Different Approaches to Management

1. Different Approaches to Management Management has the multi-disciplinary influence so Koontz referred to management as jungle. One of the way to classify management approaches is from the analysis of John G. Hutchinson which considers the development of management from five different perspectives, the history of management can be broadly classified into three groups 1) The classical approach 2) The neo-classical approach 3) The modern approach. The Classical Approach ( traditionally accepted views) : This approach emphasizes organizational efficiency to increase organizational success. It believes in functional relationship, following of certain principles based on experience, a bureaucratic structure and reward-punishment nexus. The classical school of thought developed in three different directions The Scientific management approach(Taylor), the administrative approach( Fayol), and the bureaucratic approach(Weber). Bureaucratic approach also fall under administrative school of thought.

2. The neo-classical approach emphasizes human relations, individual as well as group relationships, and social aspects. This approach was pioneered by Mayo and his associates. This was further extended to behavioural sciences approach pioneered by Maslow, Chris Argyris, Douglas McGregor and Rensis Likert. The quantitative approach and contingency approach also also form a part of the neo-classical approach. Modern management thought combines concepts of the classical school with social and natural sciences. It basically emerged from systems analysis. Contribution of pre-classical theorists is useful to appreciate the process of development in management thoughts MANAGEMENT THEORIES Management theories can be classifiedinto four main school of thought 1) Pre classical approach 2) Classical approach 3) Neo-classical approach 4) Modern approach

3. Pre-classical school of thought

4. CLASSICAL SCHOOL OF THOUGHT SCIENTIFIC SCHOOL(MANAGEMENT) ADMINISTRATIVE SCHOOL(THEORY) The classical viewpoint includes management theories that provide foundation to the modern management theory Frederick W. Taylor(1856-1915) Development of scientific management. Frank B. and L.M. Gilbreth1868-1972) Time and motion studies Henry L. Gantt(1861-1919) The Gantt chart Henri Fayol(1841-1925) General theory of management Max Weber(1868-1920) Rules of management

5. With increase in size and complexity of organizations, the need for systematic approach to management became inevitable. Attempts were made to increase industrial production. Financial incentives were viewed as important contributors to increase organizational production. Features of classical school of thought : • It involves some of the early works on management which provides foundation to the modern management theory. • It attempts to find ways to increase output of workers. • Employees have strong economic needs which can be satisfied through financial incentives. • It stresses on formal structure of jobs and work schedules to satisfy organizational and individual needs. • It views organizations as closed system which do not interact with the external environment. • It develops a set of management principles which are universally applicable to all

6. Scientific management is a classical approach that emphasizes the scientific study of work methods to improve efficiency of workers Among all the contributors to this school of thought, the contribution of Taylor is thought to be the most important. TAYLORS SCIENTIFIC MANAGEMENT THEORY Regarded as the father of scientific management, Taylor developed specific principles for this field. He started his experiment with the concept of scientific management at Midvale Steel Co. He saw that the employees were deliberately working at a pace slower than one capabilities. He found three reasons behind it • Fear of losing their jobs if they increase their output • Faulty wage systems • Outdated methods of working. He suggested some principles to overcome this problems. These principles formed the basis of scientific management theory. 1) Rule of thumb should be replaced with science : Trial and error approach should not be used for taking decisions, rather scientific way of working should be followed. Scientific working involves use of organized knowledge, precision and exactness as against rule of thumb which is based on mere estimates. 2) There should be harmony and not discord in group action : All the members of the organization should work as a team.

7. Conflicts should be solved by mutual discussion and coordination and disagreements should be eliminated. All group actions should be based on mutual understanding so that group as a whole, contributes to organizational output. 3) Cooperation not individualism : People should not promote their individual interests at the cost of organizational interest. They should cooperate with each other, solve each other’s problems and work as a team to achieve organizational goals. 4) Maximum output, not restricted output : People should not restrict production. They should increase the output and share the benefits of increased output with the management. 5) Development of workers to their fullest capacity : Development of workers through formal education, training and motivation will enable them to give their best to organizational output. Which will benefit both the organization and workers. Training should be provided at the work place so that workers learn about new technologies and methods of working. Taylor also introduced a ‘ differential rate system’ where management paid higher wage to those who finished their work in less than standard time i.e. higher wage to productive workers.

