History of Management Thought

[Pages:22]

HistoryofManagementThought

TheEvolutionofManagementTheory

Uponcompletingthischapter,youshouldbeableto:

Explainthesettinginwhichmanagementtheoryfirstdeveloped. Describethewaysinwhichatheorycanbeuseful. Distinguishthescientificmanagementschool,theclassicalorganizationtheoryschool,the

behavioralschool,andthemanagementscienceschoolofmanagementtheory. Understandthehistoricalcontextinwhichthesystemsapproach,thecontingencyapproach,and

thedynamicengagementapproachtomanagementtheoryhavedeveloped. THEAPOSTLEOFMASSPRODUC'TION

HenryFordandtheModelhavelongbeensymbolsoftheindustrialage.Eventhesubsequentgrowth andsuccessofFord'srival,GeneralMotors,wasdueinlargeparttoGM'sneedtofindaninnovative responsetotheModelT.Inlargemeasure,themanagerialapproachofHenryFord,aswellashis preferencesinmanagerialtheory,isaparadigmofmuchthatwasconstructiveandmuchthatwas imperfect--inearlyapproachestomanagement

ThesonofapoorIrishimmigrant,HenryFordwasbornin1863andgrewuponafarminrural Michigan.Hewasfascinatedbymachineryandwasquiteskilledinrepairingandimprovingalmost anymachine.HestartedtheFordMotorCompanyin1903,andby1908,theModelTwasbuilt.

Inthepartofthecenturywhenautomobileswereintroduced,theywereasymbolofstatusand wealth,thenearexclusiveprovinceoftherich.Fordintendedtochangethat:theModelTwastobe forthemasses--acarthatvirtuallyanyonecouldafford.Heunderstoodthattheonlywaytomake suchacarwastoproduceitathighvolumeandlowcost.Fordfocusedhisfactoryeffortson efficiency,mechanizingwhereverpossible,andbreakingdowntasksintotheirsmallestcomponents. Oneworkerwouldperformthesametaskoverandover,producingnotafinishedpart,butoneofthe operationsnecessaryfortheproductionofthewhole;theincompletepartwouldthenbepassedon toanotherworker,whowouldcontributeasuccessiveoperation.Fordwasabletoachieve remarkableefficiencies:AlthoughthefirstModelTtookover12?hourstoproduce,only12years later,in1920,FordwasproducingoneModelTeveryminute.By1925,atthepeakofthecar's popularity,aModelTwasrollingoffFord'sassemblylinesattherateofoneevery5seconds.

However,mechanizationoftheplanthadsomeadverseeffects.ThefasterFordpushedhisworkers, themoredisgruntledtheybecame.In1913,turnoverwas380percent,andFordhadtohiretentimes moreworkersthanheneededjusttokeepthelinemoving.Inanactionthatatthetimewas unprecedented,Fordsimplydecidedtodoublewagesinordertogetthebestpeopleandmotivate

themtoworkevenharder.Inthedaysfollowingtheannouncementthatwageswerebeingdoubled, thousandsandthousandsofmencametotheFordplantinsearchofwork.Policehadtobecalledin tocontrolthecrowds.

Whenhediedin1945,Fordwasworthover$600million.HeleftanindeliblemarkonbothAmerican industryandsociety.Hisnameissynonymouswithmassproductionandthedevelopmentofmodern managementtheory.

MostpeopleassociateHenryFordwiththeModelT,theaffordablemass-producedautomobilethat changedsociety.ButFordisalsoimportantasamanagementthinkerbecausehedevelopedideas abouthoworganizationsfunction.Moreover,Fordhiredtheorists,suchasFrederickWinslowTaylor, andgavethemthechancetodeveloptheirmanagementtheories.Inthischapterwewillseehow differentmanagementtheoriesdevelopedandcontinuetoevolve.Butfirstwe'lllookatsomeearly ideasabouthowtorunorganizationseffectively.

EARLYTHINKINGABOUTMANAGEMENT

Peoplehavebeenshapingandreshapingorganizationsformanycenturies.Lookingbackthrough worldhistory,wecantracethestoriesofpeopleworkingtogetherinformalorganizationssuchasthe GreekandRomanarmies,theRomanCatholicChurch,theEastIndiaCompany,andtheHudsonBay Company.Peoplehavealsolongbeenwritingabouthowtomakeorganizationsefficientand effective--sincelongbeforetermssuchas"management"cameintocommonusage.Twoprominent andinstructiveexamplesarethewritingsleftforusbyNiccoloMachiavelliandSunTzu.

