CHAPTER TWO

CLASSICAL MANAGEMENT
THOUGHT

1
 The Evolution of Management Theory
• The formal study of management as discipline, is relatively new or has a
short history
• Whereas the practice of management has a long past,

e.g. Effective management played a key role in the construction of the

pyramids, the use of communication and control of the Roman Empire,
and the legal framework of commerce in 14th century VENICE.
• The most significant historical point of reference in the evolution of
management was the advent of the Industrial Revolution.
• By the turn of the 20th century the science and practices of
management were on a rapid and continuing path of development.
2
The Evolution of Management Theory

3
 The Evolution of Management Theory
• Major Schools of Thought
– Classical: A focus on developing universal principles for use in
various management situations.
– Human Resource: A focus on human needs, the work group,
and the role of social factors in the workplace.
– Quantitative or Management Science: A focus on the use of
mathematical techniques for management problem-solving.
– Modern Approach: A focus on total systems and contingency
thinking, and an awareness of global developments in
management.
– Continuing Directions: Emphasis on quality and performance
excellence, global awareness, and leadership roles for a new
management.
4
 Note
Classical Management Theory
 Principles of Scientific Management ( F.W. Taylor)
 Administrative principles of Management (H. Fayol)
 Bureaucratic theory of Management (Max Weber)

Neoclassical Management Theory

 Human relation theory (Hawthorne study)
 Theory of behavior in organizations (Chester Bernard)

Modern Theory of Management

 The systems approach (Kenneth
Boulding)
 Socio-technical approach
 Contingency theory (Joan Woodward)
The focus of the chapter is classical management theory and neoclassical
management theory while modern theory of management will discussed
in chapter 3 5
 Management in Antiquity and Pioneer Contributors
• Management attention has been shaped over a period of
centuries by three major sets of forces.
• These forces are:
 Social
 Economical and
 Political
• The development of management thought dates back to the
days when people first attempted to accomplish goals by
working together in groups.

6
 Management in Antiquity and Pioneer Contributors

1. Egypt - The construction of the Egyptian pyramid (5000-

525 BC) is a testimony of the ancient Egyptian
organization and managerial abilities.
 The ancient Egyptians constructed the pyramid by 100,000
labor forces for 20 years on 13 hectares of land using
2,300,000 stones.

2. Greece: Exhibited a real skill and capacity for management

in the operation of trading companies.
 They recognized the means to maximize output through the use
of uniform methods and motion study. 7
 Management in Antiquity and Pioneer Contributors
3. Romans - the ancient Romans also provided
numerous illustrations of effective management.
There were far too many people and matters of
importance for the emperor to handle individually.

Abandoning the old structure, in which all provincial

governors reported directly to him, Diocletian
established more levels in the hierarchy.

 He reorganized the Roman Empire as: Empire

8
 Management in Antiquity and Pioneer Contributors
3. Romans….. to be continued!

He reorganized the Roman Empire as: Empire

into 100 provinces with 13 dioceses and 4 major
geographical areas.
– Hierarchy of authority: there was a hierarchical
structure from Pope - Bishop - priest - laity.
– Specialization of activities: there was a training to be
Pope, Bishop, Priest and Laity.
– Use of staff managers:
• Compulsory staff service
9
•
 Pre classical/Early contributors
• Among the principal pre-classical contributors:
1. Robert Owen (1771 - 1858)
Robert Owen was a British industrialist and an owner-
manager of several successful cotton mills in Scotland.
He was called industrialist and reformer and considered
as ‘father of modern personnel management.’
 He introduced in his organization the following:
 Reduce working hrs from 13 hrs to 10hrs a day,
 Set a minimum hiring age (10 year) to protect children
from the abuses of employers,
 Provide meal, housing, and shopping facilities for
employees,
 Improved working conditions in the factory
10
 Pre classical contributors…
2. Charles Babbage (Prof.) (1792-1871): is widely known as "the father
of modern computing".
• His management interest stemmed from his difficulties with directing
his various projects.
• He became convinced that the application of scientific principles to
work processes would both increase productivity and lower expenses.
• Babbage was particularly enthralled with the idea of work
specialization.
• Work specialization is the degree to which work is divided into
various jobs.
• He was an avid proponent of:
– Division of labor, Incentive pay, Profit sharing
– Economies of scale in manufacturing
– Application of mathematical concepts in production 11
 Pre classical contributors…
3. Adam Smith: Smith made an important contribution to the development
of management thought regarding the impact of division of labor on
manufacturing in his book ‘The Wealth of Nations’ in 1776.
• His conclusion was specialization could lead to increased efficiency.
This is because:
• Specialization increases the dexterity/skill in every particular work
person.
• Specialization saves the time lost in passing from one species of work to
another.
• Specialization helps to the invention of great number of machines,
which facilitates and bridge and enable one person to do the work of
12
many.
Classical Management Theory or perspectives