8. M Total task W1 W2 W3 W4 W5 The phases of scientific management can be illustrated as below. Phase1 Phase2 Phase3 Phase4 M W1 W2 W3 W4 W5 T1 T2 T3 T4 T5 M M W1 W2 W3 W4 W5 W1 W2 W3 W4 W5 T1 T1 T1 T1 T1 T1 T2 T3 T4 T5

9. Phase1 : Work situation. In any work situation, there are three elements– a work to be done, a pool of workers, and a manager. The total task might consist of coordinating a machine territory, and the company might assign a route manager and five workers to handle the territory. Phase2 : Task analysis. Phase2 represents management’s scientific study the task wherein it is determined what elements the task consist of, what skill each aspect demands, and how many workers should be assigned to each. Phase3 : Matching tasks with workers. The manager then matches the available personnel with the skills required for each task Phase4 : Continued management. Finally, the manager continues to cooperate with the workers by supervising the work and serving as primary planner for the work group.

10. Evaluation • Taylor’s theory gained wide popularity in the managerial world, in both business and non-business world. It introduced better management through scientific methods such as work study, incentive plans, introduction of rest hours etc • It introduced techniques of time and motion studies to increase workers contribution. Standards are decided using time and motion study. Time study helps in the determination of time required, duly defining the art of recording, analysing and synthesizing the time elements of each operation. Motion study on the other hand, involves the study of movements in doing a job in parts. It eleminates wasteful movements and retain only the necessary one. Thus it makes a job simple, easier and better. This system requires workers to perform at some pre-decided standard rate to earn their basic wages. If workers are able to produce more, then in addition to their base rate they get incentives on the number of excess units produced over and above the standard units.

11. It emphasized on scientific selection, education and development of workers, so that problem solving is not based on random decision-making. It advocated selection of workers on the basis of job requirement. Training methods were also scientifically designed to develop workers to perform the jobs they are best suited for. • He identified planning and execution of plans as two distinct jobs. • He advocated mental revolution on the part of both employers and employees. This revolution changed the attitude of management and workers towards their work. Drawbacks of Scientific management : 1) Taylor focused only on physical and economic needs of workers. He overlooked the importance of social and ego needs that affect their behaviour. Taylor viewed workers as mere factor of production and not as human being with social and emotional ties. 2) His theory was opposed by workers and labour unions as they felt that scientific ways would increase production but reduce the work force

12. c)Focus on scientific ways of performing the job can make work monotonous so that workers work along pre defined lines of action and lose interest in their jobs. This results in worker resentment and increased labour absenteeism. Administrative Theory Administrative theory, another part of the classical school of thought, focuses on principles to coordinate the internal activities in an organization. The contribution of Henri Fayol is thought to be the most important. While Taylor emphasised on productivity of workers at the shop level, Fayol focussed on managing the organization as a whole. Fayol was concerned with general management and overall control of the organization and not with supervision and control of operation at lower level of management. His work was thus related more to the top level of management. He was regarded as the first person to systematise the administrative approach to management. Fayol classified the business operations of an organization into six activities and then outlined 14 principles of management.

13. Six activities are 1. Technical : It relates to production and manufacturing of goods. 2. Commercial : It relates to buying raw materials and selling or exchanging the finished goods 3. Financial : It relates to search, acquisition and optimum use of financial resources. 4. Security : It relates to protecting human and non-human resources. 5. Accounting : It concerned with costs, profits, and liabilities, maintaining balance sheets, and compiling statistics. 6. It relates to functions performed by a manager. Activities of a Business Technical Commercial Financial Security Accounting Managerial Planning Organizing Commanding Coordinating Controlling

14. General Theory of Management : The French industrialist Fayol , through his pioneering work, “ General and Industrial Management”(1949) explained that satisfactory results can be achieved with scientific forecasting and proper methods of management. Fayol listed fourteen principles of management based purely on his experience. He described these principles as flexible and not exhaustive. They can be changed according to situations. The principles too, are flexible can be adapted to meet every need; It is just a question of knowing how to use them. These 14 principles are • Division of labour : Division of work leads to specialisation resulting in higher output. This principle recommends grouping of people as per their area of specialization. If people are specialized at their work, they can perform their task better. • Authority : Managers must have the authority to issue orders and instructions to the subordinates. Yet , formal authority alone may not help to compel obedience from subordinates; managers must have the expertise to exert personal authority. • Discipline : Discipline means respect for rules and agreements. People working in an organization need to comply with rules and agreements that govern the organization. Without discipline results cannot be achieved.

15. Discipline can be brought by a) effective leadership, guidance and motivation. B) good supervision at all levels, and c) clear and fair agreement with employees. iv) Unity of command : There should be one boss for one subordinate. Conflict will arise when one receives order and instructions from multiple managers. v) Unity of direction : All operations in an organization need to be directed towards one objective. Without this achievement of goal cannot be ensured. vi) Subordination of individual interest to general interest : If there is a conflict between the individual goals and organizational goals, preference should be given to organizational goals, i.e., individual goals should not supersede the goals of the organization. vii) Remuneration : There should be a fair system of remuneration that ensures equal pay for equal work. It should be fair to both employees and employers. viii) Centralisation : It refers to declining role of subordinates in the decision making. Though major decisions are taken by the managers at the top level, but at the same time enough authority should be given to the subordinates to do the jobs properly.

