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T ABLE OF CONTENT Title Page Chapter One Concept of Management 3 Chapter Two Concept




Chapter One

Concept of Management


Chapter Two

Concept of Organizational Theory


Chapter Three

Classical Organizational Theory




Chapter Four

Behavioural Management Perspective


Chapter Five

Contemporary Management Perspective



CHAPTER ONE CONCEPT OF MANAGEMENT   - ~   Management can be defined as working







Management can be defined as working with and through individuals and

groups to accomplish organizational goals. Organizations, referred to here

include institutions, hospitals, churches, political organizations, labour union,


Management can also be defined as the achievement of organizational



objectives throuqh leadership. According to this definition, everyone is a

manager in certain aspects of his or her life.

Furthermore, management can be defined as a distinct process consisting of

planning, organizing, motivating, and controlling, performed to determine

and accomplish stated objectives by the use of human beings and other


It is important to note that- management is an activity, not a person or a

group of persons; and those who perform this activity are managers or

management members.



Managers set forth their objectives by precise statements of the problems to

be solved or hurdles to be overcome in outlining the work to be done. A

manager is expected to spell out objectives, giving adequate regard for the

various constraints within which the goals must be achieved. To achieve the


objectives, he must be able to bring together the available basic resources   . .

objectives, he must be able to bring together the available basic resources




that include men, women, materials, machines, methods, money and

markets. These are the six Ms of management. These resources should be

brought together and related harmoniously so that the sought end result

may be accomplished within the predetermined constraints of time, effort

and cost.


The functions or processes of management refer to the duties carried out by

managers. These are:

1. Planning: This involves setting goals and objectives for the

organization and developing "work maps" that show how these goals

and objectives are to be accomplished. Planning means "thinking

before doing". Before actual work is started, the manager decides

what to produce, how to produce it, when and where to produce and

for whom to produce. Furthermore, in planning, policies and

objectives, programme of production and method of production, etc,

are decided by managers.

2. '" Organizing: This involves bringing together resources (which include:

people, capital, equipment and materials) in the most effective way to

accomplish the goals. Organizing therefore involves an integration of

resources, both material and human.



Motivating: Motivating means encouraging a worker work harder by

giving some incentives to the worker. The manager tries to find out

the motives of work in a man and then tries to give some

encouragements that will help to support the motive.

4. Controlling: Controlling involves feedback of results and follow-up to

compare accomplishments with plans and to make appropriate

adjustments where outcomes have deviated from expectations.

Controlling, as a function of management, is to see that other

functions are being performed perfectly.


1. Management is accomplished by, with and through the efforts of


others: For a manager to participate in management, he must

relinquish the normal tendency to perform all things by himself. He

should now get tasks accomplished by, with and through the efforts of

the group members. The prime measure of success of a manager is his

ability to set proper goals and get others to accomplish these goals.

However, management is also applicable to an individual's efforts. For

example, a person manages his or her personal affairs.

2. Management is intangible: Management has bee called the unseen

force. Its presence is evidenced by the results of its efforts. These


resu lt s i nc l u d e or d er li ness, en

results include orderliness, enthusiastic employees, buoyant spirit and

adequate work output.


There are three classes/levels of management. These are: Strategic or top

level management, Tactical or middle level management and Operational or

low level management.

1. Strategic or Top Level Management: The managers at this level

manage the interface between the organization and the external world.

However, for the cost effectiveness of the management of the

organization, the strategic managers must interact with the tactical

and operational managers. The officers that make up this class of

management are the Chiefmen or heads of an organization. The


~ The Managing Director

~ The General Manager

~ Deputy General Manager

~ Works Manager

~ Other high rank officers Tactical or Middle Level Management: The managers at this level translate the strategic decisions to specific decisions. They are responsible to the top management on one hand, and also control and supervise the low level management staff on the other hand. Middle level management officers include the different departmental heads

such as:

> - The Purchase Office r > - The Superintendent -   > - Chief

>-The Superintendent



>-Chief Store keeper



>-Works Engineer

3. Operational or Low Level Management: The managers at this level a

primarily concerned with the day to day decisions and actions relating

to scheduling, monitoring, evaluation and reporting of actual work

performance. This class of management officers consists of those who

are just above the operational staff and their function is to get the

work done through the operational staff according to the instructions

of middle management as issued by the top management. The lower

level management officers include:




>-Charge men

>-Office Superintendent





SUCC ESS IN MANAGEMENT Success in management is greatly conditioned by the knowledge and the


Success in management is greatly conditioned by the knowledge and the

skill in the following areas: technical, human and conceptual.

Managerial jobs at the top organizational level usually necessitate relatively

more human and conceptual knowledge and skill than technical knowledge

and skill, but. at the lower organizational level, there is need for more

technical and human and less conceptual knowledge and skill.

1. Technical knowledge and skill: This includes understanding and

proficiency in using a specific activity involving a process, procedure or

technique. It usually consists of a specialized knowledge and ability to

perform within that specialty. Technical skill enables its possessor to

accomplish the mechanics demanded in performing a particular job.

2. Human knowledqe and skill: As the name suggests, it includes the

ability to work with others and to win co-operation from those in the

work group. It includes, for example, knowing what to do and being

able to communicate ideas and beliefs to other, and to understand

what thouqhts others are trying to convey to you.

3. Conceptual knowledge and skill: This includes knowing the way and

having the ability to visualize the enterprise as a whole, to see the "big

picture", to envision all the various functions involved in a given

situation or circumstance. It is this conceptual requirement that

enables an executive to recognize the interrelationship and relative values of the various fac tors

enables an executive to recognize the interrelationship and relative

values of the various factors intertwined in a management problem. To

conceptualize requires imagination, broad knowledge and the mental

capacity to conceive abstract ideas.


