Introduction to general management theory

Part 1: "Introduction to the general theory of management".

The world in which we live is an institutionalized society composed of organizations.

In modern society, people are born, grow, learn, live, work, play, interact and die within organizations. There are for-
profit organizations, called businesses, and other non-profit organizations such as the military, the Church, public
services, philanthropic entities, non-governmental organizations (NGOs), etc. Organization Theory (OT) is the field of
human knowledge that deals with the study of organizations in general. Management is nothing more than the rational
direction of an organization's activities, whether for profit or not-for-profit. It involves planning, organization (structure),
direction and control of the activities performed in an organization, differentiated by the division of labor. Therefore,
management is essential for the existence, survival and success of organizations. Without management, organizations
would never have the conditions that allow them to exist and grow. General Management Theory (GT) is the field of
human knowledge that deals with the study of management in general, no matter where it is applied, whether in for-profit
(business) or not-for-profit organizations. TGA studies the management of organizations.

Based on the unique aspects of each organization, the manager defines strategies, diagnoses situations, measures
resources, plans their integration, solves problems and generates innovations and competitiveness. A manager who
succeeds in one organization may not succeed in another. Employability is a person's ability to obtain and maintain
employment. Getting a job can be easy, it's keeping it for the long term that's the hard part.

TGA aims to develop the ability to think, to define complex organizational situations, and to diagnose and propose
solutions' and innovations in the organization.
All this is necessary because the executive can hardly move from one organization to another without experiencing some
adaptation problem. Even if the executive has a deep knowledge of management and an excellent professional resume,
he/she will only be judged by what he/she knows about the functions of his/her specialty, but mainly by the way he/she
performs his/her job and by the results he/she obtains with the available resources. Organizations do not only evaluate
their management know-how, but mainly also their way of acting, their attitudes, knowledge, skills, competencies,
personality and work philosophy.
According to Katz, there are three important skills for successful management performance: technical, human and
conceptual.

- TECHNICAL SKILLS: include the use of specialized knowledge and the facility to apply techniques related to work
and procedures Technical skills are related to working with "objects", whether physical, concrete or material processes.

- HUMAN SKILLS: these are related to dealing with people, and refer to the ease of interpersonal and group
relationships. They include the ability to communicate, motivate, coordinate, direct and resolve personal or group
conflicts. Human skills are related to personal interaction.

- CONCEPTUAL SKILLS: imply the vision of the organization or the organizational unit as a whole, the facility to work
with ideas, concepts, theories and abstractions. A manager with conceptual skills is able to understand the various
functions of the organization and complement each other; to understand how the organization relates to the environment
and how changes in one part of it affect the others. Conceptual skills are related to thinking, reasoning, diagnosing
situations and formulating alternatives for problem solving.

The combination of these skills is important to the manager.' As an individual moves up through the levels of the
organization, his or her need for technical skills decreases and the need for conceptual skills increases. At the lower
levels, supervisors require considerable technical skill to deal with the concrete, day-to-day operational problems of the
organization.
However, these three skills require other personal competencies to be successful in practice. Competencies are the
manager's greatest asset, his intellectual capital, his greatest wealth. Faced with these challenges, the manager (to
succeed professionally) must develop three enduring competencies:

- KNOWLEDGE is all the information, concepts, ideas, experiences and learning that the manager has about his
specialty. Since knowledge is constantly changing due to the transformations and innovations that occur with ever-
increasing intensity, the manager must constantly update and renew it.
Knowledge is necessary and fundamental, but it is not sufficient for professional success. To achieve this, it is necessary
to add perspective and attitude, two other durable competencies.

- PERSPECTIVE is the ability to put knowledge into action, to know how to transform theory into practice, to apply
knowledge to the analysis of situations and to the solution of problems and the management of the business. It is not
enough to have the knowledge because it can remain in a potential state. It is necessary to know how to use it and apply
it in various situations and problem solving. Perspective is the ability to put into practice the abstract ideas and concepts
that are in the manager's mind, as well as to see opportunities (not always perceived by ordinary people) and transform
them into new products, services or personal actions.

- ATTITUDE means the manager's personal behavior towards work situations; it presents the personal style of making
things happen, the way of directing, motivating, communicating and moving things forward. It includes the drive and
determination to innovate, the conviction to continuously improve, the entrepreneurial spirit, the non-conformity in the
face of current problems and, especially, the ability to work with and trust other people.
Mintzberg prefers to identify ten specific roles of the manager, distributed in three categories: interpersonal,
informational and decisional. A role is the organization's set of expectations regarding a person's behavior. Each role
represents activities performed by the manager to fulfill the functions of planning, organizing, directing and controlling.
In truth, managing is much more than just a function of overseeing people, resources and activities. When everything
changes and the rules of change are complicated, it is not only a matter of maintaining the situation, but of continuously
innovating and renewing the organization. The role of the manager in times of change and instability focuses more on
innovation than on the preservation of the organizational status qua.

Chapter 1: Management and its perspectives

The word administration comes from the Latin ad (towards, direction, tendency) and minister (subordination or obe-
dience), and means one who performs a function under the command of another, i.e., one who renders a service to
another.

The TGA (General Theory of Management) studies the management of organizations and companies from the point of
view of the interaction and interdependence of the six main variables (tasks, structure, people, technology, environment
and competitiveness). These are the main components in the study of the administration of organizations and companies.
The behavior of these components is systemic and complex: each one influences the others, and experiences their
influence.
Changes in one component cause changes in the others to a greater or lesser degree.

Management in modern society

Management is a universal phenomenon in the modern world.

The manager is a professional whose training is broad and varied: he/she needs to know heterogeneous disciplines (such
as mathematics, law, psychology, sociology, statistics, etc.), needs to deal with people who execute tasks or who plan,
organize, control, advise, investigate, etc. and are in subordinate positions, equal or superior to his/her own. He needs to
be attentive to past and present events, as well as to future forecasts, because his horizon must be wider, since he is
responsible for the direction of other people who follow his orders and orientations.

Future prospects for management

In the coming years, the administrative task will be uncertain and challenging, as it will be affected by countless
variables, changes and transformations full of ambiguity and uncertainty. The manager will be faced with multifaceted
problems that are increasingly more complex than the previous ones; his or her attention will be contested between
events and groups inside and outside the company. They will provide you with contradictory information that will
complicate your perceptive diagnosis and your vision of the problems to be solved or the situations to be faced: the
demands of society, customers, suppliers, regulatory agencies, competitors' challenges, expectations of top management,
subordinates, shareholders, etc. These demands, challenges and expectations undergo changes that are beyond the
manager's ability to understand. These changes tend to increase with the inclusion of new variables as the process
unfolds, creating turbulence that disrupts and complicates the management task of planning, organizing, directing and
controlling an efficient and effective enterprise. The future seems to complicate this reality more and more. Several
factors will cause profound impacts on organizations and companies, such as:

1. The growth of organizations. Successful organizations tend to grow and expand their activities. Growth is an
inevitable consequence of organizational success. As an organization grows, "general" managers, endowed with generic
and varied skills, will have more promising prospects than "specialist" managers who concentrate on a few management
skills.
2. Sharper competition. As markets and businesses grow, so do the risks of doing business. The development of
products or services will require more investment in research and development, technology improvement, the dissolution
of old departments and the creation of new ones, the relentless search for new markets and the need to compete with
other organizations in order to survive and grow.
3. Sophistication of technology. With the progress of telecommunications, computer and transportation, organizations
and companies have made their operations and activities international. Technology provides more efficiency and
accuracy, and allows more time to be spent on more complex tasks that require planning and creativity. Technology will
introduce new processes and tools that will have an impact on organizations.
4. High inflation rates. The costs of energy, raw materials, labor and money are continually rising. Inflation will
inevitably impose new pressures and threats on organizations, which will have to fight for profit and survival through
increased productivity.
5. Globalization of the economy and the internationalization of business. Competition is becoming worldwide due to
globalization and planetary exchange.
6. Increased visibility of the organizations. As organizations grow, they become competitive, sophisticated,
internationalized and, consequently, their environmental influence increases. The organization's visibility (its ability to
attract the attention of others) can be positive (positive image with the public) or negative (negative image). In any case,
the organization will never be ignored by consumers, suppliers, press, unions, government, etc., which will influence its
behavior.