16. Scalar Chain (Hierarchy) : This the line of authority running from top level to lower level of management. It is also known as hierarchy of authority. It illustrated in the form of an organizational chart clearly showing the structure of authority from the top management to employees down the line. • Order : People and material should be in the right place at the right time. Fayol followed the concept of ‘ A place for everything and everything in its place ‘. When human beings are kept at the right place( right man at the right place) it is social order, and when non-human or material resources are kept at the right place, it is material order. • Equity : Managers should be fair to their subordinates. • Stability of staff : Employee turnover should be less to ensure efficiency of an organization. • Initiative : Subordinates should have the freedom to conceive new ideas and do their task, even though they commit mistakes. • Esprit de corps : ‘ Unity is strength’. People should work as a team to enjoy the benefits of synergy.

17. Evaluation Positive attributes of Fayol’s theory are summarised below : 1.Fayol pioneered in distinguishing management functions from other functions/activities of a business. 2. He was first to highlight the universality of management principles. 3. His contribution to management theory provided foundation to development of management thought. The functions of management developed by him provide systematic understanding to the process of management. Self study : Limitations of Fayol’s theory, Comparisions of Fayol’s and Taylor’s theory.

18. Bureaucratic Theory : This theory pioneered by Max Weber, which falls under the administrative school of thought, emphasizes authority structures. Weber propagated the need for organizations to be managed in a more rational manner. He introduced rational-legal authority system rather than charismatic and traditional authority system, for managing business organization. According to Weber, a bureaucracy is highly structured, formalized, and impersonal organization. He has advocated the necessity of a formal organization structure with set rules and regulations. He identified a set of characteristics of large organizations which helped in their rational operation. Such organizations were known as bureaucratic organizations. Characteristics of Bureaucratic Theory

20. Neo-classical School of Thoughts Neo classical approach emphasized human relations, the importance of individual as well as group relationship and social aspects. It was further extended to the behavioural sciences approach. The quantitative approach and the contingency approach also form a part of the neo-classical approach. The classical theorist viewed people as means of production and suggested ways to increase production. But, unfortunately, managers could not achieve the targets of production as people at work place did not always behave rationally. Behavioural Theories The behavioural school of management emphasizes the human element in an organization. It put more importance on individual attitude and behaviour and on group processes.

21. Mary Parker Follett : Was the pioneer of the behavioural approach to management. Follett was a social worker and studied issues related to working conditions of employees. She believed in group behaviour and mutuality of interests between employers and employees. She recognized the significance of the human elements and attributed greater significance to the functioning of groups in the workplace. The critical role of managers should be to bring constructive change in the organization, following the principle of ‘power with’ rather than ‘power over’. Major Contributor to the Behavioural School

22. WHAT CONTRIBUTIONS DID MARY PARKER FOLLETT MAKE TO MANAGEMENT One of the earliest writers to recognize that organizations could be viewed from the perspective of individual and group behaviour was Mary Parker Follett. Follett was a social philosopher whose ideas had clear implications for management practice. She thought that organizations should be based on a group ethic rather than on individualism. Individual potential, she argued, remained as potential until released through group association. The manager’s job was to harmonize and coordinate group efforts – the notion of “power with” rather than “power over” employees. Managers and workers should view themselves as partners – as part of a common group. Follett’s humanistic ideas influenced the way we look at motivation, leadership, power, and authority. Elton Mayo : He is recognized as the father of human relations approach. Mayo and his associates conducted their study at Western Electrict’s Hawthorne Plant between 1927-1932, to evaluate the attitude and psychcological reaction of workers in on-the-job situation. Their experiments were carried out in four phases. • Illumination experiment 2) Relay assembly test room experiments 3) Interview phase 4) Bank wiring observation room experiment.