1. Scientific Management: Frederick W. Taylor (1856–

1915), Frank Gilbreth (1868–1924), and Lillian Gilbreth

(1878–1972). Taylor played the dominant role.

2. Administrative Management: Henri Fayol (1841–1925)

& Lyndall Urwick (1891–1983), and

3. Bureaucratic theory of Management: Max Weber (1864–

13
1920).
 Classical Management Theory
• Basic Assumption: People Are Rational
– People will rationally consider the opportunities available to them and do
whatever is necessary to maximize their economic gain.

• There were two factors that had contributed for the emergence of
classical management theory.
i. the research or writings of pioneers such as Charles Babbage,
ii. the evolution of large-scale business management and practices.

• Classical management theory: concentrate on the problems of top

managers dealing with the everyday problems of managing the
entire organization.
14
 Classical Management Theory
• Classical management Theory: The approach that assumes

that there is a single best way to design organizations.

• This approach assumes that managers need to have close

control over their subordinates and calls for designing

organizations with tall hierarchies and a narrow span of

control.
15
 1. Scientific Management theory
• Productivity emerged as a serious business problem during the early
years of the twentieth century.

• Business was expanding and capital was readily available, but labor was
in short supply.

• Managers began to search for ways to use existing labor more efficiently.

• In response to this need, experts began to focus on ways to improve the

performance of individual workers.

• Their work led to the development of scientific management.

• Some of the earliest advocates of scientific management included

Frederick W. Taylor (1856–1915), Frank Gilbreth (1868–1924), and
Lillian Gilbreth (1878–1972).23 Taylor played the dominant role. 16
 1. Scientific Management theory …

A. Frederick Winslow Taylor (1856 – 1915)

• Frederick W.Taylor (1856-1915) is known as "the father of

scientific management.“
• Taylor’s first jobs was as a foreman at the Midvale Steel Company
in Philadelphia.
• There he observed what he called soldiering employees
deliberately working at a pace slower than their capabilities.
• Taylor studied and timed each element of the steelworkers’ jobs.
• He determined what each worker should be producing, and then he
designed the most efficient way of doing each part of the overall
task.
• Next, he implemented a piecework pay system 17
A. Frederick Winslow Taylor (1856 – 1915)…continued

• After Taylor left Midvale, he worked as a consultant for several companies,

including Simonds Rolling Machine Company and Bethlehem Steel.

• At Simonds he studied and redesigned jobs, introduced rest periods to

reduce fatigue, and implemented a piecework pay system.

• The results were higher quality and quantity of output, and improved
morale.

• At Bethlehem Steel, Taylor studied efficient ways of loading and unloading

railcars and applied his conclusions with equally impressive results.

• During these experiences, he formulated the basic ideas that he called

scientific management.

18
A. Frederick Winslow Taylor (1856 – 1915)…continued

 The Principle of Scientific Management, Taylor outlined his

philosophy. It rested, he said, on four basic principles:

1. The development of a true science of management, so that the

best method for performing each task could be determined.

2. The scientific selection of the workers, so that each worker

would be given responsibility for the task for which he or she
is best suited.

3. The scientific education and development of the worker.

4. Intimate, friendly co-operation between management and labor.

19
B. Frank Gilbreth (1868–1924), and Lillian Gilbreth (1878–1972)

• They were a husband-and-wife team of industrial engineers.

Frank Gilbreth (1868–1924)

• Frank Gilbreth became interested in motion study and reduced

the number of movements in bricklaying from eighteen to five.

