Classical management theory

Classical management theory is a method for running businesses that stresses the importance of efficiency and profitability for companies. Theorists believe that companies can reach their full potential for success by meeting three major criteria: a hierarchy characterized by powerful leaders and obedient management, the specialization and division of labor, and the financial motivation of employees. Classical management theory developed during the Industrial Revolution and dominated the industrialized world until the middle of the twentieth century. It was based on two earlier theories, the scientific management theory and the bureaucracy theory of management. Opposing perspectives in the late twentieth century, such as an increased focus on human relations, took away much of the classical influence. However, many small businesses still use classical approaches to increase profits and productivity.

Brief History

Management refers to the administration of resources. These can be people or other valuable inputs such as materials or time, The study of management most often occurs in business settings, although other environments such as the military or academia have their unique requirements. Good management is important in keeping a business profitable as well as retaining and motivating its workers. Over hundreds of years, modern business leaders have developed many forms and styles of management. One of the first and most basic of these is the classical theory.

The classical perspective of management began to develop during the Industrial Revolution. This period, which lasted from approximately the mid-1700s to the mid-1800s, saw the rapid rise of businesses, mainly in the United States and Europe. Many of these businesses were factories and other companies based on the production and distribution of mass-produced consumer goods. They employed small numbers of workers up to thousands of hundreds of laborers. These were often in difficult or hazardous conditions. Company leaders had to find an effective means of managing their workforces to make their businesses as successful as possible and maximize profits.

One of the main steps in the development of the classical theory of management was the introduction of scientific management theory. This theory, whose primary contributor was Frederick Winslow Taylor, postulated that the main concern of business leaders was the productivity and efficiency of employees. Taylor believed that scientific principles and measurements could be used to make employees work as hard as possible and bring the greatest benefit to the company. Scientific strategies and formulas could also be employed to measure the efficiency of the company and identify weaknesses to be corrected. Taylor’s theories provided a fundamental starting point for later proponents of the classical perspective.

A second major contributor to the classical theory was the bureaucracy theory of management, as proposed by Max Weber. The bureaucracy theory focuses on the roles of different members of an organization, as well as the expertise required for these roles, and the rules people in different roles must observe. Despite the name “bureaucracy,” this theory promoted the reduction of bureaucracy in businesses, meaning it recommended that company hierarchies remain as simple as possible. Followers of this theory often divided their businesses cleanly between the employer and the workers, with little if any room for managerial roles.

Overview

Although classical theory began to develop during the Industrial Revolution, it did not fully emerge as a distinct formal business method until between the late 1800s and first half of the 1900s. Proponents of the classical perspective of management focused on the productivity and efficiency of a business and the output of its employees. This perspective afforded little attention to other factors, including the behaviors, characteristics, or well-being of the people in the company. It assumed that workers only have physical and economic needs. As these were met, the workers would be satisfied and consistently work to the highest possible levels of efficiency.

The classical management theory is a bottom-line strategy that measures success based on the largest amount of products or earnings a company can produce in a given time. According to the classical perspective, a company must satisfy three criteria to fulfill its full potential for success. These criteria are a distinct hierarchical structure, specialization and division of labor, and employee incentives.

A classically styled company hierarchy typically has three rungs of management: the owners, the middle management, and the supervisors. Ownerswhich include executives and directorsset the major goals for the company. The owners’ objectives provide direction to middle managers on how to direct departments and supervisors. Supervisors, in turn, oversee the daily operations of the business. This includes monitoring work on the floor and handling employee training and management. Although many businesses have similar hierarchies, classically styled businesses are noted for the one-way, top-down communication and almost autocratic strength of the high levels of management. The owners of the company dictate its operations while lower-ranking leaders merely implement these decisions.

Four main ideas provide the pillars of classical management theory. The first suggests there should be a standardized process to complete each job. It is a leadership responsibility to enact this standardization. Second, employees should be assigned to roles as a function of their skills and capabilities. A third precept is that work processes should be designed with a minimum of interruptions. Lastly, wagers should be incentivized with larger wages for increased outputs.

The specialized structure of the labor force is another hallmark of classical management. This theory recommends that all workplace tasks be broken down into smaller and easier tasks. Employees or groups of employees are specifically trained to accomplish one small sub-task. Employees have limited and well-defined responsibilities, which may involve repetitive actions such as assembling a small part of a larger product. This division of labor contributed greatly to the rise of assembly line processes in which a complex product moves on a mechanized belt between stations where employees make one small alteration or specific addition at a time until the product is finally finished.

The final main feature of classical management theory relates to incentives or rewards that motivate employees to work at their highest level of efficiency. Classical theorists hold that the main—perhaps even the only—incentive of interest to employees is money. Based on this idea, employers can theoretically find the best ways to motivate and reward employees by offering more financial compensation.

Classical management theory remained a preeminent business strategy until the middle of the twentieth century. Competing theories that stressed individuality, emotional needs, and the creativity of employees cast doubt on previous methods that portrayed employees as machine-like cogs focused only on financial gain. Theories such as the behavioral management theory and human relations theory ended the long reign of classical management theory in most environments. However, this earlier theory still functions in many ways, particularly among small or struggling businesses that need to ensure steady profits for survival.

In addition to traditional precepts of classical management precepts, modern management theories incorporate the expectation for constant change, and that emerging technologies must also be addressed. In some cases, new technologies can be beneficial to existing management practices. In other cases, they are disruptive. Emergent technologies must nonetheless be accounted for in business strategies.

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