Management by objectives is a style of managing an organization which

emphasizes the achievements of result expressed in terms of objectives. The

objectives must be specific, time bound, realistic, and qualitative or

measurable. This concept is gaining importance since the last two decades

as a style of management to improve business results.

Management by objectives places great importance on defining of

responsibilities and thereby establishing targets. For this purpose,

managerial performance is measured objectively and quantitatively by using

statements of responsibility which have very specific targets. This way,

individual managers become familiar with the expectations from them by

contributing to the achievement of company goals.


It means that the individual objectives must be compatible with the

objectives of the organization or management. Both individual and

organizational objectives can be fulfilled without undue sacrifice to either.


Th e i n di v id ua l k eeps hi s id entity

The individual keeps his identity within the organization but at the same

time he respects the organization's need for co-ordination.

The objectives set for the managers are useful when the interest of both the

manager and the company are taken into account. For the company,

objective should measure performance in terms of contribution to profits and

other significant goals. For the managers, objectives must be such that they

can be understood by the manager, and they are attainable within the

authority he exercises.

If an individual is a member of the organization, he will benefit from the

efforts of the organization and the organization will benefit from his efforts.

The majority of successful organizations are due to the existence of

individuals and organizational objectives that are compatible.


Performance objective is a statement describing the conditions that will exist

when a job is. being done. The statement includes measures to determine

clearly the extent to which the objective is to be achieved. An example of an

objective is "scrap loss will not be more than 4% of the total value of the

material used". How well this objective is being achieved determines how

well a manager is doing.

Performance objective program mes must be designed in such a way that they can easily

Performance objective programmes must be designed in such a way that

they can easily be adaptable to changing conditions.

One important aspect of performance objective is that it has a clear

relationship witti the company goals. Some of the concepts which are of

significance for the manager and the company as well, and which should be

incorporated in the objectives are: savings, costs, profits, sales, etc.


1. DIRECT OBJECTIVES: These are the objectives which pertain to tasks

in which performance can be measured directly and quantitatively.

These are measured in terms of results. Managers' performance in

respect of quality and quantity of output, which can be measured

directly are dealt with in this category. Examples of this category are

reduction of cost, improvement in sales and profits, and increase in


2. INDIRECT OBJECTIVES: These objectives pertain to the characteristics

of the manager himself. These are related to his technical or

administrative skills, his personal traits and behavior. Indirect

objectives include his attitudes, his motivation, his leadership qualities,

his health and his stamina. These are the qualities which are not

possible to measure although, they are of important consideration

while setting the objectives for an organization.


CHAPTER TWO . - CONCEPT OF ORGANIZATIONAL THEORY Two concepts emanate from here. These are:




Two concepts emanate from here. These are: (l)Organization and (2)Theory.


A theory is a proposition that seeks to explain or predict something. In our

situation, the thing that we seek to explain or predict is how groups and

individuals behave in different organizational arrangements. The theories of

organizational behavior allow managers to understand and accurately

diagnose work situations in order to pin point where corrective actions may

be needed. Managers have interest in theories in order to be able to give

reasons to explain the why in human behavior particularly in the

organizational settings. Without theoretical concept, managers would be left

with their experiences and without the systematic method by which the

experiences can be related, their values would decrease considerably.

One of the major advantages of studying and practicing theory is that it

trains the mind to think in an abstract and analytical fashion. In other words,

the manager who can abstract, who can learn and reason has an advantage

over one who must inefficiently experience every principal of organizational

behavior, before it is learned and accepted. Most analysts of the origin of

organizational theory view the beginning of the factory system in Great


Britain in the 18th century as th e birth point of Complex Economics Organization and

Britain in the 18th century as the birth point of Complex Economics

Organization and consequently the beginning of the field of Organizational



The belief of early management theory abstract how organizations work or

should work with a direct reflection of societal valuables of that time. At that

time, workers were not viewed as individuals but as interchangeable parts in

an industrial machine, whose parts were made of flesh only when it was

impractical to make them of steel.

Managers frequently examine theory, examine history to learn about the

present to find new ways of addressing the future. In all organizations

around the world, the past is a variable source of ideas and warnings that

can help managers understand and cope with the expected and unexpected,

the simple and the complex and by reviewing lessons from the past

managers can be patterns and turning points that help them anticipate and

meet the challenges of the future.

Through the years, researchers and managers have offered a variety of

theories to explain and illustrate effective management. But these

philosophies did not evolve in a vacuum. Each was built and the foundation

laid by previous theories and developed without the framework of forces that

help shape management thinking at that time. Despite the years of study,

no single universally accepted theory of management exists today. However,


the pioneers of managemen t thoughts have proposed ideas that offer valuable solutions to improv

the pioneers of management thoughts have proposed ideas that offer

valuable solutions to improving managerial practice.

The theories and concepts of organizational behavior allow managers to

understand and accurately diagnose work situations in order to pinpoint

where corrective actions may be needed.

One may learn about applying management theory to study the methods,

results of successful managers but keeping in mind that what works in one

situation may not work in another. Managers most constantly evaluate

theories and techniques to see which one suite their particular organization

and situation


According to Hodge and Anthony, "an organization can be thought of as a

group of two or more people working co-operatively toward a common

objective or set of objectives". It is in their view a social system of co-

operation that is designed to enhance individual and group effort aimed at

goal accomplishment.

According to Edgar Schein, "an organization is the rational co-ordination of

the activities of a number of people for the achievement of some common

explicit purpose or goal, through division of labour and function, and through

a hierarchy of authority and responsibility".


Gibson et al defines organizations as devices for pooling and harnessing talent and ability together

Gibson et al defines organizations as devices for pooling and harnessing

talent and ability together into an effective whole that can achieve for them

some desired objectives.