Consequently, new forms and models of organization will be needed, and a change in the mentality of managers in the
new times will be essential.
The future seems to further complicate this reality. Society is undergoing major transformations (called mega trends),
which have a great impact on the life of organizations, as they are an integral and inseparable part of society. These mega
trends are:"

From For Modification

Industrial company Information society Innovation and change
Simple technology Sophisticated technology Increased efficiency
National economy Global economy Globalization and competitiveness
Short term Long term Business and future vision
Representative democracy Participatory democracy Pluralism and participation
Hierarchy Lateral communication Democratization and empowerment
Dual or binary option Multiple choice Systematic and contingency vision
Centralization Decentralization Uncertainty and unpredictability
Institutional support Self-help Autonomy and differentiated
services
Part 2: "The origins of administration".
The history of the administration is recent. It is a characteristic product of the 20th century. In fact, Administration is just
over one hundred years old, and is the historical and integrated result of the accumulated contribution of several
precursors, philosophers, physicists, economists, statesmen and businessmen who, over time, developed and
disseminated, each one, works and theories in their field of activities.

Chapter 2: Historical background of management

Influence of the industrial revolution

The first Industrial Revolution went through four distinct phases:

-Firstphase: Mechanization of industry and agriculture. At the end of the 18th century the appearance of the. spinning
machine, power loom, power loom and cotton ginning machine, replaced the work and muscle power, the work of the
animal of the water wheel. The cotton gin processed a thousand pounds of cotton, while a slave processed five in the
same time.
-Secondphase: Application of motive power to industry. With the application of steam to machines, major
transformations began in workshops (which became factories), transportation, communications and agriculture.
-Thirdphase: Development of the manufacturing system. The craftsman and his small workshop disappeared to give
place to the operator, to the small and large factories based on the division of labor. The migration of human masses from
agricultural areas to the vicinity of factories led to urbanization.
-Fourthphase: A spectacular acceleration of transport and communications. Steam navigation later succeeded in
replacing the propulsion wheels with propellers. The steam locomotive was perfected. This new means of transportation
became very popular. Other means of communication soon followed with astonishing speed: Morse invented the electric
telegraph, the postage stamp appeared in England, Graham Bell invented the telephone.

The characteristics of the Second Industrial Revolution are:

1. Substitution of iron for steel as the basic industrial material.

2. Substitution of steam by electricity and petroleum derivatives as the main sources of energy.
3. Development of automatic machines and worker specialization.
4. Growing dominance of industry by science.
5. Radical transformations in transportation and communications. Railroads were extended, automobiles were
manufactured in Germany, the pneumatic tire was perfected, and Henry Ford began production of his Model T in the
United States. Santos Dumont experimented with an airplane for the first time.
6. Development of new forms of capitalist organization, which has four main characteristics:
a) Dominance of the industry by investment banks and financial and lending institutions.
b) Immense accumulation of capital, coming from monopolies and mergers of companies.
e) Separation between private ownership and management of companies.
d) Development of holding companies (parent companies) to coordinate and integrate businesses.
7. Expansion of industrialization from Europe to the Far East.

The quiet artisanal production was replaced by the regime of machine production in large factories. As a result, there was
a sudden transformation caused by two aspects, namely:

Transfer of the artisan's skill to the machine, to produce a greater quantity with greater speed and quality, which allowed
a strong reduction in production costs.
2. Substitution of animal or human power by the power of the steam engine (and later, the engine), which allowed for
greater production and economy.

Man was only replaced by the machine in those tasks that could be automated and accelerated by repetition. The
mechanization of work led to the division of labor and the simplification of operations, and caused traditional trades to
be replaced by semi-automated and repetitive tasks, which could be easily performed by people without any
qualifications and with enormous simplicity in control.

Part 3: "Classical approach to management".

At the beginning of the 20th century, two engineers developed pioneering work on management. One, the American
Frederick Winslow. Taylor initiated the so-called school of scientific management, which seeks to increase the efficiency
of the company by rationalizing the work of the worker. The other, the European Henri Fayol, developed the so-called
classical theory, which deals with increasing the efficiency of the company through the organization and application of
general scientific principles of management.

On the one hand, the school of scientific management, developed in the United States from Taylor's work. His basic
concern was to increase the productivity of the company by increasing the efficiency of the operational or worker level.
Scientific management develops a bottom-up approach (from the worker to the supervisor and manager) and from the
parts (workers and their positions) to the whole (business organization). The focus is on the method of work. This
analytical and detailed orientation allows the specialization of the worker and the regrouping of movements, operations,
tasks, positions, etc., which constitute the so-called Rational Organization of Work (ORT).

On the other hand, the current of anatomists and physiologists of organization (classical theory), developed in France
based on the pioneering work of Fayol. The basic concern of this trend is to increase the efficiency of the company
through the form and arrangement of the organization's component bodies (departments) and their structural
interrelationships. Hence the emphasis on the anatomy (structure) and physiology (functioning) of the organization. The
anatomical and physiological current develops an approach opposite to that of scientific management: from the top down
(from management to execution) and from the whole (organization) to the parts (departments). The focus is on the
organizational structure. This orientation towards synthesis and global vision made it possible to better subdivide the
company, centralizing management in a chief executive.

Chapter 3: Scientific management

The typical approach of the scientific management school is based on the emphasis placed on tasks. The school of
scientific management was initiated at the beginning of the 20th century by the American engineer Frederick W. Taylor,
who is considered the founder of modern TGA. Taylor had countless followers (such as Gantt, Gilbreth, Emerson, Ford,
Barth and others) and caused a true revolution in management thinking and in the business world of his time. At the
beginning, this school set out to eliminate waste and losses suffered by companies and to raise productivity levels
through the application of industrial engineering methods and techniques.

Taylor's first period

Taylor's first period corresponds to the time of publication of his book Shop Management.
(Workshop Management), in 1903, on techniques for rationalization of the operator's work by means of the Motion-time
Study. Taylor started from the bottom, with the operators at the execution level, patiently analyzing the tasks of each
operator, breaking down their movements and work processes to perfect and rationalize them.
In essence, Taylor expresses in Shop Management:

1. Management's objective is to pay high wages and have low unit costs of production.
2. To achieve this objective, management must apply scientific methods of research and experimentation to formulate
principles and establish standardized processes to control production operations.
3. Employees must be scientifically selected and assigned to jobs where the working conditions are suitable, so that they
can meet the standards.
4. Employees should be scientifically trained in the execution of the task to perfect their skills, so that they meet the
normal production.
5. The management should establish an atmosphere of intimate and cordial cooperation with the workers to guarantee the
continuity of this psychological environment that makes possible the application of the other principles enunciated by
him.
Second Taylor period

It corresponds to the time of the publication of his book on scientific management, when he concluded that the
rationalization of operational work should be supported by a general structure that would give coherence to the
application of his principles.

Taylor asserted that the companies of his time suffered from ills that could be grouped into three factors:
1 Systematic laziness of the workers, who reduced production to almost one-third of normal to prevent management
from reducing wages.
2. Management's lack of knowledge regarding work routines and the time required to perform them.
3. Lack of uniformity in work techniques or methods.

To remedy these ills, Taylor devised scientific management. According to Taylor, scientific management is an evolution
rather than a theory, whose ingredients are 75% analysis and 25% common sense. For Taylor, the implementation of
scientific management must be gradual and requires a period of four to five years to avoid abrupt changes that cause
discontent among employees and damage to employers.

Management as a science

For Taylor, organization and management should be studied and treated as a science, not empirically.
The elements of application of scientific management in production standards are: standardization of machines and tools,
methods and routines for task execution, and production rewards to encourage productivity.

Rational organization of work

Since among the different methods and tools used in each job there is always a faster method and a more suitable tool
than the others, it is possible to find the latter and perfect them through a scientific analysis and a detailed study of times
and movements, instead of leaving them to the personal judgment of each operator. This attempt to replace empirical and
rudimentary methods with scientific methods in all trades was called Rational Organization of Work (ORT). With
scientific administration there is a division of responsibilities: the administration (management) is left with the planning
and supervision, and the worker is left only with the execution of the work.