MACHIAVELLIANDSUNTZU:

EARLYSTRATEGISTS

Althoughtheadjective'Machiavellian'isoftenusedtodescribecunningandmanipulative opportunistsMachiavelliwasagreatbelieverinthevirtuesofarepublic.ThisisevidentinDiscourses, abookMachiavelliwrotein1531whilehelivedintheearlyItalianrepublicofFlorence.Theprinciples hesetforthcanbeadaptedtoapplytothemanagementoforganizationstoday.

Anorganizationismorestableifmembershavetherighttoexpresstheirdifferencesandsolve theirconflictswithinit

Whileonepersoncanbeginanorganization,"itislastingwhenitisleftinthecareofmanyand whenmanydesiretomaintainit."

Aweakmanagercanfollowastrongone,butnotanotherweakone,andmaintainauthority. Amanagerseekingtochangeanestablishedorganization"shouldretainatleastashadowofthe

ancientcustoms." AnotherclassicworkthatoffersinsightstomodemmanagersisTheArtofWar,writtenbythe ChinesephilosopherSunTzumorethan2,000yearsago.ItwasmodifiedandusedbyMaoZedong, whofoundedthePeople'sRepublicofChinainl949.AmongSunTzu'sdicturarethefollowing:

Whentheenemyadvances.weretreat! whentheenemyhaltsweharass!

Whentheenemyseekstoavoidbattle,weattack! Whentheenemyretreats,wepursue! Althoughtheserulesweremeanttoguidemilitarystrategy,theyhavebeenusedwhenplanninga strategytoengagebusinesscompetitors.KeepSunTzuinmindasyoustudythechapterabout strategyandplanning. AlthoughneitherMachiavellinorSunTzuwastryingtodevelopatheoryofmanagementperse,their insightsteachusanimportantlessonabouthistory.Managementisnotsomethingthatoriginatedin theUnitedStatesinthiscentury.Wemustbecarefulnottoputonhistoricalandculturalblinders when,fromtheperspectiveofthisparticulartimeandplace,wethinkaboutthemanagementof organizations. Beforegoingontoourdiscussionofthemajormanagementtheories,let'stakeamomenttolookat thereasonsstudyingmanagementtheorywillhelpyouunderstandmanagementandtoday's complexorganizations.

WHYSTUDYMANAGEMENTTHEORY?

Theoriesareperspectiveswithwhichpeoplemakesenseoftheirworldexperiences.Formally,a theoryisacoherentgroupofassumptionsputforthtoexplaintherelationshipbetweentwoormore observablefacts.JohnClancycallssuchperspectives"invisiblepowers"toemphasizeseveralcrucial usesoftheories,the"unseen"waysinwhichweapproachourworld.

First,theoriesprovideastablefocusforunderstandingwhatweexperience.Atheoryprovides criteriafordeterminingwhatisrelevant.ToHenryFord,alargeandcompliantworkforcewasone relevantfactorashetheorizedabouthisbusiness.Inotherwords,histheoryofmanagement included,amongotherthings,thisassumptionaboutthesupplyoflabor.

Second,theoriesenableustocommunicateefficientlyandthusmoveintomoreandmorecomplex relationshipswithotherpeople.Imaginethefrustrationyouwouldencounterif,indealingwithother people,youalwayshadtodefineeventhemostbasicassumptionsyoumakeabouttheworldm whichyoulive!BecauseFordandhismanagersfullyunderstoodFord'stheoryaboutmanufacturing automobiles,theycouldinteracteasilyastheyfacedday-to-daychallenges.

Third,theoriesmakeitpossible--indeed,challengeus--tokeeplearningaboutourworld.By definition,theorieshaveboundaries;thereisonlysomuchthatcanbecoveredbyanyonetheory. Onceweareawareofthis,wearebetterabletoaskourselvesiftherearealternativewaysoflooking attheworld(especiallywhenourtheoriesnolongerseemto"fit"ourexperience)andtoconsider theconsequencesofadoptingalternativebeliefs.Twocasesareinstructive.

