DEVELOPMENT OF MANAGEMENT THOUGHT: A BRIEF HISTORY

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1 110 DEVELOPMENT OF MANAGEMENT THOUGHT: A BRIEF HISTORY 6 THE EVOLUTION OF MANAGEMENT THOUGHT The Role of Theory and History in Management Theory helps in the provision of a simple conceptual framework for the purpose of organising knowledge and for the provision of a blueprint for action which could help in guiding organisations towards their goals and objectives. Contributions from industrialists in the past have moulded the organisational culture and managers can benefit from an awareness of these contributions. The Historical Context of Management Social forces are the norms and values that characterise a culture. Earlier, workers were permitted to be treated poorly on account of social forces. However, more recently, social forces have provided for more acceptable, better working conditions for workers. These forces have influenced management theory in areas like motivation and leadership. Economic forces are the ideas behind the concept of a market economy, for example, private ownership of property, economic freedom, competitive markets and a limited role for government. Political forces like governmental regulations play a significant role in how organisations choose to manage themselves. Political forces have influenced management theory in the areas of environmental analysis, planning, control, organisational design and employee rights. Precursors to Management Theory While the practice of management can be traced back to 300 B.C., it was not given serious attention until the emergence of large organisations in the 1800s. Early Management Pioneers The early pioneers include the following: Robert Owen was one of the first managers to show respect and dignity to workers in his factory. He implemented better working conditions, raised the minimum age for child labour, reduced working hours and supplied meals to his workers. Charles Babbage applied mathematical principles to find ways of making the most efficient use of facilities and materials. He was also a pioneer advocate of profit-sharing plans. Andrew Ure was one of the first professors in the world to teach management principles at Anderson s College in Glasgow, Scotland. Approaches to Management Since the beginning of the civilisation management has been practiced in some form or the other. Though the art of management has ancient origins, the development of the science of management was after the Industrial Revolution.

2 Development of Management Thought: A Brief History 111 Modern management has evolved after several stages or approaches, which can be classified as follows: 1. Classical Theory 2. Neo-Classical or Behavioural Theory 3. Systems Approach 4. Contingency Approach Classical Theory The Classical or Empirical Approach has the following underlying tenets: 1. A body of knowledge can be developed by theoretical research in management which is essentially required for the purpose of improving the art of management. 2. Management is a process which consists of interrelated functions which have to be performed in order to achieve the desired goals and objectives. 3. Formal education in business schools and on-the-job training can hone the qualities of managers in order to develop them. 4. Principles or guidelines can be derived based upon experiences of managers in various business organisations. 5. These principles are fundamental truths. When they are applied in different organisations, they can result in an improvement in managerial efficiency. 6. The basic motivation of people lies in incentives, rewards and penalties. Managers can use and control economic rewards. Advantages of the Classical Approach The Classical Approach provides a convenient framework for the education and training of managers in the following ways: The case study approach provides an observational method which is of help in deriving common principles based on past experiences, which are relevant for further application in future circumstances. This approach helps to focus attention on what managers actually do. It effectively presents knowledge regarding management. It highlights the universal nature of management and provides a scientific basis for management practice. It is the foundation for the building of the science of management. It can also prove to be a starting point for researchers to verify the validity of managerial ideas and improve the applicability of management knowledge. Disadvantages of the Classical Approach However, this approach has several limitations which are as follows: A case study can very rarely incorporate the reality and essence of an actual situation which occurs in real-life. There is a strong danger of excessive reliance on past experiences. The principles or techniques which had proved to be effective in the past may not be pertinent for a future situation. It fails to take into account the dynamics of the environment and their subsequent effect on management. It provides an almost mechanical framework in which the role of human factor may be liable to be underestimated. The Classical Approach has its foundation in assumptions which are over-simplified. Its principles are ambiguous and contradictory. The main pillars of the Classical Approach are the Administrative Approach, the Scientific Approach and the Bureaucratic Approach. Administrative Approach Managers were more bothered about the management of the organisations instead of focusing on improving the efficiency of individual jobs, with the growth of organisations which became more complex. There was recognition of the requirement of an understanding of the overall process of

3 112 management. Managers began by trying to identify the functions of a manager with a strong emphasis on coordination of resources so as to achieve the predetermined goals and objectives. This stream of the Classical Approach is called the Administrative Approach or Administrative Theory or the Functional Approach or Management Process Approach. Henri Fayol, a French industrialist, ( ), was one of the foremost contributors to Administrative Management Theory. In 1916, he published a book entitled, Administrative Industrielle et Generale. In 1949, this now famous book was published in English as General and Industrial Management. Fayol s theory may be analysed as follows: Fayol classified all business activities into six categories as follows: (i) Technical (ii) Commercial (iii) Financial (iv) Security (v) Accounting (vi) Managerial The first five are known as the opening activities of business. The technical category deals with the production function. The commercial category is concerned with purchases and sales. The financial category deals with the function of funding and controlling capital. The security category is concerned with protection. The accounting category is concerned with balance sheets, costing records, statistics and so on. The last category, the managerial category, is concerned with planning, organising, commanding, coordinating and controlling. Fayol was of the opinion that this category was neglected the most. Therefore, he began the analysis of the managerial functions. Managerial Functions Fayol analysed the managerial job in terms of a series of functions which are performed by managers in all types of organisations at all levels. Thus, the functions which constitute the management process are: 1. Planning 2. Organising 3. Commanding 4. Co-coordinating 5. Controlling Fayol s observations were as follows: 1. Planning was concerned with studying the future and arranging the plan of operations. 