ORT is based on the following aspects:

1. Work analysis and study of time and motion: Work can be performed better and more economically by means of
work analysis, that is, by dividing and subdividing the movements necessary for the execution of the various operations
of a task.
2. Study of human fatigue: The study of human movements has a triple purpose:
1. Avoid useless movements in the execution of a task.
2. Execute them with the greatest possible economy, from the physiological point of view.
3. To give the proper sequence to the movements (principles of economy of movement).
The study of movements is based on human anatomy and physiology. In this regard, Gilbreth studied the effects of
fatigue on operator productivity, and found that fatigue leads to decreased worker productivity and work quality, and lost
time. It also contributes to increased staff turnover, illness and accidents, and decreased capacity for effort. In short,
fatigue reduces efficiency.
3. Division of labor and specialization of the operator: One of the consequences of the study of times and movements
was the division of labor and specialization of the operator in order to increase his productivity. Thus, each operator was
specialized in the execution of a single task to meet the described standards and the performance norms established by
the method.
4. Design of positions and tasks: Task is the activity performed by someone in the development of their work in the
organization. The task is the smallest possible unit of the division of labor in an organization. Charge is the set of tasks
performed: cyclically or repetitively. The simplification of the position design provides the following advantages:
Admission of employees with minimum qualifications and lower salaries, which reduces production costs,
Minimization of training costs.
3. Reduction of errors in the execution of the work, which reduces waste and returns.
4. Ease of supervision, which allows each supervisor to control a larger number of subordinates.
5. Increased worker efficiency and, therefore, productivity.
5. Wage incentives and production rewards: To achieve operator cooperation, Taylor and his followers developed
wage incentive and production reward plans. The fundamental idea was that remuneration based on time (employees
paid per month, per day or per hour) did not encourage more work, and that it should be replaced by remuneration based
on the production of each operator (wages per piece, for example): whoever produces little earns little, and whoever
produces a lot earns in proportion to his production.
6. Concept of homo economicus: With scientific administration, the concept of homo economicus, i.e., economic man,
was introduced. Man seeks work not because he likes it, but as a means of earning a living. Man is motivated to work
exclusively by fear of hunger and the need for money to live. Consequently, wage rewards and production rewards have
a profound influence on individual efforts on the job and make the operator reach the maximum of his production
capacity to obtain a higher profit.
7. Environmental working conditions: Working conditions come to be considered as important elements in increasing
efficiency. The comfort of the worker and the improvement of the physical environment (lighting, ventilation, visual
aspects of the factory, noise elimination, etc.) are then highly valued, not because the people deserved it, but because
they were essential for obtaining the worker's efficiency.
8. Standardization of methods and machines: The rational organization of work began to concern itself with the
standardization of work methods and processes, the standardization of machines and equipment, tools and work
instruments, raw materials and components, in order to reduce variability and diversity in the production process and,
consequently, eliminate waste and increase efficiency.
9. Functional supervision: The existence of several supervisors specialized in a certain area, with functional authority
(related only to their specialty) over the same subordinates. This functional authority is relative and partial. For Taylor,
the type of organization par excellence is the functional organization. "Functional management consists of dividing the
work so that each man, from the assistant to the superintendent, has to execute the least possible variety of functions."

Principles of scientific management

Principles of scientific management, according to Taylor

1. Planning principle: replace individual judgment, improvisation and empirical-practical performance of the operator at
work by methods based on scientific procedures.
Change improvisation for science by planning the work method.
2. Principle of preparation: scientifically select workers according to their aptitudes and prepare and train them to
produce more and better, in accordance with the planned method.
Rational arrangement and distribution of machines and production equipment.
3. Principle of control: control the work to ensure that it is being executed according to the established standards and
according to plan.
Management must cooperate with employees to ensure the best possible execution.
4. Principle of execution: assign attributions and responsibilities so that the work is carried out with discipline.

2. Principles of efficiency, according to Emerson

1. Draw up a well-defined plan, in accordance with objectives.

2. Establish the predominance of common sense.
3. Provide competent guidance and supervision.
4. Maintain discipline.
5. Impose honesty in the agreements, that is, social justice at work.
6. Keep accurate, prompt and adequate records.
7. To fix the remuneration proportional to the work.
8. To establish standardized norms for working conditions.
9. Determine standardized norms for the work.
10. Set standardized rules for operations.
11. Give precise instructions.
12. Establish attractive incentives to increase performance and efficiency.
Ford's basic principles

The key condition for mass production is simplicity. The system is based on three aspects:

1. The progression of the product through the production process is planned, orderly and continuous.
2. The work is given to the worker rather than the worker seeking it.
3. Operations are analyzed in their constituent elements.

Ford adopted three basic principles to establish an accelerated production scheme characterized by rhythmic, coordinated
and economical work:

Intensification principle: to reduce production time by using equipment and raw materials immediately, and getting the
product to market quickly.
2. Principle of economy: it consists of reducing to the minimum the volume of raw material stock in transformation. The
pace of production must be fast: "The ore leaves the mine on Saturday and is delivered to the consumer, in the form of a
car, on Tuesday afternoon".
3. Principle of productivity: it consists of increasing man's production capacity in the same period (productivity) through
specialization and assembly line. Thus, the operator earns more and the employer achieves higher production.

Ford was one of the initiators of mass production, through the standardization of machinery and equipment, of labor and
raw materials and, consequently, of products.

Principles of exception

The most frequent decisions should be reduced to routine and delegated to subordinates, leaving the most serious and
important problems to higher management. The exception principle is an information system that presents its data only
when the results are divergent or distant from the expected results of a program.

Critical evaluation of scientific management theory

Innumerable criticisms can be made of this school: the mechanicism of its approach (from which it derives the name
machine theory): the super-specialization (which robotizes the operator); the microscopic view of man (taken in isolation
as an appendage of industrial machinery); the absence of scientific verification of its assertions and principles; the
incomplete approach (involving only the formal organization); the limitation of the field of application to the factory
(leaving aside the rest of the life of a company), and the eminently prescriptive and normative approach characteristic of
the closed system. However, these limitations and restrictions do not detract from the fact that scientific management
was the first step in the search for an 'administrative theory', a fundamental and decisive step.

Chapter 4: Classical Management Theory

While in the United States, Taylor was developing scientific management, in 1916 the classical theory of management
emerged in France, which spread rapidly throughout Europe. If scientific management was characterized by its emphasis
on the task performed by the operator, the classical theory was distinguished by its emphasis on the structure that an
organization must have in order to achieve efficiency. Both theories pursued the same objective: the search for
organizational efficiency. According to Scientific Management, this efficiency was achieved through the rationalization
of the operator's work and the sum of individual efficiency.
Management concept
Fayol defines the act of managing as planning, organizing, directing, coordinating and controlling. Administrative
functions encompass the elements of administration, i.e., the functions of the administrator:
Planning: envisioning the future and outlining the program of action.
2. Organization: building the material and social structures of the company.
3. Management: guiding and orienting the personnel.
4. Coordination: linking, uniting and harmonizing all collective actions and efforts.
5. Control: verify that everything happens according to the established rules and given orders.

Difference between administration and organization

According to Fayol, management constitutes a whole, of which the organization is one of the parts. Organization refers
only to the definition of structure and form. From this differentiation, the word organization will have two meanings:
Organization as a social entity, in which people interact to achieve specific objectives. In this sense, the word
organization indicates any intentional human initiative undertaken to achieve certain objectives.
2. Organization as an administrative function and part of the administrative process (planning, direction,
coordination, and control). In this sense, organization means the act of organizing, structuring and allocating resources,
defining the bodies in charge of administration and establishing their attributions and interrelationships.

