadership.

14 Introduction to Management- Lecture Note