Classical Management Approach

A set of similar ideas on the organisation of people and management or management thoughts were evolved during the late 19th century and the early 20th century which form the classical approach to management theory. The approach was evolved as an outcome of the Industrial Revolution.

Classical Management Approach

Classical Management approach covers three branches:

1. Scientific management
2. Administrative principles
3. Bureaucratic organisation

The economic rationality of management and organisation as a whole are prominent factors for all three branches of the classical approach.

The economic rationality is an assumption that the motivation for employees is an economic incentive and the employees yield the greatest monetary benefit by making the choices which provide them with the highest benefit.

The classical management approach emphasised on the following aspects:

• Work planning
• Technical requirements
• Principles of management
• Formal structure
• Assumption of rational and logical behaviour

Classical theorists, with the help of logical and rational structuring of jobs and work, were able to control human emotions at workplace.

The key contributions of the classical approach of management include:

• Use of scientific principles and concepts to the practice of management
• Development of the basic functions of management
• Application and articulation of specific management principles

The merits of the classical approach are as follows:

• Clarity in hierarchy: The classical approach stresses upon a clear hierarchical structure (three-level structure) to define the leadership level and responsibilities of employees at various levels in an organisation.
  
  
• Clear definition of division of labour: The classical approach focuses on the concept of dividing the labour by breaking down project tasks into easy and smaller tasks. This helps workers acquire expertise and specialisation in a specific area. Increased efficiency and higher productivity were the benefits of the division of labour approach.
  
  
• Motivation by money: The classical approach emphasises the concept of motivating employees through monetary incentives. This gave management an easy way to handle workforce as employees themselves work harder and become more productive when they get incentives for their efforts.
  
  
• Decision making by a single leader: The classical approach used autocratic leadership to make decisions and direct employees.

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Taylor’s Scientific Management

Scientific management is the name given to the principles and practices which came out of the work of Frederick Taylor and his followers (Henri Gantt, Frank and Lillian Gilberth and Harrington Emerson). They focussed on efficiency and systematisation in management. Taylor and his disciples together revolutionised management thinking.

The major concepts from a series of ideas developed by Taylor are as follows:

• Use a scientific way to break down the tasks of each employee in smaller tasks
• Design tasks for employees in a scientific manner and train them
• Use cooperation between management and employees to perform tasks in a scientifically designed manner
• Use division of labour to set up instructions and design work between managers and workers

Principles of Taylor’s Scientific Management

The principles of scientific management are as follows:

• Replacement of rule of thumb by development of science for each part of men’s job: This principle of scientific management suggests to:
  • observe and analyse the work assigned to an employee considering all the constituents involved and time taken to do the task.
    
    
  • use methods, such as enquiry, investigation, data collection, analysis and frame rules for organisation and workers instead of the rule of thumb concept.
    
    
  • make decisions on the basis of facts and figures.
    
    
    
• Selection, training and development of workers in a scientific manner: This principle of scientific management suggests that:
  • selection of workers should be based upon a scientifically designed procedure. ‰ specific requirements for each and every job should be given in physical, mental and other requisites.
    
    
  • workers must be selected and made fit for the job through suitable training.
    
    
  • management should provide opportunities for developing workers to the best of their capabilities.
    
    
  • highest level efforts should be made for efficiency development and prosperity of each employee.
    
    
    
• Co-operation between management and workers or ‘harmony not discord’: This principle of scientific management suggests that:
  • focus should be laid on co-operation and not in individuality.
    
    
  • the goals of an organisation should be achieved through cooperation.
    
    
  • any conflict between managers and workers should be avoided.
    
    
  • there should be a mutual understanding between the employer and employees.
    
    
  • there should be a harmony of interests between the employer and employees.
    
    
    
• Division of responsibility: This principle of scientific management suggests that:
  • specific job roles to be performed by managers and workers at various levels should be defined.
    
    
  • planning should be separated from execution. This is because planning is done by management whereas the execution of planned work is carried out by the workers.
    
    
    
• Mental revolution: This principle of scientific management suggests that:
  • there should be an absolute change in the viewpoints of workers and managers regarding their work efforts and mutual relation.
    
