Theories of Management Throughout the Ages

“Management Is, Above All, a Practice Where
Art, Science, and Craft Meet”
~ Henry Mintzberg
Once upon a time there was no management, let alone management theory. Sure there were nobles controlling their serfs and minions, but you wouldn’t call that management, would you? Then management as we view it today is a relatively new concept which didn’t emerge until the late 19th century. Management thinking, however, is actually a lot older than this There were also the self-employed: the subsistence farmers, tradesmen and merchants but they weren’t really managed by anybody either. Basically,
Ancient Theories of Management
Arguably the first strategic management thinker would be the Chinese general, military strategist, writer and philosopher Sun Tzu (ca 544-496 BCE). Although his most famous work, The Art of War, mainly concerns itself with military leadership, his ideas can very easily be applied to strategic business decisions as well. His approach to management is in many ways similar to what is nowadays referred to as leadership. According to Sun Tzu, effective leaders inspire their followers by example. He advises the leader to “regard your soldiers as your children and they will follow you into the deepest battles.” A modern-day manager following this principle would show deep concern for the careers and well-being of his subordinates, inspiring them to superior performance.
A couple of centuries later, the three great-grandfathers of Western philosophy, Socrates, Plato and Aristotle, also had something to say about management. Although they didn’t talk in terms of businesses and employees, their ideas can easily be translated to modern managers’ concerns of how to build productive, loyal and ethically-minded teams of employees so that their companies might flourish. Socrates(ca 470-399 BCE), arguably best known for his views on ethics, observed that “those who understand how to employ others are successful directors of private and public concerns and those who do not understand will err in the management of both. Socrates’ student Plato (428-348 BC)then introduced the concept of division of labour in book II of his seminal work The Republic by explaining that the inhabitants of the ideal state exchange goods and services with each other and that this exchange will be for the good of all.
The last of the big three, Aristotle (384-322 BCE), provides numerous insights into the management of organizations. On the specialization of labour, he said, “Every work is better done which receives the sole and non divided attention of the worker,” and also wondered if offices should be divided according to the subjects with which they deal or according to the persons with which they deal. To this he added his ideas about centralization versus decentralization and the delegation of authority by asking, “Should one person keep order in a market and another in some other place or should the same person be responsible everywhere?” And finally, on the topic of leadership, he remarked, “He who has never learnt to obey can never be a good commander.”
Further to the East, a treatise on statecraft, economic policy and military strategy, the Arthaśāstra, was written in India sometime between the 2nd century BCE and the 3rd century CE. The manuscripts, most likely the work of several authors, deals with human motivation and dissatisfaction and the observations made in it are as modern as they are ancient, as are the prescriptions provided about maintaining order. The books also comment on the desired traits of administrators and how to select personnel through interviews and references.
In 325 CE, at the first Council of Nicaea, the assembled bishops divisively formulated an answer to Aristotle’s question about the centralization of authority by adopting the Credo Nicaea in an effort to dispel some of the organizational and theological problems that early Christianity faced. In modern organizational terms, the Catholic church leaders perceived the need to institutionalize the organization, i.e. to specify policies, procedures, doctrine and authority. With the Bishop of Rome the Supreme Pontiff and leader of the Catholic Church and with the European Christian nations banking on the principle that the world’s wealth was static (cf. Mercantilism), and consequently, attempting to accumulate the largest possible share of that wealth by maximizing their exports and by limiting their imports via tariffs, it’s safe to say that management thinking enters a status quo.
But then the inventions of the power loom and the steam engine kicked off the Industrial Revolution and things changed forever. When the revolution was in full swing the once semi-independent rural workforce moved en masse towards metropolitan areas and became employees, working for a ‘boss’ in urban factories; the professional manager, albeit a crude one, had been born Let’s call this the beta version of Management.
In the early days of this beta version the boss was just that, the chief at the top of a pyramid giving orders, making rule-of-thumb decisions and ultimately accountable for the results of his (yes they were all men) employees. However, faced with the Luddite Rebellion in the early 19th century, these early managers had to find a more effective way to control and motivate their workers. What they came up with is the what we now refer to as carrot and stick method of management. Positive inducements being the carrot and negative sanctions being the stick were used. In an effort to build new factory ethos, this became the prevailing method of providing motivation and maintaining discipline.