• The results of these changes were a reduction from 18 separate

physical movements to 5 and an increase in the output of about
200 percent.

• Frank Gilbert’s system became known as “speed work’, or cutting

down unnecessary motions.
20
Frank Gilbreth (1868–1924)…

• Frank Gilbreth identified eighteen on-the-job motions

The on-the-job motions are: i) Search, ii) find, iii)elect,

(iv) grasp, (v) position, (vi) assemble, (vii) use, (vii)
disassemble, (ix) inspect, (x) load transport, (xi) pre-
position, (xii) release load, (xiii) transport empty, (xiv)
wait when avoidable, (xv) avoidable delay, (xvi) rest for
overcoming fatigue, (xvii) plan, and (xviii) hold.

21
B. Frank Gilbreth (1868–1924), and Lillian Gilbreth
(1878–1972)…

• Lillian Gilbreth (1878–1972): Lillian Gilbreth made

equally important contributions to several different areas
of work, helped shape the field of industrial psychology,
and made substantive contributions to the field of
personnel management.

• Working individually and together, the Gilbreths

developed numerous techniques and strategies for
eliminating inefficiency. 22
 Feature of scientific management
1. Separation of planning and doing
2. Functional foremanship
3. Job analysis: E.g. time and motion
4. Standardization. standardized tools, instruments, period of
work, amount of work each worker has to undertake,
working conditions and cost of production.
5. Scientific selection and training of workers.
6. Financial incentives: piece-rate of payment system
7. Economies. Taylor insisted that internal economy must be
ensured by each worker
8. Mental revolution: there must be sound relations between
the management and the workers. 23
 Limitations and criticism of scientific Management

• The major criticism to wards the scientific

management can be seen from two perspectives;

1. The workers perspective: Unemployment,

Exploitation, Monotony, Weakening of Trade
Union and Over speeding,

2. The employer perspectives: Expensive, Time

Consuming,
24
 2. Administrative management theory
• Whereas scientific management deals with the jobs of individual employees,
administrative management focuses on managing the total organization.

• The primary contributors to administrative management were Henri Fayol

(1841–1925) and Lyndall Urwick (1891–1983)

A. Henri Fayol (1841–1925)

• A French industrialist

• His Book ‘General and Industrial Management’ translated to English in 1930

• He attempted to systematize management practice to provide guidance and

direction to other managers.

• Fayol was also the first to identify the specific managerial functions of
planning, organizing, leading, and controlling.
25
 2. Administrative management theory

• The study of how to create an organizational structure that leads to

high efficiency and effectiveness .

• Administrative management focuses on the functions and principles

of management.

• H. Fayol initiated a theoretical analysis appropriate to all organizations

and attempted towards a comprehensive theory of management:

“Management plays a very important part in the government

of undertakings; of all undertakings, large or small,
industrial, commercial, political, religious or any other”. 26
 2. Administrative management theory
Fayol’s Works:

• An industrial undertaking could be divided into six groups:

(1) technical (production).

(2) Commercial (buying, selling, and exchanging),

(3) financial (search for, and optimum use of, capital),

(4) security (protection of property and persons),

(5) accounting (including statistics), and

(6) managerial (planning, organization, command,

coordination, and control).
27
 Fayol’s Fourteen Principles of Management
1. Division of work 8. Centralization
2. Authority 9. Scalar chain (Line of
3. Discipline authority )

4. Unity of command 10. Order

5. Unity of direction 11. Equity

6. Subordination of the 12. Stability of tenure of

individual to the personnel
general interest 13. Initiative
7. Remuneration 14. Esprit de corps

