January 17, 2020

Evolution of Management Thought and Theory - Review Notes

Online MBA Management Theory Handbook 

Evolution of Management Thought and Theory

Organization of human beings for the attainment of common objectives is ages old. But in the scientific tradition, development of management theory is only around 100 years old.

Adam Smith did mention issues of entrepreneurship and increased efficiency due to specialisation. Marshall also touched upon efficiency in industrial work. But serious attention to individual firm issues in economics occurred only after 1840s.

Henry Varnum Poor discussed issues of managing a big business concern especially in railroad business during the period 1850 to 1862 as editor of American Railroad Journal.

Charles Babbage documented some issues related to efficiency of manufactures. But it was F.W. Taylor who gave the call for development of science by managers for all human activities in production processes and by implication for all man-machine activity and laid the foundation for development of theory in management in 1911. Following the scientific method,  subsequent to Taylor number of books and monographs appeared.  Henri Fayol in 1916, came out with the explanation for management as an activity distinct from other industrial activities - technical, commercial, financial, accounting and security. It is important to mention here that Taylor's writings on management start with a paper on increasing productivity through improving the engineering elements of a machine-man task and training operators in the new method. The productivity increase must lead to increase in income of the operators and Taylor proposed differential piece rate system to provide incentive to the operators to learn and produce to a daily goal. Taylor clearly stated that for productivity improvement, the improvement in engineering elements is the primary step and once operators make the higher output as a habit, the differential system may not be necessary and uniform piece rate system will also deliver the higher output through the new improved process.

Fayol came out with the list of functions of management as planning, organizing, command, co-ordination and control.  L. Gulick and L. Urwick expanded it to POSDCORB. Koontz and O'Donnell suggested planning, organizing, staffing, directing and control. This approach of explaining management theory is being called operational approach. Professor Narayana Rao suggests planning, organizing, resourcing, executing and controlling as the appropriate steps for operational approach.

Professors and researchers belonging to Psychology field have developed management related theories practices related to human behavior in organizations. Sociologists also brought in their knowledge of group behavior.

Statisticians found that management requires forecasting and statistical forecasting techniques have application. Then they developed application of statistical samples in process control and in reducing 100% inspection to inspections based on samples. Quality management area has benefited a lot form statistical thinking. Six sigma, a technique to investigate the process to reduce its variance based on experiments and the statistical analysis of resulting data has given significant benefits to organization to reduce defects and costs.

Operations research is application of scientific method to business decision making thought earlier to be complex. OR scholars formulated the complex decision making situations into mathematical models involving objective functions and constraints and developed procedures to find optimal combinations of decision variables. A large number of business decisions became better and managers were forced to include quantitative methods in their day to day functioning.

The advent of computers also brought a change in management practice. Commercial transactions are being now done using computers at both ends. Data is being captured and analyzed by the computer programs. Hence lot data processing earlier done human component is now being done by computers. Hence there was a drastic reengineering of business processes.

The development of management through various disciplines is being described in more detail in individual articles.

Scientific Management

Scientific management - Taylor

F.W. Taylor identified that efficiency of processes is not getting adequate attention of the managers. He focused his attention on using machine tools in machines shops more efficiently by employing higher cutting speeds, feeds and depths of cut. For that purpose he conducted number of experiments and from the data, he developed the laws of economic machining. Taylor introduced scientific method in investigating operation of machines and then into the study of human effort. Slowly, Taylor's contribution was recognized as scientific management. Taylor himself published a long book length paper under the title "Scientific Management." But this paper does not address management in a comprehensive manner. The paper's focus is on preventing waste of human effort. Taylor focused on the improvement of total production system in his earlier publications - Piece rate system, and Shop Management. He suggested started of a new department or section, elementary rate fixing department that improves elements of operations and determines the time required to do each elements of the operation. After determining the time required to do each elements, the department will calculate the production of an item that is possible in unit time and thereby fixed production target for various periods. This is the procedure for productivity improvement. Improvement of each engineering element will lead to increase in productivity. Time study is method developed by Taylor to determine the current time, understand the elements, finding out elements in which improvement is possible, do the engineering improvement/change needed, introduce into the product or process design and then determine the new reduced time. 

From the success, that he has achieved in improving the efficiency of use of machine tools, Taylor's attention moved to other production processes.  Taylor recognized the importance of man's effort in man-machine systems and he came to the conclusion that completing an activity in less time leads to efficiency. That insight led to the development of time study. Taylor developed the technique of time study and starting doing time studies of various ways of doing the same work. That helped in identifying the most efficient method of doing that element of the work and Taylor advocated that management train all the operators doing that activity in the most efficient method. Time study also allowed study of various operators doing the same activity and helped in identifying the most efficient method and in training all other operators in that method. Using time study as the foundation, Taylor varied sizes and shapes of various hand tools used by workmen and came out with identifying the best tools to be used in an activity.

Thus,the idea that management has to take care of efficiency,  is the first major development in modern management thought. Taylor gave his thoughts on management through three important publications, Piece rate system, Shop Management and Scientific Management. In Scientific Management, he gave four principles.

Taylor being an engineer, advocated the teaching of principles of efficiency to engineers through a subject named industrial engineering.



