Classical Management Theory

Management Theory
Pfeiffer University
8 pag.

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The Classical Management Theory is thought to have originated around the year 1900 and
dominated management thinking into the 1920s, focusing on the efficiency of the work process. It
has three schools of thinking: Scientific management, which looks at ‘the best way’ to do a job;
Bureaucratic management, which focuses on rules and procedures, hierarchy and clear division of
labour; and Administrative management, which emphasises the flow of information within the
organisation.

Scientific Management

Frederick Winslow Taylor (1856-1915) is known as the father of scientific management. His
approach emphasised empirical research to increase organisational productivity by increasing the
efficiency of the production process. In the United States especially, skilled labour was in short
supply at the beginning of the twentieth century. The only way to expand productivity was to
raise the efficiency of workers. Scientific management theory states that jobs should be designed
so that each worker has a well-specified, well-controlled task and specific procedures and
methods for each job must be strictly followed.

Taylor's management theory rests on a fundamental belief that managers are not only superior
intellectually to the average employee, but that they have a positive duty to supervise staff and
organise their work activities. Thus, it was only applied to low-level routine and repetitive tasks
that could be managed at supervisory level.

Taylor developed four principles of scientific management:

1. A ‘best’ methodology should be developed scientifically for each task.

2. Managers should select the best person to perform the task and ensure that the best training
is given.
3. Managers are responsible for ensuring that the best person for the job does the job using the
best methodology.
4. Remove all responsibility for the work method from the worker and give it to management.
The worker is responsible only for the actual job performance.

Taylor based his management system on production-line time studies. Using time study as his
base, he broke down each job into its components and designed the quickest and best methods
of performing each component. He also encouraged employers to pay more productive workers at
a higher rate. Scientific management became very popular in the early part of this century as its
application was shown to lead to improvements in efficiency and productivity.

Advantages of Scientific Management

❖ Introduced a scientific approach to management.

❖ Improved factory efficiency and productivity.

❖ Used as a model upon which the creation of modern assembly lines was based on.

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❖ Allowed managers to reward workers for higher performance and productivity through the
differential rate system.

❖ Built a sense of co-operation between management and workers.

Disadvantages of Scientific Management

➢ Limited by its underlying assumption that workers were primarily motivated by economic and
physical needs. It therefore overlooked the desire of workers for job satisfaction.

➢ Led, in some cases, to the exploitation of workers and it has been often suggested that
scientific management was at the centre of many strikes prevalent in those days.

➢ Excluded the tasks of management in its application.

➢ Instilled an authoritarian leadership approach.

➢ Focused only on the internal operations of the organisation.

Bureaucratic management

Max Weber (1864-1920), known as the father of Modern Sociology, was the first person to use
the term ‘bureaucracy’ to describe a particular, and in his view superior, organisational form.
He considered the ideal organisation to be a bureaucracy whose activities and objectives were
rationally thought, whose divisions of labour were explicitly spelled out. He believed that
technical competence should be emphasized and that performance evaluations should be made
entirely on the basis of merit. Weber defined the key elements of a bureaucracy as:

I. 1. A well defined hierarchy with a clear chain of command where higher positions have the
authority to control the lower positions.
II. 2. Division of labour and specialisation of skills, where each employee will have the necessary
expertise and authority to complete a particular task.
III. 3. Complete and accurate rules and regulations, in writing, to govern all activities, decisions
and situations.
IV. 4. Impersonal relationships between managers and employees, with clear statements of the
rights and duties of personnel.
V. 5. Technical competence is the basis for all decisions regarding recruitment, selection and
promotion.

Weber’s model of bureaucratic management advanced the formation of huge corporations such
as ford.

Bureaucratic Management – Contributions

• Ensured that the organisation would be operated and managed by qualified/high calibre
personnel only.
• Allowed many organisations to efficiently perform routine organisational tasks through job

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specialisation.
• Allowed management and employees to be more objective in their judgement and approach due
to rules and procedures for doing specific tasks being clearly set.
• Placed emphasis on job position, specialised employees and job continuity thus providing the
organisation with long-term perspectives and quality employees.
• Surpassed the loss of any employee or even of any manager due to the nature of job
specialisation. Hence in such a bureaucracy, anyone can be replaced.

Bureaucratic Management - Limitations

o Overwhelming concentration on authority discourages innovation and creativity;

o Imposed a formal and structured chain of command which is not compatible with organisations
that require flexibility and rapid decision-making. This is truer today where organisations are
constantly faced with a turbulent external environment of increased competition.
o the emphasis on impersonality and division of labour leads to boredom, dissatisfaction and
discontent within the workforce
o rules and procedures may become so important in their own right that there is a tendency to
forget the underlying processes that they are meant to make more efficient.