28
 Fayol’s 14 Management principles
1. Division of labor: allows for job specialization.
• Division of work (labor) encompasses three basic concepts:
i. Breaking down a task into its components.
ii. Training workers to become specialist in specific duties, and
iii. Putting activities in sequence so one person’s efforts build on
another’s
2. Authority and responsibility: Both formal and informal authority
resulting from special expertise.
 Authority is the right to give orders, to exact obedience.
 Responsibility, on the other hand, is a sense of obligation that goes
with authority .
3. Discipline: Obedient, applied, respectful employees are necessary for the
organization to function.
 Fayol saw the necessity for discipline and precise and exact obedience
at all levels for the smooth running of a business.
 Members in an organization need to respect the rules and agreements
29
that govern the organization.
 Fayol’s 14 ……..principles
4. Unity of Command
– Each worker should have only one boss with no other conflicting
lines of command.
5. Unity of Direction
 One head, one plan, one set of objectives.
 This improves coordination and ensures that energies are
channeled in the proper direction
 Unity of command does not exist without unity of direction but
does not necessarily flows from it
6. Subordination of individual interest to general interest/common good
 In any undertaking, the goals and interests of an organization
must take precedence over those of individuals or groups of
employees.
7. Remuneration of Personnel
– Payment is an important motivator
– An equitable uniform payment system that motivates
30
contributes to organizational success.
 Fayol’s 14 administrative principles
8. Centralization
 Fayol believed that managers should retain final responsibility but
also need to give their subordinates enough authority to do their jobs
properly.
9. Line of Authority (Scalar chain)
– A hierarchy is necessary for unity of direction later communication is
fundamental .
– A clear chain of command from top to bottom of the firm.
10. Order
 Both material and social order are necessary for minimize waste and
achieve objective.
 The arrangement of employees where they will be of the most value
to the organization and to provide career opportunities.
11. Equity
 Is dealing with subordinates, managers should be friendly, fair, kind
and lawful.
 Treating employees well is important to achieve equity. 31
 Fayol’s 14 ……principles
12. Stability of Tenure Long-term employment is
important for the development of skills that improve the
organization’s performance.
– Labor turnover should be minimized and stability nurtured.
13. . Initiative
– The fostering of creativity and innovation by encouraging
employees to act on their own.
– an intelligent executive is to be able to scarify his personal
vanity and instill those under him with the attribute to
make initiative.
14. Esprit de corps
– Comradeship, shared enthusiasm foster devotion to the
common cause (organization).
32
– Management must foster the morale of its employees.
 B. Lyndall Urwick (1891–1983-British)

• Lyndall Urwick became a noted management theorist and

consultant.
• He integrated scientific management with the work of Fayol
and other administrative management theorists.
• He also advanced modern thinking about the functions of
planning, organizing, and controlling.
• Like Fayol, he developed a list of guidelines for improving
managerial effectiveness.
• Urwick is noted not so much for his own contributions as for
his synthesis and integration of the work of others 33
 3. Bureaucratic Management Theory-Max Weber-German

Reflection
– Quick discussion
Bureaucracy: literally rule of the office
– What is your
Bureaucracy is the structure and set of rules that control the
understanding of
„bureaucracy“ or activities of people that work for large organizations and
„bureaucratic“?
government.

• Historically, a bureaucracy was a government administration

managed by departments staffed with non-elected officials.

• Today, bureaucracy is the administrative system governing any

large institution, whether publicly owned or privately owned.

34
3. Bureaucratic Management Theory (Max Weber1864-1920)
• Max Weber (1864-1920), a German sociologist,
consultant professor, and author.

His works
 It is a form of organization that is characterized by
division of labor, a clearly defined hierarchy,
detailed rules and regulations and impersonal
relationships, promotion based on achievement and
efficiency.
 Max Weber developed the concept of bureaucracy as
a formal system of organization and administration
designed to ensure efficiency and effectiveness.
35
 3. Bureaucratic ….
• Two fundamental principles:
– Rule based power
– Hierarchy
• Typical elements of a Bureaucracy
 Rigorous division of labor
 Authority limited to clearly defined scope
 Knowledge & competence appointment functional
authority
 Hierarchy
 Defined processes
 Emphasize on documentation/written communication
 Compensation of employees only based on position
 Unpersonal communication
 Separation of administrative and personal possesion
 Rationale discipline 36
 3. Bureaucratic theory of Management
Major advantages of Bureaucracy
 Precision
 Speed
 Unambiguity
 Knowledge of the files
 Continuity
 Discretion
 Unity
 Strict subordination
 Reduction of friction and
 Material and personal costs is raised to the
optimum point. 37
 3. Bureaucratic theory of Management
Disadvantages of Bureaucracy
Lie in red-tape (excessive procedure)
Rigidity , and
Neglect of human factor