Throughout the 19th century, numerous beta managers added ideas to development of the theory. Welsh textile manufacturer Robert Owen, for example, experimented moral suasion rather than corporal punishment on his workers, which lead his main contribution to management thinking: the silent monitor. The way it worked was that a block of wood was put in each of his machines with the four sides of the block coloured either black, blue, yellow or white in ascending order of quality. At the end of the workday, performance was noted by a supervisor who would turn the block the correct way. This way everyone could see the employees’ previous performance. This invention was definitely a precursor of modern management‘s public posting of sales and production data to instill departmental pride or encourage competition. In 1855, Scottish-American railroad superintendent, Daniel McCallum, designed an illustrative organization chart of the New York and Erie Railway, which is considered to be the first modern organization chart. The steel magnate Andrew Carnegie, another Scottish-American, added to the managerial toolbox that a manager should always watch costs before anything else and also was the first entrepreneur to to use vertical integration as a business strategy. As the 19th century drew to a close, the beta release of management had steadily developed into its first iteration.
Transitional Theories of Management
French management theorist Henri Fayol (1841–1925) and American mechanical engineer Frederick Winslow Taylor (1856–1915) can be seen as the founding fathers of Management 1.0 as they both realized the importance of management in industrial progress and, as a result, endeavoured to develop a rational and systematic basis for management. Fayol’s principles of management and Taylor’s principles of scientific management are mutually complementary although they differ on a number of aspects.
Foyalism
Fayol, a bourgeois in post-revolutionary France, believed that controlling workers in order to achieve greater productivity should be prioritized over all other managerial considerations. His key idea was that by focusing on managerial practises it would be possible to minimize misunderstandings and increase efficiency in organizations. In his main work General and Industrial Management he outlines an agenda whereby, under an accepted theory of management, every citizen is exposed and taught some form of management education and allowed to exercise management abilities first at school and later in the workplace.
During the early 20th century, Fayol developed 14 principles of management to help managers manage their organizations more effectively and, within his theory, he outlined five practical elements of management that depict the kinds of behaviours managers should engage in so that the goals and objectives of the organization are effectively met. These five elements of management are, planning, organizing, commanding, coordinating and controlling.
Planning means that managers should create a plan of action for the future, determine the stages of the plan and the technology necessary to implement it and decide in advance on what to do, how to do it, when to do it, and who should do it. This maps the path from where the organization currently is to where it wants to be. The planning element also involves establishing long and short-term goals and arranging them in a logical order.
Once a plan of action has been designed, managers need to provide everything necessary to carry it out. They need to organize raw materials, tools, capital and human resources. In addition to this, they need to identify responsibilities, group them into departments or divisions and specify organizational relationships.
Employees will perform at their best if they are given concrete instructions with respect to the activities that must be carried out by them. Successful managers have integrity, communicate clearly and base their decisions on regular audits. They are capable of motivating the team and encouraging employees to take initiative.
When all activities are harmonized, the organization will function better. Positive influencing of employees behaviour is important in this. Coordinating therefore aims at stimulating motivation and discipline within the group dynamics. This requires clear communication and good leadership. Only through positive employee behaviour management can the intended objectives be achieved.
The final element of management involves comparing the activities of the personnel to the plan of action, this is what keeps the manager in control. This is a four-step process in which the manager first establishes performance standards based on organizational objectives. Next the actual performances will be measured and then compared to the established performance standards. Finally, corrective or preventive measures will be taken as required.
Henri Fayol’s theory of management has been a significant influence on modern management theory and can be viewed as one of the main pillars of Management 1.0. His practical list of 14 principles and six functions of management helped early 20th century managers learn how to organize and interact with their employees in a productive way.
Although the 14 Principles aren’t widely used today, they can still offer guidance for today’s managers. Many of these principles are now considered to be common sense, but at the time they were revolutionary concepts for organizational management.
Scientific Management & Fordism
Whereas Henri Fayol was mostly concerned with the improvement of overall administration, his American counterpart, Frederick Taylor’s main focus was on improving overall productivity of an organization. Recognized as one of the first management consultants, Taylor was one of the intellectual leaders of the Efficiency Movement and his ideas were highly influential from the 1890s to 1920s. In 1911, he published a book titled The Principles of Scientific Management in which he proposed that by optimizing and simplifying jobs, productivity would increase. He also advanced the idea that workers and managers needed to cooperate with one another, which was very different from the way work was typically done in businesses beforehand.
First of all he argued that the widespread rule-of-thumb work methods of early managers were to be replaced with the scientific study of an employee’s tasks. Even a small production activity like loading iron sheets into box cars can be scientifically planned, he argued, as this will help in saving time as well as human energy. Decisions should be based on scientific enquiry with cause and effect relationships and not by intuition or hit and trial methods.In other words, rather than making educated guesses, managers should constantly be experimenting systematically to develop new techniques which make the work simpler, easier and quicker.