Therefore, we can define an organization as a group of people working

together to achieve a special purpose which cannot be achieved by an

individual working alone.

The above definitions show that the primary goal and purpose of an

organization is to bring individual talents and abilities together and combine

them so that each person could accomplish more results than is possible if

he or she were working alone.


The main characteristics that are common to all types of organization are as


1. Input-Output process: In every organization, inputs or resources are

obtained from external environment and turned into outputs which are

sent back to the external environment. Economists refer to this inputs

as factors of production which include land, labour, capital and


entrepreneur. The outputs are the goods and services which are made

available to members of the public or even organizational members.

2. P urpose or o bj ect i ve: E very organization tries to accomplish

2. Purpose or objective: Every organization tries to accomplish a purpose

or objective or goal which regulates the activities of its members.

Goals do not only serve as a common bond for the unification of the

efforts and activities of an organization's members, but also, goals are

a means for measuring the organization's performance or benefits to

its members.

3. Task or activity: All organizations carry out a major task of one kind or

another which relates to and is directed towards the realization of their

missions" or objectives. For example, the primary task of a bank is to

provide financial intermediation.

4. Hierarchical structure of authority and responsibility: In most of the

organizations, authority and responsibilities are defined by a hierarchy

of ranks "and positions

5. Division of labour: Division of labour means that each member of an

organization is given a fraction of the task of the organization to

perform. This gives room for specialization which helps to increase

individual output and overall organizational efficiency.


1. Production Organizations: Production organizations engage in

production of goods and services for society. Examples are

manufacturing companies, b anks, insurance companies, mining industries, etc . 2. Political Organizations: These are

manufacturing companies, banks, insurance companies, mining

industries, etc.

2. Political Organizations: These are organizations that co-ordinate,


control and ensure that the society at large achieves its objectives.

Examples are government establishments.

3. Pattern Maintenance Organizations: These are organizations that

socialize or prepare people for their roles in other organizations and

the society at large. They perform educational, religious and cultural

activities. Examples are institutions, religious organizations, family,etc.

4. Inteqrattve Organizations: These are organizations that resolve or

settle conflict and ensure that the various parts of the society fit

together well. E.g. the Judiciary


Now that we know what a theory is and what an organization is, what then

is Organizational Theory?

According to Hodge and Anthony, organizational theory can be defined as "a

group of related concepts, principles and tested hypothesis that is used to

explain the components of organizations and how they behave",

According to D.S. Pugh, organizational theory is defined as "the body of laws

and empirically tested and proven conclusions which establish relationships

b e t ween th e s t ruc t ure, f unc ti oning

between the structure, functioning and performance of organizations and the

behavior of groups and individuals within them".



1. Description: This means telling what the nature of something is, e.g.

featuring the nature of the factors involved in the process of decision-


2. Explanation: This means giving the details of the causes of some event

or activity. For instance, giving the details of the factors that cause the

productivity of an employee to increase or reduce.

3. Prediction: This means foretelling the probability of various outcomes

of an event, activity or a decision, based on our knowledge of the

relationship among variable.

CHAPTER THREE CLASSICAL ORGANIZATIONAL THEORY : Classical theory of organization holds that an individual is




Classical theory of organization holds that an individual is motivated almost

solely by financial incentives. It emphasizes on economics, man, rationality

and specialization.

Classical theory has been developed under 3 streams: (1) Bureaucratic

model/theory, (2) Administrative theory and (3) Scientific Management



The father of this school of thought is Max Weber.

Bureaucracy is an administrative system, especially in a government, that

divides work into specific categories carried out by special departments of

nonelected officials.

According to Max Weber, Bureaucracy is "an administrative system which is

organized rationally, logically, impersonally and according to official rules as

a means of carrvlnq out imperative control over human beings".

Scientifically, bureaucracy denotes "an integrated hierarchy of specialized

offices defined by systematic rules i.e. an impersonal routinized structure

w h ere i n l eg i ti ma ti ze d au th

wherein legitimatized authority rests in the office and not in the person of

the incumbent"

According to Max Weber, bureaucracy, which is an administrative

organization that rests on a belief in the legality of patterns of normative

rules and the rights of those elevated to authority' under such rules,

represents the most technically superior means for attaining the highest

degree of organizational efficiency and output.

Bureaucracy is found everywhere in government business, military, political

or religious or. any other organization grown too big for work by personal



1. There is ·a security of office tenure for officials, i.e. they cannot just be

removed arbitrarily.

2. There is a clear structure of career with promotions carried out

according to seniority or achievement or both.

3. Officials of the organization organized in a clearly defined hierarchy of

positions from top to bottom, meaning that, each lower office is under

the control of a higher one.

4. Each official of the organization has a level of authority and



All the officials are remunerated with salaries and pension entitlements

which are graded according to their ranks in the hierarchy.


6. No official has a right of ownership to any part of the organization or

the means of administration.

7. Every official obeys orders of superior officers, not because of the

influence of individual personalities, but because of the hierarchical

and superior nature of the positions.


1. The hierarchical nature of authority makes effective co-ordination of

activities possible.

2. Specialization is encourages and this helps to increase productivity and

efficiency .

3. There is neither favouritism nor discrimination since duties are

performed according to laid down rules.


1. There is' organizational inflexibility and structural rigidity since

bureaucracy does not adapt to changes and new ideas.

2. Bureaucracy does not encourage personal initiative because it


emphasizes strict conformity to standard rules and procedures.

3. There is an increase in the cost of administration because of excessive

paperwork, form filling and documentation of affairs.

MAJOR M ODIFICATIONS TO BUREAUCRACY 1. Management should make use of committees to make de


1. Management should make use of committees to make decisions and

solve problems that cut across two or more departments. This will

reduce the effect of excessive hierarchy, centralization,

compartmentalization and specialization.