2. Organising was concerned with building up the material and human organisation of the business. 3. Commanding was a function of making the staff do their work. 4. Coordinating was uniting all the activities. 5. Controlling meant that seeing everything was done in accordance with the standards which had been laid down and instructions which had been given earlier. Management Principles Fayol gave the following principles of management, stating that management would only be effective if it had been based on the following fourteen principles: 1. Division of Work: As far as possible, the work of every individual in the organisation should be limited to the performance of a single leading function. If this principle was followed it would entail that with the same effort, an individual would be able to put in better work and more work. 2. Authority and Responsibility: Responsibility is a natural consequence of and a corollary to authority. The two are co-extensive. Therefore, a balance should be maintained between them. However, authority should not be conceived apart from responsibility. Responsibility will always arise whenever authority is exercised. 3. Discipline: Discipline implies respect for rules and agreements which are framed up with the specific purpose of securing obedience. Discipline requires explicit, specific and fair agreements and good supervision. Wherever necessary there should be a judicious application of penalties.

4 Development of Management Thought: A Brief History Unity of Command: Every employee should receive orders and be accountable only to one boss. This is necessary to avoid a situation where there could be conflicting orders and for the purpose of ensuring order and stability in the organisation. It basically follows the concept that no man can serve two masters without favouring one over the other. Moreover in a situation where an individual is answerable to two bosses, a state of confusion may be created. 5. Unity of Direction: There should be one head and one plan for a group of activities which have the same objective. This is essential to ensure unity and coordination in an enterprise. Unity of command is unable to exist without unity of direction but does not necessarily flow from unity of direction. This is because unity of direction is related to grouping of activities and unity of command is concerned with grouping of individuals. 6. Subordination of Individual to General Interests: Efforts should be made to reconcile the interests of individuals with common interests. This requires continuous and exemplary supervision and fair agreements, for the interests of the organisation to prevail over the interests of individuals whenever there is an occasion where there is a conflict between the two interests. 7. Remuneration of Personnel: The amount of remuneration and the methods of payment should be just and fair. It should provide maximum satisfaction to both employees and employers. 8. Centralisation: The degree of centralisation of authority should be based upon optimum utilisation of all faculties of the personnel. Fayol was of the opinion that the question of centralisation and decentralisation was only a matter of finding the optimum degree for the particular concern. The degree of centralisation of authority should be determined on the basis of the individual circumstances of every particular case. 9. Scalar Chain: It refers to the chain of superiors ranging from the ultimate authority to the lowest level in the organisation. To prevent the scalar chain from bogging down action, Fayol suggested the concept of gang plank, in which a manager/supervisor can communicate directly to another manager/supervisor at the same level. He said that the scalar chain should be short circuited and not carried to the extent that it proved to be detrimental to a business organisation. 10. Order: This principle is concerned with the agreement of things and the placement of people. There should be a place for everything and everything should be in its proper place, in material order. There should be an appointed place for every individual and every individual should be in their own appointed place, in social order. Precise knowledge of human requirements and the resources of the organisation are required for a proper balance to be created between the two. 11. Equity: Equity implies that employees should be treated with justice and kindness. Managers should be fair and impartial in their dealings with subordinates. When dealing with workers, managers should adopt a sympathetic and unbiased attitude. This can result in cordial relations between the management and workers which is essential for the successful functioning of every business organisation. 12. Stability of Tenure of Personnel: Unless there is job security, employees are unable to work efficiently. Thus, they should be given the assurance of job security. An employee cannot render worthwhile services if he is removed from his job before he gets used to doing it. Every employee requires a certain amount of time to get used to doing new work. Only then will they be able to do it successfully and to the best of their ability. The management should strive towards minimising employee turnover. 13. Initiative: Employees at all levels should be given the opportunity to take initiative and exercise judgement in the formulation and execution of plans, by giving their point of view. It develops the interest of employees in their jobs and provides them with job satisfaction. Employees should be encouraged to think for themselves and use their discretion when doing their work. 14. Esprit de corps: It implies unity of effort through harmony of interests. Fayol believed that unity of command and oral communication were the best means of achieving esprit de corps.

