Chapter 2 Management Theories



Learning objectives



v     Explain briefly the history of management

v     Define the Classical Viewpoint

v     Describe the contributions of Taylor and Gilbreths

v     Explain the importance of scientific management

v     Describe the contributions of Fayol and Weber

v     Define the Behavioral Viewpoint

v     Recognize the contribution of Munsterberg and Follett

v     Describe the works of Mayo and explain the implication of Hawthorne Studies

v     Define the Quantitative Viewpoint

v     Explain the importance of management science and operation research

v     Define the Systems Viewpoint

v     Describe the 4 parts of a system

v     Define the Contingency Viewpoint






Most management literature is based on the experiences of Europe and North America these two geographical regions. However the economic success of Japan and other countries in East Asia and Southeast Asia demonstrate that other non-Western approaches to managing business organizations are very successful and worthy of study.


For this course, we introduce you to the best known management concepts and theories developed by Americans and Europeans. Japanese and Chinese management theories will be introduced from time to time.



2.1 Evolving viewpoints: how we got to today’s management outlook





Understanding theoretical perspectives of management:


v     helps us understand the present


v     provides a guide to action


v     provides a source of new ideas


v     gives clues to the meaning of managers’ ideas


v     gives clues to the meaning of outside events



Two perspectives of management are:


v     the historical which includes three views—classical, behavioral, and quantitative


v     the contemporary which includes three views—systems, contingency, and quality-management  


Ü    Here we use “time” as a criterion to classify all the theories into two main groups – the old (historical) and the new (contemporary)

Figure 2.1: The Historical Perspective


Ü    Note the names of the key persons in each branches



v     Management is both an art and a science


Evidence based management involves:


v     observing events and gathering facts


v     posing solutions or explanations based on those facts


v     making predictions of future events


v     testing predictions under systematic conditions


Ü    Art: something that is not exact, not standardized, not predictable, do it by trial and error (like drawing a picture)


Ü    Science: exact, systematic, predictable


Ü    Note the evidence based management is an approach that is based on the thought that management is a science



2.2 Classical viewpoint





The classical view of management emphasizes finding ways to manage work more efficiently using two approaches:


v     scientific - emphasizes the scientific study of work methods to improve productivity


v     administrative - concerned with managing the total organization









Ü    Scientific: the work method (of individual)



Ü    Administrative: how different parts of the organization should work together

v                 Frank and Lillian Gilbreth and Frederick W. Taylor pioneered scientific management (emphasized the study or work methods to improve the productivity of individual workers)


v                 Frank & Lillian Gilbreth focused on improving efficiency, and popularized their ideas in the book (and later, the movie), ‘Cheaper by the Dozen’






Ü    Gilbreth: time and motion study. Use scientific management techniques to reduce wasteful hand-and-body motions in jobs. In an experiment, with the proper tools and equipment, they reduced the motions of interior brick laying from 18 to 2.

v     Frederick Taylor believed that managers could eliminate underachievement, which he called soldiering, by


1. evaluating a task scientifically


2. matching worker ability with the task


3. providing training and incentives


4. using scientific principles to plan work methods and make it easier for workers to do their jobs 


Ü    Soldiering: not working at full capacity




How UPS (HK) manage its staff to achieve high efficiency?




Source: Hong Kong Economic Times


v                 Administrative management was pioneered by Henri Fayol and Max Weber, and is concerned with managing the total organization


v                 Fayol identified the major functions of management: planning, organizing, leading, controlling, and coordinating


v                 Weber believed that an organization should have: a well-defined hierarchy of authority, formal rules and procedures, a clear division of labor, impersonality, and careers based on merit






Ü    Fayol believed that sound management practice falls into certain patterns that can be identified and analyzed. He created the 14 principles of management.

Ü    Bureaucracy, or its modifications, can still be observed in many contemporary large organizations. (e.g. Governments)




What can go wrong if the Bureaucracy system (e.g. clear division of labour) suggested by Weber is not working properly?



Source: Apple Daily 2006/9/20




v               The classical theory essentially argued that by applying the scientific method, time and motion studies, and job specialization, productivity could be raised


v               However, this view may be too mechanistic because it fails to consider human needs




Now you can talk


Do you think techniques from Scientific Management are still applicable today? 

(Hints: Can you think of any industry that is very labour intensive?)




2.3 Behavioral viewpoint





v     The behavioral viewpoint of management emphasized the importance of understanding human behavior and of motivating employees toward achievement


v     This perspective was developed over three phases: early behaviorism, the human relations movement, and behavioral science


v     Behavioral theory was pioneered by Hugo Munsterberg, Mary Parker Follett, and Elton Mayo





Ü    Development

1. Early Behaviorism

2. Human Relations movement

3. Behavioral science approach

v     Munsterberg believed that psychologists could contribute to industry by:


1. studying jobs and identifying people suited to them


2. identifying the psychological conditions under which employees do their best work


3. devising management strategies to encourage employees to follow management’s interests 


Ü    First application of Psychology to industry

v                 Follett believed that: 


1. organizations should operate as communities with managers and employees working cooperatively


2. organizations should resolve conflicts through integration where managers and workers talked over differences


3. managers should be facilitators, and workers should control the work process


v     Mayo developed a theory known as the Hawthorne Effect which suggested that employees worked harder if they felt that managers cared about their welfare and paid attention to them




Ü    Key point: Power sharing/democratic












Ü    Hawthorne Studies: feeling is important

v                 Abraham Maslow and Douglas McGregor pioneered the human relations movement which proposed that better human relations could increase worker productivity 


v                 Maslow argued that people are motivated by a hierarchy of human needs: physiological, safety, social, esteem, and self-actualization


v                 McGregor theorized that a manager’s attitudes toward employees could either be Theory X (pessimistic, negative), or Theory Y (optimistic, positive)


v                 Understanding the X-Y theory can help managers avoid attitudes that become self-fulfilling prophecies   


Human Relations Movement

·        Supporters of this movement uniformly believed in the importance of employee satisfaction. They believed that a satisfied worker will be a productive worker.