Administrative Management

Henri Fayol (1841-1925) was a French industrialist and one of the most influential early
management thinkers. Scientific Management was concerned with increasing the productivity of
the shop floor. Classical Organisation Theory grew out of the need to find guidelines for
managing such complex organisations as factories. An early attempt was pioneered by Fayol to
identify the principles and skills that underlie effective management. He believed that sound
management practice falls into certain patterns that can be identified and analysed. He focused
on management, which he felt had been the most neglected of business operations. Based on his
experience in management, he developed fourteen general principles of management:

1. Division of Work and specialisation to produce more work for less effort.
2. Authority to give orders and the power to exact obedience.
3. Discipline and respect between a firm and its employees.
4. Unity of command where an employee receives orders from only one superior.
5. Unity of direction where there is only one central authority and one plan of action.
6. The general interest is superior to individual interests.
7. Remuneration is fair and provides satisfaction both to the employee and employer.
8. There is centralisation, where there is always one central authority.
9. There is a scalar chain, where a chain of authority exists from the highest level to the lowest
ranks.
10. Order, where the right materials and people are in the right place for each activity.
11. Equity, kindliness and justice are seen throughout the organisation.
12. Stability and tenure of personnel to maintain a stable work force.
13. Initiative is encouraged to motivate employees.
14. Esprit de Corps is recognised as important, and teamwork is encouraged.

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Before Fayol, it was generally believed that “managers are born, not made”. Fayol insisted,
however, that management was a skill like any other – one that could be taught once its
underlying principles were understood.

Chester Barnard (1886-1961) developed the concepts of strategic planning and the Acceptance
theory of Authority, which states that managers only have as much authority as their employees
allow them to have. It suggests that authority flows downward, but depends upon acceptance by
the subordinate. Barnard considered that the acceptance of authority depends on four
conditions:

1) That the employee understands what the manager wants them to do.
2) That the employee is able to comply with the directive.
3) That the employee thinks that the directive is in line with organisational objectives.
4) That the employee does not think that the directive is contrary to their personal goals.

Barnard believed that each person has a zone of indifference within which the individual will
willingly accept orders without consciously questioning authority and that it is up to the
organisation to broaden each employee’s zone of indifference.

Advantages of Administrative Management

o Viewed management as a profession which can be trained and developed.

o Offered universal managerial guidelines.

o Promoted communication between managers and employees.

o Highlighted the needs of employees through the unity of command, unity of direction, equity,
etc.

o Encouraged employees to act on their own initiatives.

Disadvantages of Administrative Management

▪ Lacked consideration for organisation’s environmental, technological and personnel factors,

due to the blind application of Fayol’s concepts.

▪ Fayol’s recommendations are too experience-based and therefore not driven by formal
research. Hence its concepts have not been tested.

Although these schools, or theories, developed historical sequence, later ideas have not replaced
earlier ones. Instead, each new school has tended to complement or coexist with previous ones.
The ideas of classical theorists have many applications in the management of today’s
organizations although with some modifications. Many of the internal challenges faced by
managers during earlier periods were similar to those faced by managers today. For example,
Taylor’s concern for the productivity of employees is still shared by managers. Even today, the

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Scientific Management Theory is still relevant. While not as popular as in the past, this method
of job design is still used. This sort of task-oriented optimization of work tasks is nearly
ubiquitous today in industry, and has made most industrial work menial, repetitive, tedious and
depressing; this can be noted, for instance, in assembly lines of car manufacturers and fast-food
restaurants like McDonald’s and KFC. McDonald’s divides its complete operation into a number
of tasks such as supervising, cooking operations or operating a deep fryer and assigns people to
carry out these tasks. The modern mass car assembly lines pour out finished products faster that
Taylor could have ever imagined. In addition, its efficiency techniques have also been applied in
the training of surgeons.
Today's armies employ Scientific Management. Of the key points listed - a standard method for
performing each job, select workers with appropriate abilities for each job, training for standard
task, planning work and eliminating interruptions and wage incentive for increase output - all but
wage incentives for increased output are used by modern military organizations. Wage incentives
rather appear in the form of skill bonuses for enlistments. Furthermore, industrial engineers
today are still taught the methods of Scientific Management including time and motion studies,
job-tasks analysis, wage-incentive determination and detailed production planning with respect
to the field of operation research and management.

The Bureaucratic Management is still used in the USA by service-based organizations such as
libraries. One concrete example where Fayol’s Bureaucratic Management ideas are still in use is
at the Wichita State University Libraries. Bureaucracy is also still being used in the US Postal
Service.

In Mauritius, mass production lines and piece rate systems are used in the garment and
manufacturing industries. Another industry where the Classical Management Theories are still in
use is in the sea-food hub, more specifically at the Mauritius Tuna Processing Plant.

Mauritius and its economy are at a pivotal point. The pace of change is exhilarating. That is why
in his budget speech 2008-2009, Hon. Rama Sithanen, Minister of Finance pointed out the
urgency for our economy to shift from the traditional pillars to a service-oriented economy and
to a knowledge-based society. For instance, he advocated that the ICT sector must add to the
pillars of the Mauritian economy. Business leaders expect ICT to have a greater impact on their
business. The industries experiencing the greatest change are the technology,
telecommunications and financial services. The Minister also stressed on the development of the
SMEs as he formulated that in terms of job creation, new jobs will come mostly from small
businesses and medium-sized companies.