5 114 Fayol inserted a warning that principles were to be used only as flexible guidelines and not as hard and fast rules. He felt that they should be used with discretion and were not to be blindly followed. Critical Evaluation of Fayol s Contributions Fayol s contributions to management thought are as invaluable as they are immense. He provided a conceptual framework for the analysis of the managerial job. He isolated management and analysed it as a separate discipline. Urwick acknowledged that that was his unique and original contribution to the body of management. Fayol developed fourteen principles of management which were to be used as guides to managerial action. Fayol made a very clear distinction between the operative activities of business and the managerial activities of business. The principles of administrative theory have the potential to comprehend and cope with the growing complexity of organisations to the extent they seek to bring order, structure and certainty through rules, regulations, policies and practices. Fayol rendered a great service to management- education by stressing the universal nature of managerial skills and formal training for the purpose of acquiring them. Fayol was the first to systematise the classical school of thought. Till today, his approach retains its force. Managers nowadays take many of his concerts and principles for granted. His fourteen principles of administrative theory have the potential of comprehending and coping with the growing complexity of organisations. With the use of rules, regulations, policies and practices these fourteen principles aim to bring about order, structure and certainty in an organisation. However, his theory was criticized on the following grounds: 1. Too Formal Fayol s theory has been said to be very formal. If any scientific and analytical study is conducted, however, facts and observations must be presented in a formal manner. 2. Vague Some of the concepts have not been properly defined. Though Fayol laid down the principle of division of work, he did not specify how a task should be divided. The Administrative Theory suffers from superficiality, oversimplification and lack of realism, according to Herbert Simon. 3. Inconsistency Principles of Administrative Theory were based on personal experience and limited observation. They have not been verified under controlled scientific conditions. They are merely generalisations and lack emphirical evidence. Some of them are also contradictory, for example, and the principle of unity of command is not compatible with the principle of division of work. Fayol does not provide guidance as to which principle is greater in importance and should be given more precedence over another. 4. Pro-management Bias Adequate attention to workers is not paid in the Administrative Theory. In the work process, the workers are treated as biological machines or inert instruments. 5. Historical Value When organisations operated in a stable and predictable environment, this theory was relevant. In today s turbulent environment it to seems less appropriate, because managers today cannot depend merely on formal authority. In order to get work done, they must use their powers of persuasion The theory views organisations as power centers and does not recognise the role of a democratic form of organisation. Certain other individuals have also made significant contributions to the field of Administrative Management: Lyndall Urwick is best known for integrating scientific management with administrative management. Max Weber outlined the concept of bureaucracy based on a rational set of guidelines for structuring organisations in the most efficient manner. His work is the foundation of contemporary organisation theory. Chester Bamard wrote about the acceptance of authority and how managers get employees to do what they ask in a book called The Functions of the Executive. Contributions Laid the foundation for Management Theory.

6 Development of Management Thought: A Brief History 115 Identified key processes, functions, and skills of managers that are important even today. Made management a valid subject of scientific inquiry. Limitations Best used in simple, stable organisations. Provided universal procedures that are not appropriate in all settings. Most viewed employees as tools rather than resources. Scientific Management Scientific Management grew on account of the requirement to increase productivity. At the onset of the twentieth century it was essential to improve the efficiency of workers because of shortage of skilled labour in the United States. Fredrick Winslow Taylor ( ), regarded as the father of scientific management, was a brilliant engineer and management scientist in the USA. He was sad to see the haphazard and wasteful ways of doing job in the organisations where he worked and was convinced that there was a science of doing things in physical work at the shop-door level. In order to develop scientific and systematic ways of doing things and to optimise efficiency, he conducted a series of experiments in which his objective was to provide a scientific basis for designing and performing jobs. He laid down a detailed scientific study of each job in order to determine which the best way of doing it was. He believed that management is a science based on well-recognised and clearly-defined principles. He tried to convince managers to adopt a scientific and systematic approach to managerial problems rather than using the rule-of-the-thumb or trial and error methods. Scientific Management focuses on ways to improve the performance of individual workers. Some of the major contributors are: Frederick W. Taylor saw workers soldiering or deliberately working beneath their potential and designed a four-step method to overcome this problem: 1. It begins with breaking the job into its smallest pieces. 2. The second step is to select the most qualified employees to perform the job and train them to do it. 3. Next, supervisors are used to monitor the employees to be sure they are following the methods prescribed. 