Chapter Three: The era of Classical Management

 Classical Organizational Theories

– Scientific Management Theory

– Administrative Management
– Bureaucratic Management theory
– Total Appraisal of the Classical theories
 Introduction
 It is the oldest theory of organizational management and is,
therefore, called the traditional theory of organizational
management.
 The classical theorists viewed organisation as a machine and human
beings as components of that machine.
 They were of the view that efficiency of the organisation can be
increased by making human beings efficient.
 Their emphasis was on specialisation and co-ordination of
activities.
 Most of the theorists gave emphasis on efficiency at the top level
and few at lower levels of organisation.
 Cond…
 Pillars of classical Organisation Theory:
 According to classical organizational theorists, the organisation
theory is built around four key pillars - division of work, scalar and
functional processes, structure and span of control.
 Division of Labour - implies that work must be divided to obtain
specialisation with a view to improve the performance of workers.
 This theory rests on the assumption that the more a particular job is
broken into its simplest component parts, the more specialised a
worker can become in carrying out his part of the job.
– The specialisation in workers will make the organisation efficient.
 Cond…
 Scalar and Functional Process
 The scalar process refers to the growth of chain of command,
delegation of authority, unity of command and obligation to report.
– It is called scalar process because it provides a scale or grading of

duties according to the degree of authority and responsibility.

– It generates superior- subordinate relationship in the
organisation.
 The functional process deals with the division of organisation into
specialised parts or departments and regrouping of the parts into
compatible units.
 Cond…
 Structure - is the framework of formal relationships among various
tasks, activities and people in the organisation.
 The basic structural element in the classical organizational theory is
position.
– Each position is assigned a specific task and authority is delegated
for its accomplishment.
– The efficiency with which these tasks will be accomplished will
determine the effectiveness of the organisation.
– The classical organizational emphasised line and staff
organisations.
 Cond…
 Span of Control - means the number of subordinates a manager can
control.
 Classical organizational thinkers specified numbers at different levels
which can be effectively supervised by a superior.
– A manager cannot exercise proper control if the number of
subordinates increases beyond a certain figure, on the other hand
if the number is less then his/her capacity and knowledge cannot
be fully utilised.
 Cond…
 Appraisal of Classical organizational Theory
 This theory suffers from some restraints. Some of its drawbacks are
given as follows:
– The theorists focused only on line and staff structures.
• They did not try to find out the reasons if a particular structure
is more effective than others.
– This theory did not lay emphasis on decision-making processes.
 Cond…
– Human behaviour was ignored in this theory.
• The theorists did not realize the complexity of human nature.
• They take human beings as inert instrument of organisation
performing the assigned task.
– The assumption that organisation in a closed system is unrealistic.
• Organisation is greatly influenced by environment and vice-
versa.
• A modern organisation is an open system which has interaction
with the environment.
 Cond…
 Classical organizational theory espouses two major perspectives:
 Scientific management – focussing on the management of work and
workers
 Administrative management – addressing issues concerning how
overall organization should be structured
 Three main theories that developed in the classical school of
thought are:
 Taylor’s Scientific Management Theory,
 Fayol’s Classical Organisation Theory and
 Weber’s Bureaucracy Theory.
 Cond…
 Taylor’s Scientific Management Theory
 During the beginning of the 20th century, skilled labour was scarce in
the United States.
 This affected industrial productivity.

– Efficiency of workers had to be increased and, thus, management

thinkers worked on how to increase labour efficiency to increase

productivity.
– They thought of deleting or combining the operations of work.
 Cond…
 At that time, Frederick W. Taylor (1856-1915) introduced scientific
management theory.
 Taylor is also known as the father of Scientific Management.
 It was called scientific management because Taylor focused on
solving managerial problems in a scientific way.
 Taylor defined it in the late 1800’s to replace informal rule of thumb
knowledge.
– Taylor sought(wanted) to reduce the time a worker spent on each
task by optimizing the way the task was done.
 Cond...
 Scientific management is the forerunner in the study of management.