Oneexampleinvolvesworldpolitics.Foryears,whatmightbecalledatheoryoftheColdWar dominateddiplomaticactivitybetweentheUnitedStatesandtheSovietUnion.Duringthoseyears, mostdiplomatsandmilitaryofficialsdidnotconsiderwhattheworldwouldbelikeiftheColdWar ended.Now,however,the"ColdWar"theorynolongerfitsourexperience,andgovernmentand militaryofficials,aswellasmanagersoforganizations;arescramblingtodevelopnewtheoriesfor dealingwithformerenemiesonamorecooperativebasis.Forexample,thebreakupoftheSoviet

UnionandRussia'sstrugglestowardfinancialstabilityhaveleftsomeoftheworld'stopscientists unemployed,strugglingwithpoorequipment,andwillingtoworkforlittlepay.InthisbreachU.S. firmssuchasCorning,AmericanTelephoneandTelegraph,andUnitedTechnologieshavecapitalized ontheopportunitythispresentsbyfundingresearchfacilitiesinRussia.

TheothercasetakesusbacktoHenryFord.Fordhasbeencriticizedfornotusinghisapproachasa waytolearnaboutbetterwaystorunhiscompany.WhileFordwasgivinghiscustomersnochoice aboutanythingotherthanprice(whichwasattractive!)AlfredSloanwastransformingGeneral Motors.Beginninginthe1920s,SloanrejectedpartofFord'stheoryaboutrunningabusinessinfavor ofalternativewaystodesignautomobilesandorganizemanufacturinganddistribution.GMs marketingstrategyhadalwaysbeentomarketnationwidewithcarsofinteresttodifferentsegments ofthepublic.Sloansetupseparatedivisions,withcentraldirectionfromheadquarters,tomarketthe Buick,Oldsmobile,Pontiac,Cadillac,andChevroletlines.IncontrasttoFord,eachtypeofcarhasits owndistinctionandpricedifferentials.

Inthischapter,wewillfocusonfourwell-establishedschoolsofmanagementthought:thescientific managementschool,theclassicalorganizationtheoryschool,thebehavioralschool,andthe managementscienceschool.Althoughtheseschools,ortheoreticalapproaches,developedhistorical sequence,laterideashavenotreplacedearlierones.Instead,eachnewschoolhastendedto complementorcoexistwithpreviousones.Atthesametime,eachschoolhascontinuedtoevolve, andsomehaveevenmergedwithothers.Thistakesustothreerecentintegrativeapproaches:the systemsapproach,thecontingencyapproach,andwhatwecallthedynamicengagementapproachto management.Figure2-1showstheapproximatedatewheneachofthesetheoreticalperspectives emerged,aswellaskeyhistoricaleventsthatsignaledtheemergenceofeachwayofthinkingabout organizationsandmanagement.

THEEVOLUTIONOFMANAGEMENTTHEORY

Managementandorganizationsareproductsoftheirhistoricalandsocialtimesandplaces.Thus,we canunderstandtheevolutionofmanagementtheoryintermsofhowpeoplehavewrestledwith mattersofrelationshipsatparticulartimesinhistory.Oneofthecentrallessonsofthischapter,and ofthisbookasawholeisthatwecanlearnfromthetrialsandtribulationsofthosewhohave precededusinsteeringthefortunesofformalorganizations.Asyoustudymanagementtheoryyou willlearnthatalthoughtheparticularconcernsofHenryFordandAlfredSloanareverydifferentfrom thosefacingmanagersinthemid-1990s,wecanstillseeourselvescontinuingthetraditionsthat theseindividualsbeganlongbeforeourtime.Bykeepinginmindaframeworkofrelationshipsand time,wecanputourselvesintheirshoesasstudentsofmanagement.

