Classical Theory

Classical School of Management OBJECTS OF STUDY 

To explicate facts as to theories of classical school of Management

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To elucidate observations as to their characteristics

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To figure out distinction from neo-classical & modern schools

AN INTRODUCTION 

Concept of Management - Management means organization and coordination of the activities of an enterprise in accordance with certain policies and in achievement of clearly defined objectives. 1

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Relevance of Discipline of Management - Management is often included as a factor of production along with machines, materials, and money. According to the management guru Peter Drucker (1909-2005), the basic task of a management is twofold: marketing and innovation. 2

Genesis of the Discipline of Management - Practice of modern management owes its

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origin to the 16th century enquiry into low-efficiency and failures of certain enterprises, conducted by the English statesman Sir Thomas More (1478-1535).3 

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Table 1 Five Major Schools of Management Thought

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MANAGEMENT SCHOOLS

Beginning Dates

Managing workers and organizations more efficiently.

CLASSICAL SCHOOL Scientific Management Administrative Management Bureaucratic Management BEHAVIORAL SCHOOL Human Relations Behavioral Science QUANTITATIVE SCHOOL Management Science Operations Management Management Information Systems SYSTEMS SCHOOL

1880s

CONTINGENCY SCHOOL

1960s

Meaning

Emphasis

1940s 1920s Understanding human behavior in the organization. 1930s 1950s

1940s

Increasing quality of managerial decision-making through the application of mathematical and statistical methods.

1940s 1950s— 1970s 1950s

Understanding the organization as a system that transforms inputs into outputs while in constant interaction with its' environment. Applying management principles and processes as dictated by the unique characteristics of each situation.

of Schools of Management - The schools of management thought

are theoretical frameworks for the study of management. Each of the schools of management thought are based on somewhat different assumptions about human beings and the organizations for which they work.

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Emergence of Schools of Management - Since the formal study of management

began late in the 19th century, the study of management has progressed through several stages as scholars and practitioners working in different eras focused on what they believed to be important aspects of good management practice. Over time, management thinkers have sought 2

ways to organize and classify the voluminous information about management that has been collected and disseminated. These attempts at classification have resulted in the identification of management schools.

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Varied Schools of Management - Disagreement exists as to the exact number of management schools. Different writers have identified as few as three and as many as

twelve schools. Majorly discussed schools are

- The classical school - The behavioral school - The quantitative or management science school - The systems school & - The contingency school.4

Each of the schools of management thought is based on somewhat different assumptions about human beings and the organizations for which they work.

EARLY MANAGEMENT THEORIES

Early Theories of Organizations emerged mainly for military and Catholic Church. The metaphor of the machine was dominant, where organizations are viewed as machines. Therefore, the organizational application was, since workers behave predictably (as machines do rarely deviate from the norm), management knows what to expect, and workers operating outside expectations are replaced. 4

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CLASSICAL MANAGEMENT THEORIES 

Definition - Classical School of Management professes body of management thought based on the belief that employees have only economical and physical needs, and that social needs and need for job-satisfaction either don't exist or are unimportant. Accordingly, it advocates high specialization of labor, centralized decision making, and profit maximization. 5 The classical school looks for universal principles of operation in the striving for economic efficiency. The organization works within itself and only within itself. It emphasizes management separated from labor, and labor specialized down to the smallest specialized tasks to which the most suitable (in each case) personnel are trained. They need to be trained to nothing else.6

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Major Contributors - this school of management derives from the sociology of Weber, the scientific management findings of Taylor, Gantt and Gilbreth, and the administration perspective findings of Fayol, Urwick and Brech.

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Ambit - This school of thought is made up of two branches: classical scientific and classical administrative and there are three well-established theories of classical management:

1. Taylor's Theory of Scientific Management, 2. Fayol's Administrative Theory, 3. Weber's Theory of Bureaucracy

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Theory of Classical Scientific Management Meaning - In its simplest form the theory is the belief that there is “one best way” to do a job and scientific methods can be used to determine that “one best way”. Distinctive nature - scientific management focused on the productivity of individuals & the emphasis is on the development work methods. Origin of Scientific Management Theory - Developed in the United States, mainly since about 1905 the theory of scientific management is the “brainchild” of Frederick Winslow Taylor.