General principles of management, according to Fayol

Like any science, management must be based on laws or principles. Fayol defined 14 general principles of management:
Division of labor: specialization of tasks and people to increase efficiency.
2. Authority and responsibility: authority is the right to give orders and the power to expect obedience; responsibility is a
natural consequence of authority and implies the duty of accountability. Both must be in balance with each other.
3. Discipline: obedience, dedication, energy, behavior and respect for the established rules.
4. Unity of command: each employee must receive orders from a single superior. It is the principle of sole authority.
5. Unity of direction: assignment of a leader and a plan to each group of activities having the same objective.
6. Subordination of individual interests to general interests: general interests must be above individual interests.
7. Remuneration of the personnel: there must be (in terms of remuneration) fair and guaranteed satisfaction for the
employees and for the organization.
8. Centralization: concentration of authority at the top of the organization.
9. Scalar chain: line of authority that goes from the highest to the lowest rung of the ladder. It is the principle of
command.
10. Order: there must be a place for everything and everything must be in its place, it is the material and human order.
11. Fairness: kindness and fairness to achieve staff loyalty.
12. Staff stability: turnover has a negative impact on the organization's efficiency.
The longer a person stays in a position, the better for the company.
13. Initiative: ability to visualize a plan and personally ensure its success.
14. Team spirit: harmony and union among people are great strengths for the organization.

Organizational theory
The organizational structure is characterized by a hierarchy, i.e., a line of authority that articulates the positions in the
organization and specifies who is subordinate to whom. The hierarchy (also referred to as the escalation chain) is based
on the principle of unity of command, which means that each employee must report to a single superior.
For the classical theory, the organizational structure is analyzed from the top down (from direction to execution) and
from the whole to the parts (from synthesis to analysis), contrary to the scientific management approach.

Line and staff concept

Fayol was interested in the so-called linear organization, one of the simplest types of organization, which is based on the
principles of:
a. Single unit of command or supervision: each individual has a unique and exclusive leader.
b. Unity of direction: all plans must be integrated into larger plans that lead to achieving the organization's objectives.
c. Centralization of authority: the maximum authority of an organization must be concentrated at the top.
d. Hierarchical chain: authority must be hierarchical, that is, arranged in hierarchical levels, so that a lower level must
always be subordinate to the next higher level (command authority).

Elements of administration
In determining what management is, Fayol defined its component elements: planning, organization, direction,
coordination and control. However, Fayol's followers did not accept the old master's definition of the elements of
management.

1. Elements of management, according to Urwick

For Urwick, the elements of management, i.e., the functions of the manager, are seven:
• Investigación
- Forecast
- Planning
- Organization
- Coordination
- Address
- Control
In essence, Urwick split Fayol's first element, planning, into three distinct phases (research, forecasting and planning) to
give it greater clarity.

2. Elements of management, according to Gulick

Luther Gulick, considered the author with the best knowledge of the classical theory, proposes seven elements of
management as the main functions of the manager:

a. Planning: the activity of outlining the general lines of what is to be done and the methods of doing it, in order to
achieve the company's objectives.
b. Organization: establishment of the formal authority structure, which integrates, defines and coordinates the work
subdivisions in pursuit of the desired objective.
c. Counseling: function of preparing and training personnel, and maintaining adequate working conditions. .
d. Management: continuous activity of making decisions and translating them into specific and general orders and
instructions, as well as assuming leadership of the company.
e. Coordination: duty to establish relationships between the different parts of the work.
f. Information: the activity of keeping those to whom the manager is accountable informed of what is happening; this
activity presupposes the existence of records, documentation, research and inspections.
g. Budgeting: function that includes all aspects related to budget preparation, execution and control, i.e. fiscal planning,
accounting and control.

Several criticisms can be formulated to the classical theory: the extremely simplified approach to formal organization,
which ignores informal organization; the absence of experimental work capable of giving scientific basis to its assertions
and principles; the mechanicism of its approach, which earned it the name of machine theory; the incomplete approach to
organization and the visualization of the organization as if it were a closed system. However, the criticisms made of the
classical theory do not tarnish the fact that it is to it that we owe the foundations of modern administrative theory.
Part 4: Humanistic approach to management

Chapter 5: Theory of human relations

Human Relations Theory emerged in the United States, as a consequence of the conclusions of the Hawthorne
experiment, and was developed by Elton Mayo. It was a movement of reaction and opposition to the Classical Theory of
Administration.

Origins of human relations theory

Human Relations Theory has its origins in the following facts:
1) The need to humanize and democratize the Administration, freeing it from the rigid and mechanistic concepts of the
Classical Theory and adapting it to the new patterns of life of the American people.
2) The development of human sciences, mainly psychology.

The Hawthorne experiment

In 1924, the U.S. National Academy of Sciences conducted research to verify the correlation between productivity and
workplace lighting.
Elton Mayo coordinated the experiment, and it was extended to the study of fatigue, accidents at work, turnover and the
effect of working conditions on staff productivity. The researchers realized that the results of the experiment were
affected by variables of a psychological nature. The company that lent itself to the experiment was not interested in
increasing production, but in getting to know its employees better.

First phase of the Hawthorne experiment

In the first stage of the experiment, two groups of operators were chosen to do the same work under identical conditions:
the observation group worked under variable light intensity, while the control group worked under constant light
intensity. The aim was to investigate the effect of lighting on operator performance.
One of the factors discovered was psychological: the operators reacted according to a personal assumption, i.e., they
considered that they feared the obligation to produce more when the intensity of illumination increased, and to produce
less when it decreased.
The preponderance of the psychological factor over the physiological was proven: the relationship between physical
conditions and worker efficiency can be affected by psychological conditions.

Second phase of the Hawthorne experiment

An observation group (the experimental group) was created: five young women assembled the switches while a sixth
operator provided the parts to perform the work.
The experimental team had, like the control team, a supervisor, as well as an observer who stayed in the room, observed
the work and ensured the cooperative spirit of the employees. They were subjected to their approval, insisted on working
in a normal manner and being comfortable with the work.

The assembly experiment in the switch room brought the following conclusions:
a. The employees liked working in the test room because it was fun and the supervision was not strict (unlike the rigid
control supervision in the assembly room), and it allowed them to work with freedom and less anxiety.
b. There was a friendly, no-pressure atmosphere where conversation was allowed, which increased job satisfaction.
c. There was no fear of the supervisor, who functioned as a guide.
d. There was a social development of the experimental group. The employees befriended each other and became a team.
e. The group developed common objectives, such as increasing the rate of production, even when they were asked to
work normally.

Third phase of the Hawthorne experiment

Concerned about the difference between the acrimony of the experimental group and the control group, the researchers
moved away from the initial objective of verifying the physical working conditions and became interested in the study of
human relations at work.
For this reason, an interview program was initiated with employees to learn about their attitudes and feelings, to hear
their opinions regarding their work and the treatment they received, and to hear suggestions regarding the treatment of
supervisors. The program was well received by operators and supervisors and the results were encouraging. Based on
this, the Industrial Research Division was created to expand the interviewing program and interview all employees
annually.

Fourth step of the Hawthorne experiment

An experimental group was chosen to work in a special room with working conditions identical to those of the
department.
The pay system was based on the group's production, there was an hourly wage based on factors and a minimum hourly
wage in case of interruption of production. Wages could be higher if total production increased. The observer, once
familiar with the experimental group, could see that inside the room the operators used various tricks (once the operators
had set up what they judged to be their normal production, they slowed down their work pace). The operators developed
a certain uniformity of feeling and group uniformity.