Ü    ways to look at people

X => No good

Y => Yes, they are good

v     The human relations movement was considered too simplistic for practical use


v     It was replaced by the behavioral science approach which relies on scientific research for developing theories about human behavior that can be used to provide practical tools for managers


Now you can talk


Do you believe in the above statement – happy workers are productive workers? Can you give some real life examples to support your belief?



2.4 The quantitative approach






v     Quantitative management focuses on the application to management of quantitative techniques such as statistics and computer simulations


v     Two branches of quantitative management are management science and operations management





Ü    The quantitative approach to management includes applications of statistics, optimization models, information models and computer simulations to planning and controlling activities. (e.g. linear programming, work scheduling, economic order quantity model)



v     Management science focuses on using mathematics to aid in problem solving and decision making


v     Operations management focuses on managing the production and delivery of an organization’s products or services more effectively


Now you can talk


Can students who have taken Management Science or Operation Management courses give some examples on how Operation Research or Management Science can help a manager?

(MS: pricing strategy for hotel

OM: work scheduling, production planning, facilities location and design)



Contemporary perspective




v     There are three contemporary management perspectives: systems, contingency, and quality-management


We will not cover quality-management approach in this course.

Figure 2.2: The Contemporary Perspective






2.5 The system approach



v     A system is a set of interrelated parts that operate together to achieve a common purpose

v     The systems viewpoint sees the organization as a system of interrelated parts

v     Thus, an organization is both a collection of subsystems (parts making up the whole system) and a part of the larger environment 





Ü    The organization as being made up of interdependent factors, including individuals, groups, attitudes, motives, formal structure, interactions, goals, status and authority.

There are four parts in a system:


v     inputs (the people, money, information, equipment, and materials required to produce an organization’s goods or services)


v     outputs (the products, services, profits, losses, employee satisfaction or discontent that are produced by the organization


v     transformation processes (the organizations capabilities in management and technology that are applied to converting inputs into outputs)


v     feedback (information about the reaction of the environment to the outputs that affect the inputs)   


Ü    The job of a manager is to ensure that all parts of the organization are coordinated internally so that the organization's goals can be achieved. (i.e. the manager needs to coordinate and integrate the activities of the various part of the organization as the decision and actions taken in one organizational area will affect others)

v                 An open system continually interacts with its environment


v                 A closed system has little interaction with its environment


v                 Organizations that ignore feedback from the environment are vulnerable to failure


Ü    The organization, as an open system, must fit into its environment. (Hence the manager should be more sensitive and responsive to key constituencies such as customers, government and the community)


Now you can talk


Can you think of an organization that chooses to ignore its environment? How successful is it? 




2.6 The contingency approach 





v     According to the contingency viewpoint of management, a manager’s approach should vary according to the individual situation and the environmental situation


Ü    The manager's task is to identify which technique will, in a particular condition and time, best contribute to the attainment of management goals.


Ü    This theory recognizes that all organizations are different and that there is no one best way to manage.




Key words




v     Administrative management

v     Behavioral science/ viewpoint

v     Classical viewpoint

v     Closed system

v     Contemporary perspective

v     Contingency viewpoint

v     Evidence-based management

v     Feedback

v     Historical perspective

v     Human relations movement

v     Inputs

v     Management science

v     Open system

v     Operations management

v     Outputs

v     Quantitative management

v     Scientific management

v     Subsystems

v     System

v     Systems viewpoint

v     Transformation process







v     Kinicki & Williams (2008) Management – a practical introduction, 3rd ed., McGraw-Hill.

v     Robbins & Coulter (2007) Management by, 9th ed., Pearson.



Recap: knowledge and concepts





Self learning activities



1. Try the following past examination questions:

(a) Describe what managers do in terms of functions they performed.     (12 marks)      
(b) “The managers have two duties, to come up with good ideas and to use good people”. What do you think of this statement? (8 marks)                                                                                                               


Suggested Answer: 

(a)                Planning, organizing, leading and controlling 
(b) You can consider: 

    Connection between the statement and the functions, 
    Effect of level of management 
    Mintzberg’s management roles 


2. Take a look at Fayol’s 14 principles of management; to what extent do you think they are still true today?


·        Fayol’s 14 principles of management

  • Division of work: Specialization increases output by making employees more efficient.
  •  Authority: Managers must be able to give order.
  • Discipline: Employee must obey and respect the rules that govern the organization
  • Unity of command: Every employee should receive orders from only one person
  • Unity of direction: Each group of organizational activities that have the same objectives should be directed by one manager using one plan
  • Subordination of individual interests to the general interest: The interest of any one employee or group of employees should not take precedence over the interests of the organization as a whole
  • Remuneration: Workers must be paid a fair wage for their services
  • Centralization: The task is to find the optimum degree of centralization for each situation
  • Scalar chain: The line of authority from top management to the lowest ranks is the scalar chain
  • Order: People and materials should be in the right place at the right time
  • Equity: Managers should be kind and fair to their subordinates
  • Stability of tenure of personnel: High employee turnover is inefficient
  • Initiative: Employees who are allowed to originate and carry out plans will exert high levels of effort

·        Esprit de corps: Promoting team spirit will build harmony and unity within the organization

 Last updated: 2008/Jan/07