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Organization and Management

Hand-outs on Classical and Modern Management Theories

By: Kevin R. Pura

Classical Management Approach

Classical management theory is a branch of management theory which evolved around the 19th century. It was developed
during the industrial revolution when problems related to factory systems began, to recognize the role that management
plays in an organization particularly focusing on the efficiency of the work process.

Classical approach of management professes the body of management thought based on the belief that
employees have only economical and physical needs and that the social needs & needs for job satisfaction either does not
exist or are unimportant.

Features of Classical Management

Management is viewed as a systematic process of interrelated functions.

Principles of management are used as a guideline for the executives.

Functions, Principles and skills of management are universal.

Formal education and training is needed for the development of the required skills.

Emphasis is placed on the economic efficiency.

People are motivated by economic gains and other incentives.

Classical theory pillar mainly stands on three pillars: Bureaucracy, Scientific management and Administration.

Though this approach provides Specialization, structure, rationality, predictability and democracy but at the same
time a lot of paperwork, compartmentalization of work, rigidity and Goal displacement is there.

Strengths of Classical Approach

Hierarchical Structure-One of the advantages of the classical management structure is a clear organizational
hierarchy with three distinct management levels. Each management group has its own objectives and

Division of Labour-One of the advantages of classical management approach is the division of labour. Projects are
broken down into smaller tasks that are easy to complete. Employees' responsibilities and expectations are clearly
defined. This approach allows workers to narrow their field of expertise and to specialize in one area.

Monetary Incentive-According to classical management theory, employees should be motivated by monetary

rewards. In other words, they will work harder and become more productive if they have an incentive to look
forward to. This gives management easier control over the workforce.

Autocratic Leadership-The autocratic leadership approach is the central part of classical management theory. It
states that an organization should have a single leader to make decisions, to organize and direct the employees.
All decisions are made at the top level and communicated down.

Weakness of Classical Approach

Untested assumptions-Many of the assumptions made by classical writers were based not on scientific tests but
on value judgments that expressed what they believed to be proper life-styles, moral codes, and attitudes toward
Failure to consider the informal organization-In their stress on formal relationships in the organization, classical
approaches tend to ignore informal relations as characterized by social interchange among workers, the
emergence of group leaders apart from those specified by the formal organization, and so forth.

Human machinery-Classical theories leave the impression that the organization is a machine and that workers are
simply parts to be fitted into the machine to make it run efficiently. Thus, many of the principles are concerned first
with making the organization efficient, with the assumption that workers will conform to the work setting if the
financial incentives are agreeable.

Static conditions-Organizations are influenced by external conditions that often fluctuate over time, yet classical
management, theory presents an image of an organization that is not shaped by external influences.

Theories of Classical Management

1. Scientific Management Theory- This theory was propounded by Frederick Winslow Taylor. Taylor believed that by
analysing work in a scientific manner, it was possible to find the one best way to perform a task. He felt that by
organising work in the most efficient way, the organisation's productivity would be increased, allowing it to reward
employees with additional remuneration, which Taylor argued was employee's only motivation.

2. Bureaucratic Management Theory- Bureaucratic Theory was developed by a German Sociologist and political
economist Max Weber (1864-1920). According to him, bureaucracy is the most efficient form of organisation. The
organisation has a well-defined line of authority. It has clear rules and regulations which are strictly followed.

3. Administrative Management Theory- The first expert of Administrative Management Theory was Henri Fayol (1841-
1925). Fayol is called the "Father of Modern Management". According to the Administrative Management Theory
/ School, management is the process of getting things done through people. Here importance is given to groups
and not to individuals.

Scientific Management Theory

Frederick Winslow Taylor (20 March 185621 March 1915), widely known as F. W. Taylor, was an American mechanical
engineer who sought to improve industrial efficiency. He is regarded as the father of scientific management, and was one
of the first management consultants

According to him , scientific management is the art of knowing exactly what you want your men to do and then
seeing that they do it in the best and cheapest way.

Taylors theories were based on a simple interpretation of human behavior, that people are motivated solely by
money his term was rational man


Replacing rule of thumb with science

Harmony and cooperation

Division of work and responsibility

Training and development of workers

Replacing rule of thumb with science-

Each and every job and the method of doing should be based on scientific study and analysis rather than on trial and error.
This principle says that we should not get stuck in a set and continue with the old techniques of doing we should be
consultancy experimenting to develop new techniques which make the work simpler.
Harmony and cooperation~

Management should adopt a positive attitude within an organisation and share the gains of productivity with workers.
Workers on their part should work with discipline and loyalty. As per this principle, such an atmosphere should be created
in the organisation that labour (the major factor of production) and management consider each other indispensable. taylor
has referred as a mental revolution.