Conclusions from the Hawthorne Experience

Hawthome's experiment provided an outline of the basic principles of the Human Relations School. Their conclusions
are as follows:
a) The level of production is the result of social integration.
The level of production is not determined by the physical or physiological capacity of the employee, but by social norms
and group expectations. The social capacity of the worker is what determines his level of competence and efficiency, but
not his capacity to execute efficient movements within the established time. The greater the social integration in a work
group, the greater the willingness to produce. If the employee presents excellent physical and physiological conditions
for the job but is not socially integrated, his efficiency will suffer the influence of social maladjustment.
b) Employee social behavior
The individual's behavior is fully supported by the group. Workers do not act or react in isolation as individuals, but as
group members.
c) Social rewards and sanctions
Workers' behavior is conditioned by social norms and patterns. Operators who produce more or less than the socially
determined norm lose the respect and consideration of their colleagues. Operators would rather produce less (and earn
less) than jeopardize their friendly relations with operators

For most of the classical authors, the concept of economic man prevailed, according to which man is motivated and
incentivized by wage stimuli (hombre economicus). For Mayo and his followers believed that economic motivation was
secondary in determining worker performance. For the theory of human relations, people are motivated by the need for
"recognition", "social approval" and "participation" in the activities of the social groups in which they live. From this
arises the concept of Social Man.

d) Informal groups
While the classics were concerned with the formal aspects of the organization (such as authority, responsibility,
specialization, time and motion studies, etc.), the humanist authors concentrated on the informal aspects of the
organization (such as informal groups, employees' social behavior, beliefs, attitudes and expectations, motivation, etc.).
The company was visualized as a social organization composed of informal social groups, whose structure does not
always coincide with the formal organization of the company; that is, with the purposes defined by the company.
Informal groups define their rules of behavior, forms of reward or social sanctions, objectives, scale of social values,
beliefs and expectations that each of their members assimilates and integrates into their attitudes and behavior.

e) Human relations
Human relations are the actions and attitudes developed from contacts between individuals and groups.
People try to adapt to other people and groups: they want to be understood, accepted and participate, in order to meet
their personal interests and aspirations. Human behavior is influenced by the attitudes and informal norms that exist in
the groups of which they are a part.

f) Importance of the content of the position

Mayo and his collaborators found that the specialization proposed by the Classical Theory does not produce a more
efficient organization. They observed that operators were changing positions to avoid monotony, which was against
company policy. These changes had negative effects on production, but boosted group morale. Simple and repetitive jobs
become monotonous and boring, which negatively affects the worker's attitude and reduces their satisfaction and
efficiency.

Differences between:

Chapter 6: Implications of human relations theory.

The emergence of human relations theory has brought a new language to the administrative repertoire: we now speak of
motivation, leadership, communication, informal organization, group dynamics, etc., and the old classical concepts of
authority, hierarchy, rationalization of work, departmentalization, general management principles, etc., are criticized and
set aside.The old classical concepts of authority, hierarchy, rationalization of work, departmentalization, general
principles of administration, etc., are criticized and set aside. Also the engineer and the technician give way to the
psychologist and the sociologist, and the horno economicus gives way to the social man. This revolution in management
occurred at the end of World War II.

With the theory of human relations, another conception of the nature of man emerged: the social man, based on the
following aspects.
1. Workers are complex social creatures who have feelings, desires and fears. Behavior at work, as anywhere else, is a
consequence of many motivational factors.
2. People are motivated by certain needs that they are able to satisfy in the social groups in which they interact. If there
are difficulties in participation and group relations, turnover increases, morale decreases, psychological fatigue increases,
and performance levels are reduced.
3. Group behavior depends on the style of supervision and leadership. The effective supervisor influences subordinates to
achieve loyalty, high standards of performance and commitment to the organization's objectives.
4. Group norms serve as regulatory mechanisms for member behavior and informally control production levels. This
social control can adopt positive sanctions (encouragement, social acceptance, etc.) or negative sanctions (mockery,
rejection by the group, symbolic sanctions, etc.).

Influence of human motivation

The Hawthorne experiment showed that wage rewards (even when made on a fair or generous basis) are not the only
decisive factor in worker satisfaction in the work situation. Human beings are motivated not only by economic and salary
stimuli, but also by social and symbolic rewards.

Basic human needs

The three levels or states of motivation correspond to:

a. Physiological needs
They correspond to primary, vital or vegetative needs; they are related to the survival of the person, and are innate and
instinctive. They are also found in animals. These are: food, sleep, physical activity, sexual satisfaction, shelter and
protection from the elements, and physical safety from hazards.
b. Psychological needs
These are secondary needs (exclusive to man) acquired and developed in the course of life: the need for intimate
security; the need for participation; the need for self-confidence; and the need for affection.
C. Self-realization needs
They are the highest needs, the product of education and culture. Like psychological needs, they are rarely fully satisfied.

Frustration and compensation

There are times when needs are not met due to some barrier or obstacle that prevents it. When this happens, frustration
arises, which prevents the release of tension and maintains the state of imbalance and tension.
The motivational cycle may have a third solution: compensation or transfer. Compensation occurs when a person tries to
satisfy one need by satisfying another. In physiological needs, the goals are relatively fixed: hunger is only satisfied with
food. In psychological and self-fulfillment needs, the objectives are more flexible and allow for trade-offs.
Frustration can lead to altered behavior, aggression, emotional reactions and/or alienation and apathy.

Morale and organizational climate

Morale is intimately linked to the motivational state. When the organization satisfies the needs of individuals, morale
rises, while morale decreases when the organization frustrates the satisfaction of those needs.

Leadership
Classical theory was not concerned with leadership and its implications. Leadership is necessary in all types of human
organization, whether in companies or in each of their departments. It is also essential in management functions because
the manager needs to know human motivation and to know how to lead people, that is, to be a leader. Leadership
theories can be classified into three groups, each of which has its own characteristics:

a. Personality trait theories

A trait is a distinctive quality or characteristic of the personality. The leader possesses specific personality traits that
distinguish him/her from other people, that is, he/she has personality characteristics that allow him/her to influence the
behavior of his/her peers. The leader must inspire confidence, be intelligent, perceptive and decisive to lead successfully.
b. Theories on leadership styles
The main theory points to three leadership styles: authoritarian, liberal and democratic.

The main difficulty in the exercise of leadership is to know when to apply which process, with whom and in what
circumstances and activities.

c. Situational theories of leadership

These theories are based on the principle that there is no single leadership style or characteristic that is valid for any and
all situations. The leader must adapt to a group of people in varying conditions.
Communication
Communication is an administrative activity with two fundamental purposes:
a. Provide the necessary information and explanation to enable people to perform their tasks.
b. Adopt the necessary attitudes that promote motivation, cooperation and job satisfaction.
In human relations theory, communication is important for the relationship between the parties and for explaining clearly
to subordinates the reasons for the decisions taken.

Informal organization
The set of interactions and relationships established between people is called informal organization, as opposed to formal
organization, constituted by the structure of organs, positions, functional relationships, hierarchical levels, etc., of the
organization. The behavior of a company's social groups is conditioned by two types of organization: formal (or rational)
organization and informal (or natural) organization.

Informal organization originates from the need to live together with other people. These, by associating with others in the
company, create social relationships and informal groups in which each person acquires a certain position or status.

There are four factors that condition informal groups ("friendship groups"):
a) "Common interests" bring people together. b) Interaction caused by the formal organization (the position of people in
the company requires contacts and relationships with other people). c) The fluctuation of personnel in the company alters
the composition of informal social groups (turnover). d) Rest periods (allow people to interact).

Part 5: Neoclassical approach to management

The neoclassical approach is the vindication of classical theory, updated and adapted to current management problems
and the size of today's organizations.
The neoclassical approach "consists of identifying the functions of managers and then deducing from them the
fundamental principles of management practice".

Chapter 7: Neoclassical theory of management

The neoclassical authors do not strictly speaking form a defined school, but a relatively heterogeneous movement.
The main characteristics of neoclassical theory are:
1. Emphasis on management practice
The neoclassical theory is characterized by emphasizing the practical aspects of management, by pragmatism and by the
search for concrete and palpable results, although it does not neglect the theoretical concepts of management.
2. Reaffirmation of the classical postulates
The neoclassical approach uses most of the classical concepts: linear, functional and line-staff organization structure, line
and advisory relationships, authority and responsibility problem and departmentalization.
3. Emphasis on general principles of management
Neoclassical authors establish norms of administrative behavior. For some authors, the study of administration
corresponds to the presentation and discussion of general principles on how to plan, organize, direct, control, etc.
4. Emphasis on objectives and results.
Every organization exists to achieve objectives and produce results. The organization must be determined, structured and
oriented according to these. Hence the emphasis on organizational objectives and results to be achieved, as a means of
evaluating the performance of organizations. Objectives are the visualized values or results desired by the organization.
The organization expects to achieve them through operational efficiency. It is exactly the objectives that justify the
existence and operation of an organization.
5. Eclecticism in neoclassical theory
The neoclassical authors, although based on classical theory, are quite eclectic and include the content of other recent
administrative theories. Because of this eclecticism, the neoclassical theory seems to be an updated classical theory and
is situated in the eclectic model that defines the formation of the manager in the second half of the 20th century.

