Chapter 2 : Full Notes [POM]

2.1 INTRODUCTION

Evolution of management is concerned with the various development stages that management has gone through over years. Historically, Management was not recognised as a distinct subject such as Geography, Economics, Mathematics, Physics, Law, Accounting, etc. worthy to be studied in educational institution.
The tendency was therefore for people to marginalise it since the Geographer, Economist, Mathematician, Physicist, Lawyer, Accountant, etc. who establishes his business and was in charge of affairs was regarded as a manager.

Interestingly, if one has not studied courses such as Law and Accounting one cannot call himself a Lawyer or an Accountant respectively.
The same cannot be said of Management since it is loosely used to apply to anybody who has established his own business and is in total control of it.

2.2 CHANGING TREND

The concepts of evolution and development have created a paradigm shift in emphasis to the point that management is now regarded as a distinct subject or course of study vigorously studied in many educational institutions. The existence of many management and administration educational institutions the world over are practical demonstration of the fact that there has been a paradigm shift in emphasis. For example, we have Business Schools all over the world and in Ghana we have, KNUST School of Business, Ghana Institute of Management and Public Administration [GIMPA], Institute of Professional Studies [IPS], etc.

Even though the renowned authorities in the field of management achieved fame through personal intuition, practice and experience [Art], the fact remains that many went through formal training in it [Science].
The various principles of management propounded by Henri Fayol were the results of many years of practice and formal training.

2.3 INTER-DISCIPLINARY NATURE OF MANAGEMENT

Management has assumed inter-disciplinary dimension since it borrows ideas from various fields such as Economics, Law, Sociology, Psychology, Anthropology and Accounting.

The good general manager is the one who can articulate and demonstrate rich knowledge in many related disciplines in addition to the key functional areas of Management. For example, the Finance manager should be able to understand marketing issues relating to customers satisfaction, brand image and other related issues.

Thus, the inter-disciplinary nature of management compels managers to broaden their knowledge in the relevant and related disciplines.
It can therefore be concluded that experts in the other relevant disciplines needed in management have also contributed to the evolution and development of management.

2.4 THEORIES/APPROACHES TO MANAGEMENT

A lot of theories have been developed to underpin the concept of management in organisation. Among some of these schools of management thought are the classical or traditional approach, the behavioural approach, the system approach and the contingency approach.

2.4.1. Classical /Traditional Approach

The key assumption under this approach is that people are rational and economically oriented in their approach towards work.
The approach focuses extensively on formal organizations. It also deals with management and organizations by emphasizing more on the organization‟s purpose and formal structure

Proponents of this approach also placed greater emphasis on planning of work, the technical requirements of the organization, principles of management, and rational and logical behaviour. The classical school tried to lay down universal principles for the structure and organisation of a business.

Branches/Dimensions of the Classical Approach
the classical approach is made up of:

·       
 Scientific Management

·       
 Administrative Management

·       
 Bureaucratic Management

2.4.2 Scientific Management

It aims at improving the general manufacturing process with a view to improving productivity. It is also concerned with formulating proper work procedures so that materials will flow uninterrupted. It lays emphasis on scientific methods of doing things rather than the use of personal intuition, experience, practice and guess work.

Pioneers in the Field of Scientific Management.

Scientific management was based on the work of Frederick Winslow Taylor [1856-1915]. He was described as the Father of Scientific Management. He was born in Boston, Massachusetts and started work as an apprentice in engineering. He spent most of his time working and achieving greater efficiency at the shop-floor. His solutions to problems of efficiency were from his own practical experiences. He rose through the ranks to become a Manager in the Midvale Steel Co. He also worked with Simonds Rolling Machine Co. It was at Bethlehem that he conducted experiment on how to improve labour productivity. He consolidated his ideas into a book – The Principles of Scientific Management [1911].

Taylor contributed to the study of management in the following areas:
 The need to develop scientific methods of doing things rather than opinion and rule-of-thumb.

 Scientific selection of workers with properly defined roles and responsibilities.v
 Scientific education, training and development of the workerv
 Scientific development of intimate, friendly and co-operative spirit between management and labour.

