The evolution of management theory from scientific to human relations approaches

Radical Change Management Processes in Organizations

The Evolution of Management Practices

The true commencement of managerial actions has yet to be clearly identified. On one hand, the managerial concept is a new and modern one, placing managerial actions in the contemporary society. On the other hand, management implies the supervision, coordination and motivation of one's subordinates', activities that are often described in historical and religious tales. For instance, how could Moses have led the Hebrew slaves out of Egypt without the skills of a good leader? Or how could the Egyptian pharaohs have built such impressive pyramids without properly implemented leadership? And besides management and leadership, history and religion also present tales of organizational structures. "Near the end of the second century B.C., Caius Marius reorganized the famous Roman Legions. [...] Accounts of ancient Egypt suggest concepts of organization and organizing. The Biblical account of the reorganization of the tribes of Israel also reflects this idea of organization. Trade in Babylonia; the civilizations of Greece, Rome and Phoenicia; the famous Chinese civil service and the hierarchies of ancient India certainly could not have operated without some notion of organization."

The actual terms of management and organization are only explicitly mentioned starting with the Industrial Revolution of the late eighteenth and early nineteenth centuries. The definitions received then are closely similar to the definitions and characteristics we call upon these days. The understanding of management has evolved up to present times, going through three major changes, adherent to the corresponding time periods.

Scientific Management Theory (1890-1940)

Large organizations which produced a wide array of products through an ongoing routine

Emphasis on scientific and technical matters, with increased focus on measurement and specification of the activities conducted and the results Retrieved Taylor's scientific theory which proposed measurements and specification of all organizational tasks

Standardized tasks; workers were both punished and rewarded

In this time interval, Henry Ford was among the first to prove the success of the theory. He assembled large product lines and he was the first American automobile producer to deliver cars that were affordable to a large majority of the population. Ford was also an initiator of the HR strategies as he believed in the power of his workers and offered incentives to motivate them. The primary incentives were high salaries. After the Great Depression of 1929-1933, other organizations followed Ford's model and offered their employees high wages, in the hope of reviving their performance, the company's turnover the consequently the economy. The strategies and thinking of Henry Ford is now referred to as Fordism.

Bureaucratic Management Theory (1930-1950)

Organizations were divided into hierarchical structures

Clear and strong hierarchical control and authority

Development of "comprehensive and detailed standard operating procedures for all routinized tasks."

Human Relations Movement (1930 - present day)

Protests from employee unions and governments;

Increased attention towards employees and their capabilities of aiding the organizations to reach their goals;

Embracement of workers' diversity and unique features;

The belief that the company would grow as a result of its employees' growth;

The formation of Human Resource Departments;

Granting incentives and studying the forces that motivate employees.

The Human Relations School appeared as a reply to the downsides of the previous theories. "It has been referred to as the neoclassical school because it was initially a reaction to the shortcomings of the classical approaches to management. The human relations movement began with the Hawthorne Studies which were conducted from 1924 to 1933 at the Hawthorne Plant of the Western Electric Company in Cicero, Illinois."

2. Background to change of current organizations

The changes that occurred during the past two centuries and the contemporaneous rapid pace of development reveal the future changes that are prone to affect the concepts of management and organization. Regarding the organizational background that might lead to future changes, several elements should be pointed out:

Bureaucracy - affects the company in the sense of hardening the activities developed and increasing employees' dissatisfaction at the workplace. It generates difficulties and complaints as the power is generally held by a single individual or group of individuals, which implements stern control and authority, strict hierarchical structures and conducts business in a less transparent manner. It is expected that in the future, companies will renounce, or at least limit, their bureaucratic organizational structures.

Hierarchy - represents a feature of the background to organizational change as these structures often do not please employees. Vertical hierarchies forward the idea of a controlling and less understanding manager; a formal superior figure who is primarily focused on organizational goals, in the detriment of motivating and pleasing the company's human resource. Companies have begun, and will most likely continue, to replace the vertical hierarchies with horizontal ones, where all employees are equal and where the manager is the coordinator of his team, instead of its boss.

Mechanistic vs. organic - a mechanistic organization is one that implements the measurement of all its features, be them measurable or not. These companies only analyze the company, its employees and performances in terms of revenues, profits and costs. This puts the employees under a lot of pressure as it does not recognize non-financial merits and performances. An organic company on the other hand, is one that does not force or numerically measure results and efforts. These companies promote the best treatment of their employees and expect development to come naturally. The main requirement for an organic company to properly function is its ability to unify the organization's overall goals with the individual goals of their workers. The mechanistic vs. organic feature sits at the background of organizational change as it is expected to generate a swift from forced and numerically measured performance to a more relaxed environment, where employees are appreciated and they get directly involved in the corporation's overall growth.

