Principles and Practices of Management I: The Development of Management Thought and the Contributions of Taylor, Fayol, Mayo, Mary Parker Follett and C. I. Barnard

Management as practice is as old as organised work, but management as a body of thought is a product of the factory. The Industrial Revolution gathered hundreds of workers under one roof and one owner, and the early writers were engineers and owners who faced the problems that brought: Robert Owen (1771–1858) at New Lanark improved housing, schooling and hours and argued that care of the "vital machines" paid as well as care of the inanimate ones; Charles Babbage (On the Economy of Machinery and Manufactures, 1832) analysed the division of labour and the cost of each operation. The discipline is usually divided into schools. The classical school (roughly 1880–1930) sought one best way of working and one set of principles for organising: scientific management (Taylor, the Gilbreths, Gantt), administrative or process management (Fayol, and later Gulick and Urwick) and bureaucracy (Max Weber). The neoclassical or human-relations school (from the Hawthorne studies of 1924–1932) discovered the social worker. The behavioural, systems, quantitative and contingency approaches followed from the 1940s.

Frederick Winslow Taylor (1856–1915), an engineer at the Midvale and Bethlehem steel works in the United States, is called the father of scientific management. His books Shop Management (1903) and The Principles of Scientific Management (1911) attacked "soldiering", the deliberate restriction of output by workers, which he blamed on rule-of-thumb methods and on piece rates that employers cut whenever earnings rose. His answer was to replace rule of thumb with science. Each job was broken into elements and timed (time study) to set a fair day's task; the best sequence of movements was found (motion study, carried furthest by Frank and Lillian Gilbreth with their "therbligs", the elementary hand motions); tools and conditions were standardised; workers were scientifically selected and trained; and pay was tied to output through the differential piece-rate system, under which a worker who reached the standard was paid a higher rate on every piece and one who fell short a lower rate. In the workshop he replaced the single foreman with functional foremanship: eight specialist bosses, four in the planning department (route clerk, instruction card clerk, time and cost clerk, shop disciplinarian) and four on the shop floor (gang boss, speed boss, repair boss, inspector).

Taylor insisted that scientific management was not a set of techniques but a "complete mental revolution" on both sides: management and workers were to stop quarrelling over the division of the surplus and cooperate to enlarge it. His principles are usually stated as science, not rule of thumb; harmony, not discord; cooperation, not individualism; maximum output in place of restricted output; and the development of each worker to his greatest efficiency and prosperity. The labour movement saw it differently. American unions opposed the stop-watch and the speed-up, a strike at the Watertown arsenal in 1911 led to a congressional inquiry, and critics from Robert Hoxie to Harry Braverman (Labor and Monopoly Capital, 1974) argued that it separated the planning of work from its doing and so de-skilled the worker. Both readings are examined: the method (time study, standardisation, incentive pay) and the objection (de-skilling, intensification, the neglect of the social side of work).

Henri Fayol (1841–1925), a French mining engineer who ran the Commentry-Fourchambault-Decazeville combine for three decades, looked at the organisation from the top rather than from the shop floor. His Administration Industrielle et Générale (1916; translated into English as General and Industrial Management, 1949) divided the activities of any undertaking into six groups: technical, commercial, financial, security, accounting and managerial. He defined management by five elements: to forecast and plan (prévoir), to organise, to command, to coordinate and to control. He held that management could and should be taught, and he set out fourteen principles, flexible rather than absolute, which are the most examined list in this unit.

The human-relations school grew out of a series of experiments at the Hawthorne Works of the Western Electric Company near Chicago between 1924 and 1932. The illumination experiments (1924–1927) found that output rose in both the test group and the control group whatever was done to the lighting, until the light was almost too dim to see: something other than physical conditions was at work. Elton Mayo (1880–1949), an Australian-born professor at Harvard, joined with Fritz Roethlisberger and others for the later phases: the relay assembly test room (from 1927), where six women's output rose over changes in rest pauses, hours and refreshments and stayed high when the changes were withdrawn; the mass interviewing programme (1928–1930) of over twenty thousand employees, which showed how much workers valued being listened to; and the bank wiring observation room (1931–1932), where fourteen men paid by a group incentive held output to an informal norm and disciplined "rate-busters" and "chiselers". Roethlisberger and William Dickson reported the studies in Management and the Worker (1939); Mayo drew the lessons in The Human Problems of an Industrial Civilization (1933) and The Social Problems of an Industrial Civilization (1945).

• The worker is a social being, and the work group, with its own informal organisation, norms and leaders, shapes output more than pay or lighting does.
• Attention, recognition and participation raise morale: the "Hawthorne effect" is the change in behaviour produced by being studied and noticed.
• Supervision that listens works better than supervision that commands; communication and counselling became personnel functions.
• Critics answered that the studies neglected unions and conflict of interest, treated workers' economic grievances as irrational sentiment, and rested on small groups and loose controls.

Mary Parker Follett (1868–1933), an American political scientist and social worker, wrote The New State (1918) and Creative Experience (1924), and her lectures to business audiences were collected after her death as Dynamic Administration (1941). She bridges the classical and human-relations schools, and for industrial relations she is the most useful of the five. Conflict, she argued, is not warfare but the appearance of difference, and it can be dealt with in three ways: domination (one side wins), compromise (each gives up something and neither is satisfied, so the conflict returns) and integration, in which a solution is found that meets the real interests of both, so that neither has to sacrifice anything. Her example was a library reading room: one reader wanted the window open, another shut, and they integrated by opening a window in the next room. She distinguished "power over" (coercive power) from "power with" (jointly developed, co-active power), and proposed the "law of the situation": orders should be depersonalised and derived from the facts of the situation, so that both parties take their orders from it rather than one from the other.

Follett also set out four principles of coordination: coordination by direct contact of the responsible people concerned; coordination in the early stages of policy-making, not after decisions are fixed; coordination as the reciprocal relating of all the factors in a situation; and coordination as a continuing process. Her ideas on integration anticipate what Walton and McKersie later called integrative bargaining, and her insistence that authority flows from function and knowledge rather than from position anticipates Barnard.

Chester Irving Barnard (1886–1961) was president of the New Jersey Bell Telephone Company, and his The Functions of the Executive (1938) is the book that turned organisation theory towards the systems and behavioural approaches. A formal organisation, he wrote, is "a system of consciously coordinated activities or forces of two or more persons", and it exists when there are three elements: willingness to serve (cooperate), a common purpose, and communication. It survives only if it is effective (it achieves its purpose) and efficient (it satisfies the motives of its members). Members stay as long as the inducements the organisation offers, material and non-material, are at least equal to the contributions it asks of them: the inducement–contribution balance, later developed by Herbert Simon and James March. Barnard also recognised that every formal organisation carries informal organisations within it, which ease communication and protect the individual's sense of integrity.

His acceptance theory of authority reversed the classical view. Authority does not flow down from the top; it lies in the acceptance of an order by the person who receives it. A person will accept a communication as authoritative only when four conditions hold at once: he understands it, he believes it consistent with the organisation's purpose, he believes it compatible with his personal interest as a whole, and he is mentally and physically able to comply. Orders that fall within each member's "zone of indifference" are accepted without question. The executive's functions, in Barnard's account, are three: to maintain organisational communication, to secure essential services from individuals, and to formulate and define purpose.