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Evolution of management thought

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The Evolution of Management Thought

Through the practice of management and the continued development of commerce and wealth we are transforming our lives. In Massachusetts (USA) in the 1850s the life expectancy of a male would have been 37 years of age and a female 40: in 1929 it was 58 for a male and 61 for a female; nowadays life expectancy would be in the region 70-80 years.

While appreciating the past success of ‘management’ we would also recognise that today’s accelerating pace of change is putting pressure on our organisations to be at the forefront of management thinking. If we want to maintain our standard of living our rate of change has to be comparative to the rest of the world.

But our present day management thinking has evolved from a whole range of influences over an extraordinary long period of time. In his comprehensive book ‘The Evolution of Management Thought’ Daniel A Wren writes:

" Within the practices of the past there are lessons of history for tomorrow in a continuous stream. We occupy but one point in this stream. The purpose .. is to present…the past as a prologue to the future."

So with the aim of accelerating the development of our management practice for the future let us examine that stream of evolving management thought of the past.

Our Christian past has taught that us that there was a beginning (Adam & Eve) and there will be an end (Armageddon) and in between we should hear the word of god and obey his commandments. We therefore tend to think linearly as well as in terms of authority and compliance. In contrast the religions of the East emphasise the cyclical and regenerative properties of nature. They therefore think in terms of cyclical processes and of being at one with God and authority.

The Greek influence is evident in that we retain the Socratic concept of searching for the truth by the judging of a proposition by stringent examination to confirm its validity. It is a process of thesis – antithesis – synthesis. It is uncomfortable with half-truths and poor at building up solutions from parallel thoughts.

From Aristotle’s analytical skills we have developed problem solving methods that break down complex issues into component parts. But in this process we often lose sight of the whole and how important is the interrelationship of all the parts.

Hierarchical control structures were recorded in the writings of the Chinese General Sun Tzu of 600BC China, and it is of note than our own military command structures still resemble those of ancient times.

Father Luca Pacioli invented the double entry bookkeeping system in 1494. Our accounting systems to this day are based around these principles.

During the Middle Ages the Catholic Church dominated life and provided the hope of afterlife as the only consolation for this one. It discouraged the pursuit of gain. With the reformation our beliefs move onto considering that salvation comes from a life of diligence and industry – the work ethic is nurtured and established. And at the same time comes the importance of education - the reformers of the sixteenth century Scotland had the stated aim of having a college or grammar school in every burgh.

From this general movement comes the liberty ethic where we as individuals establish our rights and start talking about government by the people for the people. And onto the Market ethic of the eighteenth century with Adam Smith’s Wealth of Nations and the encouragement of free enterprise.

And into this evolving culture comes James Watt’s work in the development of the steam engine as a source of power for factories and the resultant move from cottage industries and into factories

At one in the same time we have the development of mathematical thought. Isaac Newton and Simon Laplace’s findings encourage the view of the universe being a gigantic mechanism, which follows determinable laws. In other words when we work out these laws we will be able to find the root cause of events and be able to predict future outcomes from established structures. In terms of society we come to believe that it is possible to identify the one cause of a happening -–or the person who was at fault. Our legal system is based on this misconception.

Into this growing of industrial society comes another Scot Daniel McCallum as President of the New York to Eire Railroad. In 1854 he was facing specific problems related to the size of his organisation and a workforce that was in the main uneducated. His workers were immigrant and with an agricultural background and not used to a factory discipline imposed by management. In this environment he determines sound management as being based on:

  • Good discipline
  • Specific and detailed job descriptions
  • Frequent and accurate reporting of performance
  • Pay and promotion based on merit
  • Clearly defined hierarchy of superiors and subordinates
  • Enforcement of personal responsibility and accountability.
  • The search for and correction of errors

From this thinking he follows the classic hierarchical organisation chart.

Charles Darwin’s work on ‘The Origin of the Species’ is published in 1859. Herbert Spencer (1820-1903) subsequently develops the theme of survival of the fittest in his ‘Social Darwinism.’ Our society accepts the essential nature of competition, survival of the fittest and adulation of winners.

