2
The Development of Contemporary Management
Learning Objectives
By the end of this chapter, you should be able to:
• Identify the contributions of the classical approach to management thought.
• Identify the contributions of the behavioral science approach to management thought.
• Identify the contributions of the systems approach to management thought.
• Identify the contributions of the contingency theory of management to management thought.
• Identify the contributions of the practitioner-oriented approach to management thought.
• Identify the contributions of the total quality management approach to management thought.
Management, as an entity, began with the advent of organized human activity, and management practices can be traced throughout history. Consider the following selected illustrations (Hampton 1986, 42; Hodgetts 1985, 27–29; 1986, 29; Wagner and Hollenbeck 1992, 28):
• From 3000 B.C. onward, the Sumerians kept business, legal, and historical records on clay tablets, and some historians feel that it is likely the Sumerians developed a written language in response to their need for a managerial control process. They also formulated missions and goals for government and commercial enterprises.
• In the Bible, Chapter 18 of the Book of Exodus relates the story of Moses’ father-in-law, Jethro, advising Moses to develop a hierarchical organization, staff this organization with trustworthy people, decentralize authority, delegate responsibility for routine matters, and handle only exceptional, nonroutine problems. Jethro did this to relieve Moses of an excessive burden, because Moses was attempting to settle all of the disputes within the tribes of Israel.
• Between 800 B.C. and about 300 A.D., the Romans perfected the use of hierarchical authority.
• Around 500 B.C., a Chinese military writer, Sun Tzu, wrote the Art of War, the oldest military treatise in the world. This book showed that strategy, planning, leadership, and the effective management of people were all basic areas of interest to early military leaders.
• The ancient Chinese, Greeks, Egyptians, and Mayans, to name just a few, successfully organized and managed the efforts of thousands of workers in accomplishing huge projects. Such undertakings as the Great Wall, the Parthenon, the Pyramids, and the city of Chichen Itza could not have been built without planning, organizing, staffing, leading, and controlling activities.
• The early Roman Catholic Church developed job descriptions for its religious workers, created a chain of command extending from the Pope to the laity, and perfected a governance structure involving the use of various standardized procedures.
• In the early 1500s, Niccolo Machiavelli wrote The Prince, in which he systematically analyzed the leader’s job and derived practical principles that are useful today: No one is a leader unless the followers agree; a leader must strive for cohesiveness; and the leader has to set an example for followers.
Truly modern management practices did not begin to develop until the Industrial Revolution of the 1700s and 1800s and the emergence of the factory system of manufacture. Toward the end of the Industrial Revolution various managers and engineers throughout North America and Europe began focusing on developing general theories of management; thus the systematic study of management is comparatively recent.
THE CLASSICAL APPROACH TO MANAGEMENT
The scientific principles and the functional principles developed by theorists in the early and mid-1900s make up the classical approach to management.
Scientific Management
Frederick Taylor, known as the father of scientific management, is generally credited with developing the study of management as a science—discovering certain principles that, when applied, would increase productivity (Taylor 1911). In the late nineteenth century, Taylor, who had an engineering background, became interested in management from his experiences as a machinist and later as a shop foreman. He found that workers did not put forth their best efforts, and as a result, production suffered. Taylor also found that it was not only the employees who were at fault. Inadequate records, the performance of the fastest worker, or management hunches provided the basis on which production was gauged. Furthermore, little was done to match individual abilities to job requirements.
Taylor eventually developed his principles of scientific management to solve such problems.
1. Research: Find the one best way to perform the work.
2. Standardization: Apply this one best way to all similar jobs.
3. Selection: Choose the individual best suited to perform a job.
4. Training: Instruct the individual how to perform the job.
Taylor called for separating the planning from the doing—that is, separating managerial activity from the actual work itself. Management’s job is to plan the work—what is to be done, how it is to be done, what types and quantities of tools and materials are needed, and so on. The workers should then accomplish the tasks according to these plans and instructions.
Taylor, Henry Gantt, Harrington Emerson, and others reported that there were significant increases in productivity when the principles of scientific management were applied. Taylor went so far as to predict that scientific management would bring about a “mental revolution” that would result in labor–management peace. He believed that labor-management problems were based on how a fixed economic pie was distributed; one side’s gains were the other side’s losses. Scientific management, he held, would allow both sides to gain, since the economic pie could be greatly increased. One needs only to glance at today’s newspapers to see that Taylor’s dream of ending labor-management strife never was realized. But improved management has indeed increased the size of the pie.