The administration
For neoclassical authors, management consists of orienting, directing and controlling the efforts of a group of individuals
to achieve a common objective.
All institutions are organizations and have a common administrative dimension:
Regarding objectives. Organizations do not live for themselves; they are only means or social organs that aim at the
accomplishment of a social task. There is no scientific process for establishing an organization's objectives.
Regarding administration. Large organizations differ in their objectives and purposes, but are essentially similar in the
administrative area. All of them require the gathering of many people who must act together and integrate into a common
effort. All organizations must match organizational objectives with the need for flexibility and individual freedom.
In terms of individual performance. In this area there is the smallest difference between organizations. Individual
performance indicates the effectiveness of the personnel working in the organizations. Individuals execute, decide and
plan, since organizations are legal fictions that do nothing, decide or plan for themselves; organizations only act to the
extent that their managers act. Effectiveness is necessary for the organization (to be able to function) and for the
individual (to be able to achieve satisfaction).

Efficiency and effectiveness

Each company must be considered from the point of view of effectiveness and efficiency simultaneously. Effectiveness
is a measure of the achievement of results, while efficiency is a measure of the use of resources in that process. In
economic terms, a company's efficiency refers to its ability to satisfy a need of society by providing it with products
(goods or services), while effectiveness is a relationship between inputs and outputs;
From this point of view, it is a cost-benefit relationship.
If the manager is concerned with doing things correctly, he/she will be moving towards efficiency (the best use of
available resources). To evaluate the scope of the results, i.e., to verify that what is actually done is what should be done,
then it will be oriented towards effectiveness (the achievement of the objectives through the available resources).

Basic principles of the organization

The fundamental principles of formal organization are:

Division of labor
To be efficient, production must be based on the division of labor, which consists of breaking down a complex process
into a series of small tasks.
In the short term, the consequences of the division of labor were:
a. Increased productivity and performance of the personnel involved.
b. Increased organizational efficiency
c. Reduction of production costs, especially raw material and labor costs.
2. Specialization
Specialization is a consequence of the division of labor: each organ or position has specific and specialized functions and
tasks.
3. Hierarchy
This is another consequence of the division of labor and functional diversification in the organization. Their mission is to
direct the activities so that they fulfill their respective missions in harmony. The organization needs a hierarchical
structure to direct the operations of the subordinate levels. It is composed of Authority, Responsibility and Delegation.
4. Administrative scope
As a consequence of the principle of the distribution of authority and responsibility, neoclassical authors analyze the
managerial span (span of command or span of control), which indicates the number of subordinates that a manager can
supervise.

Centralization versus Decentralization

1. Centralization
Centralization emphasizes hierarchical relationships, i.e., the chain of command. The organization is designed on the
premise that the individual at the top has the highest degree of authority, and that the authority of the other individuals is
staggered downward, according to their position in the organization chart. The hierarchical chain or chain of command is
closely related to the unit of command.

Advantages of centralization
Centralization was very popular in the past due to the following advantages:
1. Decisions are made by managers who have a global vision of the company.
2. Decision makers at the top are better trained and prepared than those at lower levels.
3. Decisions taken are more consistent with overall business objectives.
4. Centralization eliminates duplication of efforts by decision makers and reduces operating costs.
5. Certain functions, such as purchasing and treasury, allow for greater specialization and other advantages.

Disadvantages of centralization
1. Decisions are made at the top, far from the facts and circumstances.
2. Decision makers at the top have little contact with the people and situations involved.
3. The lines of communication in the hierarchical or escalation chain cause delays and higher operational costs.
4. Since decisions must go through the escalation chain and involve many people at the intermediate level, it is possible
that there may be distortions and personal errors in the process of communicating decisions.

2. Decentralization
Allows lower levels of the organization to analyze decisions in detail. In recent decades, there has been a predominant
tendency to decentralize in order to make better use of human resources. This principle is defined: the authority to
undertake or initiate an action should be delegated as close as possible to the scene of the action.

Advantages of decentralization
1. Managers are closer to where decisions need to be made.
2. It allows to increase efficiency and motivation, to make better use of the time and aptitude of the employees.
Improves the quality of decisions as their volume and complexity are reduced, and decreases the decision making of the
top management.
4. Reduces paperwork for central office staff, as well as related expenses.
5. Coordination costs can be reduced due to greater autonomy in decision making.
6. It allows the formation of local or regional executives who are more motivated and more aware of their results.

Disadvantages of decentralization
1. Lack of uniformity in decisions.
2. Insufficient use of specialists.
3. Lack of appropriate equipment or officials in the field of activities.

Management functions
According to neoclassical theory, the functions of the manager correspond to the elements of management that Fayol
defined at the time (planning, organizing, directing, coordinating and controlling).

Administrative process:

Chapter 8: Resurgence of neoclassical theory: types of organization.

We can distinguish three traditional types of organization:

Linear organization
The linear type of organization is the simplest and oldest structural form. There are direct and unique lines of authority
and responsibility between superiors and subordinates. Hence its pyramidal format. Each manager receives and transmits
everything that happens in his or her area of competence, as the lines of communication are strictly established. It is a
form of organization, typical of small companies or initial stages of organizations. It has the following characteristics:
linear or single authority; formal lines of communication; centralization of decisions; pyramidal configuration.
The advantages of linear organization are: a. Simple and easy to understand structure. b. Clear delimitation of the
responsibilities of the organs and remarkable precision of jurisdiction. e. Ease of implementation. d. Stability. It allows
the organization to function. e. Type of organization suitable for small companies.
Disadvantages: a. Stability and constancy of formal relationships. b. Linear authority based on a single, direct command.
c. The linear organization exaggerates the function of leadership and command, presupposes the existence of bosses
capable of doing everything and knowing everything. d. Unity of command makes the manager multidisciplinary, who
cannot specialize in anything.
e. As the company grows, the linear organization causes the formal lines of communication to become congested. f.
Communications, being linear, become indirect, subject to intermediaries and distortions.

The linear organization is applicable when the organization is small and does not require specialists in highly technical
tasks, when the organization is just starting, when it has little time of operation and speed in execution.
Functional organization (Taylor)
It applies the principle of specialization of functions for each task. The functional principle separates, distinguishes and
specializes.
Taylor verified that, in addition to the time spent on communication, there was a need to involve the production manager,
general manager and repair manager in a simple routine problem. As a result, he replaced the linear supervision of
production managers with functional supervision. Its characteristics are: a. Functional or divided authority (relies on
specialization); b. Direct lines of communication (without the need for mediation)c. Decentralization of decisions
(decisions are delegated to specialized positions that have the necessary knowledge to better implement them); d.
Emphasis on specialization. Its advantages: a. Provides the maximum of specialization in the various organs or positions
of the organization; b. It allows for the best possible technical supervision, with specialization at all levels; c. It develops
direct communications, without intermediaries; d. It provides the best possible technical supervision, with specialization
at all levels; e. It develops direct communications, without intermediaries. Separates planning and control functions from
execution functions. Disadvantages: a. Dilution and consequent loss of authority; b. Multiple subordination; c. Tendency
toward competition among specialists; d. Tendency to tension and conflicts within the organization.
This organization is applicable when: a. The organization, being small, has a team of specialists reporting to an effective
leader and oriented towards well-defined and well-placed common objectives.

Staff-line organization
The line-staff type of organization is the result of the combination of the linear and functional types of organization,
seeking to increase the advantages of these two types of organization and reduce their disadvantages. In the line-staff
organization, line and staff bodies coexist. The line bodies are responsible for the achievement of the organization's basic
objectives; they produce results for the organization. The staff bodies are support and assistance bodies that advise the
line bodies.
The line-staff organization is the most widely applied and used. The organization makes it possible to incorporate
specialists into the organization at a reasonable cost, as long as their services are indispensable.

Committees (boards, councils, working groups, etc.)

For some authors, the committee is a "distinct type of advisory organization" that does not have line characteristics.
Others conceive of the committee as a "group of persons appointed to perform an administrative act". In essence, the
committee "is a group of people who, as a group, are given a topic to study.
The committee does not constitute an organ of the organizational structure. These committees are used when it is
necessary to obtain the opinion of several qualified persons in order to make an important decision; or when an adequate
conclusion requires a wide variety of information.

