PRINCIPAL OF MANAGEMENT

THE CLASSICAL THEORIES OF MANAGMENT

 THE CLASSICAL APPROACH

“An organization is the structure of the

relationships, objectives, roles,
activities, and other factors when
persons work together.”

The classical approach evolved around

the classical assumption of Adam Smith
that people are motivated by economic
ADAM SMITH
incentives.
 BUREAUCRATIC APPROACH TO MANAGEMENT
(1880-1920)
Max Weber proposed Bureaucratic approach for management of any large and
complex organization.

He suggested certain rules to eliminate managerial inconsistencies that

contributes to inefficiency.

According to him, bureaucracy is the highest form of organisation founded on

the principles of logic, orders, and legitimate authority.

Weber maintained 3 types of power in an organisation:

TRADITIONAL

CHARISMATIC MAX WEBER

A GERMAN SOCIOLOGIST

BUREAUCRATIC OR RATIONAL - LEGAL

 FEATURES
• Division of Labour based on competence and functional
specialization
• A well-defined hierarchy of authority.
• A bureaucrat seeks rationality, objectively and
consistency for this organisation.
• Interpersonal relations are based on positions and not on
personalities.
• A system of rules covering the duties and rights of
employees.
• A system of procedures for dealing with work situations.
• Selection and promotion based upon technical
competence.
• Bureaucracy recognizes only legal power and authority
given to each position in the organisation.
 EVALUATION & CRITICISM

Rigidity This model does not recognize the

importance of human relations in an
Higher cost of controls
organisation.
Difficulty of coordination &
communication
Bureaucracy is preferred in an
Blind faith in rules and regulation organisation which is static. E.g.,
Too much documentation and Government Organisations
paperwork

Resistance to change by employees

Dehumanized environment

Limited scope to develop Human

Resource (HR)
 SCIENTIFIC APPROACH TO MANAGEMENT
FREDERICK WINSLOW TAYLOR:
Frederick Winslow Taylor known as "Father of Scientific Management"
considered management as a science. Taylor conducted a great deal of
research to substantiate and prove his ideology that management could be
studied and |practiced as a science to raise overall productivity of an industrial
unit.

PRINCIPLES OF SCIENTIFIC MANAGEMNT

• One best way: According to Taylor, there is one best way of doing a work. Work standards and practices could be
established through experimentation and observation.
• Scientific selection of workers: Taylor stated that it was management's duty to determine the kind of work for which an
employee was suitable.
• Development and training of workers: Taylor supported internal promotion of employees. Development and training
should be in keeping with the promotion policy of the organisation
• Harmony in group action: Taylor thought the group must act in proper understanding and harmony. Group harmony
brings about mutual give and take situation.
• Maximise output: Taylor advocated/ continuous increase in production and productivity instead of restricted production
either by management or the workers. He was always opposed to deliberate restriction of production.
• Cordial relations between managers and workers: In order to ensure smooth implementation of work, cordial relations
between managers and workers is of great importance.
 Contributions of Scientific Management
• Time and Motion Study: Taylor realized that the workers put forth less efforts. This resulted in limited output and
low productivity. He named this kind of behaviour of deliberately restricting the output as ‘soldiering’.
• Time study: is the art of observing detailed element of an industrial operator. Motion study refers to the study and
analysis of the movements of an operator in performing a job so that attempts can be made to remove irrelevant
movements from the process.
• Differential wage plan. Payment: A new payment scheme called differential piece wage plan where a worker
received low piece rate if they produced the standard number of pieces and received high rate if he surpassed the
standard.
• Reorganization of supervision: Taylor experimented with two new successful concepts viz. (a) separation of
planning and doing and (b) functional foremanship. Taylor suggested that the/work should be planned by a foreman
and other workers. Under functional foremanship, he suggested employing four, six or eight specialist foremen who
would give orders to an individual worker
• Scientific selection and training: The selection of workers by scientific methods would not alone serve the purpose,
unless they are placed on right jobs. Appropriate training would prepare the workers to accept challenging job, and
avail of promotion opportunities arising in the organization.
• Cordial relations between management and workers: Scientific management prevailed over the workers and
management to increase productivity, so that more goods are produced at a lower cost resulting into higher
profitability. Both the parties must realize that their prosperity is dependent on each other and none should try to
prosper at the cost of the other. This called for complete ‘mental revolution'.
 BENEFITS OF SCIENTIFIC MANAGMENT
• Application and use of scientific methods
• Planning and control
• Appointing specialists
• Standardization
• No arbitrary rule
• Increased output and profits
• Benefits to workers and society
• Encourage research
• Cooperation and understanding