[Frederick Taylor (1856-1915): U.S.A. - "The Father of Scientific Management"]

Major Contributors of Classical scientific school - The classical scientific school owes its roots to several major contributors, including Frederick Taylor, Henry Gantt, and Frank and Lillian Gilbretth.

1. Frederick Taylor is often called the “father of scientific management.”

Taylor believed that organizations should study tasks and develop precise procedures. As an example, in 1898, Taylor calculated how much iron from rail cars Bethlehem Steel plant workers could be unloading if they were using the correct movements, tools, and steps. The result was an amazing 47.5 tons per day instead of the mere 12.5 tons each worker had been averaging. In addition, by redesigning the shovels the workers used, Taylor was able to increase the length of work time and therefore decrease the number of people shoveling from 500 to 140. Lastly, he developed an incentive system that paid 5

workers more money for meeting the new standard. Productivity at Bethlehem Steel shot up overnight. As a result, many theorists followed Taylor's philosophy when developing their own principles of management.

2. Henry Gantt, an associate of Taylor's, developed the Gantt chart, a bar graph

that measures planned and completed work along each stage of production. Based on time instead of quantity, volume, or weight, this visual display chart has been a widely used planning and control tool since its development in 1910.

3. Frank and Lillian Gilbreth, a husband-and-wife team, studied job motions.

In Frank's early career as an apprentice bricklayer, he was interested in standardization and method study. He watched bricklayers and saw that some workers were slow and inefficient, while others were very productive. He discovered that each bricklayer used a different set of motions to lay bricks. From his observations, Frank isolated the basic movements necessary to do the job and eliminated unnecessary motions. Workers using these movements raised their output from 1,000 to 2,700 bricks per day. This was the first motion study designed to isolate the best possible method of performing a given job. Later, Frank and his wife Lillian studied job motions using a motion-picture camera and a split-second clock. When her husband died at the age of 56, Lillian continued their work.

Need of Scientific Management Theory - The classical scientific branch arose from the need to increase productivity and efficiency in the U.S.A. especially, where skilled labor was in short supply at the beginning of the twentieth century and the only way to expand productivity was to raise the efficiency of workers. The emphasis was on trying to find the best way to get the most work done by examining how the work process was actually accomplished and by scrutinizing the skills of the workforce. Taylor developed his theory through 6

observations and experience as a mechanical engineer. As a mechanical engineer Taylor noticed that the environment lacked work standards, bred inefficient workers and jobs were allocated to people without matching the job to the worker’s skill and ability. In addition to this the relationship of the workers with the managers included many confrontations.

Principal premise - The theory underlying Scientific Management is briefly that “there is one best way of doing every act that has to be performed in a workshop, and that it is the duty of the management to discover that one best way ” and to make such arrangements as will ensure that it is always carried out. Extent of Acceptance & Applicability - Though applicable to most of the problems of industrial administration, they have in fact been worked out mainly in connection with the control of workshop processes. Taylor's system was widely adopted in the United States and the world. Although the Taylor system originated in the factory production departments, the concept of separating planning from execution was universal in nature and, hence, had potential application to other areas: production support services offices operations service industries. Major questions The method of procedure may be indicated by propounding the following three questions: I. What are the factors which limit the speed of a particular workshop process or machine? II. Why is it that the volume of output from a particular process is always less at the end of the week than the product of the speed of the process or of the machine, multiplied by the working hours in the week, would lead one to expect? III. Why do some workers produce so much more than others working under the same conditions?

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Principles of Scientific Management Theory - Taylor devised four principles for scientific management theory, which were: 1.

The development of a true science of management,

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The scientific selection and training of workers,

3.