23. Scholars generally agree that the Hawthorne studies, under the leadership of Elton Mayo, had a dramatic impact on the direction of management thought. Mayo concluded that behaviour and sentiments are closely related, that group influences significantly affects individual behaviour, that group standards establish individual worker output, and that money is less a factor in determining output than are group standards, group sentiments and security. • Illumination experiments : This experiment involved manipulation of illumination for one group of workers, called test group and comparing their productivity and performance with another group for whom illumination was not manipulated, called controlled group. In the first spell of experiment, for the test group, productivity and performance improved. However it did not last long. In fact the control group’s performance also rose in between with the alteration in lighting conditions for the test group, even though for the control group there was no change in the lighting conditions. With such contradictory results, researchers concluded that intensity of illumination was not related to productivity of workers. There had to be something besides illumination which influenced the performance of the workers in Western Electric Company. • Relay assembly test room experiment : This set of experiments was conducted under the guidance of Elton Mayo. The researchers selected six women employees of the relay assembly test room, and were put in a separate room. In the test room, a number of variables were altered, like increased wages and rest period, shortened workday and workweek etc.

24. In addition the sample workers were given the freedom to leave their workstation without permission and were also given special attention. Productivity increased during the study period. Such results led the researcher to believe that better treatment of subordinates made them more productive. They highlighted the significance of social relations. Workers would perform better if management looked after their welfare and supervisors paid special attention to them. This condition was later lebelled as the Hawthorne effect. INTERVIEW PHASE : In this phase of the experiments, about 21000 people were interviewed. The purpose of the interviews was to explore the attitude of workers in depth. The conclusions that emerged were. • A complaint is not necessarily an objective of recital of facts; it may also reflect personal disturbance of cause of which may be deep rooted. • All objects, persons, and events carry some social meaning. They relate to employee’s satisfaction or dissatisfaction. • Workers’ personal situations are the results of configurations of relationships, involving sentiments, desires, and interest. Such relational variables, when related to the worker’s own past and present interpersonal relations, result in their personal situation. • Workers assign meaning to their status in the organization and give value to events, objects, and specific features of their environment

25. d) Workers derive satisfaction or dissatisfaction from the social status of an organization. This means that they also look for social rewards, associating them with an organization. e) Workers’ social demands are influenced by social experiences in groups, both inside and outside the workplace. BANK WIRING OBSERVATION ROOM EXPERIMENT • In this experiment there were fourteen participants including wiremen, solder men and inspectors. • There was no change in the physical working conditions. • Sample workers were paid based on an incentive pay plan, relating their pay to output. They had the opportunity to earn more by increasing the output. • However, it was observed that the output was constant at a certain level. • Analysis of the results showed that the group encourages neither too much nor too little work. • They enforce ‘a fair day’s work’ on their own. Group norms, therefore more important to the worker than money. • This study, thus provided, some insight into informal social relations within groups.

26. In the behavioural school of thought, other contributors like Abraham Maslow, Douglas McGregor, and Chris Argyris also left a significant impact. The Human Relations Movement ; The human relations movement grew from the Hawthorne experiment. The classical management theory in particular assumed a simple stimulus-response relationship in the workplace. If jobs were properly designed and appropriate incentives established, predictable result would follow. Workers would perform their jobs as they were told and would maximize output to get high wages and compensation. Human relations school of thought, suggested a more complex process. It proposed that workers respond primarily to the social context, including social conditioning, sentiments and the interpersonal situation at work. The Scientific Management Perspective on Work LEADS TO The Human Relations Perspective on Work is part of Which leads to The Work Situation Worker Response Worker response The social Context The work situation

27. ABRAHAM A. MASLOW(1908-1970) Maslow focused on human needs. In 1943, he suggested that number of different human needs exists and he felt that people are motivated by a sequence of needs. So organizations which solely rely on money as a motivator may be ignoring important needs. He introduced a new concept, viz., hierarchy of needs. He felt that people are motivated by five distinct types of needs which are arranged in a hierarchy in order of their power to motivate human behaviour: • Physical or physiological needs • Safety or security needs • Social needs • Ego or status needs • Self-actualisation, self realisation, self-fulfilment needs.

28. DOUGLAS McGREGOR9(1906-1964) McGregor’s major contribution in the emerging areas of human relations lies in developing two alternative management views of subordinates, popularly known as theory X and theory Y. Theory X managers believe that their subordinates basically try to avoid responsibility and work assignments. So they can not be inspired or motivated. Thus theory X takes a relatively pessimistic and negative view of workers. On the contrary, Theory Y managers hold progressive outlook and are dynamic in nature. They view work as rewarding if given the chance by superiors. In McGregor’s view theory Y was a more appropriate philosophy for managers to adhere to. Chris Argyris : A contemporary advocate of the behavioural school of management thought, Argyris has argued in his book “Personality and Organization” that people normally progress from a stage of immaturity and dependence to maturity and independence and that many modern organization keep their employees in a dependent state, thus preventing the individual from achieving his or her fullest potential . Furthermore he felt that various concepts and principles of modern management such as specialisation inhibit the natural development of a healthy personality.-

29. Modern Management Theory With increasing complexities of organizations, the modern management theories(thoughts) are developed. The modern management thought is characterised by the following features : 1)Management is responsive to environmental changes. Successful organizations adopt environmental changes in the principles and practices of management. 2) Business organizations are dynamic institutions composed of inter-related divisions and sub divisions. 3) Business firms have multiple objectives. Managers balance economic and non-economic objectives and maximize the interests of diverse groups of stakeholders. 4) Management is multi-disciplinary in nature. It draws knowledge from various discipline and synthesises it for solving managerial problems. 5) Management is future oriented. It forecasts environment through scientific technique of forecasting and discounts it to make decisions in the present.

