Imagine a company in which a group of laborers had jobs as shovelers for a steel company. Each of the workers owned his own shovel and performed his job in a slightly different way. That was the situation Frederick W. Taylor, a management engineer, found in 1899 at the Bethlehem Steel Company when he was asked to apply his scientific management ideas there.

To start, Taylor told the shovelers that their pay would be doubled while he did some investigation for several months. Taylor and his associates used stop-watches to time the laborers as they performed various tasks. That process also counted the number of shovel-loads they each moved.

Based upon his studies, Taylor discovered that the load of a shoveler could vary from four to thirty-eight pounds. Starting at thirty-eight pounds per shovel-load, Taylor’s group counted the number of shovel-loads and tonage carried per day. Then Taylor had the laborers use short shovels that carried thirty-four pounds and found that more tons were moved. Experimentation with larger shovels and shovel-loads continued until the optimum shovel-load was determined to be twenty-one pounds. Also, Taylor suggested that different types of shovels be used for different types of materials.

In addition, methods for better scheduling and assignment of workers to shoveling jobs were recommended. Some training was done with the laborers on efficient shoveling techniques. For instance, Taylor told a worker that the most efficient method of shoveling was to put the right arm down by the right hip, hold the shovel on the left leg, and throw the weight of the body forward when digging the shovel into a pile, instead of using the arms and just pushing the shovel into a pile.

As a result of all of these changes, the cost per ton for handling materials dropped from 7 to 8 cents per ton to 3 to 4 cents per ton. Actual cash savings to Bethlehem Steel were over $70,000, and the average number of tons shoveled per worker increased from sixteen to fifty-nine. Average worker pay per day increased from $1.15 per day to $1.88 per day, but the company was able to reduce the number of workers from nearly 500 to about 150.

All of these benefits resulted from applying new management concepts to traditional jobs. As Taylor said, “Our method, instead of inventing things that were out of date forty years ago, leads on always to something better than has been known before.”

Adapted from: F. W. Taylor, Scientific Management (New York: Harper & Bros. Publishers, 1947).

As the opening discussion illustrates, the process of management has been useful in addressing management challenges for more than a century. Many of the challenges faced by managers during earlier periods were similar to those faced by managers today. For example, Taylor’s concern for the productivity of employees is shared by managers today. In fact, the challenge of meeting international competition is often addressed as the challenge of declining worker productivity. Among the challenges that managers have faced in the past are:

¾ Increasing worker productivity.

¾ Meeting the challenge of international competition.

¾ Replacing obsolete work methods and equipment with newer, more expensive equipment.

¾ Developing and introducing new products.

¾ Maintaining employee motivation and morale.

¾ Integrating the changes in societal values into workplace methods and organization policies.

Crucible Steel Shop

This is a crucible steel shop owned and operated by Bethlehem Steel similar to the one experienced by Frederick W. Taylor. The crude tools used by the workers are quite evident as is the labor intensiveness of the work. Therefore, Taylor’s analysis of the work with the intent of making it more efficient could easily pay handsome dividends for the firm. This early work of Taylor’s in the crucible steel shops eventually led to the development of his principles of scientific management.

Due to technological advances, changes in societal values, governmental pressures, and changes in the nature of the workforce, managers must be able to adapt and change their approaches as needed. This is the way it has always been and most likely the way it will always be. It is also the primary reason for studying the historical development of managerial thought. By examining where our managerial processes have come from, and how they have changed over the years, managers can better anticipate future changes. At the same time, by noting the many managerial practices that have remained essentially unchanged, managers can discover some strengths and weaknesses of various approaches and techniques.

To discuss such a broad topic in a limited space, several perspectives must be made clear. One is that people are of prime importance in all thinking about management. However, there have been differing views about why people work and how they are managed.

The second perspective recognizes the historical settings, in which certain ideas and approaches developed, noting whether the same conditions prevail today. For example, the nature of business growth in the past 100 years or so dictated that organizations centralize their decision making. However, many companies today are finding that decentralized decision making better fosters innovation. Hence, changed conditions may now dictate a different approach for decision making.

Finally, it is important to realize that there is no single best theory of management. Each of the many theories of management has some worthwhile applications and some limitations. Management today is both a reflection of and a reaction to past management theories. These theories are presented here in the order of their development and use.

