CLASSICAL MANAGEMENT THEORY

CLASSICAL MANAGEMENT THEORY

• This theory is made up of three different
approaches:
– Scientific Management Theory
– Administrative Management (Classical Organization)
Theory
– Bureaucratic Management
 Scientific Management Theory

• emphasizes on improving worker efficiency

through the scientific study of work
– How to increase productivity (output/input) by making
the work easier to perform and
– How to motivate workers to take advantage of new
methods and techniques
 Frederick W. Taylor (1856-1915), "The Father of
Scientific Management"
• He suggested the following major reasons for the
conflict and inefficiency observed.
– Soldering by employees
– Defective management system
– Lack of understanding about what constitutes a 'fair
day's work' and a 'fair day's pay' from both the
management and the works side
– Inefficient methods or work
– Lack of incentive (bonus) mechanisms
– Poor methods of selection and training of workers
 Cont’d
The studies he conducted:

1. Time and motion study: to standardize activities for

workers or determine a full-day’s work

2. Uniform method of routine tasks: to adjust worker with

work

3. Functional foremanship study - which man for which

work: to scientifically select the best worker for a given job

4. Individual Incentive: to determine the appropriate wage or

salary
 Cont’d
In his Principles of Scientific Management book:

1. Rules of Thumb should be substituted by scientific methods.

2. Specialization should be Practiced into managerial and non-

managerial categories
3. Proper selection and training should be done.

4. Harmony in group action

5. Wage incentive should be utilized.

6. man is mechanical and as a result motivated by economic

benefits.
Frank and Lillian Gilbreth ,The first dual career
couple, 1868-1924 and 1878-1972)
• Goal: the elimination of waste and the discovery of the ‘one best way’ of doing

work.

• Frank was determined to learn to lay bricks the ‘right’ way. In the end he

developed a method which cut the motions required to lay bricks.

• he identified 17 on-the-job motions and called them ‘THERBLIGS’.

• For his work, Frank was named as ‘The Father of Motion Study’

• Lillian pioneered the field of personnel administration: to help people reach

their maximum potential by developing their skills and abilities.

• For her contribution to the field of management, she was known as ‘The First

Lady of Management’.
 Henry Laurence Gantt (1861-1919)
• He worked with Taylor at the Midvale Steel Company

• Gantt made four main contributions:

1. He invented a chart for comparing actual with planned performance. The

device is now called Gantt chart.

2. He devised a task bonus plan for paying workers. His plan paid workers a
guaranteed day wage for output less than standard, a bonus for meeting
the standard, and an additional reward for output above the standard.

3. He advocated that management has a responsibility to train workers to

become more skilled, develop better work habits and perform reliably.

4. He advanced the idea that business should concentrate on providing

services, not on making profit.
 Contributions of Scientific Management
I. Finding out the one best way of doing a given
work through time, motion, and fatigue study.
II. Scientific selection and prospecting development
of the workforce.
III. The constant and intimate cooperation of
management and workers theory
IV. The separation of planning function from
executing function
V. Specialization of activities which in increases
productivity
 Limitations of Scientific Management

• Scientific Management, considers people (worker) as machine

• Taylor saw only money as a motivator and failed to recognize

the complex nature of human behavior.

• The human/social desire for job satisfaction was overlooked

• The application of scientific principles was not smooth.

• Too often, increase in productivity lead to lay-offs

• Taylor didn’t consider the organization as a whole but the

production or the technical level.
 Administrative Management Theory /Classical
Organization Theory
• focused on the management of the entire
organization unlike the scientific management
theory, which focused on production.
• two major purposes:
– Develop basic principles that could guide the design,
creation and maintenance of large corporations, and
– Identify the basic functions of managing organizations.
 Henri Fayol (1841-1925)
1. He identified the major types of activities involved
in an industry or a business as:
– Technical: producing and manning products
– Commercial: buying raw materials and selling products
– Security: protecting employees and property
– Financial: search for and optimum use of capital
– Accounting: recording and taking stock of costs, profits,
and liabilities, keeping balance sheets, profit and loss
statements
– Managerial: planning, organizing, commanding,
coordinating and controlling
2. Management as a separate field of study
3. General management principles
 Fayol 14 principles of Management
1. Division of labor or specialization
2. Authority and responsibility
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of individual interest to general interest or
common good
7. Centralization
8. Remuneration of personnel
9. Scalar Chain of Command
10. Order
11. Equity
12. Stability of tenure of personnel
13. Initiative
14. Esprit de corps
 Bureaucratic Theory
• The chief advocate was Max Weber
• a pure form of organization is characterized by rationality and
impersonality
Common Features of Bureaucracy
• Hierarchy of Authority Stable and clearly defined to give commands for
proper discharge of duties at various levels.
• Specialized division of labor- tasks are divided into very specialized jobs.
• Written rules of conduct-to insure predictability and eliminate
uncertainty in task performance.
• Impersonality: superiors take on impersonal attitude in dealing with
subordinates.
• Promotion based on achievement- employment and promotion based
on merit and technical competence.
• Record Keeping- every decision and action is taken only after writing in a
number of documents.
• Efficiency
 Advantages and Disadvantage of Bureaucracy