ImaginethatyouareamanageratanAmericansteelmill,textilefactory,oroneofFord'splantsin theearlytwentiethcentury.Yourfactoryemploysthousandsofworkers.Thisisascaleofenterprise unprecedentedinWesternhistory.Manyofyouremployeeswereraisedinagriculturalcommunities. Industrialroutinesarenewtothem.Manyofyouremployees,aswell,areimmigrantsfromother lands.TheydonotspeakEnglishwell,ifatall.Asamanagerunderthesecircumstances,youwill probablybeverycuriousabouthowyoucandevelopworkingrelationshipswiththesepeople.Your managerialeffectivenessdependsonhowwellyouunderstandwhatitisthatisimportanttothese

people.Current-daychallengesparallelsomeofthosefacedintheearlytwentiethcentury.Inthe 1980s8.7millionforeignnationalsenteredtheU.S.andjoinedthelabormarket.Theyoftenhave distinctneedsforskillsandlanguageproficiency,muchasthosebeforethemattheadventofthe industrialage.

Earlymanagementtheoryconsistedofnumerousattemptsatgettingtoknowthesenewcomersto industriallifeattheendofthenineteenthcenturyandbeginningofthetwentiethcenturyinEurope andtheUnitedStates.Inthissection,wewillsurveyanumberofthebetter-knownapproachesto earlymanagementtheory.Theseincludescientificmanagement,classicalorganizationtheory,the behavioralschool,andmanagementscience.Asyoustudytheseapproaches,keeponeimportantfact inmind:themanagersandtheoristwhodevelopedtheseassumptionsabouthumanrelationships weredoingsowithlittleprecedent.Large-scaleindustrialenterprisewasverynew.Someofthe assumptionsthattheymademightthereforeseemsimpleorunimportanttoyou,buttheywere crucialtoFordandhiscontemporaries.

THESCIENTIFICMANAGEMENTSCHOOL

ScientificManagementtheoryaroseinpartfromtheneedtoincreaseproductivity.IntheUnited Statesespecially,skilledlaborwasinshortsupplyatthebeginningofthetwentiethcentury.Theonly waytoexpandproductivitywastoraisetheefficiencyofworkers.Therefore,FrederickW.Taylor, HenryL.Gantt,andFrankandLillianGilbrethdevisedthebodyofprinciplesknownasscientific managementtheory.

FREDERICKW.TAYLOR

FrederickW.Taylor(1856-1915)restedhisphilosophyonfourbasicprinciples:

Thedevelopmentofatruescienceofmanagement,sothatthebestmethodforperformingeach taskcouldbedetermined.

Thescientificselectionofworkers,sothateachworkerwouldbegivenresponsibilityforthetask forwhichheorshewasbestsuited.

Thescientificeducationanddevelopmentoftheworker. Intimate,friendlycooperationbetweenmanagementandlabor. Taylorcontendedthatthesuccessoftheseprinciplesrequired"acompletementalrevolution"on thepartofmanagementandlabor.Ratherthanquarreloverprofits,bothsidesshouldtrytoincrease production;bysodoing,hebelieved,profitswouldrisetosuchanextentthatlaborandmanagement wouldnolongerhavetofightoverthem.Inshort,Taylorbelievedthatmanagementandlaborhada commoninterestinincreasingproductivity.

Taylorbasedhismanagementsystemonproduction-linetimestudies.Insteadofrelyingon traditionalworkmethods,heanalyzedandtimedsteelworkers'movementsonaseriesofjobs.Using timestudyashisbase,hebrokeeachjobdownintoitscomponentsanddesignedthequickestand bestmethodsofperformingeachcomponent.Inthiswayheestablishedhowmuchworkersshould beabletodowiththeequipmentandmaterialsathand.Healsoencouragedemployerstopaymore

productiveworkersatahigherratethanothers,usinga"scientificallycorrect"ratethatwould benefitbothcompanyandworker.Thus,workerswereurgedtosurpasstheirpreviousperformance standardstoearnmorepayTaylorcalledhisplanthedifferentialratesystem.

CONTRIBUTIONSOFSCIENTIFICMANAGEMENTTHEORY

ThemodemassemblylinepoursoutfinishedproductsfasterthanTaylorcouldeverhaveimagined. Thisproduction"miracle"isjustonelegacyofscientificmanagement.Inaddition,itsefficiency techniqueshavebeenappliedtomanytasksinnon-industrialorganizations,rangingfromfast-food servicetothetrainingofsurgeons.

LIMITATIONSOFSCIENTIFICMANAGEMENTTHEORY

AlthoughTaylor'smethodledtodramaticincreasesinproductivityandtohigherpayinanumberof instances,workersandunionsbegantoopposehisapproachbecausetheyfearedthatworking harderorfasterwouldexhaustwhateverworkwasavailable,causinglayoffs.