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EARLY PERSPECTIVES

The first known management ideas were recorded as long ago as 3000-4000 B.C. One example is provided in the building of the pyramids in Egypt. One pyramid built by Cheops in 2900 B.C. required the use of 100,000 men for twenty years. The pyramid covered thirteen acres and measured 481 feet in height. It was constructed with 2.3 million stone blocks, each weighing an average of two and a half tons.¹ To produce such a monumental achievement required planning, organizing, guiding and directing, monitoring, and decision making.

Archeologists and historians have discovered that the Sumerians in 3000 B.C. used a form of recordkeeping for commerce that was a relatively sophisticated system of accounting.² Other management ideas developed during the Greek and Roman empires and the Middle Ages. An interesting situation occurred in Italy in the 1400s. Venice, known for its fighting power and production facilities, used assembly-line techniques to outfit galley ships to go to war. A report from a traveler in 1436 describes the process the Venetians used:

And as one enters the gate there is a great street on either hand with the seal in the middle, and on one side are windows opening out of the houses of the Arsenal, and the same on the other side, and out came the galley towed by a boat, and from the windows they handed out to them from one the cordage, from another the bread, from another the arms, and from another the balistes and mortars, and so from all sides everything which was required was on board, together with the complement of oars, and she was equipped from end to end. In this manner there came out ten galleys, fully armed, between the hours of three and nine.³

Even now it is impressive that within just a few hours ten ships could be completely outfitted and sent to sea.

Machiavelli

In the 1500s Machiavelli wrote The Prince in an attempt to gain favor with the ruler of an Italian city state. In his book, written as a satire, Machiavelli described the way that a good prince or leader should act .⁴ He suggested two basic approaches to people. One could be labeled the “love approach”—using love or respect as a basis for leadership and administration. Machiavelli suggested that the followers can control this relationship because they can break it whenever they wish to. The other approach is to rule through fear. Machiavelli felt that fear was superior because administrators or managers control the relationship and can tighten or loosen “the screws” as they see fit.

Machiavelli

Machiavelli’s work is still examined today. It provides a useful point of comparison for more modern-day management and leadership theories. Managers sometimes still apply a Machiavellian approach. In fact, there is a questionnaire at the end of this chapter by which you can assess your own degree of Machiavellianism.

In the late 1960s a book entitled Management and Machiavelli appeared on the best-seller list. The author, Antony Jay, took many of Machiavelli’s ideas and applied them to achieving success in a large corporation. As Jay says, “. . . in fact, Machiavelli, however marginal his relevance to academic historians, is bursting with urgent advice and acute observation for top management of the great private and public corporations all over the world.”⁵

The book provides some insight into the management of power and political organizations. Knowledge of this type is important to managers, especially in their own career advancement. For example, some universities have offered a course on Machiavellian management. A course of this type focuses on learning how to use Machiavellian tactics in order to advance one’s career.

Throughout history, management style was often autocratic and paternalistic. Serfs, soldiers, workers who were “supervised” were all expected to do as they were told. Some of them were fortunate to labor under benevolent autocracy. The autocratic owner or manager was generous, similar to a stern but loving father, as long as people stayed in line. Such a style represented a tempering of Machiavellian concepts with some “love.”

There are many examples of successful managers who use fear as a principle tool of their managerial style. For example, employees at National Cash Register (NCR) still talk about the hapless executive who returned from lunch one day to find his desk and chair on the curb. A worker doused his furniture with kerosene and set it ablaze under order from John Patterson, the company’s founder. Charles Revson, the founder of Revlon, once had a police gondola in Venice bring back a vacationing staffer from a boat on the canal to discuss a minor problem. And, Jack Tramiel, an autocratic chief executive of Commodore, hired, fired, and rehired four top subordinates in an effort to demonstrate his power and control over the operations. At big corporations, however, fear must be used cautiously. There is often a premium on consensus in today’s management world, and playing too tough can bring a quick end to a promising career. A recent study of forty-one fast-track executives showed that half were fired or forced to retire early because of their abrasive, intimidating styles.⁶

Many of the greatest contributions to management thought and practice occurred during and after the late 1800s. The industrial revolution in the United States led to a need for greater efficiency in production, and thus the development of a more scientific approach to managing and organizing workers. This development was due to the changing nature of societal values, growth in the population, the use of more technology and machines, and the demand for more complex products by consumers. These changes triggered the development of the classical era of management thought.