He further emphasized that there should be complete harmony between the workers and the management since if there is any conflict between the two, it will not be beneficial for either of them. instead of being left to their own devices, employees should be scientifically selected, trained and should be provided with detailed instruction and supervision. Moreover, an atmosphere should be created in the organization that labour (the major factor of production) and management consider each other indispensable. To achieve this, Taylor often referred to a ‘Mental Revolution’ which involves a change in the attitude of workers and management towards each other. Both should realize the importance of each other and should work with full cooperation. Management as well as the workers should aim to increase the profits of the organization.
He then expanded on his theory of harmony by stressing the importance of mutual cooperation between workers and the management. Workers should be treated as integral part of organization and all important decisions should be taken after due consultation with them. At the same time, workers should also resist from going on strike or making unnecessary demands from management. Foreshadowing the evolution of management, Taylor also argues that workers should be considered as part of management and should be allowed to take part in decision making process of the management.
Finally he figured that the work should be equally divided between managers and workers, so that the managers could apply scientific management principles to planning the work and the workers could actually perform the tasks they were set. More importantly, employees should be assigned work best suitable to their physical, mental and intellectual capabilities and should be provided with training if necessary. Efficient employees produce more to earn more and this ultimately helps to attain efficiency and prosperity for both organization and the employees.
To prove his theories, Taylor conducted a number of experiments he referred to as time and motion studies. One of the most famous of these involved shovels. Taylor noticed that workers used the same shovel for all materials and deemed this to be ineffective. After careful observation and study, he determined that the most effective load was about 10kg and designed shovels that for each material would scoop up exactly that amount. The predictable result was a fourfold increase in production. Prior to Taylor’s scientific experiment, workers had used their own shuffles and rarely used one optimized for the job.
Often considered a spin-off of Taylor’s Scientific Management is Fordism. Aptly named after the US automobile pioneer Henry Ford (1863-1947), Fordism is a manufacturing philosophy that aims to improve productivity by standardizing the output, using conveyor assembly lines, and breaking the work into small deskilled tasks. Whereas Taylor’s Scientific Management seeks machine and worker efficiency, Fordism seeks to combine them as one unit, and emphasizes minimization of costs instead of maximization of profit.
At an organizational level the Management 1.0 model was pure centralized command-and-control implementing formal hierarchies of roles and rules; CEOs at the top with senior managers reporting to them, and middle managers reporting to them, and so on. All these management layers followed predefined rules and policies. The employees at the bottom of the pyramid were disempowered, they just did as they were told, executing specific highly broken down tasks and often unaware of what their exact input was in the bigger picture. Basically workers were mere cogs in a machine. Management 1.0 was suited well to large industrial factories where employees were mainly concerned with turning raw materials into more complex stuff as there wasn’t a whole lot of ‘knowledge work’ involved. But this was about to change.
Theories X & Y
The 1960s saw the rise of Management 2.0 which was the result of two important industrial and economic changes. The first major change was the increasing automation of factories. As a result of this, industry needed fewer manual labourers and more technically specialized staff who were able to operate and maintain the more complex machinery now in use. Besides this a large service industry emerged with a need for skilled knowledge workers rather than unskilled manual labourers.
The management theory here referred to as X & Y, was developed by professor Douglas McGregor of MIT’s Sloan School of Management. McGregor’s main argument was that, “[p]eople aren’t dumb automatons to be bossed around, threatened and harassed; they are beautiful precious souls who need to be nurtured and grown.” He coined the Scientific Management pioneered by Taylor as ‘Theory X’ in which, he claimed, employees are characterized as people who don’t want to work and don’t care about the organizations they work for. In contrast he proposed a ‘Theory Y’ where employees do want to work and do care about the organizations they work for, if and only if they are treated with respect and kindness. In other words, building relationships with employees and developing their abilities and knowledge should be the primary role of managers.
In the hippie turmoil of the sixties and seventies, McGregor’s ideas caught on. Instead of replaceable cogs in a machine, employees were now seen as beautiful snowflakes who should be nurtured and given hugs if they felt bad. It was also the time which saw the rise of HR departments, career plans and professional development programmes. In terms of evolution, Management 2.0 was definitely a step in the right direction, but it still relied too much on hierarchies, centralized command-control and specialization. Another technique lingering on from the Management 1.0 era was the carrot and stick method of management, albeit with more emphasis on the carrot, with the promises of bonuses and promotions, than on the stick.
Another development in this era was the implementation of project management or the practice of delegating work to a team which then had to achieve specific goals and meet specific success criteria at the specified time. Although this did somewhat address the delegation of command and control, there was a problem with it. Project management is great for the kind of work where the expected outcomes are well-known upfront but not that effective for situations with a lot of uncertainty around their value proposition, i.e. most of the work in the late 20th century.