Moreover,Taylor'ssystemclearlymeantthattimewasoftheessence.Hiscriticsobjectedtothe "speedup"conditionsthatplacedunduepressuresonemployeestoperformatfasterandfaster levels.Theemphasisonproductivity--and,byextension,profitability--ledsomemanagerstoexploit bothworkersandcustomers.Asaresult,moreworkersjoinedunionsandthusreinforcedapattern ofsuspicionandmistrustthatshadedlabor-managementrelationsfordecades.

HENRYL.GANTT

HenryL.Gantt(1861-1919)workedwithTayloronseveralprojects.Butwhenhewentoutonhisown asaconsultingindustrialengineer,GanttbegantoreconsiderTaylor'sincentivesystem.

Abandoningthedifferentialratesystemashavingtoolittlemotivationalimpact,Ganttcameupwith anewidea.Everyworkerwhofinishedaday'sassignedworkloadwouldwina50-centbonus.Then headdedasecondmotivation.Thesupervisorwouldearnabonusforeachworkerwhoreachedthe dailystandard,plusanextrabonusifalltheworkersreachedit.This,Ganttreasoned,wouldspur supervisorstotraintheirworkerstodoabetterjob.

Everyworker'sprogresswasratedpubliclyandrecordedonindividualbarcharts,--inblackondays theworkermadethestandard,inredwhenheorshefellbelowit.Goingbeyondthis,Gantt originatedachartingsystemforproductionscheduling;the"Ganttchart"isstillinusetoday.Infact, theGanttChartwastranslatedintoeightlanguagesandusedthroughouttheworld.Startinginthe 1920s,itwasinuseinJapan,Spain,andtheSovietUnion.Italsoformedthebasisfortwocharting deviceswhichweredevelopedtoassistinplanning,managing,andcontrollingcomplexorganizations: theCriticalPathMethod(CPM),originatedbyDuPont,andProgramEvaluationandReview Technique(PERT),developedbytheNavy.Lotus1-2-3isacreativeapplicationoftheGanttChart.

THEGILBRETHS

FrankB.andLillianM.Gilbreth(1868-1924and1878-1972)madetheircontributiontothescientific managementmovementasahusband-and-wifeteam.LillianandFrankcollaboratedonfatigueand motionstudiesandfocusedonwaysofpromotingtheindividualworker'swelfare.Tothem,the ultimateaimofscientificmanagementwastohelpworkersreachtheirfullpotentialashuman beings.

Intheirconception,motionandfatiguewereintertwined--everymotionthatwaseliminatedreduced fatigue.Usingmotionpicturecameras,theytriedtofindthemosteconomicalmotionsforeachtask inordertoupgradeperformanceandreducefatigue.TheGilbrethsarguedthatmotionstudywould raiseworkermoralebecauseofitsobviousphysicalbenefitsandbecauseitdemonstrated management'sconcernfortheworker.

CLASSICALORGANIZATIONTHEORYSCHOOL

Scientificmanagementwasconcernedwithincreasingtheproductivityoftheshopandtheindividual worker.Classicalorganizationtheorygrewoutoftheneedtofindguidelinesformanagingsuch complexorganizationsasfactories.

HENRIFAYOL

HenriFayol(1841-1925)isgenerallyhailedasthefounderoftheclassicalmanagementschool--not becausehewasthefirsttoinvestigatemanagerialbehavior,butbecausehewasthefirstto systematizeit.Fayolbelievedthatsoundmanagementpracticefallsintocertainpattersthatcanbe identifiedandanalyzed.Fromthisbasicinsight,hedrewupablueprintforacohesivedoctrineof managers--onethatretainsmuchofitsforcetothisday.

Withhisfaithinscientificmethods,FayolwaslikeTaylor,hiscontemporary.WhileTaylorwas basicallyconcernedwithorganizationalfunctions,howeverFayolwasinterestedinthetotal organizationandfocusedonmanagement,whichhefelthadbeenthemostneglectedofbusiness operations.Exhibit2-1liststhe14principlesofmanagementFayol"mostfrequentlyhadtoapply." BeforeFayol,itwasgenerallybelievedthat"managersareborn,notmade."Fayolinsisted,however, thatmanagementwasaskilllikeanyother--onethatcouldbetaughtonceitsunderlyingprinciples wereunderstood.