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CLASSICAL MANAGEMENT THEORY

Classical theory is a grouping of similar ideas on the management of organizations that evolved in the late 1800s and early 1900s. This theory contains three general branches. The predominant characteristic of all three branches is an emphasis on the economic rationality of the individual employee at work.

1. People are motivated by economic gains.

2. Because organizations control economic incentives, an individual is primarily a passive resource to be manipulated, controlled, and motivated by the organization.

3. Irrational emotions must be kept from interfering with economic rationality.

4. Organizations can be designed in ways to control irrational emotions, and thus unpredictable, dysfunctional behaviors of employees.

FIGURE 2-1. Rational Economic View

Rational Economic View

The rational economic assumption was an extension of the ideas developed by Adam Smith in his economic writings. Smith’s classical assumption was that people choose the course of action that maximizes their economic reward. Thus to get employees to work hard, managers should appeal to their monetary desires. Figure 2-1 summarizes the rational economic view.⁷

The assumptions that guided classical theorists essentially are based on pessimistic views of human nature. Although these views are true to some extent, they overlook more positive aspects. Classical theorists recognized that humans have emotions, but they felt that emotions could be controlled by a logical and rational structuring of jobs and work. The focus on individual jobs was predominant with scientific management. Smith’s ideas span many disciplines in addition to economics and were instrumental in the development of the industrial revolution in England

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þ LEARNING CHECK

Do you know the major assumption of the classical theory?

Scientific Management

The series of ideas that became known as scientific management grew from the work of Frederick W. Taylor, who is known as “the father of scientific management.” As illustrated in the managerial challenge, the ideas consist of four basic parts:

1. Each person’s job should be broken down into elements, and a scientific way to perform each element should be determined.

2. Workers should be scientifically selected and trained to do the work in the designed manner.

3. There should be good cooperation between management and workers so that tasks are performed in the designed manner.

4. There should be a division of labor between managers and workers. Managers should take over the work of supervising, setting up instructions, and designing the work, and the workers should be free to perform the work itself.⁸

In essence, scientific management emphasizes that managers and industrial engineers should develop the best way to perform each job, people should be trained to perform each job in the best way, and management and workers should cooperate so that the job is performed in the desired manner.

Frederick W. Taylor

Frederick W. Taylor is known as the “Father of Scientific Management”. This title was given to him because of his contributions to the practice of management. He is one of the first to apply a scientific approach to the study and practice of management. Therefore, he is the forerunner to the field of management as we know it today. Sigma Iota Epsilon, an honorary management organization, still recognized Taylor’s contributions in its ceremony to initiate new members.

Frank and Lillian Gilbreth Frank and Lillian Gilbreth were a husband-and-wife team that brought not only color but significance to the early management movement. In his later years, Frank formed his own management consulting company and became closely associated with the scientific management movement. It was the good fortune of modern management that Frank married Lillian Moller, for they formed a team whose combined interests brought a new dimension to the emerging field of management.

Their marriage in 1904 began a significant partnership. After their marriage, Lillian became interested in psychology, for she thought that this field best complemented her husband’s work. Combining marriage and a growing family (there were eventually twelve children) with her assistance in Frank’s work, Lillian continued her research on her doctoral dissertation and finally submitted it in 1912. A great blow came when the University of California informed her that the dissertation was accepted but that she would have to return to campus for a year of residency before the degree could be granted. Lillian had been led to believe that this requirement would be waived in her case, but the university officials were adamant. Frank was furious and began shopping around for a publisher. Eventually the dissertation was published as a book. The author was listed as L. M. Gilbreth, with no mention that the author was a woman. This book, The Psychology of Management, is one of the earliest contributions to understanding the human factor in industry. Eventually, Lillian received her degree in 1915.⁹

1913 Assembly Line

Ford Motor Company’s first moving assembly line was located in Highland Park, Michigan in 1913. Above, the exterior of the Ford building was used for lowering the auto body on the chassis. Ford Motor Company was one of the first manufacturing plants to use assembly lines to mass produce “look alike automobiles.” The process allowed Henry Ford to keep prices down and better control the quality of the automobile.