Division of work and responsibility~

Management should concentrate on planning the job of workers and workers should concentrate on the performance of
their specific jobs so as to increase their efficiency. According to this principle, all the activities done by different people
must be carried on with a spirit of mutual cooperation. Taylor has suggested that the manager and the worker should
jointly determine standard. This increases involvement and turn, increases responsibility.

Training and development of workers~

Workers should be selected and trained keeping in the view the job requirements. Each and every worker should be
encouraged to develop his full potential. According to this principle, the efficiency of each and every person should be
taken care of right from his selection. A proper arrangement of everybodys training should be made. IT should also be
taken care that each individual be allotted work according to his ability and interest.


Separate planning from doing.

The Functional foremanship of supervision, ex. eight supervisors required to give directions and instructions in their
respective fields.

Time, motion and fatigue studies shall be used to determine the fair amount of work done by each individual worker.

Improving the working conditions and standardizing the tools, period of work and cost of production.

Proper scientific selection and training of workmen should be done.

The financial incentives should be given to the workers to boost their productivity and motivate them to perform well.

Smart Shoveling - Taylor experimented with the shape, size, and weight of shovels to determine the impact on
productivity. His experiments showed that no one shovel was best for all materials. By designing task-specific shovels,
Taylor tripled the amount of material a worker could shovel in a day. This dramatically improved morale as well since
workers were paid by the ton. Increasing productivity meant increasing income.

A relic of the past???

Taylorism may have been good during the industrial revolution, but not so much in the technology revolution.

Automation has resolved many problems which Taylor sought to address.

The man power requirement has been lowered.

But he really believed in his ideas

To his very death he maintained that, The major beneficiary of fruits of productivity has to be the worker and not
the owner.

The new way is to teach and help your men as you would a brother; try to teach him the best way and show him
the easiest way to do his work.

Wisdom of Frederick Winslow Taylor All for one

In the past, the man has been first. In the future, the system must be first

Organizing is the art of achieving extraordinary things with ordinary people.

Bureaucratic Management Theory

Bureaucratic Theory was developed by a German Sociologist and political economist Max Weber (1864-1920). According
to him, bureaucracy is the most efficient form of organization. The organization has a well-defined line of authority. It has
clear rules and regulations which are strictly followed.

Max Weber develop the bureaucratic model of the organization which is most rational means of caring out of imperative
control over the Human being.

Management Responsibility is based on the person demonstrative ability to hold the position.

Weber's view of bureaucracy (or bureaucratic management) was a system of power where leaders exercise control over
others -- a system based on discipline

Bureaucracy as most efficient form of management model that can be used most effectively for complex organization,
such as- Govt. organization, Military Organizations etc.

Birth of Bureaucracy

During 1800s, European Org. were managed on a personal, family-like basis.

Employees loyal towards a single individual.

Resources used to realize individual desires.

Weber envisioned Org. would be managed on an impersonal, rational basis. This form of Org. is known as

Bureaucratic Model of Management

Bureaucratic management may be described as "a formal system of organization based on clearly defined hierarchical
levels and roles in order to maintain efficiency and effectiveness."

In a bureaucracy, people should occupy positions because of their performance, not because of their social standing.

Some organizations and industries are still affected by social networks in which personal contacts and relations,
not job-related skills, influence hiring and promotional decisions.

The old ways, of not what you know, but who you know, are still around in todays society, but it can only get you
so far. In todays business world, what you know and educational knowledge, play a very important part in moving
up the corporate latter and being able to maintain a managerial position requires the utilization of staying current
on up to date techniques and information.

Characteristics of Bureaucratic Model

The characteristics or features of Bureaucratic model are as follows:

Administration through well-defined rules.
Assignment of activities to individual fixed duties.
Fixed salary based on status or rank rather or the work perform and guaranteed pension as security for
old age.
There are Formal and Impersonal relations among the member of the organization.
There is a high degree of Division of Labor and Specialization.
There is a well-defined Hierarchy of Authority
It follows the principle of Rationality, Objectively and Consistency.
Interpersonal relations are based on positions and not on personalities.
There are well defined Rules and Regulations. These rules must be strictly followed.

Benefits of Bureaucratic Model

1. The rules and procedure are decided for works, So that the management process become easy.
2. The duties and responsibilities of each job are clearly defined. There is no Question of overlapping.
3. The selection process and promotion process are based on merit and expertise, there is optimum utilization
of resources.
4. The enterprises does not suffer if some persons are not available

Disadvantage/ Criticism of Bureaucratic Model

Bureaucratic organization is a very rigid type of organization. It does not give importance to human relations. It is suitable
for government organizations. It is also suitable for organizations where change is very slow. It is appropriate for non-
moving organizations.

Bureaucratic organization is criticized because of the following reasons:

1. This System Suffer from too much of paper work.

2. It has rigidity.
3. The employs does not develop belong ness to the organization.
4. Lack of growth of employs because of excessive rules & regulation.
5. There will be unnecessary delay in decision-making due to formalities and rules.
6. There is difficulty in coordination and communication.
7. There is limited scope for Human Resource (HR).