    
  • suitable working conditions should be developed by management.
    
    
  • scientific solutions to all problems should be provided.
    
    
  • workers should not waste resources of the organisation.
    
    
  • workers should be attentive and devoted while doing their jobs.
    
    
  • good remuneration should be provided to workers to boost up their morale, which further creates a sense of belongingness, facilitates discipline and increases productivity.
    
    
    
• Maximum prosperity for employer and employees: This principle of scientific management suggests that:
  • the profits for the employer as well as for the employees should be maximised.
    
    
  • each worker should be provided an opportunity to attain his highest efficiency which, indirectly, means more profits.
    
    
  • employers should get increased profits and workers should get improved wages when maximum output is achieved with the optimum utilisation of resources.

The theory of scientific management attracted criticism by various management thinkers and scholars. The criticism is given from both the workers’ and the management’s perspectives.

Criticism of Taylor’s Scientific Management

The criticism of scientific management is as follows:

• Worker’s criticism: The criticism of scientific management from the point of view of workers is as follows:
  • Fast working speed of workers: Scientific management ignores the health and well-being of workers as it focuses on the speed of performing work by workers.
    
    
  • Loss of individual worker’s creativity: It considers workers as automatic machines as they are not allowed to think of their own methods of handling tasks.
    
    
  • Issue of monotony: It makes work a routine task as it separates the functions of planning from execution.
    
    
  • Increased unemployment: It brings unemployment as more productivity is expected by workers all the time.
    
    
  • Weakening of trade unions: It brought the concept of solving important issues of wages and working conditions by the management through scientific investigation; this minimised the roles of trade unions.
    
    
  • Exploitation of workers: It improves productivity with the efforts of workers but they are provided with a little benefit for their efforts.
    
    
    
• Employer’s criticism: The criticism of scientific management from the point of view of employers is as follows:
  • Heavy investment: Application of scientific management in organisations requires heavy investment and the employer has to bear the extra cost of the planning department.
    
    
  • Loss due to reorganisation: It often leads to suspension of work for reorganising and changing the set-up of the place or premises of the business unit.
    
    
  • Not suitable for small-scale firms: It requires various measures such as establishing a separate personnel department and conducting the ‘time and motion studies’. These are too expensive for a small industrial unit/organisation.

Fayol’s Administrative Management

Henri Fayol (1841-1925), a French mining engineer, promoted the concept of administrative management. He focussed on developing administrative principles that could be applicable to both general and higher managerial levels. He laid emphasis on organisational management as well as human and behavioural factors in the organisation.

Henri Fayol and his followers (Mooney and Reiley, Simon, Urwick, Gullick, etc.) put forward the concepts of:

• Pyramidal (hierarchical) form of management
• Scalar principle
• Unity of command
• Exception principle
• Span of control
• Departmentalisation

14 Principles of Management

Additionally, Henri Fayol also gave 14 principles of management. Henri Fayol explored factors for successful management processes and synthesised 14 principles of management, which are as follows:

• Division of labour
• Authority and responsibility
• Unity of command
• Unity of direction
• Discipline
• Subordination of individual interest
• Remuneration
• Degree of centralisation
• Scalar chain
• Order
• Equity
• Stability of tenure of personnel
• Initiative
• Esprit de corps

Division of labour

Job specialisation was given importance by Henry Fayol. According to Fayol, jobs must be divided and sub-divided and allotted to individuals who specialise in a particular area. He put forward that the subdivision of work makes the work simpler to do in a more efficient way. Division of labour also increases the speed and accuracy of the person doing the job.

Authority and responsibility

He analysed that authority and responsibility exists parallel to each other. Delegation of authority to individuals at a job should go along with an equal amount of responsibility. The same rule applies at the time of allotting any responsibility to individuals.

Along with responsibility, they must also be given a reasonable authority to carry it out effectively. There should be a proper balance between authority and responsibility as through authority, superiors get the job done through subordinates and the obligation of the allotted job performance lies reflected with the presence of responsibility.