Frank Gilbreth (and later his wife, Lillian) also contributed significantly to scientific management theory (Yost 1949). Gilbreth concentrated on motion study, identifying seventeen basic on-the-job motions, which he called therbligs (Gilbreth spelled backward). The identification of these motions, Gilbreth contended, helped in determining how to accomplish work most efficiently. Gilbreth also developed mechanisms that could accurately time how long a job took. The work of Taylor, Gilbreth, and their contemporaries laid the groundwork for today’s industrial engineering departments.
Fayol’s Principles of Management
While scientific-management theorists concentrated on the work performed by those generally called blue-collar workers, others focused on higher levels of the organization, and on managing the organization as an entity. Henri Fayol, a French industrialist, presented his observations in Administration Industrielle et Générale, a work first published in 1916, but not translated and generally not available in the United States until 1949. Fayol identified 14 principles of management (Fayol 1949). Of these, the most widely known are the following four:
1. Authority equal to responsibility. Fayol argued that if individuals are given authority to act in certain areas, they must be held responsible for the results of using that authority. Conversely, if individuals are made responsible for certain tasks, they must be given the level of authority appropriate for accomplishing those tasks.
2. Unity of command. An individual should receive orders from only one superior. More than one superior contributes to a breakdown in authority and discipline.
3. The scalar chain. The scalar chain is the chain of command through which communications flow from the top to the bottom of the organization. It ties workers at one level to their superior, to their superior’s boss, and so on to the top of the organization. Although theoretically all communication should flow upward through each level to the top of the organization and back down, Fayol saw that strict adherence to the scalar chain would cause delay and inefficiency. He therefore proposed using “gangplanks,” allowing individuals on the same level to communicate directly. Fayol would authorize such direct dealings when the immediate superiors involved approved of the arrangement and when the individuals informed their respective superiors of any actions taken as a result of their dealings.
4. Unity of direction. Activities with common objectives should operate under one head and one plan. Although work may be separated into smaller elements, these elements must be coordinated at a higher level.
Fayol was careful to note that his use of the word principles did not refer to immutable laws that applied in all situations at all times. Rather, the principles must be applied judiciously and with common sense. He did, however, believe that these management guides and the management functions described below applied to political, religious, and other organizations besides businesses.
The other main aspect of Fayol’s work concerned identifying the functions a manager performs (see Chapter 1). Fayol saw these tasks originally as:
1. Planning. Establishing a course of action.
2. Organizing. Designing a structure, with tasks and authority clearly specified.
3. Commanding. Directing subordinates in what to do.
4. Coordinating Pulling together the organizational elements together toward common objectives.
5. Controlling. Ascertaining that plans are carried out.
The functional approach to the manager’s job—the approach used in this course—is attributed to Fayol.
BEHAVIORAL SCIENCE AND MANAGEMENT
The methods and findings of psychology, sociology, and the other behavioral sciences have increased our knowledge of human behavior in organizations. Although Taylor, Fayol, and others recognized the need for considering the individuals in managing organizations, not until the late 1920s and the famous studies at the Hawthorne plant of Western Electric did the importance of human behavior in the work environment come into sharp focus (Roethlisberger and Dickson 1939).
At first, research efforts at Hawthorne were directed toward determining how lighting affected productivity. Contrary to expectations, productivity rose in both the control group (where the lighting was constant) and the experimental group (where the lighting varied). The researchers concluded that human factors not considered in the experiment must have influenced the results. A relay assembly test room, consisting of six young women and an observer, was set up so that the workers could be studied more closely. Through 23 different phases, various changes were made in the conditions under which the women operated. At certain times, for example, two rest breaks were allowed; at other times, rest breaks were increased to six. Light lunches were sometimes provided. Even the incentive system was varied. No matter what change was introduced, however, productivity continued to rise until it stabilized at a relatively high level. The first set of conclusions drawn was that by singling out these few women from the 25,000 workers employed at Hawthorne and by inviting their cooperation in the experiment, the investigators had given them a new sense of their own worth and they had come to feel important, and that this enhanced self-esteem was reflected in their work.