LIMITATIONS OF SCIENTIFIC MANAGEMENT

• Workers did not enjoy freedom of choice

• Too much emphasis on division of work resulted into breaking the work into smaller parts
• Payment based on performance brought about ill-feeling among some workers
• Bargaining about wage rates were not allowed as every job was measured
• Planning and control was given exclusively in the hands of managers.

Taylor's principles and concepts were refined and popularized by several of his followers, notable among them
being Henry Gantt, the Gilberths and Emerson.
 ADMINISTRATIVE APPROACH TO MANAGEMENT

Administrative theorists concentrated on the broad administrative

principles applicable to higher organizational levels.

HENRY FAYOL (1841-1925): The credit for suggesting the principles

of management goes to French industrialist, Henry Fayol. He
developed his management principles and general management theory
and published them in the form of a book (in French) "Administration
Industrielle et Generale”; "Industrial and General Administration” in
1916.

He is rightly treated as the Father of Modern Management thought.

 Henry Fayol's Fourteen/ Principles of Management:

• Division of Work: Division of work means dividing the total work into small convenient components and giving each
component to one department and manager. This brings specialization and enables a manager to concentrate effectively on the
work. The performance of managers will also improve. Division of work is essential along with the expansion in the size and
activities of an organization. It gives more and better work with the same efforts. Fayol suggests such division of work to all
types of work-managerial, technical or general
• Authority and Responsibility: According to Fayol, authority should be equal to responsibility. Those who have authority to
give orders must be willing to accept responsibility for the results. Similarly, those who are made responsible for certain
functions must be given adequate authority. There should be proper balance between the authority and responsibility
• Discipline: Discipline is the obedience and outward mark of respect shown by an employee. Discipline means the observation
of certain rules and regulations by all employees in an organization. They have to accept certain code of conduct while
performing their jobs! For proper discipline, attention needs to be given to three requisites of discipline. These are (a) good
supervision (b) clear and fair and (c) application of penalties. Discipline can be imposed or self-motivated. Self-discipline is
the best/but human nature tilts towards forced discipline
• Unity of Command: Henry Fayol suggested that an employee should get orders from one superior only. If two superiors
exercise their authority on the same employee, there will be disorder and confusion, In fact, dual command is always
dangerous.
• Unity of Direction: Fayol suggested that there should be one head and one plan fora group of activities having the same
objective. For example, the HRD department should have only one HRD manager with a specified plan for personnel policies
and providing personnels to all departments.
• Subordination of individual interest to general interest: This principle states that the general interest of the organization is more important
than the interest of one employee or a group of employees. This can be achieved by certain measures: (a) a superior setting good example
to his subordinates, (b) fair and just agreements with the employees, (c) centralisation or decentralisation of continuous supervision on
employees.
• Centralisation: Extreme centralisation between centralisation or decentralisation of authority should be avoided and a proper balance
should be maintained. Fayol also suggests that some degree of centralisation must be introduced in order to have best results in terms of
achievement of objectives.
• Remuneration: Fayol suggests that wages paid should be fair and satisfactory to both employer and employees. It should be as per the cost
to of the organisation. Wages should attract best talented people, he also suggested that wages should be supported by non-financial
benefits such as proper working conditions and other facilities including subsidised canteen, recreation and welfare facilities.
• Scalar Chain: Scalar Chain principle refers to the line of authority or command for the purpose of communication from the top level to the
lowest level of executives
• Order: Proper order is necessary in every organisation. Misplacement of any kind is undesirable as it leads to disorder.
• Equity: The principle of equity relates to the treatment of subordinates. The dealing with the subordinates should be fair. There should be
combination of kindness and justice while dealing with subordinates especially at the time of promotions, transfers and salary payments.
• Stability of Tenure: Managers as well as subordinates need some time to learn and understand the jobs assigned to them. If they leave or
are removed within a short period, the learning time will be wasted. Hence stability of personnel is necessary which means security of job
• Initiative: Subordinates should be permitted to take some initiatives in preparing and executing plans. The manager must be able to
sacrifice some personal vanity in order to inspire the subordinates. Managers should encourage subordinates to take more interest and
initiative in the work assigned. This will create a sense of participation in the minds of subordinates
• Esprit de Corps (Team spirit): Esprit de Corps or team spirit is the last but the most important principle suggested by Henry Fayol
MARY PARKER FOLLET (1868-1933): Mary Parker Follet made valuable contributions on
group dynamics, human relations and authority exercise. She attempted to interpret classical
management principles in terms of human factors. She worked on Minimum Wages Board and
was deeply concerned about the welfare relations of workers. She was firmly convinced that all
management based on the opinion that man is basically constructive and cooperative.