Max Weber - Principles

authority hierarchy

technical qualifications employment

full-time jobs

job roles well defined

management based on rules

remuneration system

As Taylor and Fayol have stated, the workers need to be motivated either financially, through a friendly work
environment or other rewards, while Weber considers that a powerful administrative hierarchy can categorize
each department within strong entities.

Taking all of the individual assessments and the management framework into consideration, classic theories have
a strong impact on modern world, due to the fact that they represent a set of guidelines that any company can
follow to ensure high productivity and efficiency levels.

Webers theory is a strong point of view for powerful administrators and managers, regardless of the type of
project they work on.

Fayols principles ensure that the workers are motivated each day and come to a job they are comfortable with.

Taylors rewards and incentives strategy can keep an employee motivated towards personal
development and company success

Administrative Management Theory

Administrative management is the process of managing information through people. This usually involves
performing the storage and distribution of information to those within an organization.

Represent top level management pertaining thinking and planning functions.

It performs the function of formulating of vision, mission and strategies.

Henri Fayol was a French mining engineer.

Later he turned out to be a leading industrial and successful manager.

He wrote a monograph in French in 1916 titled General and Industrial Administration.

Fayolism focused on managerial practices that could minimize misunderstandings and increase efficiency in
organizations. The focus is on enlightened managers on how to accomplish their managerial duties.

He is considered as the Father of Administrative Management Theory.

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.

14 Principles of Management

Division of Work

Work should be divided among individuals and groups.

When employees are specialized, output can increase because they become increasingly skilled and

It produces more and better work with the same effort.

Fayol said that work specialization is the best way to use the human resources of the organization.

Authority and Responsibility

Authority was defined by Fayol as the right to give orders and the power to exact obedience. Responsibility
involves being accountable, and is therefore naturally associated with authority.
Managers must have the authority to give orders, but they must also keep in mind that with authority
comes responsibility.

Responsibility is closely related to authority and it arises wherever authority is exercised


Discipline means obedience to authority, observance of the rules and norms of performance, respect for
agreements, sincere efforts for completing the given job, respect for the superiors and the organization,

The best means of maintaining discipline are good supervisors at all levels, clear and fair agreements
between the employees and the employer, and judicious application of penalties.

Unity of Command

Each employee should receive instructions about a particular work from one superior only.

If there were to be more than one superiors, the employee would be confused due to conflict in

Unity of Direction - Without unity of direction, unity of action cannot be achieved.

Teams with the same objective should be working under the direction of one manager, using one plan.

Fayol advocates "One head and one plan" which means that group efforts on a particular plan be led and
directed by a single person.

This enables effective co-ordination of individual efforts and energy.

Subordination of Individual Interest to General Interest

First priority to general interest.

An individual is always interested in maximizing his own satisfaction through more money, recognition,
status, etc. It is very often against the general interest of the organization.

The interests of one employee should not be allowed to become more important than those of the group.


According to Fayol wage-rates and method of their payment should be fair, proper and satisfactory.

Fair remuneration increases workers efficiency and boost their morale.

It also plays a vital role in making the relations of the employees and the management better.


Fayol defined centralization as lowering the role and importance of the subordinate role.

Decentralization is increasing the importance of subordinate.

According to Fayol should be proper and effective adjustment between centralization and
decentralization in order to achieve maximum objectives of the business.

Scalar Chain
Scalar chain is the formal line of authority which moves from highest to lowest rank in a straight line. This
chain specifies the route through which the information is to be communicated to the desired

Fayol emphasized that every information in the organization must flow according to this chain to facilitate
clear communication of orders of the superiors and feelings of the subordinates.

It consumes a lot of time to pass information.

Fayol defines scalar chain as 'The chain of superiors ranging from the ultimate authority to the lowest.
Every orders, instructions, messages, requests, explanation etc. has to pass through Scalar chain. But, for
the sake of convenience & urgency, this path can be cut shirt and this short cut is known as Gang Plank


Management should treat all its employees as equally as possible.

Managers should be free from all prejudices, personal likes or dislikes.

It ensures healthy industrial relations between management and labour.

This will create loyalty and devotion among the employees.


right place for everything and right man at right place

There should be proper, systematic and orderly arrangement of physical and social factors, such as land,
raw materials, tools and equipments and employees respectively.

There should be an orderliness in work through suitable organization of men and materials.

Stability of Tenure of Personnel

Workers should be assured of the security of job by the management.

This is important to motivate them and extract better work from them.

If they fear for job security, their morale will be low and they cannot give efficient work.

Also, they will not have any sense of attachment to the organization and they will always be on the lookout
for a job elsewhere.