Time and Motion Studies The Gilbreths are best known for their work on motion studies and the importance of increasing efficiency. From Frank’s earlier work in improving the efficiency of bricklayers, the Gilbreths ultimately developed a list of seventeen basic motions called therbligs (Gilbreth spelled backward, almost). The list of seventeen basic movements used in performing most tasks included such items as grasp, transport, load, and hold. 10 However, time-and-motion study did not always work out as planned, as indicated in the “When Things Go Wrong” discussion.

Piece-Rate Incentives Another major managerial practice developed by scientific management theorists and still widely used is the piece-rate incentive system. The development of these systems was a logical extension of the rational economic view. With a piece-rate incentive system, the largest amount of income goes to the workers who produce the maximum output.

Tying pay directly to output serves both the worker’s interest and management’s requirements. Take, for example, workers who operate a plastic injection molding machine for a luggage manufacturing company. This machine takes hot plastic and molds it into one side of a luggage case. Each worker is paid $0.18 for each side of luggage, and skilled workers can complete about 400 sides each day. Therefore, skilled workers can earn an average of $72 per work day. The benefit to management is the production of 400 parts.

This practice parallels the later work of B. F. Skinner, who developed principles of operant conditioning, and whose work will be reviewed in Chapter 10 (on motivation). It should be recognized that there were frequent abuses of piece-rate incentives in the days of its introduction. Frequently, managers would raise the base rate of production when it was discovered that workers could indeed work faster than before. The result was that workers often found themselves working harder and harder just to maintain the same wages they had before the introduction of piece-rate incentives. However, this practice was not what the scientific management theorists had in mind when they developed the system. They had intended for the rates to provide incentive to work harder and more efficiently, not to serve as a means for managers to get higher production from the workers without incurring higher wage costs.

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WHEN THINGS GO WRONG

Efficiency to the Extreme

Frank and Lillian Gilbreth

Frank and Lillian Gilbreth, like Frederick W. Taylor, were pioneers in the study and practice of management. They prompted what became known as time and motion studies, the forerunner of the current field of ‘industrial engineering. They applied many of their managerial ideas at home with their children which led to the book (and later movie) about their family life entitled Cheaper by the Dozen.

Frank Gilbreth was a fanatic about reducing inefficiency and using time-and-motion studies in all phases of life. However, there are numerous amusing anecdotes about his overzealous use of time-and-motion studies at home and on the job. As recounted by two of his children in Cheaper by the Dozen, Frank’s insistance upon efficiency at home backfired in several instances. For example, to reduce the time it took him to shave in the mornings, he used two shaving brushes to lather his face and found that he could reduce shaving time by seventeen seconds. He tried shaving with two razors and found that he could reduce the total shaving time by forty-four seconds. But he abandoned this scheme because it took him two minutes to apply bandages to cuts. His children suggested that it was the two lost minutes that bothered him and not the cuts.

At another time, Frank Gilbreth attempted to use efficiency to deal with family sickness. His philosophy of sickness was to ignore it. He said, “A sick person drags down the performance of the entire group ... You have been given health and it’s your job to keep it.” Yet, in spite of his admonitions, Frank was told that his tonsils needed to be removed. To enhance efficiency, he decided that as long as he was to have his tonsils out, the entire family (except for one older girl) would have their tonsils taken out at the same time. Frank even set up motion picture equipment to film the operating efficiency of the surgeon performing the tonsillectomies. However, in spite of the confusion of operating on all dozen or so people of the same name, the operations went well. Frank

had the most difficult recovery time, having to spend two weeks in bed (which was an extremely inefficient use of time). But the most severe problem was that the photographer had forgotten to take off the lens cap, so there were no movies of the operations for Frank to study and make recommendations on to the surgeons.

Adapted from: F. B. Gilbreth, Jr. and Ernestine Gilbreth Cary, Cheaper by the Dozen (New York: Crowell, 1963).

Contributions of Scientific Management Scientific management has made important contributions to the general field of management. First, it emphasized the need for specialized labor. Second, it fostered the beginnings of job design. Third, it emphasized the desirability of well-trained employees.

Administrative Principles

A second group of classical management theorists dealt less with individual workers and their jobs and more with the operation of the total organization. Just as Taylor and the Gilbreths looked for the best piece-rate incentives and work motions, the administrative theorists looked for the best way to combine jobs and people into an efficient organization.

