Classical Management Theory Overview
Classical Management Theory
Manufacturing
The craftsman traditionally worked at home. However, the broker began to gather scattered workers in one place, creating a division of labor. This division increased production power and reduced production costs. As a result, the worker became an employee, and the employer and broker transformed into powerful capitalists. From an economic standpoint, manufacturing exhibited all the characteristics of modern business. However, from a technical perspective, it lacked a key element: the machine. While machines were used, manual labor remained crucial.
The Factory
Characterized by the use of mechanical engines, the factory became the hallmark of modern industry, starting with the application of steam power in the late eighteenth century. This allowed for maximum production but amplified existing issues: the concentration of large masses of workers in a single location, the rise of night work and almost military-style regulations, the employment of women and children, and the need for significant capital investment.
Fundamental Principles of Scientific Management
- Develop a science for each element of a worker’s job to replace old empirical methods.
- Scientifically select, teach, and train workers instead of leaving their development to chance and circumstance.
- Equitably distribute work and responsibilities, avoiding overburdening workers.
- Cooperate cordially with workers to ensure all work aligns with scientific principles.
Proposed Operational Level
- Select workers with the potential to specialize in their assigned tasks.
- Scientifically study work, breaking it down into operations and establishing a direct relationship with machines and tools.
- Time operations and analyze each movement.
- Study each process and its relationship with preceding and subsequent processes.
- Implement specialized monitoring instead of general functional foremen.
- Establish standards and methods by selecting the best movements and standardizing tooling. Document these standards on cards for each operator.
- Provide incentive bonuses for each task and different production levels.
- Plan all tasks and ensure a reasonable and logical workflow for each position.
Development of a Procedures Manual
- Conduct a general study of the problem to be solved.
- Establish a plan and program of action.
- Define the organizational structure.
- Determine the level, quantity, and frequency of communication reports.
- Establish inter-managerial committees when necessary.
- Define exceptions to standard procedures.
- Set timeframes for each task.
- Assign responsibility for each area to a specific person and implement effective control mechanisms.
Basic Proposals
- Design management processes.
- Define areas of company operations.
- Enunciate the principles of management.
- Develop a procedures manual.
- Develop a needs analysis and skills assessment for each position.
Development of a Needs Analysis and Skills for Each Position
Fayol developed a method to correlate job requirements with the skills of individuals selected for those roles. This involved two tables highlighting the relative importance of various skills required by industrial staff, including both technical personnel and managers.
Defining the Areas of Business Operations
- Technical: Encompasses the production process, including production, manufacturing, and processing.
- Business: Includes purchasing, sales transactions, etc.
- Financial: Concerns the acquisition and management of funds.
- Safety: Refers to the protection and security of company personnel and property.
- Accounting: Involves information and control, including balances, inventories, costs, etc.
- Administration: Includes management, forecasting, organizing, and controlling company activities.
Conception of Administration
Administration is defined as the art of governing a business.
- Predict: Plan all company activities in the short and long term on an ongoing basis.
- Organize: Provide the company with a structure that supports all activities.
- Lead: Synonymous with command, this refers to the way the entire company staff is directed.
- Coordinate: Aims to achieve harmony between the attitudes and goals of all members, pursuing the integration and unity of all company activities.
- Control: Consists of checking and controlling operations to ensure they are conducted in accordance with issued orders, followed by penalties for non-compliance.
Fayol’s 14 Principles of Management
- Division of Labor: Refers to the specialization of functions to achieve better performance, production, and quality.
- Authority and Responsibility: The right to command and the power to compel obedience. Granting authority implies assuming responsibility. Authority should be based not only on legal grounds but also on knowledge, experience, and aptitude.
- Discipline: Obedience to the established authority system, which depends on effective leadership.
- Unity of Command: Each person should receive orders from only one boss to ensure clear lines of authority. This principle does not allow for flexibility and rejects the concept of dual command. Taylor, in this regard, supports full supervision.
- Unity of Direction: There should be only one boss and one plan for each activity.
- Subordination of Individual Interest to the General Interest: The interests of an individual should not take precedence over the interests of the company.
- Remuneration of Personnel: The price of service should be fair and equitable, based on the hierarchy and including a form of profit-sharing.
- Centralization: Decisions should be concentrated at the top of the company.
- Hierarchy: The pyramid of authority, built from the top down. The hierarchy is used for descending command and ascending control.
- Order: Defined as both natural and social order: “a place for everything and everything in its place.”
- Equity: Implementation requires good judgment, extensive experience, and kindness.