A number of practitioners, thinkers and academicians of management have contributed to the formation and development of management principles, thought and approaches.
The study of theories is more important as they guide management decisions, they shape our organization, make us aware of the business environment and are a source of new ideas.
Management theories are a collection of ideas that recommend general rules for how to manage an organization or business. Management theories address how supervisors implement strategies to accomplish organizational goals and how they motivate employees to perform at their highest ability. Typically, leaders apply concepts from different management theories that best suit their employees and company culture. Although many management theories were created centuries ago, they still provide many beneficial frameworks for leading teams in the workplace and running businesses today.
Theories of Management can be categorised as below.
(A) Classical Theory of Management.
- (A l) Bureaucracy- Introduced by Max Weber.
- (A 2) Scientific Management – F.W. Taylor and his followers.
- (A 3) Process/Administrative Management – H. Fayol and others.
(B) Neoclassical Theory of Management.
- (Bl) Human Relations – B.E. Mayo and Roethlisberger
- (B2) Behavioral Science approach – By D. McGregor, A. Maslow & others.
(C) Modern Management theories: Peter Drucker.
Classical theory of management
The Classical Management Theory
Classical management theory is based on the belief that workers only have physical and economic needs. It does not take into account social needs or job satisfaction, but instead advocates a specialization of labor, centralized leadership and decision-making, and profit maximization.
Designed solely to streamline operations, increase productivity and enhance the bottom line, this idea arose in the late 19th century and gained prominence through the first half of the 20th century. While not widely subscribed to in modern times, this theory offers some principles that remain valid, to an extent, in small business settings in regards to manufacturing.
Fredrick Winslow Taylor: Scientific Management Approach
Frederick Winslow Taylor, known popularly as the father of scientific management and a classicist in management theory, was the first person who insisted on the introduction of scientific methods in management. He made for the first time a systematic study of management and evolved an orderly set of principles to replace the trial and error methods then in vogue,
Principles of Scientific Management
The contributions to scientific management evolve into principles. These principles are called principles of scientific management. They include:
(i) Time and Motion Study: Workers were performing their work haphazardly before the era of scientific management. F.W.Taylor observed that a number of movements of the workers at the work place were unnecessary and consequently they were taking more time to do the job than necessary. Hence, he proposed time and motion study. This study involves the following aspects:
- Observing the various motions (movements) of the worker at the work place.
- Identifying the necessary and unnecessary movements in carrying out the work
- Elimination of unnecessary movements.
- Observing the time required for each of the necessary movements with the help of a stop watch.
- Developing shorter and fewer motions and
- Standardising the motions and time.
Thus, this study developed the best way of doing the job, replacing the old rule of thumb knowledge of the workers.
(ii) Science, but not Rule of the Thumb: Scientific management suggests doing the work systematically, determining the work clearly and sequentially, standardisation of motions and time for each motion and allotment of fair work to each worker. Thus, scientific management eliminated the rule of the thumb at the workplace.
(iii) Differential Payment: F.W.Taylor suggested differential piece rate system. He fixed the standard level of production. Those employees who produce less than the standard production received low piece rate and employees produced above the standard production received higher piece rate. Differential piece rates are introduced in order to motivate the employees to produce more than the standard level and enhance productivity.
(iv) Group Harmony: F.W.Taylor emphasised upon group harmony which can be achieved through satisfying the needs of the group members, eliminating the dissatisfaction and frustration of group members, maintaining the sound interpersonal relations among the group members and involving them in various group activities.
(v) Cooperation Between Workers and Management: He also advocated sound employee-employer relations which should result in cooperation between workers and the management. Sound employee-employer relations can be achieved in the following ways:
- Management should understand the workers’ needs and take steps to satisfy them.
- Workers should understand the organisational requirements like increasing productivity, sales, profitability etc. and maximising their contribution.
