THE EVOLUTION OF MANAGEMENT THOUGHT, 6 TH EDITION Electronic Resource by: Regina Greenwood and Julia Teahen

Emergence of Management and Organization Theory CHAPTER 10

Emergence of Management and Organization Theory  Henri Fayol – Modern approach to general management theory through the management process  Max Weber – Bureaucracy to provide a formal approach to organization theory

Henri Fayol ( )  Jules Henri Fayol was born to French parents in Constantinople. Jules Henri Fayol  His experiences as the Managing Director of Comambault formed his conception of management as the general activity of integrating functions of the firm in order to intelligently use resources to attain the objectives of the firm.  While Taylor was more production oriented, Fayol’s viewpoint was that of general management. Henri Fayol, circa 1872 Source: La Societe de Commentry-Fourchambault et Decazeville, , Paris : Brodard et Taupin, 1954, p. 160.

Henry Fayol’s Conclusions  Managerial abilities differed from technical ones, and the success of the firm depended to a greater degree on good managers than good technicians.  Fayol felt that every organization required management regardless of whether it was “commercial, industry, politics, religion, war, …”  This statement suggests the universality of management in that this activity is necessary in all organizations.  It does not mean that managers are universal.

Fayol’s List of Managerial Qualities  Physical qualities: health, vigor, address  Mental qualities: ability to understand and learn, judgment, mental vigor, and adaptability  Moral qualities: energy, firmness, willingness to accept responsibility, initiative, loyalty, tact dignity  General education: general acquaintance with matters not belonging exclusively to the function performed  Special knowledge: that peculiar to the function, be it technical, commercial, financial, managerial, etc.  Experience: knowledge arising from the work proper; the recollection of lessons a person has derived from things

Henry Fayol’s Conclusions  Managerial abilities become more important as a person moves up in the hierarchy.  Technical abilities are less essential for upper level managers.  Management could be taught in schools and universities but was not because of the absence of management theory.  Fayol defined management theory as “a collection of principles, rules, methods, Fayol and procedures tried and checked by general experience.” (Fayol, 1949, p. 15)

Fayol’s Principles of Management 1. Division of work 2. Authority 3. Discipline 4. Unity of command 5. Unity of direction 6. Subordination of individual interests to the general interest 7. Remuneration 8. Centralization 9. Scalar Chain 10. Order 11. Equity 12. Stability of tenure of personnel 13. Initiative 14. Esprit de corp

Fayol’s Principles of Management  Keep in mind Fayol’s disclaimer that there is nothing rigid in management. Fayol’s principles were guides, not absolutes or universals.  We will not stress each principle…the following is a discussion of a few key ones. Henri Fayol

Fayol’s Principles of Management  Division of Labor – Fayol is rather traditional here regarding work design. However, he also used job enlargement when appropriate.  Authority – Fayol distinguished between formal authority and personal authority. He was aware of the need to combine and complement the authority of position with leadership qualities.  Authority must be commensurate with responsibility.

Fayol’s Principles of Management  Unity of command – Fayol felt that employees should receive supervision from only one person.  Unity of direction – “one head and one plan for a group of activities having the same objective” (Fayol, 1949, p. 32). This is still good advice for many organizations today.  Centralization – This is not centralized decision making. Instead it is finding where decisions should be made depending on the factors Fayol mentioned. (See Wren text for Fayol’s excellent discussion.)

Scalar Chain and the “Gangplank”  The “gangplank” is a means for providing lateral communications. (Fayol used the French term passerelle)  The Foreman (F) wishing to communicate with Foreman (P) without reporting upward through the President (A) can use a “gangplank to bypass organizational red tape.

Figure Scalar Chain and the “Gangplank”

Fayol’s Elements of Management  Planning (could also be translated as foresight)  Plans depended on the firm’s resources, work in process, and future trends that could not be predetermined (resembled a strategic audit).  Plans needed to have the characteristics of unity, continuity, flexibility, and precisions.  Long range planning was a unique idea for his time but a valuable contribution to the evolution of strategic management.

Fayol’s Elements of Management  Organizing – Fayol included both the design of the organization and the staffing job of the manager in this element.  Structure of the organization had to be consistent with the objectives, resources, and requirements of the firm  Functional (horizontal) and scalar (vertical) growth  Span of control – narrow at the top but greater at lower levels  Staff – advisory personnel are needed by line managers  Staffing (separate issue from staff above) – involved selection, evaluation, and training of personnel.

Fayol’s Elements of Management  Command – Fayol’s term for directing, leading, supervising, etc.  Coordination – harmonizing the activities of the organization  Control – checking on performance to identify and make corrections if necessary

Fayol’s Elements of Management  Fayol spent relatively little time discussing command, coordination, and control.  Planning, organizing, and staffing set the stage for where we are going and when and how we intend to get there.  These plans, people, and resources are activated, led, motivated, and coordinated.  As our information system brings us performance data, the control element enables management to renew the elements by reorganizing or whatever is indicated by our control system.

Fayol’s Elements of Management  Management is a continuous process, not a neat set of discrete elements and functions that are performed without coordination of other elements.  Fayol’s perspective was that of a strategist.

What remnants of Fayol's ideas exist today in management theory and practice? How did Henri Fayol's approach to management compare with Taylor's? Henri Fayol

Max Weber ( ) Bureaucracy  Weber’s Germany was characterized by cartels which limited competition (anti-trust laws limited this in the U.S.). Weber’s  To Weber, capitalism in the US encouraged innovation and competition. Max Weber

Max Weber and Bureaucracy  His interest in the U.S. Capitalistic spirit led him to ask:  If a market oriented society could operate large organizations on some rational, systematic basis?

Bureaucracy as a Theory  It was management by the office not by a person.  It was an “ideal,” the “pure form” of organization but this did not mean that it was the most desirable.  Weber is suggested as the “Founder of Organization Theory.” Weber

Three “Pure” Types of Legitimate Authority  Rational-legal – “right of those elevated to authority…to issue commands.”  Traditional – rested on the belief “in the sanctity of immemorial traditions and the legitimacy of the status of those exercising authority under them.”  Charismatic – based on “devotion to the specific and exceptional sanctity, heroism, or exemplary character of an individual person.” (Weber, 1947, p. 328)  Weber believed that rational type of authority must be the basis for a bureaucracy.

Elements of Bureaucracy  The division of labor and authority and responsibility were clearly defined for each member and were legitimatized as official duties.  Offices or positions were organized in a hierarchy of authority resulting in a chain of command or the scalar principle.  All organizational members were selected on the basis of technical qualifications through formal examinations or by virtue of training or education. Max Weber

Weber’s Elements of a Bureaucracy  Officials were appointed, not elected.  Administrative officials worked for fixed salaries and were career officials.  Administrative officials were not owners of the units they administered.  Administrators were subject to strict rules, discipline, and controls regarding the conduct of their official duties. These rules and controls were impersonal and uniformly applied in all cases.

Summary  The emergence of management and organization theory had two forms:  Fayol’s principles and elements of management  Weber’s rationalized organization structure for efficiency  Fayol stressed: planning and organizing, and education for management.  Weber sought leadership based on rational-legal authority, not tradition or charisma.