Proper remuneration for fast and high-quality work,

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Equal division of work and responsibility between worker and manager

Merits - Frederick Winslow Taylor’s innovations in industrial engineering, particularly in time and motion studies, paid off in dramatic improvements in productivity. Moreover, Taylor's ideas on management and workers speak of justice for both parties. He propounded that "It (the public) will no longer tolerate the type of employer who has his eyes only on dividends alone, who refuses to do his share of the work and who merely cracks the whip over the heads of his workmen and attempts to drive them harder work for low pay. No more will it tolerate tyranny on the part of labour which demands one increase after another in pay and shorter hours while at the same time it becomes less instead of more efficient."7 Limitations of Scientific Management Theory - Although Scientific Management Theory maximized efficiency and productivity but its main limitation was ignoring human aspects of employment. This is manifested in the following: “Some workers and unions opposed this theory because they feared that working harder or faster would exhaust...” Thus Frederick Winslow Taylor is a controversial figure in management history and he has been credited with destroying the soul of work, of dehumanizing factories & making men into automatons.

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Scientific Management, pg 139

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Theory of Classical Administrative Management or Functional Management Theory and Classical organization theory Distinctive nature - the classical administrative approach concentrates on the total organization. The emphasis is on the development of managerial principles . Major Contributors of Classical Administrative school - The leading proponents of classical organization theory were 1. Max Weber, (a German sociologist). 2. Henri Fayol, (a French engineer),

3. Mary Parker Follett, and 4. Chester I. Barnard. Lyndall Urwick (a British company manager) was also among contributors to this school of thought. These theorists studied the flow of information within an organization and emphasized the importance of understanding how an organization operated.

1. In the late 1800s, Max Weber disliked that many European organizations were

managed on a “personal” family-like basis and that employees were loyal to individual supervisors rather than to the organization. He believed that organizations should be managed impersonally and that a formal organizational structure, where specific rules were followed, was important. In other words, he didn't think that authority should be based on a person's personality. He thought authority should be something that was part of a person's job and passed from individual to individual as one person left and another took over. This nonpersonal, objective form of organization was called a bureaucracy.

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Weber believed that all bureaucracies have the following characteristics: •A

well-defined hierarchy. All positions within a bureaucracy are structured in a way

that permits the higher positions to supervise and control the lower positions. This clear chain of command facilitates control and order throughout the organization. • Division

of labor and specialization. All responsibilities in an organization are

specialized so that each employee has the necessary expertise to do a particular task. • Rules

and regulations. Standard operating procedures govern all organizational

activities to provide certainty and facilitate coordination. • Impersonal

relationships between managers and employees. Managers should

maintain an impersonal relationship with employees so that favoritism and personal prejudice do not influence decisions. • Competence.

Competence, not “who you know,” should be the basis for all

decisions made in hiring, job assignments, and promotions in order to foster ability and merit as the primary characteristics of a bureaucratic organization. • Records.

A bureaucracy needs to maintain complete files regarding all its activities.

Classical organization theory is the “B” in bureaucracy. Weber defined the organization elements which comprised the “ideal bureaucracy.” These included: •

A clearly defined (and documented) set of rules and procedures. This is

the company handbook, and other written instruments of company policy •

Division of labor according to functional expertise. This is the notion of

individual departments (sales, purchasing, accounting, etc.) •

A clear chain of command. There is a hierarchy based on management

rank. Weber also stipulated that authority in an organizational setting should be based on the office itself—not on the individual. (Consider a political analogy: Neither Gerald Ford nor Jimmy Carter would be empowered to declare war or veto a bill today. Their past executive powers were based on the office they held —not on their individual persons.) 10

Individual advancement based on merit. Promotions should go to those

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who deserve who perform well on the job. Professional managers. The person (or other entity) who owns the

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company doesn’t necessarily possess the expertise needed to keep it running smoothly on a day-to-day basis. As you can see, many aspects of Weber’s “ideal bureaucracy” are simply measures that ensure fairness and objectivity. But critics of classical organization theory charged that it placed too much faith in the infallibility of rules and procedures, while ignoring important aspects of individual motivation.

2. Henri Fayol, a French mining engineer, developed 14 principles of management

based on his management experiences. These principles provide modern-day managers with general guidelines on how a supervisor should organize his department and manage his staff. Although later research has created controversy over many of the following principles, they are still widely used in management theories.