(vi) Methods Study: F.W.Taylor believed that a methodological and systematic movement of materials ensure fast movement of materials in the factory, avoidance of unnecessary transportation of material from one stage to another stage of production, reduction of distance from one machine to another machine, reduction of the transportation time etc.
(vii) Scientific Selection and Training: He suggested the scientific selection of employees based on job analysis and using various selection tests. He also suggested providing training and development facilities to all the employees based on training needs. This process helps the organisation to exploit the employers’ potentialities and faculties for organisational success.
(viii) Standardisation: Taylor advocated the importance of standardisation tools, instruments, working hours, working conditions, quality of work, cost of production etc.
(ix) Separation of Planning from Execution: He advocated separation of the planning function from the execution function. He advocated that supervisors perform planning function whereas workers perform execution functions.
Henry Fayol : Administrative management approach
Henry Fayol was a major contributor to administrative management approach.
Based on, more than 50 years of experience and obsevation in the company. Fayol felt that the activities of business could be divided, into six groups: (i) Technical; (ii) Commercial; (iii) Financial; (iv) Security; (v) Accounting and (vi) Managerial
Fayol felt that the first five were well known and as a result, devoted most of his book to an analysis of the sixth. He classified the managerial group into six sub- groups, viz., forecasting, planning, organising, co-ordinating, commanding and controlling. Fayol stated the qualities required by managers to be physical, mental, moral, educational and technical. As a matter of fact, he emphasised that as one goes higher up in the levels of management, the administrative knowledge and skills become relatively more and more important, and technical knowledge and skill less important.
Fayol’s Principles of Management
In addition, Fayol listed out fourteen principles of management. They are:
- Division of Labour: The more people specialise, the more efficiently they can perform their work. This principle is epitomised by the modern assembly line.
- Authority: Managers must give orders so that they can get things done. While their formal authority gives them the right to command, managers will not always compel obedience unless they have personal authority (such as relevant expertise) as well,
- Discipline: Members in an organisation need to respect the rules and agreements that govern the organisation. To Fayol, discipline results, from good leadership at all levels of the organisation, fair agreements (such as provisions for rewarding superior performance) and judiciously enforced penalties for infractions.
- Unity of Command: Each employee must receive instructions from only – one person. Fayol believed that when an employee reported to more than one manager, conflicts in instructions and confusion authority would ultimately result.
- Unity of Direction: Those operations within the organisation that have the same objective should be directed by only one manager using one plan. . For example, the personnel department in a company should not have two directors, each with a different hiring policy.
- Subordination of Individual Interest to the Common Goal: In any undertaking, the interests of employee, should not take precedence over the interests of the organisation, as a whole.
- Remuneration: Compensation for work should be fair to both employees and employers.
- Centralisation: Decreasing the role of subordinates in decision making is centralisation, increasing their role ‘is decentralisation. Fayol believed that managers should retain final responsibility but should at the same time give their subordinates enough authority to do their jobs properly. The problem is to find the proper degree of centralisation in each case.
- The Hierarchy: The lines of authority in an organisation are often represented today by the neat boxes and lines of the organisation chart that runs in order of rank from the top management to the lowest level of the enterprise.
- Order: Materials and people should be in the right place at the right time. People in particular, should be in the jobs or positions, in which they are most suited.
- Equity: Managers should be both friendly and fair to their subordinates.
- Stability of Staff: A high employee turnover rate undermines the efficient functioning of an organisation.
- Initiative: Subordinates should be given the freedom to conceive and carry out their plans, even though some mistakes may result.
- Esprit de Corps: Promoting team spirit will give the organisation a sense of unity. To Fayol, even small factors could help to develop the spirit. He suggested, for example, the use of verbal communication instead of formal, written communication whenever possible.
Max Webber propounded the bureaucratic theory of organisation and management.
Bureaucracy is an administrative system designed to accomplish large-scale administrative tasks by systematically coordinating the work of many individuals.
characteristics of bureaucratic organisations.