According to Taylor, the success of the above principles required a complete mental revolution on the part of management and labour. This required substituting facts or scientific method for intuition, opinion and guesswork.
Taylor was concerned with finding the one best way to perform a task. His basic philosophy of work was based on motivation. He believed that prosperity of both the employer and the worker could only be achieved through maximizing productivity. Taylor suggested that organisations would be more efficient if their knowledge, experience and practices were analysed and the best methods established by management.

Implications of Taylor‘s work

Managers have now realised the need to assign roles and responsibilities. Managers now apply the principles of division of labour and specialization. Managers now design an organizational structure, recruit workers and fit them into the organization with well–defined roles and responsibilities.
Managers at the shop–floor of manufacturing concerns now appreciate correct sequence of manufacturing operations through appropriate plant layout- product, process, fixed position etc.
Examples of Taylor’s Scientific Studies

He analysed and timed steel worker movement on series of jobs. Using time study as a base, he broke each job down into its components and designed the quickest and best methods of doing each component of the job[task] the conclusion was that, he was able to allot the optimum time for performing a task given the equipment and material on hand.

He also recommended appropriate compensation for more productive workers in relation to others based on a scientifically correct rate that would benefit both the worker and the organization.

Contributions/benefits from scientific management

·       
 Scientific approach to doing things leads to general improvement in working conditions

·        Scientific improvement in working methods leads to increased in productivity all other things being equal.

·       
 It enables workers to be paid by results and to take advantage of packages.

·       
 The scientific approach to management enable managers to adopt a more positive role in leadership styles at the shop floor level in particular

·        It was the basis and the foundation for advanced studies [motion study]

·       
 It created orderliness through a well-designed organizational structure

·        It reduced putting square pegs in round holes since workers were carefully selected based on their abilities to do a particular work

·       
 It emphasized the importance of training and development of employees to enhance their productive efficiency.

·       
 It provided supervisors with the necessary support to make them more effective

Limitations/drawbacks of the scientific management

·       
 Workers resented Taylor‟s position expressing anxiety that working faster or harder will exhaust work and may lead to redundancy and consequently lay-offs.

·       
 The faster work rate which implied speed up was criticized since it exerted pressure on the work force to achieve a set standard to qualify for an incentive package.

·       
 Scientific management had little regard for human feelings and sentiments. The emphasis was too much on hard work and increased productivity.

·       
 Greater emphasis on productivity and profitability made the manager to exploit the worker and the buyer of his products.

·       
 The worker was made a rigid adherent to methods and procedures to the detriment of discretion and initiative.

·       
 It narrowed motivation to bonus system of incentive to the neglect of other methods of motivation such as respect for human rights.

·       
 The approach gave managers at the workplace the exclusive right to plan and control activities.

·       
 The system of bargaining for conditions of work was absent since every job was scientifically measured, timed and rated.

·       
2.4.3 Administrative management principles/theory

The administrative principles/theory was also regarded as classical organization theory. Its two major purposes are;
 

·        To develop basic principles that could guide the design creation, and maintenance of large organizations;

·       
 To identify the basic functions of managing organizations.

Henri Fayol [1841-1925]

He was French industrialist and had extensive business experience. He founded the classical approach. He started work as a mining engineer at the age of 19. He spent his entire working life with the same company and rose to become the managing director at the age of 47 and retired at the age of 77. He published his lifetime working experience in his book “Administration
Industrielle et generate in 1916”. The book was later translated by Storrs [1949] into English to read General and Industrial Management.
Fayol‟s concern was on the totality of an organization. To him, management was the most neglected aspect of business operation. Before Fayol, the general believe was that managers are born and not made. That is to say, no one could become a manager through formal training.

However, Fayol was of the view that management was a skill like any other, and that, it could be taught once its underlying principles were understood. He was thus given the following accolades:
 Father of classical approach

 Practical man of Management
 Father of modern management theory

Key areas of Contribution
Fayol contributed to modern management theory through the development of his 14 Principles [blue-print of management].

1. Division of labour
Fayol‟s objective here was to maximize both the amount and quality of production for a given degree of effort, hence he argued for the advantages of specialization. An interesting idea he raises particularly in relation to Taylor‟s ideas (which will be discussed in later chapters) is that there are limits to the division of labour, which experience teaches us should not be exceeded.

2. Authority and responsibility
Fayol suggests that management has the right to give orders and to expect obedience. Managers derive authority either from their official position or personal qualities. “Wherever authority is exercised, responsibility arises.” Fayol (1949).