Organizational life cycle and development - the development of a company throughout all five stages of its existence (start-up, growth, decline, renewal or death and bankruptcy) is influenced by the management's capability to lead the organization. For instance, when decline occurs, the second major responsible for it is an inadequate management (first is extensive debt), and inexperienced management is the fifth cause. In this order of ideas, two changes are prone to occur: placing increased emphasis on the skills and training of the managers or, limiting their decision power within the organization.

Strategy-structure fit - Current companies have the tendency to implement those strategies aimed to lead to organizational growth and development. Changes are expected to occur in the meaning of implementing strategies fit for each organizational department and then unifying these strategies with the corporation's overall goals.

Formal vs. informal organizations - Similar to bureaucratic and vertically structured organizations, formal companies have a stricter hierarchy and implement a strict command chain, pressuring employees. On the other hand, informal organizations promote a friendly environment where managers are seen as coordinators instead of rulers.

Planned and emergent change - Planned changes occur based on previous plans and calculi, whereas emergent changes occur "in an apparently spontaneous and unplanned way." The future tend will be that of limiting the number of emergent changes, better managing of the factors that might lead to emergent changes and the better preparation of leaders for such situations.

3. Background to change of current economy

Changes in the approach of management and organization structures can also be generated by the economic background. In this order of ideas, two features should be observed:

Knowledge age - the contemporaneous society is developing at a rapid pace leading to increased market demands. In order for a company to survive and remain competitive, it has to use the latest technologies available. Changes have started to become obvious with the increased interest on technological developments and the continuous training of the personnel in order to insure the firm with the most skilled and knowledgeable employees.

Environmental turbulence - encompasses environmental hostility, environmental dynamisms and environmental complexity. This is expected to change the organization in the meaning of increasing the requirements for the managerial positions. As such, managers will have to be able to cope with stressful and unprecedented situations, they must be able to take the company to new levels; penetrate new markets and overcome the competition.

4. Bureaucratic organizations

Strengths: - Clear chain of control

Numerous vertical structures, where individuals become increasingly specified on their domain

Mechanistic structures with highly developed measurement tools

Rational and goal-directed hierarchy

Impersonal decision making

Clear division of work and responsibilities

Weaknesses:

Numerous hierarchical structures

Lack of transparency

Unsatisfied employees

Numerically measures performances and does not consider non-financial achievements

Highly formal.

5. Forms of organizational development

Organizational development refers to the process companies go through in order to remain competitive, increase their market share and revenues and achieve their stated mission and objectives. There are three major alternative forms of organizational development that can be implemented:

Form of Organizational Development

Short-Term Effect

Long-Term Effect

Physical expansion by hiring more employees, purchasing or renting more work facilities and increasing the customer palette

Limited beneficial effects generates additional costs

Beneficial effects the costs and investments will return in the form of profits

Increase retail price for products and services

Beneficial: generates additional incomes by increased sales revenues

Negative: it should only be used as a temporary means of overcoming financial difficulties or for generating financial resources for further investments

Use better technologies

Negative: generates additional costs

Beneficial: increased productivity, reduces expenditures and increases quality

Engines automobiles

This system shows how customers' demands and concerns can change the manufacturing features of companies. But companies can also change customers' preferences, even if at first they might feel reluctant to trying a new product. Take for instance the case of developing technologies. Some customers, out of a multitude of reasons, might prefer the old products, even though the new ones, produced with superior technologies are better. Considering that the usage of new technologies generates reduced costs, increased productivity and a higher quality of the items produced, the company has to change the customers' purchase behaviour.

2. Technological

Production with Marketing -> Sales of the new

Developments new technologies

Strategies Products

In order for the change systems to be properly implemented and retrieve the desired results, companies have to possess adaptable employees committed to their teams' as well as the organization's development. Companies have to increase their awareness of the changes occurring at both micro and macroeconomic levels. They also have to charge the most skilled and experienced workers with the tasks of increasing the company's adaptability to environmental forces, developing a strong culture and a positive image for the company and promoting it worldwide, through all media channels, including television, radio and the internet.