2. They can design jobs in such a manner as to minimize the problems of

extreme specialization, extreme rigidity, etc. This will help to prevent

job monotony and improve interpersonal relations among

organizational members.

3. Management should ensure that the allocation of authority is

commensurate with responsibility. This will help to avoid

overdependence on rules.


Weber explained how organizations can ensure continuity and co-ordination

of their operations. To him, organizations are coordinated when there is a

system of administration based on hierarchy of authority, division of labour,

standard procedures, impersonal rules, use of merit in personnel recruitment

and selection which enables an organization to be staffed by qualified people

rather than privileged ones, and security of office tenure for workers.

THE ADM INISTRATIVE APPROACH The administrative approach was pioneered by Henri Fayol (1841 - 1925).


The administrative approach was pioneered by Henri Fayol (1841 - 1925).

According to Henri Fayol, management comprised of the following activities:

1. Forecasting and Planning: This means examining the future and

drawing up a plan of action.

2. Organizing': This means building up the structure of an organization.

3. Directing: This means maintaining activity among organizational


4. Coordinating: This means unifying and harmonizing all activity and


5. Controlling: This means ensuring that everything done in the

organization is in conformity with the established plan.

According to Fayol, to effectively perform the above activities, the following

principles and rules must be observed:

1. Division of labour: This means that employees should be grouped into

divisions, departments and each group should have a separate work to


2. Parity of authority and responsibility: This means that a manager's

responsibility should be commensurate with his/her authority. This is

also called the principle of correspondence



3. Discipline: Everyone should be disciplined enough to obey and respect the rules and objectives

3. Discipline: Everyone should be disciplined enough to obey and respect

the rules and objectives of the organization.

4. Unity of command: This means that an employee has to receive order

from only one superior and then report back to the same superior in

order to avoid conflicts and confusion.

5. Unit of direction: This means that organizational members should work

towards the same objective.

6. Fair remuneration: Management and employees should receive a pay

that is fair and satisfactory.

7. Scalar chain: This means that there should be clear and unbroken lines

of authority from the top of the organization to the bottom with the

chains of command represented in an organization chart.

8. Centralization and decentralization: This means that in the

organization, strategic decisions should be centralized while

operational decisions should be delegated.

9. Order: This means that the right man should be appointed to the right

position while materials should be in the right place at the right time.



Equity: This means that there is need for fairness and justice in

an organization so as to encourage loyalty and good work.



Stability in tenure: This means that employees should be

guaranteed job security.



Initiative: This means that employees should be encouraged to

also use their personal initiatives and creative abilities and then get

rewarded for these.

13. Esprit de corps: This means that the management should impact

in his employees a spirit of co-operation, unity and teamwork.

14. Subordination of individual interest to general interest: This

means that the interest and goals of the organization should be

superior to those of the workers.


Henri Fayol explained the importance of rewarding workers and encouraging

their hard work. Also according to him, good managerial practice must be

based on a suitable organizational structure and efficient staffing, planning,

directing, communicating, co-ordinating and controlling.


The administrative approach which was pioneered by Henri Fayol has been

majorly contributed to by Lyndal Urwick. According to Urwick, the principles

for building an effective organization are:

1. Definition: This means that there should be a clear specification in

writing, of authority and responsibility.

2 . Obj ec ti ves: Thi s means that the objectives of the organization


Objectives: This means that the objectives of the organization must be

clearly defined.


Specialization: This means that each group of employees in the

organization should perform separate duties.


Chains of command: This means that there should be a clear line of

authority from the top to the bottom.


Span of control: This means that there should be limitation to the

number of subordinates under a superior, i.e. four to six should be the

optimum number.


Primary task: This means that the line functions should be separate

from the advisory staff functions.


Co-ordination: This means that the efforts of employees should be



Communication: This means that there should be a limitation to the

number of levels of authority in the organization hierarchy to ease flow

of communication.


Exception: Management should only be concerned with non-routine




decision-making and should only be notified' when results are

remarkably off target.


Responsibility: This means that the superior assumes absolute

responsibility for the acts of his subordinates. So, it is authority that

can be delegated, not responsibility.


11. adjust to changes.
adjust to changes.

Flexibility: This means that the organization should be able to

12. Simplicity: This means that the organization should stay simple

in order to remain effective.


Scientific Management Theory was pioneered by Frederick Winslow Taylor

(1856 - 1915)

F.W. Taylor spent the greater part of his life working on the problems of

achieving greater efficiency on the shop-floor. It was against this

background that Taylor developed his ideas. He was passionately interested

in the efficiency of working methods. At an early stage he realized that the

key to such problems lay in the systematic analysis of work. Experience had

convinced Taylor that few workers put more than minimal efforts into the

daily work.

Taylor observed antagonism between the workers and the management, as

well as low output and a general inefficiency in the company where he

worked. To Taylor, the problems were caused by:

1. The belief of workers that there salaries remain the same regardless

of whether they work harder or not. i.e. harder work does not

guarantee higher pay.

2 . N a t ura l so ld er i ng: Th is means


Natural soldering: This means natural restriction of output. Workers

don't want to overwork themselves to increase output because

increasing output may even lead to loss of their job when the

management has excess output to sell.

3. Systematic soldering: This means deliberate slowing down of work.

Workers tend to refrain from working harder than their colleagues

with whom they receive the same pay.

According to Taylor, the above problems could be solved if the principles of

science are applied to the study management.


By science, Taylor meant systematic observation and measurement. The

principles of scientific management constitute the cardinal responsibilities of

management, which are:

1. The development of a true science, that is, the systematic observation,

study and recording of work processes and the skills required to do a

job so as to discover the one best or most efficient method of

performing the work.