For instance, a production manager is given the responsibility to make employees work extra hours so as to fulfil an urgent consignment commitment. The production manager was given the responsibility and authority to get the work done but he was not given the authority to punish a subordinate for not obeying his orders. Hence, there should be a balance of authority and re- responsibility.

Unity of command

He indicated that subordinates should receive orders from one boss only. Unless it is necessary, dual sub-ordination should not be preferred. This is because receiving orders from more than one boss can lead to the duplication of work, overlapping of efforts, division of loyalty, confusions, chaos and delays, escapism and indiscipline in the work environment. In order to create a harmonious relationship between superiors and subordinates, the unity of command should be followed.

For instance, Rahul, a sales executive of an office décor chain, is asked to finalise a deal with a buyer. His senior, the marketing manager, allowed him to give a maximum of 10% discount to close deals with buyers. Rahul faces problem in closing deals with buyers when he comes to know that the finance department has issued strict instructions not to allow more than 5% discount. This situation shows the lack of unity of command.

Unity of direction

He suggested that the efforts of all persons working in an organisation should be linked to a common objective. The presence of a common objective for all helps the team to be focussed and work in the same direction. This is achieved by defined and planned activities of managers as they are ultimately responsible for work execution, monitoring and controlling.

For instance, if a business firm manufactures kids garments and shoes, then it should have two separate divisions for both kids garments and shoes. Each division should have its own employees, in-charge, plans and resources to ensure unity of direction.

Discipline

He suggested that maintaining discipline helps an organisation function more smoothly due to the absence of chaos and confusions. Good conduct and healthy interactions among all the levels of management are often a part of the core values of an organisation.

For instance, assume that the management of a company and labour union enter into a mutual agreement that to revive the company from losses, the workers will put ef- forts working extra hours without any additional payment.

The management of the company has made a commitment that after reviving from losses, the wages of the workers will be increased. Discipline in this situation implies that both parties must fulfil their promise without any prejudgment towards one another.

Subordination of individual interest

This means that an organisation should keep its objectives at a higher priority than individual objectives. There should be a demarcation between individual interests and the interests of an organisation.

Remuneration

He suggested that the efforts and productivity of employees should be recognised and they should be motivated accordingly by providing remuneration in both the monetary and the non-monetary forms.

Degree of centralisation

He indicated that depending upon the volume, size and hierarchy of the organisation, the decision-making authority can be centralised and decentralised. When the decision-making authority is concentrated in the hands of top management, it is referred to as centralisation of authority. Contrary to this, if the decision-making authority is delegated to top-level, middle level and lower level of management, it is called decentralisation of authority.

Scalar chain

He used the ‘hierarchy’ management principle to define a clear line of authority between different levels of management from top managers to employees working at lower lev- els. The hierarchy levels vary from organisation to organisation.

A chain of hierarchy represents which employee has to connect with which manager or superior for work-related issues and challenges.

Order

He suggested the use of ‘material order’ and ‘social or- der’ for the systematic arrangement of organisational resources to achieve goals. Material order refers to the arrangement of all non-living resources such as tools and materials and the social order is the arrangement of human resources. According to Fayol, People and materials must be in suitable places at appropriate time for maximum efficiency.

Equity

He advocated for kind and equal treatment of employees at all levels of management. There should be a fair and impartial treatment of employees.

Stability of tenure of personnel

He specified to place the right staff at the right place to keep a check on employee turnover rate by providing them job security.

Initiative

He contended that employees should be provided with a chance to express new ideas in management decisions. This motivates employees and creates value.

Esprit de corps

He indicated the use of ‘Espirit de’ Corps’ for inspiring workers to work harder. Espirit de’ Corps implies understanding among team members and team spirit in the workgroups.

Max Weber’s Bureaucratic Approach

Bureaucratic management was promoted by Max Weber (1864-1920), who was a German sociologist. According to Weber, bureaucratic organisation is the most appropriate type of organisation which is characterised by specialisation, division of labour, well-defined hierarchy, formal rules and regulations and impersonality in the application of rules.