4. Finally, continue in this fashion, but only use employees who are getting the work done. The Gilbreths, Frank and Lillian, a husband and wife team, also helped to find more efficient ways for workers to produce output. Frank Gilbreth made his most important contribution in the field of bricklaying. He changed an 18-step process into a five-step process and increased productivity by approximately 200%. Henry Gantt introduced the Gantt chart, which is a way to schedule work. This type of chart is still used today. Harrington Emerson was an advocate of specialised management roles in organisations. He testified before the Interstate Commerce Commission that the rail road could save $1 million a day by using scientific management. Principles of Scientific Management The basic principles of scientific management are as follows: (i) Develop a true science for each element of a worker s job and do not use the old rule-of-the-thumb method. In other words, every element offered job should be scientifically analysed for the purpose of determining it, such that the most efficient ways of performing it can be used. (ii) The underlying thread in an organisation should be harmony in group action and not discord. Job specialisation or division of labour should be practiced for each job. Every worker should concentrate and perform only one function so that he can specialise in it. The management should undertake all the

7 116 executive work for which they are better trained than the workers. Taylor clearly demarcated which was the work and the responsibility of the management vis-à-vis the workers. (iii) Every man should be developed to the greatest of his ability and efficiency. Scientific selection, training and development of workers should be practiced. There would be a marked improvement in productivity when there would be proper selection of employees who were best suited for the job. For every job which had to be done, required qualifications should be clearly specified. Only on this basis should the selection and training of employees be done. Proper arrangements should be in place so that every employee can be scientifically trained to perform to the best of his ability and efficiency. (iv) Maximum prosperity of the employer should be coupled with maximum prosperity for each employee. They should be close co-operation between the management and the workers for the purpose of ensuring that work is performed according to the principles of scientific management. Harmonious relationship between management and labour is essential for complete harmony of interests. Not only should there be a harmonious relationship between the management and the labour in an organisation but there should be a complete change in the mindset of both the managers and the workers. Workers should be dedicated and loyal to the organisation and work in a disciplined manner. Managers should share the gains of productivity with the workers. (v) Maximum output in place of restricted output should be the goal of the organisation. When surplus has to be divided there can arise a conflict between management and labour. Taylor suggested that the best way to resolve the problem is to increase the size of the surplus so that each side can have larger share. He firmly believed that both the management and the workers had a common interest in increasing productivity. Box 6.1 Basic Philosophy of Scientific Management According to F.W. Taylor The basic philosophy of Scientific Management lies in a positive change in the mindset and the attitudes of both the management and the workers. According to Taylor, Scientific Management is not an efficiency device, nor time study, nor motion study, nor is it a new system of figuring cost, nor a new system of paying workers. In its essence, Scientific Management involves a complete mental revolution on the part of the working men engaged in any particular establishment or the industry-a complete mental revolution on the part of these men as to their duties, towards their work, towards their fellowmen, and towards their employers. And it involves an equally complete mental revolution on the part of those on the management side-the foreman, the superintendent, the owner of the business, the board of directors-a complete mental revolution on their part as to their duties towards their fellow workers in the management, towards their workmen and towards all of their daily problems. And without this complete mental revolution on both sides Scientific Management does not exist. The great revolution that takes place in the mental attitude of the two parties under Scientific Management is that both sides take their eyes off the division of the surplus as the all-important matter, and together turn the attention towards increasing the size of the surplus. Techniques of Scientific Management Taylor developed the following techniques of Scientific Management for the purpose of implementing the above principles: 1. Work Study: Taylor suggested that work should be studied for the purpose of simplification of work so that efficiency should be increased. He stressed the need for a scientific determination of remuneration for workers. For determining the remuneration of workers, Taylor suggested that a direct link should be created between remuneration and productivity so that workers could be motivated. For this, he developed a differential piece rate system, of wage payment, in which two piece rates are laid down: one low rate for those failing to achieve the standard output and the second, a higher rate for those achieving or exceeding the standard output. 2. Time Study: Time study or work measurement was specifically designed to establish the standard time required to perform a job under specified conditions. It involves analysis of a job into its constituent elements

