Classical Management Theory

This theory is among the first schools of management thought, it developed

during the Industrial Revolution (1900-1930) when new problems related to
the factory system began to appear. Managers were unsure of how to train
employees (many of them nonEnglish speaking immigrants) or deal with
increased labor dissatisfaction, so they began to test solutions. As a result,
the classical management theory developed from efforts to find the one
best way to perform and manage tasks. This school of thought is made up
of two branches: classical scientific and classical administrative, described in
the following sections.
1. The classical scientific branch arose because of the need to
increase productivity and efficiency. The emphasis was on trying to find
the best way to get the most work done by examining how the work
process was actually accomplished and by scrutinizing the skills of the
workforce.
The classical scientific school owes its roots to several major contributors,
including Frederick Taylor, Henry Gantt, and Frank and Lillian Gilbreth.
Frederick Taylor is often called the father of scientific management.
Taylor believed that organizations should study tasks and develop precise
procedures.
Henry Gantt, an associate of Taylor's, developed the Gantt chart, a bar
graph that measures planned and completed work along each stage of
production. Based on time instead of quantity, volume, or weight, this visual
display chart has been a widely used planning and control tool since its
development in 1910.
Frank and Lillian Gilbreth, a husbandandwife team, studied job motions.
In Frank's early career as an apprentice bricklayer, he was interested in
standardization and method study. He watched bricklayers and saw that
some workers were slow and inefficient, while others were very productive.

He discovered that each bricklayer used a different set of motions to lay

bricks. From his observations, Frank isolated the basic movements necessary
to do the job and eliminated unnecessary motions. Workers using these
movements raised their output from 1,000 to 2,700 bricks per day.
Based on the studies by the above pioneers, basic ideas regarding scientific
management developed. They include the following:

Developing new standard methods for doing a job

Selecting, training, and developing workers instead of allowing them to

choose their own tasks and train themselves

Developing a spirit of cooperation between workers and management

to ensure that work is carried out in accordance with devised
procedures

Dividing work between workers and management in almost equal

shares, with each group taking over the work for which it is best fitted

2. The classical administrative approach concentrates on the total

organization. The emphasis is on the development of managerial
principles rather than work methods.
Contributors to this school of thought include Max Weber, Henri Fayol, Mary
Parker Follett, and Chester I. Barnard. These theorists studied the flow of
information within an organization and emphasized the importance of
understanding how an organization operated.
In the late 1800s, Max Weber disliked that many European organizations
were managed on a personal familylike basis and that employees were
loyal to individual supervisors rather than to the organization. He believed
that organizations should be managed impersonally and that a formal
organizational structure, where specific rules were followed, was important.
In other words, he didn't think that authority should be based on a person's
personality. He thought authority should be something that was part of a

person's job and passed from individual to individual as one person left and
another took over. This non personal, objective form of organization was
called a bureaucracy.
Weber believed that all bureaucracies have the following characteristics: A
welldefined hierarchy, Division of labor and specialization, Rules
and regulations, Impersonal relationships between managers and
employees and Competence.
Henri Fayol, a French mining engineer, developed 14 principles of
management based on his management experiences. These principles
provide modernday managers with general guidelines on how a supervisor
should organize her department and manage her staff.
Mary Parker Follett stressed the importance of an organization
establishing common goals for its employees. She stressed the importance of
people rather than techniques a concept very much before her time.
Chester Barnard, introduced the idea of the informal
organization cliques (exclusive groups of people) that naturally form
within a company. He felt that these informal organizations provided
necessary and vital communication functions for the overall organization and
that they could help the organization accomplish its goals.

Neo-classical Theory
Neoclassical approach of management (1930-1960): The Neoclassical
approach began with the Hawthorne studies in the 1920s (Wikipedia, 2013).
It grew out of the limitations of the classical theory. Under classical approach,
attention was focused on jobs and machines. After some time workers
resisted this approach as it did not provide the social and psychological

satisfaction. Therefore, attention shifted towards the human side of

management. George Elton Mayo (1890- 1949) is considered to be the
founder to the neoclassical theory (Gupta C B, 1992). He was the leader of
the team which conducted the famous Hawthorne Experiments at the
Western Electric Company (USA) during 1927-1932.
There are mainly three elements of neoclassical theory of management.
They are Hawthorne Experiment, Human Relation Movement, and
Organizational Behavior.
Human Relations Movement
The human relations movement was a direct result of Elton
Mayo and Fritz J. Roethlisberger's Hawthorne studies, which were
designed to find ways to increase worker productivity at Western Electric's
Hawthorne Works factory by assessing working conditions related to things
such as lighting levels, rest periods, and the length of a work day. Those
participating in the experiments were watched closely by the researchers.
During the experiment, productivity levels of those participating in the
experiment increased but not directly due to the conditions that Mayo and
Roethlisberger were imposing on them.
Because they could not correlate the increase in productivity to the working
conditions that they were controlling in the experiment, alternative causes
were explored. Eventually, the researchers attributed the increase in
productivity to the higher morale that was witnessed in the group during the
experiment. This morale and productivity boost was indirectly caused by the
changes the researchers made to working conditions, including:

Workers feeling special because they were selected to participate in

the study and were being paid so much attention by the researchers.

Workers developing strong interpersonal relationships with one another

and their supervisor as they determined how to manage their work

together under the new structure. They all valued the contributions of
their coworkers.

The strong interpersonal relationships also created a pleasant and

enjoyable work environment.