Mary Parker Follet has called it ‘plus value of the group“. She proposed four principles as guide
to management:
• Coordination by direct contact of responsible people.
• Coordination in the early Stages.
• Coordination as the reciprocal relating to all factors in the situation
• Coordination as a continuing process.

Contributions of Administrative Approach:

• Fayol gave a definition of management viz., "forecast and plan, to organize, to command, to
coordinate and to control.
• He provided basic terminology and concepts in the form of division of labour, unity of
command, scalar chain and centralization
• His principles have become point of reference to today's business organizations
• According to Follet in a good organization people develop themselves by contributing to the
development of the organization.
HUMAN RELATIONS APPROACH TO MANAGEMENT
Human Relationists stressed on human and social factors in
organisations.

They emphasized that workers were not simply “cogs in machines”

Employee morale could have positive effects on productivity.

This approach recognized the workers as essentially social beings

and thus managers should adopt “people-oriented” approach to
management.

Mayo pointed out that the organization is a social system and

informal organization is a reality. He emphasized that successful
human relations approach can easily create harmony in an
organization, higher employee satisfaction and great operational
efficiency.

This gave rise to the concept of the "social man" whose interaction
with others would determine the quality and quantity of the work.
 ELTON MAYO & HAWTHORNE EXPERIMENT

Elton Mayo and his associates conducted Hawthorne studies in the

Hawthorne plant of Western Electric Company in the USA between 1927
and 1932 Some of the major findings include:

• Employee's behaviour is influenced by mental attitudes and emotions

including prejudices
• The workers in a group develop a common psychological bond
uniting them as a group in the form of informal organization.
• In managing and motivating employee groups, human and social
motivation plays a greater role than financial incentives.
• Management must understand that a typical group behaviour can
dominate individual preferences.
• When workers are given special attention by management, the
productivity is likely to increase irrespective of actual changes in the
working conditions.
 PHASES OF HAWTHRONE EXPERIMENT
PHASE 1: (Illumination Experiments 1924-1927) These experiments were performed to find out the effects of
different levels of illumination on productivity of labour. The intensity of light was increased and decreased to
determine its impact on the productivity of the test group. Surprisingly productivity increased even when the level of
illumination was decreased. It was concluded that factors other than light were important.

PHASE 2: (Relay Assembly Test Room Study 1927-1929) Under this test two small groups of six female telephone
relay assemblers were selected. Each group was placed in separate rooms. From time to time, changes were made in
working hours, rest periods, lunch breaks, etc. Output increased in both the control rooms. It was concluded that social
relationship among workers had greater effect on productivity rather than working conditions.

PHASE 3; (Mass Interviewing Programme 1928-1930) 21,000 employees were interviewed over a period of three
years to find out reasons for increased productivity. It was concluded that productivity can be increased if workers are
allowed to talk freely about matters that are important to them.

PHASE 4: (Bank Wiring Observation Room Experiment 1932) A group of 14 male workers in the bank wiring room
were put under observation for a period of six months. It was thought that more efficient workers would put pressure
on less efficient workers to provide higher output. It was concluded that the group had established its own standards of
output and these standards were implemented through social pressure.
Contributions of Human Relations Approach
Forced managers to consider
employees as individuals whose
mental attributes can affect the
efficiency of the organisation

Group dynamics was emphasised

for the first time to improve
organisational performance.
Contributions of Human Relations
Approach
Concept of "social man" was
emphasised in place of "economic
man”

"Suggestion Boxes" were used

for the first time.