Classical management theory was introduced in the late 19th century. It became widespread in the first half of the 20th century, as organizations tried to address issues of industrial management, including specialization, efficiency, higher quality, cost reduction and management-worker relationships. While other management theories have evolved since then, classical management approaches are still used today by many small-business owners to build their companies and to succeed. There are three well-established theories of classical management: Taylor’s Theory of Scientific Management, Fayal’s Administrative Theory, and Weber’s Theory of Bureaucracy.
Although these schools, or theories, developed historical sequence, later ideas have not replaced earlier ones. Instead, each new school has tended to complement or coexist with previous ones. Theory recognizing the role that management plays in an organization. The importance of the function of management was first recognized by French industrialist Henri Fayol in the early 1900s.
In contrast to the purely scientific examination of work and organizations conducted by F W Taylor, Fayol proposed that any industrial undertaking had six functions: technical; commercial; financial; security; accounting; and managerial. Of these, he believed the managerial function, ‘to forecast and plan, to organize, to command, to coordinate, and control’, to be quite distinct from the other five. Fayol also identified general principles of management: division of work; authority and responsibility; discipline; unity of command; unity of direction; subordination of individual interest to general interest; remuneration of personnel; centralization; scalar chain of authority; order; equity; stability of tenure of personnel; initiative; and esprit de corps. Fayol’s views on management remained popular throughout a large part of the 20th century.
Evolution of Classical Approach to Management
Traditional process of learning is either through obsevation and experiment. Nature or environment is considered uniform and when we observe certain phenomenon or events uniformly leading to the same result or results, we conclude a cause and effect relationship between the two. This is learning by observation or in other words by experience. Earlier thinkers on management followed this approach in developing theories of management. Learning principally is through empirical process and through analysis of the data collected through observation. Draw the principles of management by looking at and analyzing the jobs that all managers commonly do.
This approach served as a starting point for pioneers on management science to verify the validity and improve the applicability of the principles and practices of management. Analysis of observed data is what constitutes a case study. The observational method of case study helps arriving at logical conclusions about past experience and to test the same as standards for future events. The German socialists, Max Weber followed the classical approach and developed his theory of Bureaucracy, which portrays the structure and design of organization characterized by a hierarchy of authority, formalized rules and regulations that serve to guide the coordinated functioning of an organization.
Basic Postulates of the Classical Approach by Max Weber
1. Management of an organization is considered as a chain of inter-related functions. The study of the scope and features of these functions, the sequence through which these are performed and their inter-relationship leads one to draw principles of management suitable for universal application 2. Learning principles of management is done through the past experiences of actual practicing managers. 3. As business environment consists of uniform cycles exhibiting an underlying unity of realities, functions and principles of management derived through process of empirical reasoning are suitable for universal application 4. Emerging new managers through formal education and case study can develop skill and competency in management concepts and practices 5. The classical approach also recognized the importance of economic efficiency and formal organizational structure as guiding pillars of management effectiveness. 6. Business activity is based on economic benefit. Organizations should therefore control economic incentives
Advantages and Benefits of the Classical Management Theory
Hierarchical Structure One of the advantages of the classical management structure is a clear organizational hierarchy with three distinct management levels. Each management group has its own objectives and responsibilities. The top management is usually the board of directors or the chief executives who are responsible for the long-term goals of the organization. Middle management oversees the supervisors, setting department goals according to the approved budget. At the lowest level are the supervisors who oversee day-to-day activities, address employee issues and provide employee training. The levels of leadership and responsibilities are clear and well defined. While the three-level structure may not be suitable for all small businesses, it can benefit those that are expanding.
Division of Labor One of the advantages of classical management approach is the division of labor. Projects are broken down into smaller tasks that are easy to complete. Employees’ responsibilities and expectations are clearly defined. This approach allows workers to narrow their field of expertise and to specialize in one area. The division of labor approach leads to increased productivity and higher efficiency, as workers are not expected to multitask. Small-businesses owners can benefit from taking this approach if they are looking to increase production with minimal expense.
Monetary Incentive According to classical management theory, employees should be motivated by monetary rewards. In other words, they will work harder and become more productive if they have an incentive to look forward to. This gives management easier control over the workforce. Employees feel appreciated when being rewarded for hard work. A small-business owner can take this approach to motivate the employees to achieve production goals.
Autocratic Leadership The autocratic leadership approach is the central part of classical management theory. It states that an organization should have a single leader to make decisions, to organize and direct the employees. All decisions are made at the top level and communicated down. The autocratic leadership approach is beneficial in instances when small-business decisions need to be made quickly by a leader, without having to consult with a large group of people, such a board of directors. Small businesses, especially sole proprietorships, can have an advantage in taking this approach, as they need a strong leader to grow.
Faults with the Classical View
The classical view of management is often criticized as viewing a worker as a mere tool to improve efficiency. Taylorism and classical management styles negatively affected the morale of workers which created a negative relationship between workers and managers.