3. Discipline
Fayol argued that discipline marks a mutual respect between the organization and its employees. He embodies the principle that a manager can take sanctions in the case of a breakdown of discipline.

4. Unity of command
“For any action whatsoever, an employee should receive orders from one superior only.” Fayol (1949).Thus he argues that authority should be clearly allocated and suggests that if command is divided or unclear it is a continual source of conflict.

5. Unity of direction
He argues that for any group of activities with the same objective, there should be one clear leader and one clear plan so as to provide for unity of action.

6. Subordination of individual interest to general interest
In any organization there will at least be times when individual interests differ from the interests of the organization. Fayol argues, “The interests of one employee or group of employees should not prevail over the interests of the concern or organisation.”

7. Remuneration of personnel
Salaries - the price of services rendered by employees - should be fair and provide satisfaction both to the employee and employer. It shall not go beyond reasonable limits.

8. Centralization
The degree of centralization, Fayol argues, is a question of proportion and will vary according to different cases. It will depend, he argues on the character of the manager, the condition of the business and the reliability of the subordinates to whom the manager can delegate.

9. Scalar chain
Fayol argues for a clear chain of authority through which communication should flow. He did however appreciate that some activities require speedy action and recognizes that it was appropriate for people at the same level of the organisation to communicate directly. Notably he
required superiors to approve any such communication. He also expected “some measure of initiative at all levels of authority.” Fayol (1949)

10. Order
Fayol approved of both social and physical order. This could be summarized as – the right thing in the right place at the right time. Appropriate selection should ensure competent people are in place, their tasks, responsibilities and places of work should be clear. Echoes of this approach are clearly apparent in what are seen as relatively new practices such as Just in Time.

11. Equity
Managers are encouraged to be both fair and friendly to employees. Fayol argues, “Equity requires much good sense, experience and good nature.” Fayol (1949)

12. Stability of tenure of personnel
Fayol felt that high employee turnover was not the best and that mangers in particular, if they were to develop themselves fully, required as much security as was possible. He noted however that the stability it was possible to generate in any industry depended on the commercial environment in which the organization was operating.

13. Initiative
Fayol argues that initiative is a source of strength for an organization, particularly in times of difficulty. Initiative he felt should be encouraged at all levels and “The manager must be able to sacrifice some personal vanity to grant this satisfaction to subordinates” Fayol (1949). In a sentiment as appropriate today as it was at the turn of the century he states “A manger able to do so is infinitely superior to one who cannot.

14. Esprit de corps
In a sentiment possibly borrowed from the military, Fayol outlines the importance of harmony within, and commitment to, the organization. He describes in particular two methods to help build such a spirit, the use of verbal rather than written communication wherever possible and secondly the avoidance of encouraging dissension among subordinates.

Lyndall F. Urwick
He was a prolific writer on administration and management. He had rich working experience in industry business consultancy and the armed forces. He was strongly influenced by the ideas of Henri Fayol in particular. He advocated the use of principles as the only way social organization
could be controlled .He translated this into his best known-book “The Elements of Administration” published in 1947.

His principles of management represented a code of good practice which he claimed if strictly adhered to should lead to success in administration or management. His work resulted in the development of the following ten (10) principles:
1. Objective
2. Specialization
3. Co-ordination
4. Authority
5. Responsibility
6. Definition [job]
7. Correspondence [authority and responsibility]
8. Span of control
9. Balance [of all depths]
10. Continuity [going concern]

Urwick principles concentrated more on getting the organizational mechanisms right rather than focussing on issues such as remuneration and morale.

A major weakness of Urwick principles is its concentration on the internal environment to the detriment of the external environment. No organization can succeed without the external environment. This is because; organizations are open-systems not self-contained. They have to respond to pressures from the external environment-social, economic, cultural, political, etc.

Urwick also identified the key functions/process of management to be planning, organizing and controlling. He expanded the controlling function to include staffing, selecting and placing. Hiscontrolling function served as the foundation or the forerunner to personnel /human resources management and the human relations approach to management.

E. F. L. Brech
Even though Brech shared the opinion of using principles, he was concerned with the development of people in organizations. He was less advocate of the use of principles. Instead, he emphasized the use of flexibility according to a particular situation. He also emphasized the need for written definitions of responsibilities and the value of job descriptions as an aid to effective organization and delegation.