Henri Fayol

One administrative theorist whose ideas stand out is Henri Fayol, the son of a middle-class Frenchman. Fayol was schooled as a mining engineer and became involved in studying the causes of underground fires. Later he created new techniques for improving mine safety and published studies of the design of mine shafts in regard to safety. Also, as the managing director of a mining company, Fayol developed a unified concept of management. Whereas scientific management was concerned primarily with tasks at the worker level, Fayol focused on managerial levels and the organization as a whole.¹¹

Fayol divided management into five activities: planning, organizing, commanding, coordinating, and controlling. At the heart of his theory was the use of foresight (planning). He advocated both long-range planning and participation by managers.¹²

Within the group of five major activities, Fayol developed a list of basic management principles for achieving a good organization. These principles are summarized in Figure 2-2.

Although there are many elements in Fayol’s theory, the key idea is the tremendous emphasis placed on logic, rationality, and consistency. You will see the importance and impact of Fayol’s precepts in many areas of management, especially the organizing process.

1. *Division of Work.* The intent of division of work is to produce more and better work for the same effort. Specialization is the most efficient way to use human effort.	2. *Authority and Responsibility.* Authority is the right to give orders and obtain obedience, and responsibility is a corollary of authority. The two types of authority are official authority, which is the authority of command, and personal authority, which is the authority of the individual manager.
3. *Discipline.* Obedience to organizational rules and employment agreement is necessary. The best way to have good superiors and clear and fair rules and agreements is to apply sanctions and penalties judiciously.	4. *Unity of Command.* There should be one and only one boss for each individual employee.
5. *Unity of Direction.* All units in the organization should be moving toward the same objectives through coordinated and focused effort.	6. *Subordination of Individual Interest to General Interest.* The interests of the organization should take priority over the interests of any one individual employee.
7. *Remuneration of Employees.* The overall pay and compensation for employees should be fair to both employees and the organization.	8. *Centralization.* There is a need to balance subordinate involvement through decentralization with managers’ retention of final authority through centralization.
9. *Scalar Chain.* Organizations should have a chain of authority and communication that runs from the top to the bottom and should be followed by managers and subordinates.	*10.* *Order.* People and materials must be in suitable places at the appropriate time for maximum efficiency.
*11.* *Equity.* Good sense and experience are needed to ensure fairness to all employees, who should be treated as equally as possible.	*12.* *Stability of Personnel.* Employee turnover should be minimized to maintain organizational efficiency.
*13.* *Initiative.* Workers should be encouraged to develop and carry out their plans for improvements.	*14.* *Esprit de Corps.* Management should promote a team spirit of unity and harmony among employees.

FIGURE 2-2. Fayol’s Principles

Source: Henri Fayol, General and Industrial Management, trans. Constance Starrs (London: Sir Isacc Pitman & Sons, Ltd., 1949): 19-42.

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Bureaucratic Organization

The writer most often associated with the bureaucratic approach to organization is Max Weber. Weber’s ideas of bureaucracy were a reaction to managerial abuses of power. He looked for methods to eliminate managerial inconsistencies that contributed to ineffectiveness, and his solution was a set of principles for organizing’ group effort through a bureaucratic organization. Although the term bureaucracy, has been popularized as a means of referring to organizations that “rule too rigidly by the book,” these principles are found in virtually every formal organization, today.

Max Weber

Max Weber proposed the development of ideal bureaucracy. Weber’s ideal bureaucracy was designed to eliminate inefficiency and waste in organizations. Many of the principles that he proposed many years ago are applied in the design of large organizations today. In fact, the term bureaucracy, that many consider similar to “red tape,” has a much broader and positive meaning because of Max Weber. In the last few decades, we have learned of some of the weaknesses of bureaucracies. As such, bureaucratic organizations are being modified.

The basic principles of bureaucratic organization are:

1. A division of labor by functional specialization.

2. A well-defined hierarchy of authority.

3. A system of rules covering the rights and duties of employees.

4. A system of procedures for dealing with work situations.

5. Impersonal relations between people.

6. Promotion and selection based on technical competence.¹³

One of the more dramatic examples of the strengths and weaknesses of bureaucratic organization is the U.S. Postal Service. A fact that sometimes escapes the demanding public is that usually a letter can be delivered quickly and cheaply across the country. Coordinating the efforts of a number of employees equivalent to a major metropolitan city is possible only because the postal system has a workable set of rules and policies and a hierarchy of authority. These obvious strengths of bureaucracies can be seen in many organizations.