This developed from the work of Henri Fayol (1841 - 1925) and his book Administration Industrielle et Genrale. He advocates the following principles of business organization: (1) Division of work, (2) Clear allocation of authority, (3) Discipline stemming from close supervision of work, (4) Unity of command - that is, everyone should know who his supervisor is. Other principles are introduced to develop in detail these ideas, which in essence compare business organization to a military organization.8 • Division

of work: Division of work and specialization produces more and better

work with the same effort. • Authority

and responsibility: Authority is the right to give orders and the power to

exact obedience. A manager has official authority because of her position, as well as 8

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personal authority based on individual personality, intelligence, and experience. Authority creates responsibility. • Discipline:

Obedience and respect within an organization are absolutely essential.

Good discipline requires managers to apply sanctions whenever violations become apparent. • Unity

of command: An employee should receive orders from only one superior.

• Unity

of direction: Organizational activities must have one central authority and one

plan of action. • Subordination

of individual interest to general interest: The interests of one

employee or group of employees are subordinate to the interests and goals of the organization. • Remuneration

of personnel: Salaries — the price of services rendered by

employees — should be fair and provide satisfaction both to the employee and employer. • Centralization:

The objective of centralization is the best utilization of personnel.

The degree of centralization varies according to the dynamics of each organization. • Scalar

chain: A chain of authority exists from the highest organizational authority to

the lowest ranks. • Order:

Organizational order for materials and personnel is essential. The right

materials and the right employees are necessary for each organizational function and activity. • Equity:

In organizations, equity is a combination of kindliness and justice. Both

equity and equality of treatment should be considered when dealing with employees. • Stability

of tenure of personnel: To attain the maximum productivity of personnel,

a stable work force is needed. • Initiative:

Thinking out a plan and ensuring its success is an extremely strong

motivator. Zeal, energy, and initiative are desired at all levels of the organizational ladder.

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• Esprit

de corps: Teamwork is fundamentally important to an organization. Work

teams and extensive face-to-face verbal communication encourages teamwork.

3. Mary Parker Follett stressed the importance of an organization establishing

common goals for its employees. However, she also began to think somewhat differently than the other theorists of her day, discarding command-style hierarchical organizations where employees were treated like robots. She began to talk about such things as ethics, power, and leadership. She encouraged managers to allow employees to participate in decision making. She stressed the importance of people rather than techniques — a concept very much before her time. As a result, she was a pioneer and often not taken seriously by management scholars of her time. But times change, and innovative ideas from the past suddenly take on new meanings. Much of what managers do today is based on the fundamentals that Follett established more than 80 years ago.

4. Chester Barnard, who was president of New Jersey Bell Telephone Company,

introduced the idea of the informal organization — cliques (exclusive groups of people) that naturally form within a company. He felt that these informal organizations provided necessary and vital communication functions for the overall organization and that they could help the organization accomplish its goals.

Barnard felt that it was particularly important for managers to develop a sense of common purpose where a willingness to cooperate is strongly encouraged. He is credited with developing the acceptance theory of management, which emphasizes the willingness of employees to accept that managers have legitimate authority to act. Barnard felt that four factors affected the willingness of employees to accept authority: • The

employees must understand the communication.

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• The

employees accept the communication as being consistent with the organization's

purposes. • The

employees feel that their actions will be consistent with the needs and desires of

the other employees. • The

employees feel that they are mentally and physically able to carry out the order.

Barnard's sympathy for and understanding of employee needs positioned him as a bridge to the behavioral school of management, the next school of thought to emerge.

VARIED SCHOOLS OF MANAGEMENT THAT DIFFER •

Behavioral school of management - Body of management thought based on the belief that use of psychological techniques in motivating employees works better than rules and regulations proposed by classical school of management. 9

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Contingency school of management - Body of management thought, based on the premises that there is no single best way to manage because every situation and every manager is different. Therefore, there are only a few universal management principles, and an appropriate management style depends on the demands of a particular situation.10

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Quantitative school of management - Body of management thought that seeks to combine classical management theories and behavioral science through the use of elaborate mathematical models. 11

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