Implications of neoclassical theory: departmentalization

For the classical approach, the fundamental basis of organization is the division of labor.

Concept of departmentalization
For the classical authors, specialization in the organization can occur in two directions: vertical and horizontal. Vertical
specialization occurs when there is a need to increase the quality of supervision or management by adding more
hierarchical levels in the structure.
On the other hand, horizontal specialization (departmentalization) occurs when there is a need to increase expertise,
efficiency and better quality of the work itself. It corresponds to a specialization of activity and knowledge. Horizontal
specialization is achieved at the expense of a larger number of specialized bodies, at the same hierarchical level, each in
its own task.
Vertical specialization rarely occurs without horizontal specialization, and vice versa. Both complement each other and
hardly walk separately.
Vertical specialization is a division of labor in terms of authority and responsibility, while departmentalization is a
division of labor in terms of differentiation between the various types of tasks performed by the organs.
Types of departmentalization (Gulick)

Management by Objectives (APO) ( Peter Drucker)

Beginning in the 1950s, neoclassical theory shifted attention from the so-called "activities-means" to the organization's
objectives or goals. The focus on "process" and the major concern with activities (means) was replaced by a focus on
results and objectives achieved (ends). The focus on "how" to manage shifted to "why" or "what for" to manage. Work
went from an end in itself to a means of obtaining results.

The APO has the following characteristics:

1. Joint goal setting between the manager and his superior (both the manager and his subordinate are actively involved in
the process of defining and setting goals).
2. The establishment of objectives for each department or position.
3. Interrelation between departmental objectives
4. Emphasis on measuring and controlling results.
5. Continued evaluation, review and modification of plans.
6. Active involvement of management and subordinates.
7. Intensive staff support.

Target setting

Management by objectives is a management model by means of which an organization's management establishes goals
for its administration.
An objective is a written statement of the results to be achieved within a certain period. The objective must be
measurable, challenging, relevant and compatible. As much as possible in numbers.
There are three levels of objectives:
a. Strategic objectives. These are broad objectives that encompass the organization as a whole. Its basic characteristics
are: globality and term.
b. Tactical objectives. These are objectives related to each department of the organization. Its characteristics are:
connection with each department and medium term.
c. Operational objectives: These are objectives related to each activity or task. Its characteristics are: breakdown and
short term.

Concepts of strategy and tactics

Strategy as the mobilization of all the company's resources on a global level with the purpose of achieving long-term
objectives. Tactics is a specific scheme of resource employment within an overall strategy.

Part 6: "Structuralist approach to management".

Chapter 11: Bureaucratic Model of Organization

From the 1940s onwards, criticisms of both classical theory (for its mechanicism) and human relations theory (for its
naive romanticism) revealed the lack of a solid and comprehensive theory of organization to guide the manager's work.
Some scholars looked to the work of the late economist and sociologist Max Weber for inspiration for this new theory of
organization. Thus arose the theory of bureaucracy in administration.
Bureaucracy is a form of organization based on rationality, that is, on the adequacy of the means to the intended
objectives (ends), with the purpose of guaranteeing the maximum possible efficiency in the achievement of those
objectives.

According to the current popular concept, bureaucracy is understood as an organization where paperwork multiplies and
increases, preventing quick or efficient solutions. The concept of bureaucracy for Max Weber is exactly the opposite. For
him, bureaucracy is the efficient organization par excellence.
According to Max Weber, bureaucracy has the following characteristics:
Legal nature of the rules and regulations (the bureaucracy is an organization based on its own legislation, which defines
in advance how the bureaucratic organization should function).
2. Formal nature of communications (bureaucracy is an organization united by written communications. Rules, decisions
and administrative actions are formulated and recorded in writing).
3. Rational character and division of labor (each participant must know what his task is, what is his capacity of command
over others, and above all, what are the limits of his task, right and power).
4. Impersonality in relationships (the administration of the bureaucracy is carried out without considering people as
persons, but as occupants of positions and functions).
5. Hierarchy of authority (each lower position must be under the control and supervision of a higher position).
6. Standardized routines and procedures (the occupant of an office does not do what he wants, but what the bureaucracy
imposes him to do).
7. Technical and meritocratic competence (Bureaucracy is an organization in which the choice of people is based on
merit and technical competence and not on personal preferences).
8. Management specialization (the leader is not necessarily the owner of the business or a large shareholder of the
organization; he/she is a professional specialized in its management).
9. Professionalization of the participants (Each employee of the bureaucracy is a professional).
10. Complete operational foresight (all employees must behave in accordance with the rules and regulations of the
organization, with the aim of achieving the maximum possible efficiency of the organization).

Bureaucratic rationality
A concept closely linked to that of bureaucracy is that of rationality. In the Weberian sense, rationality implies adequacy
of means to ends. In the bureaucratic context, that means efficiency. An organization is rational if the most efficient
means are selected for the implementation of goals.
Dilemmas of bureaucracy
Weber observed the fragility of the bureaucratic structure, which faces a typical dilemma: on the one hand, there are
pressures from outside forces to motivate the bureaucrat to follow rules other than those of the organization and, on the
other hand, the commitment of subordinates to bureaucratic rules tends to weaken gradually. The organization, in order
to be efficient, requires a special type of legitimacy, rationality, discipline and limitations of scope.

Dysfunctions of the bureaucracy

For Weber, bureaucracy is an organization whose desired consequences are summarized in the predictability of its
operation to obtain the greatest efficiency of the organization. Yet, in studying the intended (or desired) consequences of
bureaucracy that lead it toward maximum efficiency, Merton also noted the unintended consequences, and used the name
dysfunctions of bureaucracy to designate anomalies of functioning. These dysfunctions are: 1. internalization of rules and
adherence to regulations; 2. Excessive formalism and paperwork; 3. Resistance to change; 4. Depersonalization of the
relationship; 5. Categorization as the basis for the decision-making process; 6. Superconformity to routines and
procedures; 7. Display of signs of authority; B. Difficulty in customer service and conflicts with the public.

Selznick presents the interaction between the bureaucracy and its environment, functioning as a system also focused on
environmental transactions.
For Gouldner there are degrees of bureaucratization in formal organizations. The model proposed by Weber constituted
the ideal model of bureaucracy and not the only absolute model.
A careful critical appreciation of bureaucracy leads us to the conclusion that, despite all the limitations and restrictions,
bureaucracy is perhaps one of the best organizational alternatives, superior to several other alternatives attempted in the
course of the twentieth century. Most importantly, Bureaucracy Theory set aside the normative and prescriptive approach
in favor of a descriptive and explanatory approach.

Chapter 12: Structuralist theory of management

At the end of the 1950s, Human Relations Theory went into decline. The opposition between the classical theory and the
theory of human relations created a dead-end situation in administration that the theory of bureaucracy was unable to
overcome. The Structuralist Theory means a splitting of the Theory of Bureaucracy and a slight approximation to the
Theory of Human Relations; it represents a critical vision of the formal organization.
Among its origins, there is a new concept of structure: Structure is the formal set of two or more elements that remains
unchanged either in the change or in the diversity of contents, that is, the structure is maintained even with alteration of
one of its elements or relationships.

A society of organizations
For structuralists, modern industrialized society is a society of organizations on which man depends to be born, to live
and to die.
Organizations smooth all aspects of modern life and involve the participation of countless people. Efficiency is obtained
when an organization applies its resources to the alternative that produces the best result. Formal organization makes it
possible to reduce the uncertainties arising from human variability (individual differences among people), to take
advantage of the benefits of specialization, to facilitate the decision-making process and to ensure the implementation of
the decisions taken.

The organizational man

While the classical theory characterizes homo economicus and the theory of human relations as "social man", the
structuralist theory focuses on "organizational man", the man who plays different roles in various organizations. Its
characteristics are: flexibility (in the face of the constant changes that occur in modern life); tolerance to frustrations;
ability to postpone rewards; and permanent desire for fulfillment.

No two organizations are alike. Organizations are different from one another and show enormous variability.

Part 7: Behavioral approach to management

Chapter 13: Theory of behavior in management
The behavioral theory is based on the individual behavior of people. In order to explain how people behave, it is
necessary to study human motivation.