Breech sees management as a social process, for planning and regulating the operations of an enterprise towards an agreed objective. To him, the process is carried out within a framework known as organizational structure.
He argued that the key elements in developing an organizational structure are:

·       
 Defining the responsibilities of management, supervisors and specialist personnel.

·       
 Determining how the responsibilities should be shared.

·       
 Co-ordinating the execution of the responsibilities

 Maintaining a high level of morale among personnelBrech‟s principles of management overlap those of Fayol and Urwick.

However, they are less dogmatic than the others. Some of his principles are division of responsibilities, clear lines of communication, unity of command, and allocation of authority. His principles are contained in his book The Principles and Practice of Management [1975].

Brech regrets that there are no generally accepted principles of management since each writer has formulated his own principles. In the absent of general agreement on the fundamental body of principles, Brech finds it difficult to regard management as a science or a profession

Contributions/benefits from the administrative theory

The numerous principles that have evolved have provided blue- prints in management. The works of Fayol, Follett and others have set the foundations for present emphasis on the key components of the function/process of management-planning, organizing, directing/leading and controlling. Follette‟s principle of making every worker part owner in a business is still valid today as we often hear of workers in troubled unionised organizations agitating to take up ownership and management by using their end-of-service benefits to buy shares.

It has enhanced and promoted the skills of managers. The use of principles makes room for little deviations since the principles provide blue-print and direction. In this way, trial and error are minimized.

Criticisms /Drawbacks to the Administrative Principles. Dogmatic adherence to principles stifles initiative and discretionary use of authority Principles are not applicable in all situations since we are in a dynamic environment. They cannot be used as rule-of-thumb Since organizations cannot function without people, the disregard for human factors that will apply the principles is a serious drawback to the Administrative Principle.

2.4.4 Bureaucratic Management

This is the third arm of the classical approach. The most important personality associated with bureaucracy is Max Weber [1864-1920]. As a German sociologist, psychologist and a practising manager, he was the key innovator of the concept of bureaucracy. His views on bureaucracy were published in his book “The Theory of Social and Economic Organization” He used bureaucracy to describe a form of organization that exists in almost every organization.

The concept of bureaucracy often referred to as “red tapeism” i.e. too many rules, regulations and paperwork which often lead to inefficiency. It is referred to as officialdom i.e. all the apparatus of central and local government.
The concern of Weber was on bureaucracy as a form of organization with hierarchy of authority regulated by rules and regulations. He saw the development of bureaucracy as a means of introducing order and rationality into social life.

He identified the characteristics/features of bureaucracy as follows: Every organization functions continuously through rules and regulations. Need for competence, division of labour and specialization. Allocation of authority regulated by rule. Appointment to positions/offices made on the basis of technical competence A hierarchical arrangement of offices/jobs i.e. work should be arranged in hierarchical order with control systems.

The need to separate working staff from the ownership of the organization. Rules, decisions and actions are formulated and recorded in writing. Official positions exist in their own right and the job holder has no right to a particular position except through promotion or initial occupation based on merit.

According to Weber, the above characteristics/features make bureaucratic organizations capable of attaining the highest degree of efficiency since to him, it is the most rational means of controlling workers or members in an organizations. He believed that bureaucracy is indispensable for the needs of large-scale organizations.

The size [large] and complex nature of organizations make bureaucracy inevitable in such organizations.
Weber’s legitimate authority
Max Weber identified three types of legitimate authority:
Traditional authority- This is where acceptance of authority is based on tradition and custom.

Charismatic authority- The acceptance of authority is based on loyalty to, and confidence in the personal qualities of a person in authority.

Rational-Legal authority –This is also based on the office or the position a person legitimately occupies; regulated by rules and procedures of the organization.

Contributions/benefits from Weber’s bureaucracy

·       
 The need for fairness and uniformity of treatment of workers demands bureaucracy.

·       
 Adherence to rules and procedures does not make room for arbitrariness.

·       
 The element of hierarchy of authority creates orderliness and respect for higher authority.

·       
 The elements of division of labour and specialization put the worker on the right job/task.

Limitations/drawbacks of Weber’s bureaucracy

·       
 Too much emphasis on rules, procedures, record-keeping and paperwork may lead to delay and inefficiency.

