Making Sense of Management

Management Theories of Yesterday and Today

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?
This question first gained serious attention after the Industrial Revolution reshaped the business landscape. As production increased, organizations grew in size and scope, and owners became more removed from day to day operations. The concept of management took on newfound importance, as these now-distant owners needed proxies to ensure that large-scale operations were carried out as efficiently as possible.

This move to mass production required new ways of approaching an age-old conundrum: how to get people to do what you want them to do. As cottage industries gave way to factories, new concepts emerged, from quality control and standardization to specialization of labour and workflow planning. Soon, business took on the qualities of a machine, the people within it akin to cogs that could be managed through new, leading edge theories.

Classical perspective
Theories of management first surfaced in the late 19th century as businesses learned to adjust to the new pressures of mass production. Founded in 1881, the Wharton School at the University of Pennsylvania jumped in to deliver North America’s first formal study of management at the university level. Harvard Business School – another pillar in management education – opened its doors in 1908. A new academic discipline had been born – and the way we approach the workplace would never be the same again.

The Scientific Management Theory was the first major management theory to gain traction, making its largest impact from the late 1800s until the beginning of WWII. As the name suggests, this theory approached productivity scientifically, turning over a new leaf in how we attempt to increase efficiency. Frederick W. Taylor (1856-1915) spearheaded the theory’s development, publishing The Principles of Scientific Management in 1909.

Taylor carefully studied and measured how workers performed their jobs and how long these jobs took to perform, then established standard timeframes and steps for each task. Once jobs were standardized, managers knew what to expect and could measure individual performance. Suddenly, productivity could be rewarded – and inefficiency penalized. Think of it as the ‘carrot and stick’ approach; workers who produced more earned more. As a general rule, managers applied the theory to operations utilizing assembly lines and repetitive tasks.

While Scientific Management is not practiced today as it was in its heyday, the theory has left an enduring legacy. The approach introduced us to the concepts of systems, procedures, and measured efficiency and promoted training and teamwork – all of which are core to today’s management.

Max Weber (1864-1920) developed the Bureaucratic Management Theory, taking the Scientific Management theory to the next level. Like Taylor, this German sociologist promoted comprehensive systems and standard operating procedures, but he also believed the workplace should be divided into strict hierarchies and that managers should wield clear control over their subordinates. Weber’s authoritarian approach provided structure and stability, but it also stifled creativity and flexibility.

The Administrative Theory was another early theory that reinvented how we approach management. Henri Fayol (1841-1925) developed the backbone of this theory while acting as Director of a mining company with more than 1 000 employees. His on-the-job observations led him to believe that good managers are created, not born – the opposite of the traditional understanding of management.

Fayol believed that virtually anyone can become a good manager – as long as they understand the key concepts of management. Conveniently, he developed 14 Principles of Management that provided the guidance he believed managers needed. Published in 1916, his principles emphasized cooperation between managers and employees.

Fayol also identified six primary functions of management: forecasting, planning, organizing, coordinating, commanding, and controlling. He believed that these primary functions were foundational to all management – and that management was foundational to all organizations, not just the workplace. Because management skills were needed to run everything from the home to the government, he pushed for it to become an academic discipline.

Behavioural perspective
Early theories of management emphasized the manager and the organization, reducing workers to theoretical objects who were little more than cogs in a wheel. The Human Relations Movement sought to bring the worker to the forefront. The theory’s roots go back to the Hawthorne studies, which were conducted by Harvard professor Elton Mayo (1880–1949) in the 1920s.

Mayo and his colleagues determined that workers were not one-dimensional characters motivated by money alone. In contradiction to Taylor’s belief that employees could be enticed to increase production through financial incentives, Mayo’s team found that social factors had a strong influence on a worker’s productivity. Feelings of pride, belonging, and achievement, as well as peer pressure, all pushed people to produce.

These findings led to a management theory that emphasizes the individual worker over systems and procedures. Workers are given more freedom to participate in decisions and their individual contributions and talents are appreciated. Rather than relying on Taylor’s monetary carrot or Weber’s authoritarian rules, Human Relations Theory motivates through emotions and social interaction, drawing heavily on behavioural science. The idea is that when workers are fulfilled, satisfied, and appreciated, business success will naturally follow.

The concepts underpinning Human Relations Theory were nothing short of revolutionary; employees transformed from anonymous worker ants to individuals worthy of consideration and respect. The theory revamped the business landscape, leading to a new, people-centred value system that continues to dominate the workplace to this day. While the approach remains relevant, Human Relations Theory does have some drawbacks. For example, emotions and feelings may be given too much consideration, undermining efficiency and reason.

Douglas McGregor (1906-1964), a social psychologist at MIT, expanded our understanding of worker motivation by creating the X Theory and Y Theory. These theories demonstrate how a manager’s perspective governs his or her approach. Theory X sees workers as naturally lazy, disinterested, and irresponsible, while Theory Y views them as naturally motivated, interested, and responsible. Managers who adhere to Theory X adopt a heavy-handed, authoritarian approach that harkens back to classical management theories. Theory Y adherents, on the other hand, involve workers in decision-making, reiterating behaviourism’s people-centred approach.

As a general rule, Theory Y is considered more modern and enlightened, although Theory X is still utilized in operations that feature assembly lines and other forms of mass production. Theory Y tends to be applied more in professional settings where workers are valued for their skills and education.

The Systems Theory attempts to bridge the gap between Scientific Management Theory and Human Relations Theory, balancing the two extremes of impersonal authority and emotion-driven management. The Systems Approach views an organization as a system, with each component operating as part of a unified whole. Because each component is connected, the theory emphasises communication and interdependence. Every decision must take other components into consideration, analysing impacts across the entire organization.

Good managers tend to adopt aspects from multiple theories and make them work for their specific organization and goals, discarding the aspects that are not effective or relevant. And to be sure, theories will continue to evolve as the workplace – and our attitudes toward it – keep evolving. Therefore, modern management demands flexibility and an open mind. Managers must be able to sift through current and past theories, dismissing or embracing strategies based on their appropriateness and effectiveness – without being swayed by fashion or whim.

Making Sense of Management

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?

May 30, 2017, 11:19 AM AEST

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