advantages
• precision, speed, un ambiguity, knowledge of the files, unity,
strict subordination, reduction of friction and of material and
personnel costs.

Some of the drawbacks

• Rigidity of rules, regulations and procedures;

• Failure of cooperation and coordination;

• Displacement of goals; and

• Red tape (excessive procedure).

 BEHAVIORAL MANAGEMENT THEORY
• It emerged because practicing managers found the classical
management approach didn't achieve complete production and
work place harmony
• It merged opposing the ideas of classical management theory,
and emphasized on human relations
• They focused on motivation, communication, work group
formation and leadership.
• Among writers Abraham Maslow, Douglas McGregor and Elton
Mayo were pioneer
• Of these Elton Mayo was the most prominent one
 The Hawthorne studies (1924-1932)
• The studies were conducted at the Hawthorne plant of Western
Electric Company in Illinois, USA.

• initial purpose of these experiments was to study the effect of

physical factors such as illumination, rest periods, length of
working days, and the payment schemes up on productivity

• The Hawthorne studies consist of four major experiments.

Phase one: Illumination Experiments- any correlation between

intensity of light and productivity

• The researchers concluded that illumination has little or no effect

 The Hawthorne Cont’d
• Phase two: Relay Assembly Test Room Experiment- two groups of
six women (experiment and control group)
• workers were told that the experiment was not designed to boost
production but merely to study various types of working conditions
• They were instructed to keep working at the regular pace.

• Researchers allowed the groups to choose their own rest periods

• output still remained high, indicating that the change in conditions

was not the only reason for the increase in output but the
improved outlook that the workers had toward their work.
 The Hawthorne Cont’d
• Phase three: The Massive Interviewing Program- After the first two phases,

the researchers concluded that their attempt to relate physical conditions of

the job to productivity did not produce any significant results.

• So they postulated that the human element in the work environment

apparently had a significantly greater impact on productivity than the technical

and physical aspects of the job.

• On the extensive interview program, the researchers proposed that the work

group as a whole determined the production output of individual group

members by enforcing an informal norm of what a fair day's work should be.

• The interviews begun by asking employees direct questions about supervision

and the work environment in general

 The Hawthorne Cont’d
• Although the interviews promised answers would be kept in
strict confidence, the responses were often guarded and
stereotyped. The approach was therefore changed from direct
to indirect questioning

• A wealth of information about employee attitudes resulted.

• The researchers realized that an individual's work performance,

position and status in the organization were determined not by
that person alone but also by the group members.

• Peers had an effect on individual performance.

 The Hawthorne Cont’d
• Phase four: The Bank Wiring Observation Room Study:

• The procedure in this part of the study was similar to that used in the relay assembly

test room, except that nine males who assembled terminal banks for telephone

exchanges were selected.

• This experiment focused on the effect of a group piecework incentive pay.

• The assumption was that the workers would seek their own economic interests by

maximizing their productivity and that faster workers would pressure the slower

ones to improve their efficiency.

• However, the researchers found that pressure was actually a form of social behavior.

• They concluded that the wage incentive plan was less important in determining an

individual worker's output than was group acceptance and security.

 Findings and Implications of Hawthorne Studies
1. Physical working conditions did not seem to explain the changes that were

related in productivity.

2. There are other factors other than physical factors and monetary incentives,

which affect productivity. Theses factors are social and psychological in nature.

• Social factor
– Ability to talk to each other

– The right to choose their rest periods.

– The right to leave the workstation without permission.

– The right to have a say in suggested changes.

• Psychological conditions
– Since they were selected as a member of the study group they felt social acceptance,

recognition, and social importance.

 Findings and Implications of Hawthorne Studies cont’d
3. Workers are not motivated by the bodily needs only but also by social and

psychological needs.

4. A kind of managerial leadership capable of understanding individual and

group behavior and that would serve them through such skills as

motivation and communication is necessary.