Under this principle, the successful management provides an opportunity to its employees to suggest
their new ideas, experiences and more convenient methods of work

Employees should be given the necessary level of freedom to create and carry out plans.

Employees should be encouraged to make all kinds of suggestions to conceive and carry out their plans.

Esprit de Corps

This term means team spirit.

Harmony and unity among the employees is a great source of strength to the organization.

To achieve this, the motto of divide and rule should be avoided. And, verbal communication should be
used for removing misunderstandings.

Fayolism's concern with the humanity of employees and his focus on training management instead of focusing on
individual worker efficiency.

Every citizen is exposed to some form of management education and allowed to exercise management abilities first at
school and later on in the workplace.

Fayol was concerned with management and is generally agreed to consider more human and behavioral factors

Taylor was concerned with task time, and improving worker efficiency

Fayol emphasized a more top-down perspective focused on educating management on improving processes first and then
moving to workers

Taylor viewed management improvements as happening from the bottom up, or starting with the most elemental units
of activity and making individual workers more efficient


Modern :

Relating to the present or recent times.

Characterized by or using the most up-to-date techniques, equipment, etc.

Management :

The process of managing: administer and regulate (resources under ones control).

Theory (pl. Theories) :

1. A supposition or a system of ideas intended to explain something, especially one based on general principles
independent of the thing to be explained.

2. A set of principles on which an activity is based.

Modern Management Theories

1. System Approach .......................................................................................

2. Quantitative Approach ...............................................................................

3. Contingency Theory/Approach..................................................................

Systems Management Theory

System Management Theory believes that a system is a collection of parts brought together to accomplish some goals or

Everything is part of a system.

Types of Systems

Open system a system that continually interacts with the environment around it.

Closed System is the opposite of an open system, it is a system (or company) in dependent of the
environment around it
Subsystem this a system that is part of a larger system

Synergy order to a process where all the parts work harmoniously and in unison with each other.

Entropy Discord or a lack of predictability; a gradual decline into disorder.

Quantitative Approach in Management

Incorporates many analytical and numeric techniques into management methods

Management science or operations Research This area applies mathematical models and statistical techniques

to management decision making

Examples of Management Science

"Determining the critical path in a production line"

"Determining the percentage of items produced that have quality errors, and the types of errors that are

Applying statistical concepts, like error percentage, into his quality measurement process

Operations Management applies management science methods to improve the timing of delivery and streamline
production process

Example of Operations Research

Forecasting inventory and raw material needs for future periods

Determining the best location for a distributor center to minimize shipping time to all potential purchases
Reviewing inventory forecasting methods, to see if the amount of materials sitting in the warehouse can be
reduced without impacting the production process.

Management Information System

Are computer-based systems that generate information useful in managing a business from raw data

Examples of Management Information Systems

Reports giving trends in sales data.

Reports showing production defect rates and comparing them to prior periods

Contingency approach stresses the need for flexibility and adaptation of management practices and ideas to
suit changing circumstances.

Contemporary management approaches represent major innovations in ways of thinking about management
and appropriate management practices. One of the most important contemporary viewpoints is the
contingency approach to management. It stresses the need for flexibility and the adaption of management
practices and ideas to suit changing circumstances.
Explanation of topic

The stress for management to adapt to changed circumstances to best suit the business.

If a problem is faced by the business, the management sector is required to adapt and change business
operations to counteract the possible effect a circumstance may have.
To adopt this approach managers must sample all the past and present ideas of offer; some refer this to the
smorgasbord approach.

Contingency theorists stress that the traditional classical approach to management are no longer adequate for
our needs today.

They believe that management must adopt a wide range of management approaches

Key aspects of topic

Adapting to changing circumstances No two situations are absolutely identical, therefore each situation
requires its own unique solution.

For example, you may have chosen to construct a building a certain way with certain strategies, but that same
approach may not work for different buildings because they require a completely different approach.

Advocates of the contingency approach believe that managers need to be adaptable and flexible in their
technique to solving problems.

No one wants a manager who is dogmatic and inflexible.


When situations are extreme in nature (meaning possibility of a high degree of success or failure) the best
approach is task-focused

Task-oriented leadership focuses on completing a job. It concentrates on the tasks that have to be done,
rather than who is doing them. This leadership style emphasizes structure, plans, and schedules. Other
elements of task-oriented leadership include:
Creating detailed plans and schedules
Prioritizing goals
Constantly reviewing tasks to ensure the project is on track
Setting and sticking to tight schedules for all aspects of the project
Reviewing all of the elements of the project with the employees

If the situation is moderate the best approach is an employee-focused approach

"The employee-centered leader, on the other hand, believes in delegating decision-making and in helping
followers satisfy their needs by providing a supportive work environment

Critics argue that corporations should have a roughly equal amount of task focus and employee focus to optimize the
amount of influence and control the leader has over the situation