More detailed article: Scientific Management - Foundation and Development of the Approach

General management - Fayol

Fayol is the CEO and Chairman of a mining company. He brought out the fact that management is not being taught as a subject. He advocated that management can be taught as a subject.

He presented a paper outlining the content that can be taught. Fayol discussed the ideas of Taylor in his paper and advocated that Taylor's ideas are applicable in many more work systems.

Operational Management Theory - Henri Fayol  -  Summary of Fayol's Book

Contribution of Behavioral school

The behavioral school identified more variable capable of increasing productivity apart from the technology or process improvement and financial incentives identified and advocated by Taylor, other proponents of scientific management and industrial engineering.  They found that the improvement in productivity is also due to such social factors as morale, satisfactory interrelationships between members of  work group (a sense of belonging), and effective management - a kind of managing that takes into account human behavior, especially group behavior and maintains a climate where the worker feels psychologically and socially satisfied.

In terms of scholars and managers who contributed to the behavioral school, Hugo Munsterberg published Psychology and Industrial Efficiency in 1912. Lillian Gilbreth published Psychology of Management in 1914. Elton Mayo, F.J. Roethlisberger and others undertook famous Hawthorne experiments during 1927 to 1932.

Elton Mayo - Narayana Rao  Synthesis - Utilization of Human Sciences in Industry

Human Effort Industrial  Engineering for Increasing Productivity - Principle of Industrial Engineering


Quantitative School

The contributors from this school converted many management problems into mathematical models and solved them for coming out with optimal decisions. Decisions that will provide maximum profits for the given or assumed situation or minimum costs.

Systems Approach

Systems approach in one way is an extension of mathematical approach whereby, the entire working of an organization is modeled and its working over a period of time is visualized through repeated cycles. Many times the outputs of the system feed into the system as inputs for the next period and system behavior can change based on these inputs. For example, profits are ploughed back and capital of the organization increase enabling the organization to grow. Customer happiness or unhappiness becomes an input for the next period. Similarly job satisfaction of the employees is also a variable which is an output in one period and becomes input for the next period.  Government,  general public and media may also become stakeholders and have their impact on the organization.

More detailed article on system approach is now developed.

See what this lecture on A Systems Approach to Airport Systems Planning, Design and Management explains the approach


MIT Systems Design Management Course Video
Prof Richard de Neufville

Management Timeline - From Ancient Days


Approaches to Management Analysis
(List given by Heinz Weihrich, Mark V. Cannice and Harold Koontz)

Empirical or Case Approach

Managerial Roles Approach

Contingency or Situational Approach

Mathematical or Management Science Approach

Decision Theory Approach

Reengineering Approach

Systems Approach

Sociotechnical Systems Approach

Cooperative Social Systems Approach

Group Behavior Approach

Interpersonal Behavior Approach

McKinsey's 7-S Framework

Total Quality Management Approach

Management Process or Operational Approach

Koontz and O'Donnell now  Weirich, Cannice and Koontz integrate and discuss the important ideas of all  the above approaches and present it under the

Management process framework - Koontz, Weirich and Cannice

Planning - Organizing -Staffing - Leading - Controlling

Management process framework - Narayana Rao

Planning - Organizing - Resourcing  - Executing - Controlling


Management: A Global and Entrepreneurial Perspective
Henry Weihrich, Mark V. Cannice and Harold Koontz
13 Edition, 2010
McGraw Hill

Author(s) Yamamoto, Yasujiro
Kyoto University Economic Review (1965), 35(2): 1-32

The Management Process in 3-D
R. Alec Mackenzie

The Social Construction of Management

Nancy Harding
Routledge, 01-Jun-2004 - Business & Economics - 240 pages
What is management and how do the people who become managers take on a managerial identity?
How does text inform the manager's identity?

From cultural studies we understand that the relationship between text and reader is not passive but that each one works upon the other, and that text is active in forming the identity of the reader. This books is the first to analyse how many management textbooks construct their readers. It analyses management textbooks published since the 1950s and shows they construct a world in which chaos is kept at bay only by strong management, and in which strong management is based upon the rationality of modernity. This book exposes and analyses such claims-to-truths, and theorizes their arguments using the work of Butler and Foucault, the sociology of scientific knowledge, critical legal studies, art history and queer theory.

Encyclopedia of History of American Management
Morgen Witzel
A&C Black, 15-May-2005 - Business & Economics - 564 pages
Contains more than 250 entries.  The book traces the development of management thinking and major business culture in North America.

Second article of the day for revision: Scientific Management - Foundation and Development of the Approach

MBA Core Management Knowledge - One Year Revision Schedule

Evolution of Strategic Management Concepts

Recent reference - Content to be included in the article

Fifty Years of Management—A Look Back and a Look Forward
Peter F. Drucker
J. Eng. Ind. Aug 1961, 83(3): 366-370 (5 pages)

Related links





Personnel Management



Updated 18 Jan 2020,   8 January 2020,  5 August 2019,  12 June 2019,  2 May 2019,   9 September 2018,  4 August 2018,  18 Jan,  9 Jan 2016, 17 Sep 2015, 29 Dec 2014


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