- Administrative Class:
Bureaucratic organisations generally have administrative class responsible for maintaining coordinative activities of the members.
Main features of his class are as follows:
(i) People are paid and are whole time employees,
(ii) They receive salary and other perquisites normally based on their positions,
(iii) Their tenure in the organisation is determined by the rules and regulations of the organisation,
(iv) They do not have any proprietary interest in the organisation,
(v) They are selected for the purpose of employment based on their competence.
The basic feature of bureaucratic organisation is that there is hierarchy of positions in the organisation. Hierarchy is a system of ranking various positions in descending scale from top to bottom of the organisation.
In bureaucratic organisation, offices also follow the principle of hierarchy that is each lower office is subject to control and supervision by higher office.
Thus, no office is left uncontrolled in the organisation. This is the fundamental concept of hierarchy in bureaucratic organisation. This hierarchy serves as lines of communication and delegation of authority. It implies that communication coming down or going up must pass through each position.
- Division of Work:
Work of the organisation is divided on the basis of specialisation to take the advantages of division of labour. Each office in the bureaucratic organisation has specific sphere of competence.
(i) a sphere of obligations to perform functions which has been marked off as part of a systematic division of labour;
(ii) the provision of the incumbent with necessary authority to carry out these functions; and
(iii) the necessary means of compulsion are clearly defined and their use is subject to definite conditions.
Thus, division of labour try to ensure that each office has a clearly-defined area of competence within the organisation and each official knows the areas in which he operates and the areas in which he must abstain from action so that he does not overstep the boundary between his role and those of others. Further, division of labour also tries to ensure that no work is left uncovered.
- Official Rules:
A basic and most emphasised feature of bureaucratic organisation is that administrative process is continuous and governed by official rules. Bureaucratic organisation is the antithesis of ad hoc, temporary, and temporary and unstable relations. A rational approach to organisation calls for a system of maintaining rules to ensure twin requirements of uniformity and coordination of efforts by individual members in the organisation.
These rules are more or less stable and more or less exhaustive. When there is no rule on any aspect of organisational operation, the matter is referred upward for decision which subsequently becomes precedent for future decision on the similar matter. Rules provide the benefits of stability, continuity, and predictability and each official knows precisely the outcome of his behaviour in a particular matter.
- Impersonal Relationships:
A notable feature of bureaucracy is that relationships among individuals are governed through the system of official authority and rules. Official positions are free from personal involvement, emotions and sentiments. Thus, decisions are governed by rational factors rather than personal factors. This impersonality concept is used in dealing with organisational relations as well as relations between the organisation and outsiders.
- Official Record:
Bureaucratic organisation is characterised by maintenance of proper official records. The decisions and activities of the organisation are formally recorded and preserved for future reference. This is made possible by extensive use of filling system in the organisation. An official record is almost regarded as encyclopedia of various activities performed by the people in the organisation.
Benefits of Bureaucracy:
The following are the advantages of Bureaucracy:
- The rules and procedures are decided for every work it leads to, consistency in employee behaviour. Since employees are bound to follow the rules etc., the management process becomes easy.
- The duties and responsibilities of each job are clearly defined there is no question of overlapping or conflicting job duties.
- The selection process and promotion procedures are based on merit and expertise. It assists in putting right persons on right jobs. There is optimum utilisation of human resources.
- The division of labour assists workers in becoming experts in their jobs. The performance of employees improves considerably.
- The enterprise does not suffer when some persons leave it. If one person leaves then some other occupies that place and the work does not suffer.
Disadvantages of Bureaucracy:
The following are the disadvantages of Bureaucracy:
- This system suffers from too much of red tape and paper work.
- The employees do not develop belongingness to the organisation.
- The excessive reliance on rules and regulations and adherence to these policies inhibit initiative and growth of the employees. They are treated like machines and not like individuals. There is neglect of human factor.
- The employees become so used to the system, they resist to any change and introduction of new techniques of operations.