The schools of management thought have evolved through three distinct historical phases: Classical Management Theory, Neoclassical Theory, and Modern Management Theory. Each school represents a shift in focus, from being organization-centered to person-centered, and finally to a more integrated, scientific approach.
1. Classical Management Theory (1880s–1920s)
This school of thought is described as organisation-centered, focusing on the organization itself and viewing the employee as an "economic rational man". Its primary concern was improving efficiency and systematization in management. The classical school includes several approaches:
Scientific Management: Pioneered by Frederick W. Taylor, this approach emphasized replacing "rules of thumb" with science and organized knowledge. Its core principles aimed to increase efficiency in production to lower costs, raise profits, and enable higher pay for workers. The fundamental principles of scientific management include:
- Replacing rules of thumb with science (organized knowledge).
- Obtaining harmony in group action rather than discord.
- Achieving cooperation among human beings rather than chaotic individualism.
- Working for maximum output instead of restricted output.
- Developing all workers to their fullest potential for their own and the company's prosperity.
Administrative Management: This approach focused on the overall management of an organization and was developed by theorists like Henri Fayol and Chester I. Barnard.
- Fayol's 14 Principles: Fayol identified flexible principles applicable to management, including Division of Work (specialization), Unity of Command (an employee should receive orders from only one superior), and Unity of Direction (one head and one plan for a group of activities).
- Barnard's Principles: Barnard viewed the executive's role as maintaining a system of cooperative effort. He argued that a formal organization requires people who can communicate, are willing to contribute to group action, and share a conscious common purpose. For Barnard, leadership was the "indispensable culminator" of these cooperative forces.
Bureaucratic Organisation: Associated with Max Weber, this is also considered part of the classical school.
2. Neoclassical Theory (1920s–1950s)
The neoclassical school marked a significant shift toward a person-centered and human-oriented approach. It emphasized the needs, behaviors, and attitudes of individuals, viewing the employee as a "social person". This school includes:
Human Relations School: Associated with Elton Mayo, F.J. Roethlisberger, and W.J. Dickson, this school emerged from the famous Hawthorne Studies. These studies were among the first to demonstrate the importance of the human side of an organization. They found that psychological needs and receiving special attention (the "Hawthorne effect") have a significant impact on group performance. The studies recognized that an organization is a social system and that informal groups can be a positive force.
Behavioural School: This school further explored human behavior in the workplace with contributions from theorists like Maslow and McGregor. A key concept from this school is McGregor's Theory X and Theory Y, which presents two contrasting sets of assumptions about human nature that influence management styles:
- Theory X offers a pessimistic view, assuming that people inherently dislike work, avoid responsibility, and must be closely supervised and controlled through authority.
- Theory Y presents a positive view, assuming that people do not dislike work, will seek responsibility, and can exercise self-direction and control if they are committed to organizational objectives. The manager's role under Theory Y is to create an environment that allows these positive traits to flourish.
3. Modern Management Theory (1950s onwards)
This modern phase takes a "complete employee view" and is characterized by a scientific approach to management. It incorporates systems theory, contingency theory, organisational humanism, and management science.
The key characteristics of modern management theory include:
- Application of Scientific Methods: It involves the use of scientific analysis, mathematical modeling, and operations research for planning and decision-making.
- Consideration of Human Elements: It places serious consideration on human factors, drawing on psychological studies and behavioral analysis.
- Emphasis on Economic Effectiveness: A focus on economic effectiveness is central to all management functions.
- A Systems Approach: This approach focuses equally on all functions of management, viewing them as an integrated whole to achieve a common goal.
- Use of Technology: It utilizes electronic computers for analysis and studies, aiding in the development of tools like Management Information Systems (MIS).