8 Development of Management Thought: A Brief History 117 and recording the time taken in performing each of them. Taylor suggested that time study should be used to lay down a fair day s work so that there would be no guess work involved regarding how much effort each worker should put in and how much was the expected productivity of each worker. 3. Motion Study: It is a systematic and critical study of the movement of both the workers and the machines for the purpose of identifying and eliminating unnecessary and wasteful movements. 4. Scientific Task Setting to Determine a Fair Day s Work: It is the technique of forecasting every step in a long series of separate operations, such that each step can be taken in the right place, of the right degree and in the right time, and each operation can be performed at the optimum efficiency. It answers questions regarding what is the work to be done, how has it to be done, where it has to be done and when it has to be done. This scientific task planning resulted in development of a more efficient routing system and scheduling of work. 5. Standardisation and Simplification: Predetermined standards are laid down regarding the task, material, methods, time, quality, cost and working conditions, under Scientific Management. It helps to simplify work, to ensure interchangeability of parts, to ensure uniformity of operations and to facilitate comparison of efficiency. 6. Functional foremanship: According to Taylor, it is not feasible that one superior can be an expert in all aspects of work supervision. He suggested the system of functional foremanship in which eight foremen supervise a worker s job. Four of them would be concerned with the planning of work in the factory office and the other four would be involved in the execution of work at the shop floor. These eight foremen and their duties are as follows: Route Clerk: The route clerk lays down the sequence of operations to be followed for the completion of a particular job. He has to take the decision regarding the exact route through which every piece of work would travel from one machine to another. He is the sole authority regarding the route and workers should strictly follow route designated and specified by him. Instruction Card Clerk: The job of the instruction card clerk is to prepare detailed instructions according to which workers have to perform their jobs. These detailed instructions are regarding the speed of the work, tools and fixtures which have to be used, technical specifications of the work and so on. Time and Cost Clerk: The time and cost clerk has the duty of framing the time-table for doing various jobs and maintaining the records of cost of work. Shop Disciplinarian: The main function of this foreman is to enforce rules and regulations and maintain discipline among the workers. He is responsible for dealing with the cases of absenteeism, insubordination and the breaking of the rules of the organisation and so on. Gang Boss: The gang boss is concerned with all preliminary work before the actual operation takes place. It is his responsibility to assemble the necessary tools and also arrange the facilities in the plant and he is also expected to explain to the workers how to set the work in the machine in the most accurate and quickest manner. Speed Boss: The speed boss is responsible for ensuring that the allotted work is completed in time. In order to get the work completed within the specific time frame, he should see that the workers operate at the right speed and according to the predetermined specifications. Repair Boss: The job of the repair boss is to ensure that each worker keeps his machine clean and free from rust, and that he oils and treats the machine properly so that it is always in perfect working condition. He is responsible for ensuring that the predetermined standards regarding maintenance and care of the machines and the accessories are strictly followed. Inspector: It is the responsibility of the inspector to see that the work is performed in accordance with the quality standards laid down by the organisation. 7. High Speed Steel: Taylor conducted systematic experiments to improve the operational efficiency of tools and equipment for pig iron handling, shovelling iron ore and coal for metal cutting. He developed high speed

9 118 steel for metal cutting and designed better shovels. He developed the slide rule and many other labour saving implements. These resulted in a tremendous increase in the productivity of labour and reduced the physical strain and effort which was put in by the workers. Critical Evaluation Even though Scientific Management led to a tremendous increase in productivity and wages, his approach to every aspect of management created fear in the minds of workers that working harder and faster may lead to exhaustion of all available jobs. Hence, Scientific Management was criticised on the following grounds: 1. Mechanistic Approach: The main criticism levied is that Scientific Management does not consider the human element in production and lacks a human touch. It does not treat workers as human beings but as mere factors of production. Taylor was ridiculed as an efficiency expert. 2. Unrealistic Assumptions: Scientific Management is based on the unrealistic assumption that people are rational and that material gains will motivate them. It concentrates on physical and economic gains and overlooks the social needs of the workers. Later researches have proved that workers also want job satisfaction, participation and recognition and that there social and ego needs should be looked into. 3. Narrow View: Scientific Management is quite limited in scope as Taylor focused only on efficiency at the shop floor and hence overlooked general aspects of management. It was described as a theory of industrial engineering since it did not deal with the management of the business organisation as a whole. 4. Impracticable: Many ideas of Taylor are said to be unrealistic in practice. Planning cannot be totally segregated from the actual doing part of the job since they are both two sides of the same coin and cannot be separated. Hence, functional foremanship is likely to create problems because it violates the principle of unity of command. 5. Exploitation of Labour: Workers were forced to speed up affecting their physical and mental health, in the belief that efficiency would be increased. Specialisation and standardisation made the jobs dull and monotonous. Bureaucracy Max Weber ( ), a German sociologist, felt that there are three types of legitimate authority, i.e., rational-legal authority, traditional authority and charismatic authority. He had described an ideal bureaucracy as a theory of administration based on rational-legal authority systems which are as follows: Division of Labour: Organisations need to appear rational and so gain legitimacy, in order to secure resources and support, and to inspire confidence and trust. Authority Hierarchy: It is an essential part of PR. Formal Selection Formal Rules & Regulations Impersonality Career Orientation Max Weber analysed the formation and administration of public bureaucracies, which are the oldest form of organisation. He thus evolved an ideal type of bureaucracy as a conceptual model for analytical purposes, which has the following features: 1. Division of Work: Bureaucratic organisations involve high degree of specialisation or division of labour, at both the operative and administrative levels. The tasks are divided on the basis of specialisation and everyone performs his own work. 2. Hierarchy of Authority: A clearly defined hierarchy of positions is created by downward delegation of authority. Each position in the hierarchy covers an area over which it has complete jurisdiction in terms of