Ivan Pavlov does experiments with dogs to develop classical conditioning. He pairs an artificial stimulus with a natural one. He gives the dog a piece of meat while at the same time ringing a bell. In time he can make the dog salivate purely by ringing the bell. B F Skinner develops this train of thought into operant conditioning or positive re-enforcement. ‘Do this and you will get that.’ This work gives legitimacy to the belief that you can motivate a worker by offering rewards. From this grows the widespread use of bonus and commission systems.

Scientific Method would be described as the practice of postulating a theory and then conducting disciplined experiments to confirm or disprove the theory. It is the method by which science has developed over the centuries. By the early 1900s Frederick Taylor (1856-1915) was credited with bringing scientific disciplines into the ethos of management. He is known as the father of Scientific Management. He paid particular attention to the study and subsequent planning of tasks. Time and motion study evolved which would lead into the setting of standards and performance measurement. Unfortunately the majority of Taylor's excellent work is clouded by his misconception that workers restrict output from ‘the natural instinct and tendency of men to take it easy.’ He referred to it as ‘soldering’

Henri Fayol (1841-1925) writes about leadership and the ‘theory of management’ and Max Weber (1864-1920) develops organisational structures – Weber would be the originator of the term bureaucracy – management by the office. From these writings evolve the corporate structures of Alfred Sloan, CEO of General Motors 1918-57. The need of these practitioners was to develop principles whereby large corporations could be controlled and developed.

In parallel to this need to manage and control people a social dimension emerges. Robert Owen in his New Lanark experiments (1795) recognises the importance of the human element in an enterprise. Karl Marx, within a society that contained extremes of poverty and wealth, challenged the basis of the capitalist system. He questioned the control of society’s ‘means of production’ by the few, while it had the many trapped in burdensome and meaningless work. The social sciences emerge through the work of Mary Parker Folett where she recognises the interdependencies between the individual, the work and the environment. There are the human behaviour studies of the Hawthorne experiments of the late 1920s, and the subsequent research into motivation by Mayo, Maslow, Hetzberg, McClelland etc. In 1960 Douglas McGregor writes "The answer to the question managers often ask – how do you motivate people? – is - you don’t." We all come to work already motivated; the organisation either captures or destroys that motivation. David McClelland (1970s) of Harvard University researches motivation for 10 years over 19 different cultures. He identifies ‘Primary Social Motives (PSM),’ the three main ones of which are Achievement, Affiliation and Power. The individual or society tends to be energised by one or other of these ‘Primary Social Motives.’ With ‘Achievement’ the focus is on achieving tasks. ‘Affiliation’ considers relationships and friendship. ‘Power’ is concerned with status and influence over others. He considers observed behaviour is a function of the situation and the Primary Social Motive of the individual. Meredith Belbin (1980s) identifies the ‘team roles’ we enact when participating in teamwork situations.

In parallel is the development of psychology. Sigmund Freud (1856-1939) identifies subconscious human drives and that we are not in fact rational beings. In the 1960s we have Thomas Harris developing Transactional Analysis recognising that our subconscious retains memories of all events we have experienced and those memories strongly influence our emotions and actions. Stuart Sutherland in his book on Irrationality (1992) argues that irrational behaviour is the norm not the exception.

From the writings of Norman Vincent Peale (1952) through to Scotland’s own guru Jack Black (Mindstore 1994) we recognise the considerable benefits of ‘Positive Thinking’ within the individual, their organisation and society.

In the past century mathematical thought was also transforming through Einstein, Shewhart, Poincare etc with the recognition of relativity, variation and chaos. They challenge the deterministic concepts of Newton and Laplace. With so many variables impinging on circumstances we can longer with confidence trace root causes and identify blame. There is no one answer. Our old simplistic linear thinking is being challenged by systems theory. There is recognition of feedback loops and the nature of interdependence.

Shewhart (1930s) from his experiments at the Bell Laboratories develops ‘Statistical Process Control’ to assist the analysis of data in the context of variation. He develops the control chart to help us understand variation and focuses on the need to reduce variation and complexity if we are to achieve ‘quality.’ He also re-emphasises the need for scientific method in the context of developing our concepts of management. He insists that each of our management theories need to be systematically tested.