2. The scientific selection of workforces in order to ensure that workers

are employed on the kind of work for which they are best fitted.

3. The progressive development and training of workers to do the job in

the best cost saving way.


The appointment of a supervisor who will oversee the way the work is

done and direct the workers and ensure that they do their work in

accordance with the principles of science.

5. The paying of workers on the basis of the output only thus ensuring

that higher work guarantees higher pay.


1. That there will be greater output if the ordinary principles of science

are applied to work and organizational problem.

2. That the good worker accepts orders but does not initiate actions.

3. That workers are economically rational and are working to maximize

their financial incomes and not to satisfy their social needs while at




1. F.W. Taylor introduced personnel management techniques such as

employee selection tests, job evaluation, job analysis and performance


2. Taylor laid emphasis on management's responsibility for planning what

to do and how to do it in an organization

SHORTCOMINGS OF SCIENTIFIC MANAGEMENT 1 . Scientific management neglects the emotional nature of man, mak


1. Scientific management neglects the emotional nature of man, making

an employee a mere order taker, forgetting that human beings are not

like inanimate objects.

2. It has a" wrong assumption that man works purely to make money,

that money was the prime motivator of a worker.

3. It restricts planning and controlling to management only, that

employees are just to dance to their tune.


HENRY L. GANTT (1861 - 1919)

Henry Gantt made many improvements in production planning and control.

He is mainly remembered for the production control chart, known as Gantt

Chart or Bar Chart.

Gantt also introduced the concept of task-and-bonus system which a direct

replacement of Taylor's piece-rate system. Gantt, by this system, meant

that a worker should be paid a bonus if he produces to a specified target.



Frank Bunker Gilbreth did work with his wife, Lilian, regarding modern

management. They analyzed human work motion systematically in order to


discover the most efficient way of performing it and thus reduce work fatigue and increase

discover the most efficient way of performing it and thus reduce work

fatigue and increase labour productivity.


Harrington developed The Twelve Principles of Efficiency in 1911 which,

according to him, are the basis of correct and highly productive

organizations. The principles are:

1. Clear objectives

2. Common sense

3. Competent counsel

4. Discipline.

5. Justice and fairlay

6. Adequate and reliable records

7. Proper routing

8. Standardized operations

9. Work standards and schedules

10. Standardized conditions

11. Written standard practice instructions

12. Reward for efficiency


M ORRIS COOKE According to Morris Cooke, all employees should be involved in find i


According to Morris Cooke, all employees should be involved in finding the

one best method of doing a job. His modification to Taylor's work is that for

Taylor, finding the one best way of doing a job should be the responsibility

of specialists i.e. management.







The Neo-classical theory focuses on the individual and adds the

psychological and social aspects of the individual into organization design.

Neo-classical theory is developed by human relations movement and is built

upon the classical theory by giving due consideration to psychological and

social needs of individual and work groups.

The Neo-classical theory is also known as the behavioural-humanistic

management theory. The original exponents of this theory of organization

and management are: (1) Elton Mayo, (2) Roethlisberger and (3) Dickson.


The human relations school or movement which started with the famous

Hawthorne studies talks about humanizing the work organization. It

recognizes the importance of the formal organization which will always be

present within the formal structure.

Informal within the formal

In the mid 1920s, a series of studies/experiments was initiated in the

Hawthorne, Illinois plants of the Western Electric Company. Elton Mayo

(1880 - 1949) an d hi s co ll eagues - Roethlisberger and Dickson -

(1880 - 1949) and his colleagues - Roethlisberger and Dickson - at the

Western Electric Company wanted to study the effect of the physical work

environment on worker productivity and they actually studied that. In effect,

they were carrying on the tradition started by Freder.ick Taylor and his

followers by systematically trying to improve worker efficiency. There were

four (4) phases to the Hawthorne experiments:

1. The first phase covers the Illumination experiment.

2. The second phase covers the Relay Assembly Test Room Experiment

3. The third phase covers the Interviewing Programme

4. The fourth phase covers the Bank Wiring Observation Room



The first major experiment of Hawthorne investigated the effects of different

levels of lighting on productivity. The researchers systematically manipulated

the lighting of the area in which a group of women worked. They found out

that inspite of the manipulation, productivity continued to increase, that is,

when the lighting was increased, the people produced at a higher rate, when

the lighting was decreased, the people still produced at higher rate. When

the lighting was turned off to see whether it will have effect on the people,

the people still produced at higher rate. They then concluded that variables

other than illumination were responsible for the increase in productivity.

.:. THE RELAY ASSEMBLY TEST ROOM EXPERIMENT In that experiment, 6 women workers were transferred


In that experiment, 6 women workers were transferred from their normal

departments to a separate area. The women were involved in assembling

Telephone relays by putting together a number of small parts. In order to

obtain more control over the factors affecting work performance, the

researchers isolated this group of workers from their regular work and began

to study them. At first, they introduced rest breaks to see what effect the

break would have on their productivity. As productivity increased, the

researchers believed that these work pauses/work break were reducing

fatigue and thereby improving output. Shorter work days were instituted and

outputs again were up.

However, when the original working

conditions/periods were restored, output still remained high. This proved

that the change in physical condition or the introduction of rest breaks or

work pauses could not have been the only reasons for the increase in

output. So they were still not satisfied and went to the third face.



In an attempt to find out more about the workers' feelings towards their

general conditions of work and their supervisors, a large interviewing

programme was introduced. Over 20,000 interviews were conducted among

a large number of workers in which the interviewers were primarily


i n t eres t e d i n ga th er i ng i

interested in gathering information about the effect of supervision on work

environment. The result was a wealth of information about employees'

attitudes. The researchers realized that an individual's position and status in

the organization were determined by both the person and the group

members .