10 Development of Management Thought: A Brief History 119 competence and authority. Each superior exercises supervision and control over his subordinates with provision for appeal to higher authorities in the prescribed manner. Thus each lower position is under the control of a higher position. There is unity of command. The bureaucratic structure is hierarchical in nature like a pyramid in which the amount of authority an individual enjoys will increase as the individual moves up the ladder in the organisation. 3. Rules and Regulations: Detailed and rigorous rules and regulations are clearly laid down by the organisation s top administration for the purpose of specifying and governing work behaviour, rights and duties of job-holders and so on. The benefits of these rules and regulations is that they standardise operations and decisions, serve as a memory bank of past learning and protect the incumbents as well as ensure equality of treatment. In addition, procedure is laid down for orderly performance of tasks. 4. Technical Competence: Technical competence will be the sole criteria for the selection and the promotion of job holders. Qualifications are prescribed for each job/position for which special training is imparted to provide the knowledge of rules and regulations and administrative procedure. 5. Record- Keeping: The administration of a bureaucratic organisation will be supported by an efficient system of record keeping. Every decision and action is recorded and preserved in the form of an original written document and a draft form copy for future reference. Thus an extensive filing system is required. This rules out loop-holes in oral communication among members of the business organisation. 6. Impersonal Conduct: Relations among the members of a bureaucratic organisation are impersonal and formal to ensure the decisions are entirely guided by the rules and regulations of the business organisation. Thus, there is no room for emotions or sentiments to guide business decisions. 7. Staffing: When personnel are employed it is strictly by contract so that there is a contractual relationship between the employer and the employee. The rules and the regulations of the business organisation, govern the tenure of service. Depending upon the job being done and the length of the service, employees will get a salary every month. Advantages of Bureaucracy Max Weber s ideal bureaucracy was designed for the specific purpose of bringing rationality and predictability of behaviour in every business organisation. It contributed to efficiency in operations on account of its characteristics of division of work, impersonality in relationships, rules and regulations, employment and promotion on the basis of technical competence and so on. It is an administrative device. It helped in achieving the following advantages: (i) Specialisation: In a bureaucratic organisation because every member is assigned a specialised task to perform, it enjoys the advantages of specialisation. (ii) Democracy: An organisation becomes democratic when emphasis is laid on qualifications and technical competence. Officials have the prescribed rules, policies and practices to guide them rather than by patronage or other privilege treatment which results in favoritism. (iii) Structure: A form is created by specifying the duties and responsibilities of each employee and the reporting relationships in a command hierarchy. This form or structure will set the pace and the framework so that there will be smooth functioning within the business organisation. (iv) Predictability: The rules, regulations, specialisations, structure, and training impart predictability. When individuals conform to the rules and the roles in the structural framework it results in order and thereby ensures stability in the organisation. (v) Rationality: Since the decision making criteria is predetermined and laid down well in advance, it ensures a measure of objectivity in routine situations.

11 120 Disadvantages of Bureaucracy (i) Goal Displacement: Rules which are framed to achieve organisational objectives at each level can become an end in themselves. The objectives of the organisation may be neglected in the pursuit of personal objectives. (ii) Red Tapism: Bureaucratic procedures entail unnecessary delays and frustration in the performance of tasks. The procedures are valued, perpetuated and multiplied for their own sake and also for the purpose of passing the buck. (iii) Rigidity: Rules and regulations which are laid down in a bureaucratic organisation often become rigid and inflexible. These encourage status quo. They can breed resistance to change. They can sap the initiative and the creativity of the employees. They can also result in an excuse for taking responsibility for failure. (iv) Impersonality: A bureaucratic organisation lays stress on a mechanical way of doing things. Organisational rules and regulations are given priority over the needs and emotions of an individual. Contractual obligations are given primacy over human relations when the office held by an employee becomes or assumes greater importance than the individual. (v) Paperwork: Bureaucracy involves excessive paperwork. Every decision must be put in writing. All documents have to be maintained in their draft and original forms. This leads to a great wastage of time, space and stationery. (vi) Empire Building: People in a bureaucracy tend to use their positions and resources to perpetuate their own interests or the interests of their sub-units. It is hard to destroy bureaucracy even when it outlives