• It is the systematic study of the relationships between people and

tasks for the purpose of redesigning the work process for higher
efficiency.
 It is the art of knowing what exactly you want from your people to do
& then seeing that it is done in best possible manner.
– In simple words, it is just an application of science to management
 It developed because of the need to increase productivity.

– To compensate for short supply of skilled labour at that time, this

theory developed to increase efficiency of the workers .
 Cond…
 Taylor found that work was not being done scientifically in many
organisations which led to wastage of human and non-human
resources.
– Time and work studies were not followed so that ‘how much work
should be done in a day and how much should be paid for each
day’s work’ was not scientifically planned.
 He felt that workers produced much less than what they could as
they followed traditional methods of production.
– ‘Hit and trial’ approach was used for combinations of work
schedules.
– Scientific ways (or the best way) of work were not adopted.
 Cond…
 In this regard, Taylor was confronted with many questions:
 Could the existing work schedule be reorganised by adding or
deleting some of the operations?
 Could the sequence of existing operations be changed?
 Was there ‘one best-way’ of doing the work?
 Taylor worked on these lines and provided scientific ways of doing
the work.
 He conducted various experiments and developed the theory of
scientific management.
 Cond…
 The theory focused on:
 The best way of doing each task/job by eliminating operations that
resulted in wastage of people and materials.
 Time and motion studies to find optimum time and nature of
operations for successful completion of each task.
 Principles of scientific management
 Science not the rule of thumb - scientific investigation should be
used for taking managerial decisions instead of basing on opinion,
institution or thumb rule.
 Harmony not discard/ cooperation between employers and
employees - harmonious relationship between employees and
employers.
– Cooperation of employees that managers can work is carried in
accordance standards.
 Cond…
 Scientific selection, training, and development of employees -
selection means to choose the best employee according to the need.
– Their skill an experience must match the requirement of the job.
 Scientific development refers to criteria for promotions, transfers
etc.. So that work is done with full efficiency.
 Division of work/ responsibility - the responsibility of workers and
management should be properly divided & communicated so that
they can perform them in an effective way and should be reward for
the same.
 Cond…
 In short, the four principles of scientific management are:

– The development of a true science.

– The scientific selection of the work person.
– The scientific education and development of the work person.
– Intimate and friendly cooperation between the management and
the employees.
 Cond...
 Read also on the other contributors to scientific management such
as:
 Henry Gannt
 Frank and Lillian Gilbreth
 Henri Fayol’s Administrative Management Theory
 Administrative management theory ,in general, attempts to find a
rational way to design an organization as a whole.
 It generally calls for a formalized administrative structure, a clear
division of labor, and delegation of power and authority to
administrators relevant to their areas of responsibilities.
 Henri Fayol is a French mining engineer
 Latter he turned out to be a leading industrial and successful
manager
 He is considered as the father of administrative management
theory
 Cond…
 He developed a general theory of business administration that is
often called Fayolism.
 Fayolism - a theory of management that analyzed and synthesized
the role of management in organizations.
 Before his time, there was a general belief that ‘managers are born,
not made’, that is, only those who had inherent qualities of being a
manager can become managers.
– Managers cannot be made through formal knowledge and
training.
 Cond…
 Fayol opposed this by saying that managers need not necessarily be
born; fundamental principles underlying the managerial theory can
be taught and, thus, managers can be made.
– He believed that “management could be taught, once its
underlying principles were understood and a general theory of
management was formulated.”
 Cond...
 His theory can be understood under the following headings:

(a) Activities of a business:

 Fayol divided business activities into six groups:

1. Technical - it relates to production and manufacturing of goods.

2. Commercial - it relates to buying raw materials and selling or
exchanging the finished goods.
3. Financial - it relates to search, acquisition and optimum use of
financial resources.
4. Security - it relates to protecting human and non-human resources.
 Cond...
5. Accounting - it relates to:
(i) Keeping accounts such as Profit and Loss account and balance
sheet,
(ii) Minimising costs, and
(iii) Maintaining statistics.
6. Managerial - it relates to functions performed by a manager.
– Fayol believed that first five activities of business (operating
activities) were followed in the organisations but they were
lacking in managerial skill and, therefore, based his theory on
managerial activities of business organisations.
 Cond...
(b) Functions of a manager:
 Fayol classified the following functions of managers:

1. Planning:
• To determine goals of the organisation and devise a course of action
to achieve them.
2. Organising:
• To coordinate human and non-human resources of the organisation
to put the plans into action.
 Cond...
3. Commanding:
• To direct and guide the workers to perform their duties well.

4. Coordinating:
• To synthesise the resources and activities of the organisation to
achieve the goals.
5. Controlling:
• To ensure that plans are effectively carried out and discrepancies are
checked.
 Cond...
(c) Abilities of managers:
 These refer to the skills of managers at different levels of the
organisation, like managerial skill, technical skill, human skill etc.
 These skills vary according to the:

1. Level at which managers work, and

2. Size of the organisation.

 According to the level - at higher levels, managers exercise more of
managerial skills and at lower levels they exercise more of technical
skills.
 Top level managers perform managerial activities more than technical
activities and lower level managers perform more of technical work.
 Cond...
 Importance of managerial ability increases as one moves up the
hierarchy.
– Fayol, therefore, advocated sound management principles that
enhance the ability of top managers to manage the organisation
effectively.
 According to size of the organisation - managers at the same level
perform duties of higher skills in a large-sized organisation and
lower skills in a small-sized organisation.
– For example, general managers of a large business have
managerial skills but those of a small business have technical skills
along with managerial skills to achieve the organisational goals.
 Cond...
 Fayol identified the qualities of managers as:

1. Physical – Health and vigour,

2. Mental – Ability to analyse, interpret and arrive at conclusions,
3. Moral – Willingness to accept responsibility, loyalty and dignity,
4. General education – Knowledge of overall affairs of the organisation,
5. Special knowledge – Knowledge of a specific activity; technical,
commercial or financial, and
6. Experience – Knowledge gained over a period of time while working
in the specific functional area.
 Fayol’s Principles of Management
 Division of Labor: allows for job specialization.

– jobs can have too much specialization leading to poor quality and
worker dissatisfaction.
 Authority and Responsibility

– both formal and informal authority resulting from special

expertise.
 Unity of Command

– Employees should have only one boss.

 Line of Authority

– A clear chain of command from top to bottom of the firm.

 Cond...
 Centralization

– The degree to which authority rests at the top of the organization.

– Fayol preferred a less centralized management hierarchy
– He didn’t want decisions made too far away from the problem
 Unity of Direction or singleness of purpose

– A single plan of action to guide the organization.

 Equity - The provision of justice and the fair and impartial

treatment of all employees.

– Employees should be treated fairly
 Cond…
 Order - The arrangement of employees where they will be of the most

value to the organization and to provide career opportunities.

 Initiative – related to the creation of interest and willingness in the

employees by motivating and satisfying the employees.

• employees should be able to act on their own which spurs creativity

and innovation
 Discipline

– Obedient, applied, respectful employees are necessary for the

organization to function.
 Cond...
 Remuneration of Personnel

– There must be monetary as well as non-monetary remuneration

to the employees based on their performance level.
 Stability and Tenure of Personnel

– Long-term employment is important for the development of skills

that improve the organization’s performance.
• Long-term employees lead to better producing companies
 Cond...
 Subordination of Individual Interest to the Common Interest

– The interest of the organization takes precedence over that of the

individual employee.
• Employees need to understand how their performance affects the
whole organization
 Esprit de corps