The fourth experiment involved the observation of a group of 14 men

working in the Bank Wiring Room. The workers were wiring and soldering

bank terminals. It was noted that the men formed their own informal

organization with sub-groups or cliques. The group developed its own

pattern of a formal social relations and norms of what constituted proper

behavior. Despite a financial incentive scheme where the workers could

receive some money for more work performed, the group decided on a level

of output well below the level they were capable of producing. Group

pressures on individual worker were noted as being stronger than financial

incentives offered by management.

The main conclusions to be drawn from the Hawthorne studies:

1. Individual workers cannot be treated in isolation but must be seen as

members of a group. This can be seen in the 4th phase.

2. The need to belong to a group and have status within it is more

important than monetary incentive.


Informal groups at work exercise a strong influence over the behavior

of workers.

4. Supervisors and managers need to be aware of employees' social


needs and cater for them.

5. Attitudes towards work are strongly influenced by the group since

work is frequently a group activity.

We would conclusively say that the Hawthorne studies provided the

foundation for an entirely new approach to management known as the

Human Relations Movement. The basic premises underlying this movement


1. That people respond primarily to their social environment.

2. That motivation depends more on social needs than on economic

needs and that satisfied workers work harder than unsatisfied



1. It over-emphasized emotional and social needs, thus making it another

single factor explanation of human behavior.

2. The approach is only selectively applicable. For instance, it is not

applicable in military and prison establishments where the nature of

the command system requires authoritarian practices.

3 . Th e approac h con t a i ns a pro-management bias and


The approach contains a pro-management bias and a strong moral

undertone because it contains ideas which were put forward on how to

eliminate conflict and manipulate the worker to work harder.



The human resources or neo-human relations was pioneered by Abraham

Maslow, McGregor, Likert, Herzberg and Argyris. This approach centres on

the notion that people's needs from organization and work are more than

economic reward, job security, human treatment and physical and social

needs. According to the approach, employees have a creative ability, a

capacity for imagination and other natural potentialities or resources which

they want to make use of in order to achieve self-fulfillment, recognition and



In 1954, Abraham Maslow discovered what actually motivates workers in an

organization fo work. He pointed out that motivation depends on the

realization of needs. If the needs and desires of the workers are identified

and met, he would be motivated to work. He however stated that the needs

are of hierarchy and priority and he classifies them into five levels.

According to Maslow, needs ha ve a sequence of domination. Unless and until the needs

According to Maslow, needs have a sequence of domination. Unless and until

the needs of the lower level are reasonably satisfied, those of the higher

order do not dominate. Only the needs not yet satisfied can influence


behavior. The needs can be arranged in an ascending order as follows:

1. Physiological needs: These include food, clothing, shelter, sex and a

fair temperature.

2. Safety and security needs: i.e. Protection against harm, danger,

threats, fear and deprivation

3. Belonging and social needs: i.e. The need for atfectlon, to love and be

loved, to associate with others, to belong and be accepted by fellow

human beings.

4. Self esteem or ego needs: The desire for status, prestige, recognition,

appreciation and respect from fellow human beings and personal

satisfaction from one's achievements.

5. Self actualization/fulfillment needs: i.e. The need to fulfill one's

potential, to use one's creative talents to the highest limit, to achieve

one's ambition.

According to Maslow, unless we satisfy the lower or primary needs, the

higher order needs do not have much impact but as soon as we satisfy the

lower or primary needs, the next need in rank after that emerges and

demands satisfaction, and so on.

According to Maslow, man's needs determine his behavior and persona l ity which is controlled

According to Maslow, man's needs determine his behavior and personality

which is controlled by the brain. A reasonable pay is not usually adequate to

motivate an employee.


1. Maslow affirmed that unless one need is satisfied, another higher need

will not be attended to. In real life situation, this is not realistic

because a rational being will choose safety instead of satisfying hunger

in an insecure environment.

2. Abraham Maslow averred that a time will come when majority of the

people in the society will be yearning for self esteem and self

actualization needs. This goes to mean that the basic needs of the

society in terms of food, clothing and shelter would have been

guaranteed, whereas, when Abraham Maslow was researching his

theory, he did it in an ideal society of Europe and America where

government caters for the basic needs of its citizens. In the third world

i.e. developing countries this is not so


Douglas McGregor (1960) differentiated between two styles of leadership or

management. This he called Theory X and Theory Y.


Theory X consists of assumptio ns of the traditional (classical) management view which emphasizes the

Theory X consists of assumptions of the traditional (classical) management

view which emphasizes the need for strict managerial direction and control

of employees. It assumes that people are naturally lazy and that they do not

want to work. According to this view, people want only security, are

naturally not ambitious and will avoid responsibility if they can. For these

reasons, workers must be coerced, controlled, directed and constantly

supervised and threatened with punishment, otherwise, they will not carry

out their tasks.

McGregor challenged Theory X. according to him, the assumptions of theory

X appear inadequate and ineffective for the full utilization of human

potentialities. The alternative which he offered is called Theory Y and is an

optimistic view of human nature.

Theory Y assumes that man is not as lazy as theory X suggests and that

work to man is as natural as play or enjoyment but the difficult thing is the

unfavourable working conditions in which man finds himself. According to

Theory Y, people have a capacity to be highly imaginative and creative, and

if people are treated like adults and allowed to use their imaginations and

creativity to exercise control over their activities without being subjected to

excessive external controls, it will satisfy their ego and social needs as well

, as their bread and butter requirements and they will be willing to work.