its utility. (vii) Compartmentalisation of Activities: Jobs are divided into water-tight compartments which restrict people from performing tasks that they are capable of performing. It also encourages preservation of jobs even when the jobs are redundant. Neo-classical or Behavioural Approach Fayol, Taylor and Weber and other classical writers neglected to focus on the human relations aspect. The neo-classicalists focused on this aspect. They modified the classical theory laying emphasis on the fact that organisation is a social system and the human factor is the most important element in the organisation. Certain experiments were conducted and they investigated informal groups, informal relationships, patterns of communication, and patterns of informal leadership and so on. This led to the development of the human relations approach. The basic tenets of the neo classical theory or human relations approach are as follows: 1. The business organisation is a social system. 2. An individual s behaviour will be dominated by the informal group of which he is a member. 3. Economic incentives alone cannot motivate an individual employee. In order to improve the level of motivation the social and psychological needs of an individual employee must be met. 4. Ultimately, it is the cooperative attitude in any organisation and not the mere command which will yield results. 5. In addition to technical skills, the management must aim at developing social and leadership skills by taking interest in the welfare of the workers. 6. In any organisation, morale and productivity go hand in hand together. The Neo-classical Approach may be analysed in three parts, i.e., Hawthorne Experiments, Human Relations Movement, and Behavioural Sciences Thinking. Hawthorne Experiments George Elton Mayo is considered the father of neo-classical approach. He was invited to lead a team which conducted the famous Hawthorne experiments. They were conducted between

12 Development of Management Thought: A Brief History at a factory of the Western Electric Company at Hawthorne near Chicago, USA. The essence of these experiments are as follows: 1. Illumination Experiment: The aim of this experiment was to establish a relationship between output and illumination and assess the effect of illumination on the output of employees. Two groups were selected from the employees. The first group were placed in a room where the lighting remained constant and the other group in a room where the lighting varied periodically. The output tended to increase every time as the intensity of light was improved. However, when the illumination was gradually brought down from the normal level, the output again showed an upward trend. Surprisingly, the output of both the groups increased steadily. It was concluded that lighting was a minor factor and there was no consistent relationship between the output of the workers and illumination in the factory. There were other more important factors influencing the output than the intensity of light. 2. Relay Assembly Test Room Experiments: These studies were conducted in three different groups. The test group consisted of a small homogenous group of six female workers. Frequent changes were made in the working conditions by introducing several new elements, for example, shorter working hours, pauses for rest, improved physical conditions, friendly, informal supervision, free social interaction among the members of the group and so on. During the period of the experiment, productivity and morale increased considerably. However, the productivity of the group kept increasing even when the improvements in the working conditions were withdrawn. It was concluded that socio-psychological factors, for example, a feeling of well being, importance, recognition, attention, participation, cohesive workgroups and non directive supervision, are the key and exercise a greater influence on productivity than working conditions. 3. Bank Wiring Observation Room Study: In this experiment, a group of fourteen workers was studied and put under close observation in as normal conditions as possible. The performance of the group as a whole determined the pay of every member. At the end of the experiment the production records of the group were compared with their earlier production records. It was found that the output could not increase despite group incentive schemes due to various social pressures and work norms. There were no significant changes between the two due to the maintenance of the normal conditions. 4. Mass Interview Programme: A large number of workers were interviewed by the researchers to find out their opinions regarding work, working conditions and supervision, to judge their attitudes and opinions regarding the factors influencing productivity. It was discovered that the opportunity to speak freely boosted the morale of the workers and this resulted in better productivity. In the beginning, the researchers used a direct approach. The interviewers were asked questions which were considered important by the managers and the researchers. Later on, however, an indirect technique was used thereby the interviewers simply listened to what the employees had to say. The findings confirmed the importance of social factors at work in the total work environment. The main conclusions of these experiments are as follows: (i) Workers act or react not as individuals but as members of a group. (ii) Workers are not merely rational economic beings who are motivated only by money. They are also sociopsychological beings. They respond to the total work situation. (iii) A work group is not merely a techno-economic unit. It is also a social system. It has a culture of its own. (iv) Social and psychological factors exercise a greater influence on employee behaviour and performance than physical conditions. (v) Complaints and criticism by employees are manifestations or symptoms of deeper dissatisfaction. Human Relations Movement Elton Mayo and the Hawthorne Studies concluded that the informal organisation, social norms, acceptance, and sentiments of the group determined individual work behaviour. Maslow, McGregor, Herzberg and many others stressed the importance of social relations in organisations, understanding workers and managers as human beings having social and emotional needs.