The Toyota Production System (TPS) & Agile
However, also in the 1960s, the seeds were sown for what we now refer to as Lean Manufacturing when Japanese industrial engineers at the Toyota Motor Company, Taiichi Ohno and Eiji Toyoda, developed the socio-technical Toyota Production System (TPS). The main objectives of the TPS are to avoid overburden (muri) and inconsistency (mura), and to eliminate waste (muda). To successfully achieve these objectives, the TPS adheres to the underlying principles of continuous improvement (kaizen) and respect for people.
By the 1990s, Lean Manufacturing, as the TPS had become known as, got company from Agile Development theory. Whereas Lean had its roots in industrial manufacturing and mainly focused on the process and quality, Agile is based around software development and concentrates on scope and value. This basically means that Agile is about building one new thing for only one time, while Lean is about building the one same thing over and over again. In manufacturing, variation and rework are bad, but in development they are good. Most agile development methods break product development work into small increments that minimize the amount of up-front planning and design and are completed in short time frames or iterations. At the end of an iteration a working product is demonstrated to stakeholders. This minimizes overall risk and allows the product to adapt to changes quickly.
The 1990s also saw a revival of the practice called System Thinking with the publication of the book The Fifth Discipline by Peter Senge, a researcher at MIT. Systems Thinking moves away from traditional analysis methods, in which systems are studied by breaking them down into their separate elements, by focusing on the way that a system’s constituent parts interrelate and how systems work over time and within the context of larger systems. Building on this theory, which was developed in the 1950s at MIT’s Sloan School of Management, Senge’s book applied Systems Thinking to organizational theory and knowledge management. Systems Thinking has been of great influence to the work of later management theorists, especially Jurgen Appelo and David Snowden and thus foreshadowed the leap to Management 3.0 in the years to come.
But What Is Today’s Main Management Theory?
Since the 1990s, both the Lean and Agile management theories have made big strides. Many organizations are realizing the limits of McGregor’s ‘Theory Y’ and some of the more daring ones have moved towards the model of ‘Servant Leadership’. In this model, championed by many in the Agile movement, the main role of managers is to help their subordinates do their work, not to boss them around. To a certain extent, this has been the defacto role of managers in Lean Manufacturing in Japan since the 1960s, where workers define and improve their work and managers help them by providing the tools and support needed to get the work done.
However, at a structural level not much has changed. This is because traditional organizational structures and bureaucratic models are rigid and thus resistant to change. As a result, Lean hasn’t really adopted servant leadership properly, even the Japanese organizations that lead the way still have giant rigid bureaucratic structures with set roles and hierarchies.
In today’s fast and volatile corporate environments this won’t do. Everyday, the market demands quicker answers to its problems and needs. If the decision-making capability remains centralized and specialized, organizations will quickly lose momentum. In traditional organizations, decision processes, most of the time, are too slow because of the centralized and specialized intelligence of decision is which creates a series of bottlenecks in the process of making decisions.
Today the main theory of management and leadership supposes that a leader’s effectiveness is contingent on whether or not their leadership style suits a particular situation. According to this theory, an individual can be an effective leader in one circumstance but an ineffective leader in another one. To maximize the likelihood of being a productive leader, this theory posits that managers should be able to examine each situation and decide if their leadership style is going to be effective or not. In most cases, this requires managers to be self-aware, objective and adaptable.
This theory of Management builds on previous ones by decentralizing the intelligence of decision or viewing management as a group responsibility. This doesn’t mean that anyone can just do whatever they want, it means allowing the right people to make the right decisions at the right time, so they will produce results in the fastest possible manner. As long as the right constraints are in place and managers manage the system not the people, decentralized control will create maximum value for any organization. Not too bad, right? But, of course… this is easier said than done.
The first step in adapting to this mindset is to make sure everybody is aware of your effort, be open and transparent about it. Basically everybody today has grown up in a world based on hierarchical structures and so most employees don’t realize that they are also responsible for management stuff, that management is joint performance.
However, it is important to stress that no one is aiming to get rid of management, nor is it a remodelled form of communism. Rather, management today is more like a commonsensical way to transform the role of the manager into an enabler for the collective intelligence of decision. The manager should foster an environment set up to help individuals and teams make informed decisions.
Any manager can adopt the right mindset regardless of their organization’s structure. As long as a manager aims to manage the system, not the people, the people will take care of themselves and consequently, today’s management theory means better management with viewer managers.
One other caveat I’d like to make here is that this is not yet another framework. It’s not the next Scrum, Six Sigma, Holocracy or whatever. It is not a set of rules for you to follow. Instead it is more about attitude then structure. It is a set of practises to help employees help their managers manage an organization. The tools and practises of modern management will be easier to implement in more flexible and organically structured organizations, but it is possible to put the concepts into practice in even the most stiff hierarchical organizations.
[T]here you are.