Maslow's hierarchy of needs

Maslow presented a theory of motivation according to which human needs are organized and arranged in levels, in a
hierarchy of importance and influence:
Physiological needs: These are the primary level of all human needs, but of vital importance. Physiological needs are
related to the survival of the individual and the preservation of the species. They are instinctive needs and are born with
the individual.
Safety needs: These are needs for security, stability, seeking protection against threat or deprivation and escape from
danger.
3. Social needs: the need for association, participation, acceptance by peers, exchange of friendship, affection and love.
4. Need for esteem: These are the needs related to the way in which the individual sees and evaluates him/herself. It
involves self-appreciation, self-confidence, the need for social approval and respect, status, prestige and consideration.
5. Self-realization needs: These are related to the realization of one's own potential and continuous improvement. This
tendency is expressed through 'the impulse a person has to grow more than he is and to be all that he can be.
Human needs take on forms and expressions that vary according to the individual.

Herzberg's two-factor theory

For Herzberg, there are two factors that guide people's behavior:
1. Hygienic factors or extrinsic factors: these are found in the environment surrounding people and include the conditions
in which they perform their work. Hygienic factors are beyond the control of individuals. The main hygienic factors are:
salary, social benefits, etc.
Motivational factors, or intrinsic factors: Motivational factors are under the control of the individual, as they are related
to what he/she does and performs. They involve feelings of individual growth, professional recognition and self-
fulfillment, and depend on the tasks the individual performs at work.

When motivational factors are optimal, they lead to people's satisfaction.

Herzberg's two-factor theory presupposes the following aspects:

- Job satisfaction depends on motivational or satisfying factors. The challenging and stimulating content or activities of
the person's position.
- Dissatisfaction in the position depends on hygienic or unsatisfactory factors. The work environment, salary, benefits
received, supervision, co-workers and general context involving the position held.

Maslow's and Herzberg's theories of motivation show points of agreement. Herzberg's hygiene factors relate to Mazlow's
primary needs (physiological and safety needs, including some social needs), while motivational factors relate to
secondary needs (esteem and self-actualization needs).

Theory X and Theory Y

McGregor compares two opposing and antagonistic styles of management: on the one hand, a style based on traditional,
mechanistic and pragmatic theory (which he called Theory X) and, on the other, a style based on modern conceptions of
human behavior (which he called Theory Y).

a. Theory X
It is the traditional conception of management and is based on erroneous and incorrect convictions about human
behavior, which are:
- People are indolent and lazy by nature: they avoid work or work as little as possible.
- They lack ambition: they do not like to take on responsibilities and prefer to be directed and feel dependent.
- Their very nature leads them to resist change, as they seek their own security and do not want to take risks that could
put them in danger.
- Their dependence makes them incapable of self-control and self-discipline: people need to be directed and controlled
by management.
b. Theory AND
It is the modern conception of management according to the behaviorist theory. Theory Y is based on current and
unbiased conceptions and premises about human nature, which are:
- People have no inherent dislike of working. Depending on certain conditions, work can be a source of satisfaction and
reward.
- People are not, by their nature, passive or resistant to the needs of the company.
- People have motivation, development potential, appropriate behavior patterns and the ability to assume responsibility.
- The mediocre man learns under certain conditions to accept, but also to seek responsibilities.
- The capacity for a high degree of imagination and creativity in business problem solving is widely (and not sparsely)
distributed among people.

Management systems
Líkert, an exponent of behavioral theory, considers management to be a relative process, in which there are no universal
rules and principles valid for all circumstances and situations. Management is never the same in all organizations and can
assume different characteristics, depending on the existing internal and external conditions. Based on his research, Likert
proposes a classification of management systems. Administrative systems are characterized in relation to four variables:

A. SYSTEM 1: "Coercive authoritarian". It is an autocratic and strong administrative system, coercive and arbitrary,
which rigidly controls everything that happens within the organization.
B. SYSTEM 2: "Authoritarian benevolent", is an authoritarian administrative system consisting of an attenuated
variation of System 1. In essence, it is a more condescending and less stringent System 1.
C. SYSTEM 3: "Consultative". It is a system that tends more towards the participatory side than towards the autocratic
and imposing side, as in the two previous systems. It represents a gradual softening of organizational arbitrariness.
D. System 4: "Participative". It is the democratic administrative system par excellence. It is the most open of all systems.

The four systems have no defined boundaries between them. A company can be located above System 2 and below
System 3, i.e., around 2.5. It can also be classified as System 2 in the decision-making process and 3 in the reward
system.

Decision theory
Decision is the process of analysis and choice among the available alternatives of courses of action to be followed by the
individual.
The decision maker is in a situation, aims to achieve objectives, has personal preferences and follows strategies (courses
of action). To achieve results. The decision involves a choice.
Rationality lies in the choice of the appropriate means to achieve certain ends, with the aim of obtaining the best results.

Chapter 14: Organizational Development (OD) Theory

Based on behavioral theory, a group of social scientists and business consultants developed a modern, democratic and
varied approach to the planned development of organizations, which received the name of Organizational Development
(OD).
The OD movement emerged in 1962 as a set of ideas about man, organization and the environment, with the purpose of
facilitating growth and development. development of organizations.
The concept of OD is related to the concepts of change and the organization's capacity to adapt to the change occurring
in the environment.
The main focus of OD is on changing people and the nature and quality of their working relationships. Its emphasis is on
changing the culture of the organization. In principle, OD is a planned organizational change.

The common objectives of an OD program are:

Creation of a sense of identification of the people in relation to the organization. Motivation is sought in conjunction
with commitment, sharing of common objectives and increased loyalty.
2. Development of team spirit through the integration and interaction of people.
3. Improvement of the common perception of the external environment in order to facilitate the adaptation of the entire
organization.

Chapter 15: Technology and Management

Technology has always had a strong influence on the functioning of organizations since the Industrial Revolution.
Technological development always constitutes the basic platform that drives the development of organizations and
enables the consolidation of globalization.
Cybernetics emerged as an interdisciplinary science to relate all sciences.
Cybernetics is the science of communication and control, whether in the animal (man, living beings) or in the machine.
Communication makes systems integrated and coherent and control regulates their behavior.
The system receives inputs in order to operate. The input to the system is everything that the system imports or receives
from its external world. It can be made up of information, energy and materials.
Output; the final result of the operation of a system. Every system produces one or more outputs.
By means of the output, the system exports the result of its operations to the environment. This is the case of
organizations that produce outputs such as goods or services and a myriad of other outputs (information, profits, retired
or retiring people, pollution and detritus, etc.).
The concept of black box refers to a system whose interior cannot be revealed, whose internal elements are unknown
and can only be known "on the outside", through external manipulations or external observation.
Feedback is a mechanism whereby a portion of the output energy of a system or machine is returned to the input.
Homeostasis is a dynamic equilibrium obtained by self-regulation, that is, by self-control. It is the capacity of the system
to maintain certain variables within limits, even when the stimuli of the external environment force these variables to
assume values that exceed the limits of normality.
The concept of information, both from the popular and the scientific point of view, involves a process of uncertainty
reduction. In everyday language, the idea of information is related to that of novelty and usefulness.
Redundancy is the repetition of the message so that its correct reception is guaranteed. Redundancy introduces in the
communication system a certain capacity to eliminate noise and prevent distortions and deceptions in the reception of the
message.
Entropy means that parts of the system lose their integration and communication with each other, causing the system to
break down, lose energy and information and degenerate.
Synergy literally means "working together". The concept of synergy is also controversial. Synergy exists when two or
more causes, acting together, produce an effect greater than the sum of the effects they produced acting individually.

Chapter 17: Systems Theory

GST does not seek to solve problems or attempt practical solutions, but to produce theories and conceptual formulations
for applications in empirical reality.
The most important aspect of the system concept is the idea of a set of elements interconnected to form a whole. The
whole has its own properties and characteristics that are not found in any of the isolated elements.
The open system is characterized by an exchange of transactions with the environment and is constantly maintained in
the same state (self-regulation) despite the fact that the matter and energy of which it is composed are constantly renewed
(dynamic equilibrium or homeostasis).