Jan 15, 2011

A brief history of the philosophy of Management: Part 1

(This is the first part of a two part guest post by management researcher Kunal Sharma, on a brief History of the Philosophy of Management. He chronicles the evolution of management practices, their philosophical bases and the attendant historical circumstances. He is crisp, precise and impartially analytical and, operating with a bare minimum of factoids, keeps your freedom of thought intact)

  • Introduction

This short essay provides an overview of major schools of thought and philosophical perspectives in the field of management theory. The focus is on the contribution and the gradual growth of the management thought from the early 20th century to the modern theories of management which influence the thoughts of the 21st century management thinkers. We will focus on Individuals and their contributions to the development of management theory. As obvious, no theory is a product of a single mind, nor can it exist without any context. We will try to see what the situations were which gave rise to the theories – the contexts and the environments in which the thoughts took shape and yielded the well sung theories of management, many of which have become trite yet remain true. 

  • Emergence of Management Philosophy in Academics

Industrial revolution:
The Impetus for management philosophy
When the words “Management Thought” skirt our ears, the alphabets MBA do resonate in our mind. Management has become the synonym of Business Management, and a MBA degree has become a much respected degree of the modern age. Let us spend some time going back to the history to find out when did “Management” gain its focus and when did it get incorporated into the regular courseware. It was in the year 1902 when Dartmouth College in New Hampshire (USA) started the first master’s degree in business education.

The program offered was the Masters in Business Administration, MBA for short, which would soon become a much sought of degree in days to come. However, management education emerged more because of a need than any academic desire: the effect of the Industrial Revolution of the 18th and the 19th Century was being felt in all aspects of human life. Fast technological and economic changes changed the way the people lived their life. While new innovations and inventions were expected to make life simpler and safer for the masses, not everything went in the right direction. Problems arose from time to time with many of them remaining unresolved. Some problems, like the problems arising because of the social effects of Industrial revolution would have no perfect solution, and many a times what was needed was a better understanding of the problems at hand. This way, there arose a need to look out for multiple perspectives, a need to look at a problem from multiple paradigms. The natural reaction of the industry was to look towards the universities for answers: fortunately, the universities did not disappoint them. The seed of management education was thus sown. 

  • Focus on Technological Efficiency – the era of Scientific Management

The primal focus of the Industrial Revolution in its formative years was on increased mechanization of activities. With this arose the need to put more efficiency in the manufacturing processes, for, the final output was directly related to the efficiency of the processes – the better the processes, the better the output. To improve the processes, Frederick Taylor (1856 - 1915) proposed systematic observation and study of the processes involved. He was of the view that a proper observation and analysis would help one arrive at the most efficient way to perform a task. Taylor would observe people working, then put them in controlled situation and analyze the results to arrive at conclusions. As Taylor used scientific ways to arrive at solutions to management problems, he is rightly regarded as the Father of Scientific Management. It was an irony that the first chapter of the book of Management Education was not written in the arena of academics, but was written on the shop floor. However, Taylor was of the view that management needed to be formulated as an academic discipline, and industries should consult those having the knowledge of this discipline to arrive at the most efficient ways of doing things. 

Assembly line: Pinnacle of Taylorian standardization

Taylor believed that it would be better to separate planning from execution; earlier those who planned would execute. This way he reasoned that most of the work which the workers were doing could be done by the top management in a better way. Thus, the onus to plan shifted to the top management and the workers remained responsible only for the execution of the plans. Taylor also focused on the selection and development of workers. He put the emphasis on imparting skills through education; this was very different from the earlier thought of gaining skills through continual and repetitive practice. Nonetheless, he was of the view that continual practice helped one refine the skills, but ‘which skills to refine’, and ‘the best way to refine the skills’ was to be decided by the top management. Taylor also focused on designing a compensation system which was different from the traditional piece-meal system. The compensation system which he designed valued above-average performance and punished below-average performance; to arrive at the ‘average performance’ he once again took help of the scientific enquiry. This way, Taylor introduced the scientific enquiry into all the fields of management, whether it was selection, training, recruitment or compensation. For the first time, the industry was looking at these activities in a different way: the processes were being standardized and the focus was on finding the best way of doing things through scientific investigation. However, scientific investigation had its limits – in business activities, not all processes could have been standardized. The biggest criticism of scientific management was related with its treatment of humans as mere instrument of production. The men too were seen as being machines, and thus their behavior too was to be molded and standardized! Perhaps, scientific management tried to deliver too much, and with its excessive focus on treating humans as instrument of production, it failed to take care of the human issues inside the organization which had started to surface with the advancement of the industries. 