A later phase of the Hawthorne studies showed the existence of informal groups; they had not been designed by management, but had arisen naturally from the formal organization. These groups were composed of individuals in the workplace who had begun to associate with one another for various reasons. It was found that such informal groups sometimes set their own goals and standards of performance, which may or may not coincide with the formal organization’s goals and standards.
The Hawthorne experiments spawned what was known as the human relations movement, and later the behavioral science approach to management as the studies took on a wider disciplinary base, including psychology, sociology, and anthropology. Some of the early work concentrated on improving morale, on the basis that increased satisfaction would lead to increased productivity. Later research, however, showed that the relation is not so simple, and that a happy worker is not necessarily a productive one. Much work has been done and is continuing on factors affecting employee motivation and productivity.
The influence of the behavioral sciences on management theory has provided managers with many motivation and leadership concepts. These are discussed in greater detail in Chapters 6 and 7.
THE QUANTITATIVE AND SYSTEMS APPROACHES TO MANAGEMENT
The quantitative and systems approaches to management are of more recent origin.
The quantitative approach originated from operations research developed by the British during World War II (McQuade 1964). A small group of scientists was called on to solve numerous complex military problems, such as determining the best size for convoys, evaluating defenses against German U-boats, and determining bombing patterns over enemy territory. Following the war, firms such as Du Pont and H. J. Heinz began to use operations techniques in their organizations.
xhibit 2–1
Today, operations research is applied to whole or substantial parts of systems. It relies heavily on mathematical modeling. The rise of operations research has coincided with the development of the computer, which facilitates the manipulation of large quantities of data within the models. Two examples of operations research in management are a linear programming model that studies costs in a manufacturing operation, and the Program Evaluation and Review Technique (PERT), a planning and controlling device. (This technique is described briefly in Chapter 3.)
The systems approach sees the organization as separate but interacting components that must work together. The output of the system is assumed to be greater than the sum of the individual parts.
In the systems perspective, environmental factors have an effect on what determines output. An organization in which the main components are constantly changing can be considered an open system. Such a system is illustrated in Exhibit 2–1.
The organization draws on resources from the environment (“inputs” to the system) and puts these resources through some process, transforming them into a product (“output”), which is then distributed to the individuals, groups, and organizations that make up the society in which the organization operates. At all stages, the environment is important to the survival of the organization. If the organization cannot attract input or find buyers for its output, it cannot survive. At the same time, the environment influences the organization through changes in technology, economic factors, legal constraints, and the ethical framework within which the organization operates. Hence, good management is more than the activities of the manager and the employee. It also must include effective responses to environmental variables. The systems perspective paved the way for the evolution of the contingency theory of management.
CONTINGENCY THEORY
Over the years, management theorists and behavioral scientists examined a wide range of businesses as they searched for a universal theory of management. They found it increasingly difficult to agree upon a single set of principles of good management. Each situation, each business, each organization, each external competitive environment seemed to pose new and different issues for management. Contingency theory was developed in response to these variations.
Contingency theory asserts that management methods must differ according to the people, the task, and the situation. Managing a university is different from managing an auto parts store. Each situation has its own set of problems, and management practices that are effective will differ for each.
Management researchers investigated the contingencies that determine effective management. What works in a university, and why? What works in an auto parts store, and why? Some of the key findings are those of Burns and Stalker; Woodward; Lawrence and Lorsch; and Tannenbaum and Schmidt.
Tom Burns and Gerald M. Stalker (1961) found that firms were organized differently according to the technology used and the markets served. The more uncertain the technology and market environment, the looser the organization; the more stable to environment, the more traditional the organization. Joan Woodward (1965) showed the importance of the type of technology in the relationship between economic success and organizational structure. Paul R. Lawrence and Jay W. Lorsch’s study of firms in three different industries (1967) showed that the degree of centralization and detailed procedures of a business must vary according to elements of the environment, such as the dominant technology and the dominant market. Robert Tannenbaum and Warren H. Schmidt (1973) examined leadership styles and found that there is no one effective leadership style in business. Rather, the effectiveness of leadership is contingent upon the required task and the level of experience and competence of the individuals in the group. Flexibility and adaptability in leadership style may be the key to high productivity.
In short, contingency theory holds that the variables for effective management are complex and intertwined. They include the nature of the business (manufacturing, service, etc.); the external environment (the competition, the market, and economic factors); the technology; the people; the task itself; and the dominant leadership style, organizational structure, and culture. There is no easy prescription for effective management, because each situation requires its own diagnosis and a unique response.