·       
 There is the tendency of workers to place too much reliance on rules and procedures to the detriment of initiative and discretion.

·       
 Bureaucracy does not make room for flexibility and adaptation

·       
 It disregards informal organization and the development of groups with their own goals.

2.5 THE BEHAVIOURAL APPROACH

It was made up of a group of management scholars trained in behavioural disciplines such as Sociology, Psychology, Anthropology and related fields who used their diverse knowledge to propose more effective ways to manage people in an organisation. It was developed to take care of the human element in organizations which was a major limitation of the classical approach. The major assumption that underlines the behavioural approach is that people are social and self-actualizing

2.5.1 Dimensions of the Behavioural Approach

Human Relations

This approach deals with how managers interact with their workers. Proper “worker management” leads to organizational harmony and increases productivity. Many antagonisms, suspicions, acrimonies, wrangling, strikes, riots, demonstrations, etc. are often the result of how people in an organization are treated.

 In a wider perspective, the way the government manages the various ethnic factions can also affect the relations between the government and certain ethnic groups.
Human relations sub-approach was founded by Prof. Elton Mayo (1880-1949).

The approach is deeply rooted in the social environment and personality trait of the manager unlike the classical approach which emphasized the physical environment. Expert in this approach say that managers should be trained in both „technical skills‟ and „people skill‟.

The main underlying principle in this approach is that the achievement of organisational effectiveness depends on how people’s needs and wants are satisfied. Under the human relations approach, managers must know why their subordinates behave in a certain way and the psychological and social factors that influence them. The human relations approach led to the famous Hawthorne Experiment conducted by Prof. Elton Mayo.

Hawthorne Experiments
The genesis of the experiments was the desire of the National Research Council [NRC] of the National Academy of Sciences to study how lighting in the workplace influenced individual efficiency. This led to what has become popularly known as the Hawthorne Studies.

The experiments conducted by Mayo at Western Electric were;

·       
 To determine the effects/impacts of changes in illumination on worker productivity.

·       
 The determine the effects of work-related periods, coffee breaks, shortened work days and other changes in working conditions on worker productivity. This was the relay assembly room experiments.

·       
 To interview workers to determine workers‟ attitude.

·       
 To analyse the various social factors at work

·       
Douglas Murray McGregor [1906-1964)

McGregor developed Theory X and Theory Y which are sets of assumptions about human behaviour. He wrote the book “The Human Side of Enterprise”
Theory X regards employees as being inherently lazy, requiring coercion and control, avoiding responsibility and only seeking security.

Under this theory, work is distasteful and therefore workers must be directed and motivated through force, pecuniary consideration (financial incentives) and praise to achieve results.

Theory Y sees man in a more favourable position. It regards employees as liking work which is regarded as natural. That the worker should not be directed, controlled and coerced if he is committed to the directives of the organization. Under this theory, the worker will accept responsibility.

The above theories have become the basis for the extreme forms of management style that managers are using. A blend of the two theories may provide the best prescription for effective management.      Abraham H.Maslow
As a motivation theorist, his hierarchy of needs influenced the work habits of people at the workplace. He identified the levels of needs to be:

 Physiological needs
 Safety needs
 Love/Affection needs
 Esteem/Ego needs
 Self-Actualization

According to Maslow, the manager should know the level of the hierarchy on which his subordinates are so that he can apply the appropriate motivational factors to move them up to the next level of hierarchy. The behaviour of workers will to some extend be influenced by the degree to which their needs are satisfied.

2.6 SYSTEMS THEORY

During the 1940s and World War II, systems analysis emerged. This viewpoint uses systems concepts and quantitative approaches from mathematics, statistics, engineering, and other related fields to solve problems. Managers find optimal solutions to management problems by using scientific analysis which is closely associated with the systems approach to management.

A system is an interrelated and interdependent set of elements functioning as a whole. It is an open system that interacts with its environment. It is composed of inputs from the environment (material or human resources), transformation processes of inputs to finished goods (technological and managerial processes), outputs of those finished goods into the environment (products or services), and feedback (reactions from the environment). Subsystems are systems within a broader system. Interdependent subsystems (such as production, finance, and human resources) work toward synergy in an attempt to accomplish an organizational goal that could not otherwise be accomplished by a single subsystem.