13 122 The foundation for human relations movement in management was laid by the Hawthorne Experiments. Subsequent research contributed several concepts and techniques of human relations. The human relations movement is based on the idea that if a manager is concerned and shows his concern for workers, it will lead to their increased satisfaction and improved performance. The human relations school suggests that a business enterprise is a social system in which group norms exercise significant influence on the behaviour and performance of individuals. Managers should create a climate in the organisation which is conducive so if that workers can feel happy and are satisfied. The human relations school is based on the following ideas: 1. The Individual Each person is unique and brings certain attitudes, beliefs, values, and skills to the job situation. Thus, an individual is not only motivated by factors but by social and psychological factors. 2. The Work Group Work is a social experience. Most workers find satisfaction by working in social or informal groups. The attitudes and performance of the workers are determined to a great extent by the norms of such groups. 3. The Leader As the leader of a work group, it is the duty of a supervisor/manager to provide a pleasant working climate where the employees are allowed to have a say in the decision-making process. Even if the opinions have no weightage and are not taken seriously, the very fact that the employees opinion has been asked for in front of his peer group, makes him gain respect and importance. 4. The Work Environment A positive work environment enables employees to satisfy their needs as well as the organisational goals and objectives. A positive work environment can be created by clearly defining the goals and objectives, linking rewards to performance, getting feedback on performance, encouraging workers participation in the decision making process, and so on. Criticisms The human relations movement may be criticised on the following points: 1. Anti-individualistic: This approach advocates a highly indulgent approach towards people which is tantamount to their manipulation. It enforces the control of the group, thus replacing the control by the boss. Therefore it can force an individual to sacrifice his personal values to group norms. It is not necessary that group membership is a rewarding experience for all the members in the group. All the members may not be satisfied with the participation in the group. The group may be ruled by an autocrat who manages the group for their own selfish goals and objectives. 2. Unscientific: Critics have questioned the scientific validity of this approach. The Hawthorne Experiments on which this movement is based suffers from clinical bias as they discounted theory. The total workforce cannot be said to be represented by only one small group of American workers. Experimental groups cannot be equated with work groups. 3. Negative View of Conflict: Human relationists believed all conflict is always bad and that it must always be avoided. They failed to recognise that conflict can also be a creative force. 4. Short-sighted: This approach is based on over-liberal assumptions about people. It soft-pedals the requirements organisations and management and neglects the real issues of the work situation. Inter personal relationships were considered as an end in themselves. Little or no attempt was made to create understand the human behaviour at work. At the cost of technical and economic aspects of work, this approach stressed the social and psychological aspects. 5. Too muchconcern with Happiness: The human relations approach assumed that happy workers are productive workers. However, research has revealed that there is no direct correlation between morale and productivity. It suggests that the decisions of an individual are inferior to the decisions of a group. This may be true in certain cases but it is not generally true all the time. Behavioural Science Approach The human relations approach focused on interpersonal relations. In the behavioural science approach, knowledge was drawn from behavioural sciences, for example, psychology,

14 Development of Management Thought: A Brief History 123 sociology and anthropology. It is applied to explain and predict the behaviour of an individual. The main focus was on human behaviour in an organisation. It overlooked the wider subject of organisational behaviour. Organisational behaviour involves the study of attitudes, behaviour and performance of individuals or groups. It is also called human resource approach as it stresses development of human beings for the benefit of both the individual and the organisation. Behavioural approach is multi-dimensional and inter-disciplinary in nature. In the behavioural science approach, knowledge from various behavioural sciences is applied to understand, explain and predict human behaviour. The emergence of organisational behaviour occurred because of the too simplistic descriptions of work behaviour by the human relationists. Organisational behaviour takes a holistic view of behaviour by addressing individual, group and organisation processes. The main propositions of this approach are as follows: (i) An organisation is a socio-technical system. (ii) Individuals differ in terms of their attitudes, perceptions and value systems and hence, react in different ways to similar situations. (iii) Individuals working in an organisation have their needs and goals. These may be different from those of the organisation. The management should achieve fusion between the goals and objectives of the organisation and human goals. (iv) Relations among individuals are influenced by a wide range of factors. (v) The behaviour of a person as an individual may differ from their behaviour when they are members of a group. (vi) Individuals working together in an organisation form their own informal groups, deciding their own norms, culture and systems of communication. (vii) The performance of employees is significantly influenced by informal groups which decide their attitudes, behaviour and performance as employees. Contributions Gave insights into interpersonal processes in organisations such as motivation and group dynamics. Focused managerial attention on these processes. Challenged the view of employees as tools and not resources. Limitations The complexity of human behaviour makes prediction difficult. Managers may be reluctant to adopt some of the behavioural concepts. Contributions are often not communicated to the practicing managers in an understandable form. Systems Approach Since 1950 researchers began to take a look at organisations from a systems view point. The system s approach is based on the generalisation that an organisation is a system and that its components are interrelated and interdependent. A system is composed of related and dependent elements which, when in interaction, form a unitary whole. It is a combination of things or parts, forming a complex whole. Therefore, each system may comprise of several subsystems and, in turn, each subsystem may be further composed of several other subsystems. In 1951, Wiener described an adaptive system as mainly dependant upon measurement and correction through feedback. Later Ludwig Von Bertalanffy and Kenneth Boulding evolved the General System Theory. This theory consists of general principles for understanding the physical, mechanical, biological, and social entities and the relationship among them. The main elements of systems approach are as follows: (i) An organisation is a unified and purposeful system consisting of several interconnected, interacting, and interdependent parts.