  • The Emergence of Bureaucratic Organizations

Before we deal with the human problems of the organizations, it would be helpful to us if we look at the general structure of the organizations which we are talking about. The new organizations which followed the theories of scientific management had standardized processes and had a central authority which took care of the planning activities. It was a system where tasks were divided and fixed, where there was hierarchy in terms of workers and the top management. However, as the number of workers increased, what was needed was a structure which could take care of the controlling the huge number of workers and their problems. Therefore, the need for a vertical hierarchical structure: this vertical hierarchical structure had standardized processes, a formal authority, heavy planning – all this needed a lot of documentation, and a mechanical way of doing things. Since the new emergent organization focused a lot on desk work (documentation) it was rightly called a bureaucratic organization (Fr. bureau = office, desk). 

Max Weber
It would be prudent to introduce Max Weber (1864 - 1920) and Henri Fayol (1841 - 1925) at this point of time. While Weber described the bureaucratic superstructure of the emergent organizations, Fayol underlined the personal duties of management in these organizations in an elaborate manner. It was Fayol who first proposed the five primary functions of management, viz. planning, organizing, commanding, coordinating, and controlling. He believed that the management theories could be developed and taught. He went on to develop many principles of management, most of which are relevant even till date. No wonder, he is called the Father of Modern Operational Management Theory

While Fayol proposed the functions of management, Weber described in detail the need for Bureaucratic organizations, their benefits and their limitations. Even though Weber was of the view that Bureaucratic organizations were the need of the hour, he did predict that bureaucracies would face extreme difficulties facing individual cases. Thus the failure of the scientific management in taking care of the individual cases was getting reflected in the organizational superstructure as well. The time had come, when one needed to look at organizations as not a highly efficient machine, but also as a social conglomeration of individuals. The primal focus on increasing efficiency through standardization of process perhaps needed a change – other factors like human aspects of organization needed to be incorporated. Also, with the passage of time, the external environment was changing, complex changes (expanding markets, diverse workforce, democratic governments, trade unions, etc) in the global environment had started to affect the organizations as well, and the organizations needed to respond quickly to these changes. Quick response needed flexibility – something which was not possible in a bureaucratic organization; what was impending was none other than another change. 

  • The Human Relations Approach

Mayo during Hawthorne studies
The process of scientific enquiry looked at the human aspect of the organization as one which needed to be taken care of by focusing on the relationship between the man and the machine (the problem of fatigue) and the relationship between the worker and the supervisor (controlling through standardization of practices). It was thought that while the relation between the worker and the supervisor can be taken care of by standardization of practices and making rules and regulations related to proper behavior of worker and the supervisor, the relationship between man and machine could be taken care of if the problem of fatigue could be solved. In order to analyze the problem of fatigue, a series of experiments were being conducted at Western Electric Hawthorne Works. The experimenters thought that a change in variable such as illumination would affect the efficiency of the workers. The experimenters expected to find a direct positive relation between illumination and efficiency, but their expectations were not met! Even when illumination was kept low it did not affect the efficiency of the workers who were working in test conditions. The experimenters could not understand what was happening: it was unclear as to what contributed to the increase performance. After a detailed analysis involving interviewing the subjects and doing other experiments, Elton Mayo (1880 - 1949, who was called upon by Western Electric after the initial failure to understand the results of the illumination studies) arrived at the conclusion that the increased efficiency was because of the positive mental attitude of the workers which developed as a result of close supervision and formation of informal social relationship among the subjects by virtue of working as a team. It was a major finding – one that gave a new direction to the Industrial Organizations: the industry now knew that taking care of the human aspects of the organization would also lead to better efficiency. Management Thought thus got a new direction. 

  • Early Thoughts on Leadership

Mayo’s experiments had shown that human aspects of the organization needed to be taken care of; it brought into focus ideas concerning group norms, worker participation, resistance to change, job satisfaction, and other issues which dealt with the human side of the organizations. They brought the worker feelings to the limelight and stressed that the overall productivity of the organizations would increase if the worker’s feelings were taken care of. But Mayo was not alone, there were many others, some of them not directly related to the industry, but whose voice would ultimately be heard by the organizations and whose ideas would be worshipped in the days to come. Mary Parker Follett (1868 - 1933) was not a member of any profit making business organization; she was more interested in volunteering for organizations working for social causes. Nevertheless, she was an avid speaker and writer. She published many books dealing with diverse topics. Her contribution to management thought was chiefly through her writings on conflict management and effective leadership. She did not focus on the technicalities of the organizations, instead she dig deeper: for the first time someone was trying to better understand the psychological foundations of the organizations. She went to the roots and heeded them; her thoughts helped cultivate an organization where human emotions were taken care of, where efficiency came not through upgrading talents and skills but through better understanding of people’s requirements. It was a welcome change: the organizations were now ready to understand the people that constitute them.

End of part one.

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