Systems develop synergy. This is a condition in which the combined and coordinated actions of the parts of a system achieve more than all the parts could have achieved acting independently. Entropy is the process that leads to decline.

2.6.1 Contribution of the System Approach

·       
 It ended the dominance of the classical and the behavioural approaches

·        It blended the opposing views of both the classical approach and the behavioural approach.

·       
 It brought to fore the important role the environments and its elements play on business activities.

·       
 It cautions managers to be circumspect in the decision-making process since a decision made in one department can affect almost all the other departments

·       
 It creates the awareness of sub-systems each with potentially conflicting roles and goals which must be integrated.

·       
 It focuses attention on inter-relationships between it and its environment i.e. the need of the system as a whole

·       
2.6.2 Limitations/Drawbacks/Criticisms of the Systems Approach

 It is perceived that some organizations operate successfully and achieve their corporate objectives under the closed system i.e. without recourse to the external environment. Examples are Catholic Monastery and the Trokosi in the Volta Region of Ghana.
 The environment and its elements sometimes have negative impact on organization. The external environment has negative socio-cultural practices that may adversely affect other organizations that may relate to it.
 Breakdown of a sub-system of a system may affect all the other systems and a general breakdown of the entire systems.
 The impact of a decision in one department on the entire organization may cause managers to be over-circumspect. This may lead to delays in decisions or no decisions at all

2.7 CONTINGENCY VIEW

In the mid-1960s, the contingency view of management or situational approach emerged. This view emphasizes the fit between organization processes and the characteristics of the situation. It calls for fitting the structure of the organization to various possible or chance events. It questions the use of universal management practices and advocates using traditional, behavioural, and systems viewpoints independently or in combination to deal with various circumstances.

The contingency approach assumes that managerial behaviour is dependent on a wide variety of elements. Thus, it provides a framework for integrating the knowledge of management thought.

2.7.1 Contributions to the Contingency Approach

 It gives rise to the notion that different problems require different methods of approaches of solution.
 It calls for the application of different management styles in dealing with different situations.
 It has eliminated some of the loopholes associated with the classical approach. For example, the classical approach wanted to find only one best way of doing things. The contingency approach does not subscribe to this It creates a synthesis and a collaborated relationship among other approaches
2.7.2 Limitations/Drawbacks/Criticisms of the Contingency Approach
 The ideal of psychic unity of mankind implies that certain principles and perceptions are capable of universal application.
 Different management styles based on situational analysis may not always yield the same expected results.

2.8 Management Science/ Quantitative approach

The emphasis of this approach is on the use of quantitative techniques in solving management related problems in the areas of Statistics, Mathematics and Computers. This approach emerged out of Operation Research approach. As a result the two [management science and operations Research] are often used interchangeably/synonymously. The focus of the approach is on technical problems rather than on Human/personal problems. The computer has emerged as a very important facilitator to this approach. Why?

2.8.1 Practical application of management science approach includes:

1. Mathematical forecasting- for projections into the future for planning purposes.
2. Inventory modelling- to exercise effective control over inventories by mathematically establishing how much/many to order and produce.
3. Linear programming- it deals with the allocation and utilization of scarce resources among competing ends/uses.
4. Queuing theory- it deals with the facilitation and allocation of service personal or work stations to minimize customer waiting time and service cost.
5. Network model/analysis- breaking large tasks into smaller and simple components so that they can be properly worked on. It can also be used to map out programmes of activities in such a way as to create the most effective planning and control.
6. Simulation- make models of problems to create hypothetical situations to test different solutions under various assumptions

2.8.2 The above techniques aim at;

i. Rational decision
ii. Economic viability of such decisions based on proper cost, revenues and returns on investment analysis.
iii. Using appropriate mathematical models based on formulas and rules.
iv. Using computers for faster processing of large mass of data.

2.8.3 Contributions of the Management Science Approach
 Introduction of the various techniques, Use of mathematical models in dealing with productions issues often lead to concise and unambiguous solutions in contrast with the behavioural approach. It has improved on the mathematics/quantitative reflexes of managers.

2.8.4 Limitations of the Management Science Approach
 The fact that management is a behavioural science implies that it is not in all cases that a mathematical model can be used to explain why a person behaves in a certain manner towards another.
 The use of computer in analysing certain events may sometimes be influenced by human beings who operate it and this may lead to manipulation of figures.