Contingency theory has dominated management thinking for some 30 years. It fits with the practical knowledge that there is no one best way, but there are better and worse ways to manage a given situation.
THE PRACTITIONER-ORIENTED APPROACH TO MANAGEMENT
The early management theorists contributed to the establishment of management as a field and assisted in the recognition of the important role of managers in getting work done. In recent years, as American business has begun to feel competitive pressures from foreign businesses, such as the Japanese, theorists have been searching for more relevant theories that could describe what managers actually do. Much of this work is being done in an effort to discover what works best so that management practice can be improved. From the behavioral science approach to management evolved the practitioner-oriented approach to management theory (Chung 1987, 86).
Peter Drucker, a prominent management writer and consultant, has consistently looked at management from the perspective of the manager. He advanced the concepts of strategic management, management by objectives, decentralization, managing for results, and managing in turbulent times (Drucker 1954, 1964, 1967, 1969). Drucker’s concepts were derived from his particular perspective on the world and not from scientific investigation. The fact that so many managers have found his material useful (and continue to do so) attests to its relevance.
Henry Mintzberg, whose contribution to management thought was discussed in Chapter 1, is another practitioner-oriented scholar. Recall that his work posed the question, What is it that managers actually do? His results, characterizing managers’ work into three categories and ten different roles, were a major contribution to the practitioner-oriented approach (see Exhibit 1–4).
John Kotter (1982) was also concerned with what successful managers do. He studied 15 general managers from nine different companies and found that successful general managers invest their time developing expertise in an area and developing interpersonal networks to get things done.
Drucker, Mintzberg, Kotter, and other recent theorists have contributed to the body of knowledge we have on management by introducing the notion of using data collected from indirect observation as a basis for understanding managerial work. They have focused attention on the importance of what really happens in the workplace. However, practitioner-oriented theorists have been criticized on the basis of their methodology. Some academics feel that generalizations about good management cannot be made on the basis of so few observations.
THE TOTAL QUALITY MANAGEMENT APPROACH
The most recent approach to management is what has come to be known as total quality management (TQM). Overall, it seeks to improve product or service quality and increase customer satisfaction by restructuring a number of traditional management concepts. It is actually not so much a new management concept as an integration of widely accepted business practices, therefore similar to the practitioner-oriented approach just discussed. TQM’s importance as a management concept is discussed fully in Chapter 9.
Based on a review of recent management literature and observations of the practices of a number of U.S. companies that have adopted TQM, the U.S. General Accounting Office (1991) concluded that there is a consensus on the attributes that are common to all TQM-oriented organizations.
Customer-driven Quality
An essential attribute of TQM is the general understanding that the customer is the final arbiter of quality. TQM is based on the premise that quality is driven by and defined by the customer. Product and service attributes that create a perception of quality on the part of the customer will increase customer satisfaction and, ultimately, increase customer demand.
Strong Quality Leadership
Many of the management practices and principles that are required in a TQM environment may be contrary to long-standing practice. Only a strong leadership team focused on quality improvement can overcome the inevitable inertia and resistance to change by creating clear quality goals and developing the systems and methods for achieving these goals.
Continuous Improvement
Continuous improvement, a fundamental attribute of TQM, arises from a philosophy that all business operations and work activities can be done more effectively or efficiently. It requires a management approach that encourages identifying and pursuing ongoing opportunities to improve.
Action Based on Facts, Data, and Analysis
Another important attribute is a willingness to measure quality constantly and to identify and correct conditions causing poor quality. TQM is predicated on decision making that uses reliable information and analysis. A number of statistical techniques have been adopted to support this process.
Employee Participation
TQM environments allow all employees to participate in helping achieve organizational quality goals. All employees are held accountable for quality and are given tools and training to fulfill this responsibility. TQM assumes that the employees closest to their organization’s daily operating procedures are in the best position to understand and improve the quality of those procedures.
IMPLICATIONS FOR MANAGERS
Though total quality management is the most recent approach to management, all six approaches—the classical, the behavioral science, the systems and quantitative, the contingency, the practitioner-oriented, and the total quality management—influence present-day management practice (see Exhibit 2–2). A full understanding of management must incorporate the significant findings and generalizations of all six approaches and not concentrate on just one, or a few, to the exclusion of the others.
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