To implement Theory Y, McGre gor stated that management should arrange organizat i onal conditions

To implement Theory Y, McGregor stated that management should arrange

organizational conditions and methods of operation in a way which would

enable people to achieve their own objectives best by directing their efforts

toward organizational objectives. According to McGregor, the increase in

productivity will be greatest if, in achieving the firm's goals, workers are also

achieving their own.

FREDERICK HERZBERG (The 'two factor' theory)

Frederick Herzberg, in his two factor theory stated that job satisfaction and

job dissatisfaction are produced by separate sets of factors. These two sets

of factors are:. (1) hygiene or maintenance factors; and (2) 'motivators' or


By hygiene or maintenance factors, Herzberg meant such factors as physical

working conditions, company policy and administration, interpersonal

relations, supervision and salary. If these factors are not present in a job,

there will be job dissatisfaction. However, their presence does not mean that

there will be job satisfaction. This is because job satisfaction is caused by a

separate set of factors which relate to the nature of the job itself.

According to Herzberg, 'motivators' or 'satisfiers' include achievement,

recognition, the work itself, responsibility and opportunity for advancement

and growth on the job.

To make the motivators to be e ffective, there must be a reasonable amount of

To make the motivators to be effective, there must be a reasonable amount

of the hygiene or maintenance factors in an organization.

CHRIS ARGYRIS (Impact of Formal Organization upon individual)

Chris Argyris' contribution to organization theory was his analysis of the

impact of the formal organization upon the individual. According to Chris,

there is an inherent conflict between the demands of a formal organization

and the nature and needs of psychologically healthy or mature persons

working within them. As people grow older or more mature, they tend to

become more active, more independent and seek to grow and find

expression for their creative and psychological energy. However, in its drive

to maximize efficiency and achieve its objectives, a typical formal

organization develops a structure based on the principles of task

specialization, chain of command, unity of direction, and rigid rules and

regulations. These principles demand that the worker shall be dependent,

passive and subordinate towards his superior.

The formal organization frustrates the individual by reducing the chances of

realizing his needs for independence, growth, creativity and self-expression

especially at the lowest levels of organizational hierarchies where individual

autonomy and responsibility are least. When people become frustrated in

this way, they may seek to adjust themselves by working hard to get to a

high position where conditions are less frustrating.

If the prospects of advan cement are slim, the frustrated individual may resign his appointment

If the prospects of advancement are slim, the frustrated individual may

resign his appointment with the organization or start to frequently absent

himself from workplace or become apathetic and aggressive or loose interest

in his work or attempt to get 'even' with management by restricting output

or slowing down work. According to Argyris, these methods of adjustment or

adaptation are- sanctioned and perpetuated by informal work groups. In fact,

the informal organization for restriction of output develops as a mechanism

for resolving this inherent conflict between the demands of the formal

organization and the needs of psychologically healthy or mature person.

To correct this situation, Argyris recommends:

1. Increased employee participation in management in order to

accommodate the personal values of organization members in the

decisions that are made.

2. A flexible organizational structure that permits a two-way open

relationship between managers and their subordinates.

3. A horizontal and vertical loading of jobs in order to increase individual

motivation. Job enlargement or horizontal loading of jobs means

increasing the variety of tasks at the same level of complexity i.e.

allowing each employee to perform more varied tasks in the hope of

making the jobs less monotonous. This can lead to increased

productivity and it shows that division of labour doesn't necessarily

produce greater efficiency. Job enrichment or vertical loading of jobs


means adding jobs of a more complex, interesting, and challenging nature. In other words, job

means adding jobs of a more complex, interesting, and challenging

nature. In other words, job enrichment seeks to increase the

employees' responsibility and recognition while it offers increased

opportunities for challenging work and for advancement and growth on

the job.


CHAPTER FIVE - . CONTEMPORARY MANAGEMENT PERSPECTIVE Under the contemporary management perspective, we shall consider:





Under the contemporary management perspective, we shall consider:

(1.) Contingency theory, (2) System theory and (3) Management by

Objective (MBO).

MBO has been discussed in chapter one.


The basic thesis of the contingency or situational theory is that there is a

relationship between organization design and the task environment faced by

an organization and therefore, that certain types of organization design are

suitable for certain types of circumstances and task environments. In other

words, the task environment and circumstances in which an organization

functions determine the structure that the organization uses and the way its

activities are coordinated.

The major proponents of the task contingency theory are Tom Burns and

G.M. Stalker. Others are Fred Fiedler and Lawrence and Lorsch. The major

thesis of this theory is that the style of management and .organization design depends on the situation or task environment in which an organization


operates. According to Burns a nd Stalker, an organization can be described as a continum

operates. According to Burns and Stalker, an organization can be described

as a continum from mechanistic to organic.

The task environment of an organization may be relatively stable and

unchanging or relatively dynamic, unstable and rapidly changing. A relatively

stable task environment is that in which product innovations evolve slowly,

where the needs and tastes of customers as well as government regulations

and competitors' actions are fairly stable and constant. Companies facing

these task environments do notplace emphasis on innovation and creativity

in organizational processes and management.

The most suitable organization structure or design for companies operating

in relatively stable and predictable environments is what Burns and Stalker

term mechanistic organization system. The characteristics of such

organizations are as follow:

1. A clear, hierarchical lines of authority and control

2. A strong emphasis on technical efficiency

3. Adherence to a chain of command

4. Elaborate rules and regulations and inflexible and standardized


procedures .