– Comradeship, shared enthusiasm foster devotion to the common

cause (organization).
• managers need to develop a shared feeling of devotion to a
common cause
 Comparison of Taylor’s and Fayol’s Theories
 Points of similarities - Taylor’s and Fayol’s theories are similar to
each other with respect to the following:
 Both the theories represent pioneering work in the study of
management. They are the foundation to the study of
management.
 Both Taylor and Fayol found ways to increase the output.
 Both emphasise that managerial qualities can be acquired.
Therefore, organisations should attempt to develop these
qualities.
 Cond...
 They focus on formal jobs and work schedules to satisfy individual
and organisational needs.
 They view organisations as independent units with little or no
interaction with the external environment.
 Etc....
 Points of differences - while Taylor focused on efficiency of
operating workers, Fayol aimed at improving efficiency of the
organisation as a whole.
– Fayol’s theory, therefore, has wider applicability.
 Cond...
 The theories differ from each other on the following grounds:
 Weber’s Bureaucracy Theory
 Max Weber (1864-1920), a German sociologist, made significant
contribution in the fields of management, economics, philosophy and
sociology.
 In the field of management, his most significant contribution is his
work on bureaucratic management.
 At the time when managers had traditional authority (authority by
virtue of a particular class by birth) or charismatic authority
(authority by virtue of appeal and social power), Weber propagated
the need for organisations to be managed in a more rational
manner.
 Cond...
 He introduced rational-legal authority system (rather than
charismatic and traditional authority) to manage business
organisations.
– The system was rational because organisations with formal
authority-responsibility structures aimed to achieve a set of pre-
determined goals.
– It was legal because authority was exercised by a person not by
virtue of his appeal, class or reference but by position in the
organisation and was bound by a system of well- defined rules
and regulations.
 Cond...
 He identified a set of characteristics of large organisations which
helped in their rational operation.
– Such organisations were known as bureaucratic organisations.
 Bureaucracy – an exercise of control on the basis of knowledge
 This theory focuses on the organization as a whole

– The organization is based on the principles of structure;

specialization; predictability and stability; rationality; and
democracy.
• Managing based on rational legal authority was more effective
than managing based on subjective criteria
 Cond...
 An organization governed under Weber’s conception of Bureaucracy
is characterized by;
– the presence of impersonal positions that are earned and not

inherited,
– rule-governed decision-making,
– professionalism,
– chain of command,
– defined responsibility, and
– bounded authority.
 Weber’s Principles of Bureaucracy
 A manager’s formal authority derives from the position he holds in
the organization.
 People should occupy positions because of their performance, not
because of their social standing or personal contacts.
 The extent of each position’s formal authority and task
responsibilities and it’s relationship to other positions should be
clearly specified.
 Authority can be exercised effectively when positions are arranged
hierarchically, so employees know whom to report to and who
reports to them.
 Cond...
 Managers must create a well-defined system of rules, standard
operating procedures, and norms so they can effectively control
behavior . System of written rules and
standard operating
procedures that specify how
employees should behave

Clearly specified Clearly specified

system of task and A bureaucracy
should have a: hierarchy of
role relationships authority

Selection and
evaluation of system
that rewards employees
fairly and equitably
 Advantages of bureaucratic approach
 Protects employees from unfair rulings from leaders which gives a
greater sense of security to the employees.
 Creates an opportunity for employees to become specialists within
one specific area, increasing the effectiveness and efficiency in each
area of the organization.
 Creativity and stability are promoted within their respective duties
and sub-tasks
 Disadvantages of bureaucratic approach
 There is diffusion of responsibility and subsequent refusal to make a
decision.
 Organizational structure is too inflexible to effect necessary changes
efficiently
 It is too difficult to determine specific individual contribution to
successful patient care outcome
 The top bottom hierarchy does not utilize specialized lower level to
make decisions in their field of specialty
 Overspecialization, makes individuals not aware of larger
consequences of their actions