Fayol's14Principlesofmanagement

DivisionofLabor.Themorepeoplespecialize,themoreefficientlytheycanperformtheirwork. Thisprincipleisepitomizedbythemodernassemblyline.

Authority.Managersmustgiveorderssothattheycangetthingsdone.Whiletheirformal authoritygivesthemtherighttocommand,managerswillnotalwayscompelobedience unlesstheyhavepersonalauthority(suchasrelevantexpertise)aswell.

Discipline.Membersinanorganizationneedtorespecttherulesandagreementsthatgovernthe organization.ToFayol,disciplineresultsfromgoodleadershipatalllevelsoftheorganization,

fairagreements(suchasprovisionsforrewardingsuperiorperformance),andjudiciously enforcedpenaltiesforinfractions. UnityofCommand.Eachemployeemustreceiveinstructionsfromonlyoneperson.Fayolbelieved thatwhenanemployeereportedtomorethanonemanager,conflictsininstructionsand confusionofauthoritywouldresult. UnityofDirection.Thoseoperationswithintheorganizationthathavethesameobjectiveshould bedirectedbyonlyonemanagerusingoneplan.Forexample,thepersonneldepartmentina companyshouldnothavetwodirectors,eachwithadifferenthiringpolicy. SubordinationofIndividualInteresttotheCommonGood.Inanyundertaking,theinterestsof employeesshouldnottakeprecedenceovertheinterestsoftheorganizationasawhole. pensationforworkdoneshouldbefairtobothemployeesandemployers. Centralization.Decreasingtheroleofsubordinatesindecisionmakingiscentralization;increasing theirroleindecentralization.Fayolbelievedthatmanagersshouldretainfinalresponsibility, butshouldatthesametimegivetheirsubordinatesenoughauthoritytodotheirjobs properly.Theproblemistofindtheproperdegreeofcentralizationineachcase. TheHierarchy.Thelineofauthorityinanorganization--oftenrepresentedtodaybytheneatboxes andlinesoftheorganizationchart--runsinorderofrankfromtopmanagementtothelowest leveloftheenterprise. Order.Materialsandpeopleshouldbeintherightplaceattherighttime.People,inparticular, shouldbeinthejobsorpositionstheyaremostsuitedto. Equity.Managersshouldbebothfriendlyandfairtosubordinates. StabilityofStaff.Ahighemployeeturnoverrateunderminestheefficientfunctioningofan organization. Initiative.Subordinatesshouldbegiventhefreedomtoconceiveandcarryouttheirplans,even thoughsomemistakesmayresult. EspiritdeCorps.Promotingteamspiritwillgivetheorganizationasenseofunity.ToFayol,even smallfactorsshouldhelptodevelopthespirit.Hesuggested,forexample,theuseofverbal communicationsinsteadofformal,writtencommunicationwheneverpossible. Source:HenriRayolIndustrialandGeneralAdministration,J.A.Caubrough,trans.(Geneva InternationalManagementInstitute,1930) MAXWEBER

Reasoningthatanygoal-orientedorganizationconsistingofthousandsofindividualswouldrequire thecarefullycontrolledregulationofitsactivities,theGermansociologistMaxWeber(1864-1920) developedatheoryofbureaucraticmanagementthatstressedtheneedforastrictlydefined hierarchygovernedbyclearlydefinedregulationsandlinesofauthority.Heconsideredtheideal organizationtobeabureaucracywhoseactivitiesandobjectiveswererationallythoughtoutand whosedivisionsoflaborwereexplicitlyspelledout.Weberalsobelievedthattechnicalcompetence shouldbeemphasizedandthatperformanceevaluationsshouldbemadeentirelyonthebasisof merit.

Todayweoftenthinkofbureaucraciesasvast,impersonalorganizationsthatputimpersonal efficiencyaheadofhumanneeds.Weshouldbecareful,though,nottoapplyournegative connotationsofthewordbureaucracytothetermasWeberuseit.Likethescientificmanagement theorists,Webersoughttoimprovetheperformanceofsociallyimportantorganizationsbymaking

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