5. Specialization and compartmentalization of tasks.

Because of the relatively homogeneous predictable and unchanging nature of

the task environment, especially the technology and market conditions,

activities in a mechanistic orga nization tend to be programmed, specialized . : and routinized

activities in a mechanistic organization tend to be programmed, specialized



and routinized while leadership tends to be directive, authoritarian and work

centred. Thus,·the classical form of organization is more effective here.


relatively heterogeneous, unstable, and rapidly changing task environment


that in which technology and government policies change quickly and

products and market conditions also change quite frequently because of

changes in customers' needs in terms of quality, quantity and competitive


The most suitable organization structure for companies operating in an

uncertain and rapidly changing task environment is what Burns and Stalker

termed organic or organismic organization system, that Is, a fluid or flexible organization structure which enables the company to cope with unstable

market conditions and to adapt to changes. The characteristics of an

organismic structure are as follows:

1. Lines of authority are not clearly defined, rather, there is a network

structure of control, authority and communication.

2. A continual redefinition, modification or changing of individual tasks

and roles; jobs are not specialized and job contents change all the


3. A decentralized decision-making system with subo.rdinates having the

power to make decisions and participate in management generally


It should be noted that even wit hin the same company, different departments may face

It should be noted that even within the same company, different

departments may face different environmental conditions. Thus, the task

contingency theory is not only applicable in managing and designing a

company as a whole, it is also applicable in managing the individual parts of

the organization. The structure of each department is determined by the

demands placed on such department by its external influences. Where the

tasks are routine and require uniform actions, it is appropriate to use a

mechanistic management structure with emphasis on close supervision and

tight control.

In departments where the tasks performed are less well defined and outside

influences are not predictable, it is more effective to use an organismic

management structure with emphasis on flexibility, greater decentralization

of responsibility and decision making and less hierarchical control. This is

typical of Research and Development department which is usually faced with

a pressure for new ideas and product innovations.

The above analysis shows that the task-contingency approach to

management is based on the notion that the correct solution to a

management problem is a function of its situational variables. The approach

emphasizes variations in the internal structures and functioning of

companies with each company having different goals and objectives and

therefore different working methods and relationships and different types of

people. It shows that there is no magical blueprint that is capable of

ensur i ng a company ' s success. Instead, the effectiveness of a company i

ensuring a company's success. Instead, the effectiveness of a company is

seen as a function of a correct match between the company's internal

structure and its operating environment, tasks, and conditions.

With respect to employee motivation, the basic idea of contingency theory is

that although workers may be desirous of self-actualization and participation

in management, not all employees are responsive to enriched job

opportunities and joint goal setting. The degree of self-direction and self-

control across all types of technological and structural characteristics differs

from individual to individual. Workers differ in their expectations because of

variations in individual personality characteristics and socio-cultural


backgrounds. Some people prefer easier and more routine work, others like

challenging jobs where abundant opportunities exist to use their own ideas.

The premise on which the contingency theory is based is that situations

dictate managerial action; that is, different situations call for different

approaches. No single way of solving problem is best for all situations. This

thinking challenges the concept of "universality" proposed by Fayol and

other classical writers who believed that managerial principles and practices

should be applied consistently in all situations.

Contingency theory is integrative, meshing the ideas and concepts of the

other schools of management thought. It applies the concepts drawn from

other disciplines to individual situations as it finds them appropriate.

Contingency theory focuses on identifying and understanding the forces that shape an organization's task environment

Contingency theory focuses on identifying and understanding the forces that

shape an organization's task environment and on applying the management


approach known to work best under those conditions.


The systems theory was developed from the writings of Chester Bernard

(1938), Norbert Weiner (1948), Ludwig Von Bertalanffy (1995), the

Structural-Functionalists particularly Talcott Parsons (1961) and

Organizational Social Psychologists particularly Katz and Kahn (1966).

The systems approach sees organization as systems. A system is a set of

interrelated parts such as the various departments of a firm which together

form a complete unit that performs a particular function. Each department is

a subsystem of the whole organization while each organization is a

subsystem of the whole society. Departments and individuals in an

organization are seen as interacting elements that are working together

interdependently. Each department or element of the whole system may in

turn comprise a sub-system with its own network of interrelated elements

i.e. the various sections and positions.

The overriding assumption of the systems approach is that any system (the

whole) is greater than the sum of its parts. In other words, the output of the

whole organization is more than the output of the constituent parts would be

if they were to function independently and individually. System theories are

based on the view that it is no t appropriate to examine individual parts of

based on the view that it is not appropriate to examine individual parts of

the organization. Instead, one should examine both formal and informal

relationships between and among subsystems within the organization in

order to explain the system as a totality. Thus, while the classical-

mechanistic school focused on the formal structure of the organization and

the behavioural-humanistic school emphasized social relationships, systems

theory suggests that it is significant to look at the interaction between the

parts of the organization and the relationship between the organization and

its environment.

Every system or subsystem is made up of people who interact and work


together. This is the organisation's human or social sub-system. The

employees perform tasks and produce goods using various techniques,

procedures, plant, equipment, layout, and work methods (all collectively

called technoloqy) within the organization's formal structure. This is the

organization's technical sub-system. When the objectives of the organization

are added to the structure, it becomes a socio-economic and technical

system. The way in which the firm's material and human resources are used

by management is the firm's organizational sub-system. Thus, the operation

and behavior of each system or subsystem are subject to social, economic,

technical and organizational variables. Changes can occur at anytime in one

or more of the firms sub-systems (for example the introduction of new


mac hi nery or t h e creat i on o f a new position)

machinery or the creation of a new position) that will affect the other sub-

systems as well as the firm (or system) as a whole.

An organization is a closed system when only its internal environment is

considered. An organization is an open system when account is taken of the

internal environment and the influence of the external factors over which the

organization has no direct control (1).

A closed system does not receive inputs from its outside environment. In

addition, it does' not distribute any outputs to the outside environment. In

short, it does not interact with its external environment. Closed systems

rarely exist in real life.

In an open system, inputs are received from the external environment and

are processed by the system, the result of this resource energy conversion

activity being an output to the external environment. In short, an open

system maintains continuous information with its external environment.