But since the formulation of the Classical Management Theories in the 18th century, the
economic landscape has changed. Businesses do not exist in a vacuum. They are in fact open
systems with constant and dynamic interaction with the environment. Today’s business
environment is global and highly competitive. Managers are becoming increasingly aware of the
effects of the business environment

There are two aspects of the business environment, namely the internal and the external
environment. The internal environment relates to those factors that the organisation can
relatively control. These are the owners, employees, customers, suppliers, authorities and

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pressure groups. But the external environment that constitutes the PEST (Political, Economical,
Social and Technological) factors is relatively remote from what the organisation can control.
Without the ability to analyse the strength and weaknesses of the internal and the opportunities
and threats of the external environments, managers risk making decisions that are not in the
best interest of the organisation. At the same time, worldwide concern about the natural
environment has emerged. Current natural environmental concerns are pollution, climate
changes, ozone depletion and other global issues like biodiversity, adequate water supplies,
population and food security. As McDonald’s concluded, today’s managers have to be
concerned not only with the scientific facts but with public perception.

Today’s business environment is characterized with changes, innovations and uncertainty. It is

becoming more challenging amid global economic slowdown and turmoil in the financial sector.
Businesses must at all cost adapt or die. Out of five businesses experiencing a disaster or
extended outage,

a) Two never re-open their doors.

b) One of the remaining three will close within two years.

The business environment is exceedingly tough and competitive. Competition is intensifying in

many sectors. Technology is constantly creating new opportunities and threats. There are
changes to the regulatory environment: the advent of the Equal Opportunities Act being a clear
example. Customer tastes are also changing – providing a moving target. Smart companies
operating in highly competitive business environments are working very hard to improve
efficiency and productivity, test high-yielding new initiatives, and differentiate themselves from
competitors.

Command and Control Management style (as stated in the Classical Management Theories) is
effective in an environment where both change and competition are limited and there is plenty
room for error (high profit margins). Such is not the case in the age of computing and
communications. In today’s business environment, things change very quickly and profit margins
are reducing. In addition, more things are happening on a continuing basis. Because of the speed
at which things are changing, it is important to push decision-making down in the organization to
the level that has all of the information at the time when a decision must be made. This calls for
very different management attitudes, it demands a democratic and flexible point of view and of
course accountability must be delegated. All these are not present in the Classical Management
Theories.

Rapid change that is sweeping through every aspect of the business environment today prompts
managers to rethink the ways they do things. Although the Classical Management model has
evolved quite a bit, it is still geared to a rigid structure and command-and-control mentality.
This model was well tailored to an environment where change was slow and evolutionary rather
than rapid and revolutionary. It helped organise processes and foster a sense of accountability,
order and discipline. What it lacks is flexibility, making the organisation irresponsive to
continuous internal and external environment changes. We have reached a limit to what can be
accomplished using the Classical Management approaches. But by changing the way managers do

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things, that constraint can be removed. This is not to say that the basics of Classical
Management should be ignored, but they are just not enough to get the job done in today’s
business environment.

Although Classical Management Theories are quite useful in the early stages of economic
development, they are not an adequate explanation of how to administer organisations in a
complex, developed society. When it comes to seeking cost, efficiency, productivity and
profitability improvements, the Classical Management Theories have a limited field of action.
Managers need to get used to the idea that what worked yesterday won’t tomorrow. They need
to work on tomorrow today. When the business environment becomes more challenging, it is
actually an opportune time for managers to think about ways to reinvent their business. We find
that new managers are willing to investigate innovative solutions to business problems because
they are unhampered by the limitations of tools and methods of the past. It is not so much that
established managers are not willing to change; it has more to do with that fact that they are
using methods that were designed for different circumstances. And they worked. So, established
managers have to be prepared to discard something that has been effective for them. Managers
need to use today’s tools to solve today’s problems. They must be willing to learn about new
ways of doing things.

To compete successfully in the global arena, managers must now act as entrepreneurs and create
new business models – rethink, re-plan, strategize, innovate and learn continuously. Innovation
is the most important source for organisations to gain competitive advantage, and advanced
innovation management is critical to a business’s sustainable development. Classical
Management theories can’t catch up with the dramatic changes of the business environment.
Once-reliable guides for managerial actions no longer exist. In an environment virtually bereft of
the old rules of conducting business, there is no safety net. Every process, procedure, rule of
thumb and standard ratio is being challenged, re-engineered and morphed into a new form. This
fundamental change has brought a daunting new reality to the challenge of growing and managing
business.

Conclusion

Today, organizations are mostly influenced by the external environment (fierce market share
competition, continuous technology change, globalisation, hiring and retaining qualified
executives and front line workers) that often fluctuate over time. Yet Classical Management
Theories present an image of an organisation that is not shaped by external influences. Classical
Management Theories are now gradually fading for the principal reason that people and their
needs are considered by Classical theorists as secondary to the needs of the organisation.
Nowadays, The Scientific approach is very seriously challenged by Human Resource
Management. Furthermore, The Bureaucratic Management is fast giving way to the Matrix
Structure in organisations. However, Classical Management theories are important because they
introduced the concept of management as a subject for intellectual analysis and provided a basis
of ideas that have been developed by subsequent schools of management thought.

Bibliography

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