38
• Major characteristics of Weber’s Ideal bureaucracy:
1. Specialization: jobs are broken into routine, well-defined tasks so
that members know what is expected of them and can become
extremely competent at their particular subset of tasks
(Specialization with Division of Labor).
2. Formal rules and procedures: written rules and procedures
specifying the behaviors desired from members facilitate
coordination and ensure uniformity (Technical Competence
Guidelines).
3. Impersonality: rules, procedures, and sanctions are applied
uniformly regardless of individual personalities and personal
considerations (Impersonality and Personal Indifference)
4. Well-defined hierarchy: multiple levels of positions, which
carefully determined reporting relationships among levels
(Hierarchical Authority Structures)
5. Career advancement based on merit: selection and promotion is
based on qualification and performance of members. 39
 Breaking Classical Organization Theory
question •Organizations exist to accomplish
production-related and economic
goals.

• Why classical Strength

theory of •Effective management techniques
management
• Evaluate its
and principles
strength and Shortcoming
weakness • Organization were closed system and
organizational factors are under the
control of management.
• Theorists of these theories look at
workers as mere devices, motivated only
by financial incentives. 40
 Neo-classical management Theory

1. The Behavioral Management Perspective

• In contrast to classical management, the behavioral management
perspective placed much more emphasis on individual attitudes,
behaviors, and group processes and recognized the importance
of behavioral processes in the workplace.

Contributors: Hugo Munsterberg (1863–1916), Mary Parker

Follett (1868–1933), Elton Mayo, Abraham Maslow (1908–1970)
and Douglas McGregor (1906–1964).

A. The Hawthorne Studies

B. The Human Relations Movement 41

 A.Hawthorne Studies-Elton Mayo and his associates.

• Studies conducted near Chicago at Western Electric’s Hawthorne

plant between 1927 and 1932.
• Mayo was a faculty member and consultant at Harvard.

• The Hawthorne studies were a series of early experiments that

focused on behavior in the workplace.
• In one experiment involving this group of workers, for example,
researchers monitored how productivity changed as a result of
changes in working conditions.
• The Hawthorne studies and subsequent experiments led scientists to
the conclusion that the human element is very important in the
workplace. 42
 B. The Human Relations Movement
• Human relations movement Argued that workers respond primarily
to the social context of the workplace
• The manager’s concern for workers would lead to increased
satisfaction, which would in turn result in improved performance.
• In 1943, Maslow advanced a theory suggesting that people are
motivated by a hierarchy of needs, including monetary incentives
and social acceptance.
• Meanwhile, Douglas McGregor’s Theory X and Theory Y model
best represents the essence of the human relations movement
• According to McGregor, Theory X and Theory Y reflect two
extreme belief sets that different managers have about their workers.
43
• Maslow - Theory of Human Needs
People act to satisfy "deprived" needs- needs for which a
satisfaction "deficit" exists.

Hierarchy of Needs

Self-Actualization
Esteem
Social
Safety
Physiological
44
• Theory X: A pessimistic and negative view of
workers consistent with the views of scientific
management
• Theory Y: A positive view of workers; it
represents the assumptions that human relations
advocates make

45
46
 • Neoclassical Organization Theory
Short discussion
• The organization in general is a social
system (behavior of people impact org
performance)
Why Strength
neoclassica
• Introduced the concept of informational
l theory of
organization and human behavior
manageme
approach
nt
Criticism
What are
the • Assumptions on which this theory is
strength based are sometimes not factual
and
criticism?
47
 Summary questions
• The classical school emphasizes production of goods
and services as the key focus of economic
analysis. Neoclassical economics focuses on how
• What is the individuals operate within an economy. As such,
main the neoclassical school emphasizes the exchange of
difference goods and services as the key focus of economic
between analysis.
classical • The main difference between classical and
and neoclassical is that classical theory (approach)
neoclassical assumes that managers need to have close control
theories over their subordinates and calls for designing
organizations with tall hierarchies and a narrow span
of control. Whereas Neoclassical theory approach
assumes that managers do not have to carefully
monitor their subordinates and calls for designing
organizations with flat hierarchies and a wide span48 of
49