Some of the important characteristics of bureaucratic management are:

• Management by standard rules
• Division of labour
• Selection of personnel having technical skills
• Hierarchical organisational structure
• Record of all administrative acts, decisions, and rules

Management by standard rules

According to Weber, an organisation must be governed by a set of rules. Upper level managers must follow these rules while controlling lower level workers.

Division of labour

Weber promoted the principle of division of labour while assigning the work to all employees. According to him, the division of labour results in saving a lot of time consumed during changing over from one job to another.

Selection of personnel having technical skills

Employees having required technical skills must be hired in order to perform their jobs efficiently.

Hierarchical organisational structure

In order to be successful, an organisation must adopt a hierarchical structure wherein lower level employees must be under the supervision of higher-level managers.

Record of all administrative acts, decisions, and rules

An organisation must keep a record of all its administrative activities including policies, rules, and decisions. The record can be used in the future for studying the nature of activities and people in the organisation.

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Neo-classical Approach

The neo-classical approach came into existence due to inability of the classical approach to achieve the desired level of efficiency. The unpredicted or rational behaviour patterns of employees created varied difficulties for managers at the workplace.

Hence, this required managers to know the ‘people side’ of their organisation. In an attempt to solve problems which were not solved by the classical theories, neo-classical theories of management were developed, which incorporated behavioural sciences into classical management thoughts.

The neo-classical approach gained importance after World War I. This was basically due to the ‘Hawthorne Experiments’ conducted by Elton Mayo. The following are the features of the neo-classical approach:

• A business organisation is considered to be a social system.
  
  
• The most important element of a social system is humans.
  
  
• The significance of social and psychological factors in deriving worker productivity and satisfaction was also revealed.
  
  
• An individual’s behaviour is dominated by his informal group.
  
  
• The management should aim to develop social, leadership and technical skills of workers for their welfare.
  
  
• The morale of employees and productivity in an organisation has a direct relation.

Elton Mayo’s Hawthrone Experiments

As per the human relations approach, management is all about studying people’s behaviour at work. This approach originated in a NOTE series of experiments conducted by Elton Mayo and his associates at the Harvard School of Business and at the Western Electric Company’s Hawthorne Works, situated near Chicago. The studies conducted were known as ‘Hawthorne Experiments or Studies’.

The main aspect of conducting Hawthorne studies was to concentrate and redevelop managerial strategy by focusing on the integration of human behaviour with socio-psychological aspect in organisations.

Phase of Hawthorne Experiments

Hawthorne experiments were conducted in four phases:

• Illumination experiments: They determined the effects of changes in illumination on productivity.
  
  
• Relay assembly test room experiments: They determined the impact of changes in hours and other working conditions on productivity.
  
  
• Mass interviewing programme: It determined the sentiments and attitudes of workers at work and conducted mass interview programs to determine this.
  
  
• Bank wiring observation room experiments: These experiments determined and analysed the impact of small groups on individuals.

Elton Mayo, on the basis of Hawthorne studies, mainly concluded that a factory/organisation should be considered as a social unit to motivate employees/workers working there. Apart from that, a factory/ organisation should:

• Consider the effect of group influence to make employees/workers more productive.
  
  
• Understand the effects of group behaviour in order to avoid dominance of any one person.
  
  
• Use human or social motivation factors to manage a group of employees.
  
  
• Use an appropriate supervision style as it impacts employees’/ workers’ attitude towards work and productivity.
  
  
• Provide improved working conditions to its employees to increase productivity.
  
  
• Develop employee morale as it positively impacts productivity.
  
  
• Communicate and explain logics behind decisions taken for better productivity and results.
  
  
• Follow a balanced approach (consider all aspects of a problem or situation) to understand a situation well and achieve better results.

Criticism Hawthorne Experiments

The Hawthorne experiments were criticised on the following grounds:

• The experiments were conducted in controlled situations, thus they lacked validity.
  
  
• The experiments conducted, only focused on human behaviour aspects, which is not enough for production improvement.
  
  
• The experiments emphasised on making group decisions which is not possible every time and for all types of decisions in an organisation.
  
  
• The experiments gave too much importance to freedom of workers, which may affect performance or productivity adversely in reality.

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