30. MODERN MANAGEMENT THEORIES Quantitative Theory System Theory Contingency Theory Operational Theory QUANTITATIVE THEORY : This theory became an acceptable theory during world war II , when Britain wanted to solve the problem of war. The problem was that the rader system did not perform well at field sites as it performed at the testing stations. During the war managers ,govt officials, and scientists are brought together to help the army to utilize the resources effectively. The experts solved many logistic problems in the war. After the war, such techniques were used by the organizations to solve their business problems. This school of thoughts uses statistics, optimization models, information models, and computer simulation to solve business problems. It has various branches , such as • Management science b) Operations Management c) Management information system Management Science approach: Also known as the operation research approach, which is applied in the areas like capital budgeting, production scheduling, product strategy management, human resource planning and inventory management.

31. Various mathematical tools like queuing theory, linear programming, PERT, CPM, decision theory, probability theory and smpling etc are used to minimize the error in management decisions. The operations management approach : is primarily concerned with production management and its related areas. This approach is helpful in decision making in the functional areas like finance, marketing and human resource management. The management information system approach focuses on designing and implementing computer based information systems for use by management. THE SYSTEMS THEORY APPROACH In mid 1960s began a decade in which the idea that organizations could be analysed in a systems framework gained a strong following. The systems approach defines a system as a set of interrelated and interdependent parts arranged in a manner that produces a unified whole. Societies are systems and so, too, are computers, automobiles, organizations, and animal and human bodies.

32. This approach consider the organization as a whole because of the interdependent nature of activities, requiring the organization to interact with external environmental factors. The two basic types of systems are closed and open. Closed systems are not influenced by and do not interact with their environment. In contrast, an open system approach recognizes the dynamic interaction of the system with the environment. Today when we talk of organizations as systems, we mean open systems. That is, we acknowledge the organization’s constant interaction with its environment which can result in negative entropy or synergy.

33. Features : Following are the important features of system approach to management thoughts • It considers the organizations as a dynamic and inter-related set of parts. Continuous and effective interaction of sub systems helps to attain goalsof the larger system. • It considers the impact of both near and distant future on organizational activities. • It integrates goals of different parts of the organization(sub systems or departments) with the organization as a whole. It also integrates goals of the organization with goals of the environment or society in which it operates. 4. It synthesises the knowledge of different fields of study 5 It enables organizations to frame policies that promote business objectives and social objectives.

34. Technological Variables Social Variables Competitors Customer Employee Financial Institute Suppliers The Organization Labor Union Govt Shareholders & Board of Directors The Media Special Interest group Economic Variables Political Variables Internal Stakeholders External Stakeholders Indirect Action Elements (PEST)

35. EVALUATION : This theory provides the following benefits • It provides the holistic view of the organizations and emphasises on their adaptive nature. It increases the organization’s adaptability to environmental changes. • It analyses the system at different levels and inter-relates and integrates it into a unified set of direction. • It provides a framework for effective interaction of different parts of the organization for attainment of its goal. • It considers the impact of environment on the organization and vice versa. Interaction of external environment with the organization’s internal environment is the most significant contribution of the system theory. • It synthesizes the classical and behavioural theories into broader framework to solve managerial problems.

36. What is a Contingency Approach to the Study of Management Management, like life itself, is not based on simplistic principles. The contingency approach( sometime called the situational approach) has been used to replace simplistic principles of management and to integrate much of management theory. A contingency approach to the study of management is logical. Because organizations are diverse- in size, objectives, tasks being done, and the like- it would be surprising to find universally applicable principles that would work in all situations. In other words, managing Oracle’s software design engineers would be different from managing sales force in LIC. But of course, it is one thing to say, “ It all depends”, and another to say what it depends on. Advocates of the contingency approach- a group that includes most management researchers and practitioners- have been trying to identify the “what” variables. Table below describes four popular contingency variables. The contingency variables can have a significant effect on what managers do, that is, on the way work activities are coordinated and integrated.

37. FOUR POPULAR CONTINGENCY VARIABLES