Application/Appraisal of neoclassical approach

Neoclassical theory has made significant contribution to an understanding of
human behavior at work and in organization. It has generated awareness of
the overwhelming role of human factor in industry. Contributors to this
approach recognize an organization as a social system subject to the
sentiments and cultural patterns of the member of the organization, group
dynamics, leadership, motivation, participation, job environmental, etc
constitute the core of the neoclassical theory. This approach changed the
view that employees are tools and furthered the belief that employees are
valuable resources. It also laid the foundation for later development in
management theory. Neoclassical approach is not free from limitations. First,
it lacks the precision of classical theory because human behavior is
unpredictable. Secondly, its conclusions lack scientific validity and suffer
from a clinical bias, its findings are tentative. Lastly its application in practice
is very difficult because it requires fundamental changes in the thinking and
attitude of both management and workers.

Modern Management Theory (1960 to present)

The modern business ideologists have recognized the social responsibilities
of business activities and thinking on similar lines. During the period, the
principles of management reached a stage of refinement and perfection. The

formation of big companies resulted in the separation of ownership and

management.
This change in ownership pattern inevitably brought in salaried and
professional managers in place of owner managers. The giving of control to
the hired management resulted in the wider use of scientific methods of
management. But at the same time the professional management has
become socially responsible to various sections of society such as customers,
shareholders, suppliers, employees, trade unions and other Government
agencies.
Under modern management thought three streams of thinking have
been noticed:
(i) Systems Approach.
(ii). Contingency Approach
(iii) Quantitative or Mathematical Approach.

(ii) Systems Approach:

In the 1960, an approach to management appeared which tried to unify the
prior schools of thought. This approach is commonly known as Systems
Approach. Its early contributors include Ludwing Von Bertalanffy, Lawrence J.
Henderson, W.G. Scott, Deniel Katz, Robert L. Kahn, W. Buckley and J.D.
Thompson.
They viewed organization as an organic and open system, which is composed
of interacting and interdependent parts, called subsystems. The system
approach is to look upon management as a system or as an organised
whole made up of subsystems integrated into a unity or orderly totality.

System approach is based on the generalization that everything is interrelated and inter-dependent. A system is composed of related and dependent
element which, when in interaction, forms a unitary whole. A system is
simply an assemblage or combination of things or parts forming a complex
whole.
One of its most important characteristic is that it is composed of hierarchy of
sub-systems. That is the parts forming the major systems. For example, the
world can be considered to be a system in which various national economies
are sub-systems.
In turn, each national economy is composed of its various industries, each
industry is composed of firms; and of course, a firm can be considered a
system composed of sub-systems such as production, marketing, finance,
accounting and so on.
The basic features of systems approach are as under:
(i) A system consists of interacting elements. It is set of inter related and
interdependent parts arranged in a manner that produces a unified whole.
(ii) The various sub-systems should be studied in their inter- relationships
rather, than in isolation from each other.
(iii) An organisational system has a boundary that determines which parts
are internal and which are external.
(iv) A system does not exist in a vaccum. It receives information, material
and energy from other systems as inputs. These inputs undergo a
transformation process within the system and leave the system as output to
other systems.
(v) An organisation is a dynamic system as it is responsive to its
environment. It is vulnerable to change in its environment.

The systems approach is considered both general and specialized systems.

The general systems approach to management is mainly concerned with
formal organizations and the concepts are relating to technique of sociology,
psychology and philosophy. The specific management system includes the
analysis of organisational structure, information, planning and control
mechanism and job design, etc.
(iii) Contingency or Situational Approach:
The contingency approach is the latest approach to the existing
management approaches. During the 1970s, contingency theory was
developed by J.W. Lorsch and P.R. Lawrence, who were critical of other
approaches presupposing one best way to manage. Management problems
are different under different situations and require to be tackled as per the
demand of the situation.
One best way of doing may be useful for repetitive things but not for
managerial problems. The contingency theory aims at integrating theory
with practice in systems framework. The behaviour of an organisation is said
to be contingent on forces of environment. Hence, a contingency approach
is an approach, where behaviour of one sub-unit is dependent on its
environment and relationship to other units or sub-units that have some
control over the sequences desired by that sub- unit.
Thus behaviour within an organisation is contingent on environment, and if a
manager wants to change the behaviour of any part of the organization, he
must try to change the situation influencing it. Tosi and Hammer tell that
organization system is not a matter of managerial choice, but contingent
upon its external environment.
Contingency approach is an improvement over the systems approach. The
interactions between the sub-systems of an organisation have long been
recognised by the systems approach. Contingency approach also recognises

that organisational system is the product of the interaction of the sub

systems and the environment. Besides, it seeks to identify exact nature of
inter-actions and inter-relationships.
Contingency views are ultimately directed towards suggesting organisational
designs situations. Therefore, this approach is also called situational
approach. This approach helps us to evolve practical answers to the
problems remanding solutions.
Kast and Rosenzweig said, The contingency view seeks to understand the
inter-relationships within and among sub-systems as well as between the
organization and its environment and to define patterns of relationships or
configurations of variables contingency views are ultimately directed toward
suggesting organization designs and managerial actions most appropriate for
specific situations.

IMPORTANCE OF MANAGEMENT
1) Acquisition and utilization of resources Management performs efficient
acquisition effective development and utilization and proper coordination of
resources.
2) Environmental adaptation. Management adopts organization to changing
environmental forces.
3) Goal achievement Management achieves goals by balancing the
requirement of jobs and people.
4) Problem solving. Management solves organizational problems. It identifies
and evaluates various alternatives and choose appropriate course of action.
5) Performance control. Management measures and evaluates the actual
performance.

6) Social responsibility Management anticipates and acts beforehand to

social expectations.

Ref;
Bertalanffy, Ludwig von. 1968. General System Theory: Foundations,
Development, Applications.
Robbins, S.P. and David A. Decenzo (2001) Fundamental of Management.
Delhi: Pearson