5. Hawthorne Effect: which is simply the observation that when people know

that they are being watched, they will act differently than when they are

not aware of being observed.

– It refers to the possibility that individuals singled out for a study may improve their

performance simply because of the added attention they receive from researchers,

rather than because of any specific factor being tested in the study.
 Contributions and Limitations of Behavioral Management Theory

Contributions

• It has changed managerial thinking- Managers are now more likely recognize

the importance of people and to view workers as valuable resources than mere

tools. Mayo had rediscovered Owen's century old dictum

• provided important insights into motivation, group dynamics and other

interpersonal processes in organizations.

Limitations

• The complexity of individual behavior makes prediction of that behavior

difficult

• Contemporary research findings by behavioral scientists are not often

communicated to practicing managers in an understandable form.

 MODERN APPROACHES TO MANAGEMENT

• Traditional organizational theories used a highly structured and closed

system approach.

• But modern theories have moved towards the open system approach.

• That is, the classical and neo classical approaches focused on the

internal management of the organization.

• They didn't take into consideration the effect of the external

environment on the organization and vice versa.

• The three of the most important contemporary viewpoints emerged

representing the recent major innovations in thinking about

management are the systems, contingency and Integrative theories.

 Systems Theory
• organizations can be visualized as a system- a set of interrelated parts that operate as a

whole in pursuit of common goals.

• This approach views organizations and the environment within which they operate as

sets of interrelated parts to be managed as a whole in order to achieve a common goal.

• an organizational system has four major components.

– Inputs: are human, financial, equipment and informational resources required to produce

goods and services.

– Transformation process: are the organization's managerial and technological abilities that are

applied to convert inputs in to outputs.

– Outputs: are the products, services and other outcomes produced by the organization.

– Feedback: is information about results and organizational status relative to the environment. It

is a key to system control.

•
 Open system
• Open System is one that continually interacts with its
environment- dynamic and adaptive with the change in the
environment.

• Open system organizations share these characteristics

– Entropy: the tendency of systems to decay over time-if they don't
interact with the environment. If a system does not bring in or receive

–
inputs and energy from its environment, it will eventually cease to exist.

– Negative Entropy is the ability of open systems to bring in new energy in

the form of inputs and feedback from the environment in order to delay

–
or arrest entropy, the decaying process.
 Open system cont’d
– Differentiation: is the tendency of open systems to become more
complex that stems from the addition of specialized units to handle
particularly troublesome or challenging parts of an environment.
– Synergy: "the whole is greater than the sum of its parts." It
emphasizes on the importance of working together in a cooperative
and coordinated fashion.
– Steady state: the balance to be maintained between inputs flowing
in from the external environment and the corresponding outputs
returning to it. Steady state is the tendency of maintaining
equilibrium condition by making constant and proportional
adjustment in response to changes in its environment.
 Closed system
• is a system that does little or no interaction with its environment nor
receives little feedback. It has rigid boundary. E.g. physical systems,
mechanical systems
•

• According to the systems viewpoint, managers are more successful if they

their units and organizations as open systems that are carefully attuned to
the factors in the environment that could significantly affect them.

• Subsystems: the parts that make up the whole of the system. Each system

may be a subsystem of a still larger whole until we reach the larger supra

system.
– Eg. Department, plant, industry, national economy, the world system sequential

relationship can show us the system-subsystem formation.

 Contingency theory
• The classical theorists like Taylor and Fayol, were attempting to identify “the one best

way" for managers to operate in a variety of situations.

• Unfortunately, things were not simple. Consequently, contingency theory began to

develop.

• Contingency theory is a viewpoint that argues that appropriate managerial action

depends on the particular parameters of the situation.

• Hence, rather than seeking universal principles that apply to every situation, contingency

theory attempts to identify contingency principles that prescribe actions to take

depending on the characteristics of the situation.

• Contingency theory suggests that appropriate managerial behavior and decision in a

given situation depends on a wide variety of elements.

• It states, "Nothing is best for all situations.“ This is because the world is too complex to
 Integrative approach
• The objective of the integrative approach is to have integration between
different management theories.

• It states that classical, behavioral and other schools of management are

supplementary and the systems and contingency approaches can help to
integrate the various schools of thought.

• The initial premise of the integrative approach is that before attempting

to apply any concepts from the various schools of management thought
we must recognize the interdependence of units within the organization,
the effects of environmental influences, and the need to respond to the
unique characteristics of the situation that arises in terms of its unique
END OF CHAPTER TWO