In 1945 Japan finds itself decimated and desperate to rebuild their economy for basic survival. Furthermore many of their pre-war industrial leaders are jailed or de-franchised by their American conquerors. New managers emerge that are wide open to the latest of management concepts. Into this receptive vacuum the Americans pour the expertise of Sarashon, Protzman, Deming and later Juran. But this new thinking is also in tune with their ancient culture of seeing the cyclical and regenerative nature of the world and their respect for and being part of the authority within society. Japan’s manufacturing success challenges the domination of the ‘West.’ The Deming prize is instituted in Japan in 1952 and to this day is regarded as the premier ‘quality’ award for a Japanese company.

One of the major mindset changes offered to the Japanese by Deming and Juran is to see their organisations holistically and as an overall system. Deming’s drawing ‘production viewed as a system is reproduced below:

 

THE EVOLUTION OF MANAGEMENT THOUGHT

We began our discussion of management by suggesting that every one of us is already a manager in terms of our daily activities. Historically, we can also find many examples of management. The Great Wall of China could not have happened without a great deal of management expertise. The same could be said of the construction of the pyramids in Egypt. Without management, Columbus could not have made his journeys of discovery. Napoleon’s march across Europe required considerable management. Nonetheless, the systematic study of management is a fairly recent phenomenon.

The need to study management arose with the industrial revolution in Europe (more specifically, England). The industrial revolution and the systematic study of management are the result of a remarkable confluence of ideas and events.

The industrial revolution was the result of a remarkable confluence of ideas and events

The industrial revolution required an unprecedented increase in scientific and technological knowledge. It further required enormous inputs of human capital (workers) to operate the factories made possible by the new technology. Not only did new technologies bring about newer, more efficient ways of producing goods, technological developments in agriculture also ensured that workers, no longer needed on farms, became available as cheap labor to urban factories. But the industrial revolution was not simply a technological and economic (increased supply of labor resulting in cheap labor) phenomenon. The emergence of the industrial revolution also required a philosophical shift.

Without a new way of thinking about the role of human beings in society, the industrial revolution would likely not have happened; at least not in the way that it did. The period just prior to the industrial revolution was marked by a changing philosophical paradigm. Not only was it economically convenient for wealthy land owners to let their peasants go (now that new technologies made them superfluous on the farms), new ways of thinking about the rights of humans made it seem morally right. With the emergence of liberal philosophies, which spoke of individual rights, land owners no longer needed to feel a sense of obligation to the day laborers on their lands. It became quite right and proper to "give these people their freedom". And that they did.

...land owners no longer felt a sense of obligation to the day laborers on their lands...

Thousands of recently unemployed peasants flocked to the cities in search of work.

Thousands of recently unemployed peasants flocked to the cities in search of work.

Once in the cities, these former peasants found work in factories exploiting the new technologies. And, in keeping with the new philosophy and the notion of individual rights, workers were "free" to accept the jobs or not. Of course, the factory owners were free to pay the workers according to the basic economic principles of supply and demand. As there were thousands of peasants streaming into the cities from the country and from as far away as Ireland and Scotland, the supply of labor was plentiful. And the price was low.

The lives of these workers were clearly governed by the economics of supply and demand. And the principles of economics, as part of this new philosophical paradigm, had been articulated by Adam Smith.

 For purposes of this course, we'll dispense with the bulk of Adam Smith's learned writings and concentrate on his astute observations about job specialization through division of labor. Smith described the transition from a craft approach to the manufacture of goods, to the factory approach.

Craft manufacture describes the creation of products by one (or a few) person(s) in disparate locations. The solitary cabinetmaker, slowly crafting a dining room cabinet, which he will later take to the village market to sell, provides an example of craft manufacturing. On the other hand, the factory approach to cabinet making would involve a number of people who have specialized in small, discrete elements of the process. Likely one person would be responsible for the purchase of the wood and other materials required. Another person might be required to cut all wood to the appropriate dimensions.

Craft manufacture describes the creation of products by one (or a few) person(s)...

...the factory approach involves a number of people who have specialized in small, discrete elements of the process.

The genius in job specialization lies, of course, in increased efficiency.

The productivity per worker is naturally significantly higher than that of the craft worker.

Yet another worker might glue and fasten the pieces of wood according to plan. Finishing the cabinet through sanding and painting could constitute one or more other jobs. Sales would be left to someone else.

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REFERENCE:
         www.harehall.co.uk/evot.html - 20k