On the other hand, the postal service sometimes follows its rules and policies too rigidly. Even though more than 10,000 local post offices are uneconomical, bureaucratic procedures prevent their closing. Furthermore, the postal system frequently cannot make changes because of resistance by the letter carriers’ union.

Advantages of Bureaucracy Bureaucracy has many positive outcomes, but they occur only when the bureaucracy operates ideally. Some of the positive consequences are as follows:

1. Employee behavior is consistent because of set policies, procedures, and rules.

2. Overlapping or conflicting job duties are eliminated because jobs are defined clearly.

3. Behavior is predictable because there is a hierarchy of authority (supervision).

4. Hiring and promotion are based on merit or expertise.

5. Employees develop expertise in their jobs because they specialize in those jobs.

6. There is continuity in the organization because it emphasizes the position rather than the person (that is, when one person leaves a position, another person assumes that same position).

Although rules and policies can be enforced too strictly, they are needed for efficiency. Also, they provide the bases for coordinating many different managers and entities. For example, realistic dress-code policies and rules used by all supervisors may reduce employee complaints about inconsistent standards and personal bias. Without an official policy, each supervisor might have a different dress expectation, which would be more likely to lead to complaints from employees. The advantages of bureaucracy are many; often difficulties blamed on it arise merely from employees misinterpreting rules or applying them inappropriately.

A major advantage associated with bureaucracy is that it helps ensure the consistent treatment of employees that is required by law (nondiscrimination). Precise job definitions can assure the manager that all necessary tasks will be accomplished, and they may prevent wasted actions due to overlapping jobs. The hierarchy of managerial positions provides for predictable behavior throughout the organization. Two supervisors must report to the same superior, and ultimately all managers report to one person, the president. This control is designed to prevent inconsistent policies among supervisors.

It is effective to promote individuals on the basis of merit and expertise—which bureaucracy facilitates—allowing them to move up the hierarchy as they gain expertise and experience. Specializing in their jobs helps individuals become “experts” on those jobs; thus they can perform more effectively. Finally, the organization continues even if individuals leave. If the president leaves, another person is simply promoted, and the organization continues.

Disadvantages of Bureaucracy The negative aspects of bureaucratic organization invite many criticisms about large organizations such as the federal government. Some of the charges made are:

1. There is too much red tape and too much paperwork.

2. Employees do not care about the organization.

3. Employees are treated impersonally (according to the rules).

4. Regulations result in conformity in behavior.

5. Relying on rules and policies stifles the growth of employees.

Most people have had unpleasant experiences at some time with some organization because an employee is unwilling to break a rule or exercise individual judgment. If a problem is not covered by a written rule or policy, many employees are afraid to make decisions or take actions to resolve the problem. This reliance on rules may lessen creativity, employee development, and initiative. Employees of bureaucracies sometimes are not treated like individuals but like machines. The impersonal treatment can lead to employee indifference toward the organization and job performance. Finally, recording all actions in writing and relying on rules may produce a lot of red tape, which wastes time that could be spent in more productive ways.

The complaints that students have about course registration procedures are examples of problems with the bureaucratic approach. Large numbers of students are impersonally processed, but individual problems are often ignored. In sum, the bureaucratic approach can have some important advantages, but it also has significant negative side effects.

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Contributions and Critique of Classical Theory

Any critique of classical theory must consider the time period in which it developed and the prevalent conditions of society and industry during that time. Classical principles of management evolved during the late nineteenth and early twentieth centuries. The United States was recovering from the Civil War and was changing from a frontier nation to an industrialized and urbanized society. Most organizations were small, inefficient manufacturing operations. The available workforce was made up of a large number of immigrants who spoke little English and had limited education. (Under such conditions, it is easy to understand why the concepts of scientific management and bureaucracy were such productive breakthroughs.)

Narrow, specialized jobs were performed by the immigrant workforce. Money was a major concern of many workers who were living in rather primitive circumstances. The orientation toward close supervision, ru