Classical organization theory

Classical organization theory includes two different management perspectives.

1. Scientific management

         2. Administrative management

Scientific Management:

Fredrick Winslow Taylor (1856-1915) was a pioneer in the field of Scientific                     Management.

He is regarded as the father of Scientific Management. 

Taylor published his work “Principles of Scientific Management” in the year 1911 A.D.

Taylor started as a worker in Midvale Steel Company and he was promoted to chief           engineer. Later, he joined Bethlehem Steel Company. After his retirement, he worked as a consulting engineer.

According to F.W Taylor- 

“Scientific Management means knowing exactly what you want men to do and seeing that they do in the best and the cheapest way.”

So, we can understand that scientific management is the art of knowing what is to be done and how it is to be done.

During his time in the companies, he found out that there were no specific ideas guiding the action of management but managers used a rule of thumb. There was no proper division of responsibilities among the labor and managers. The resources were not fully utilized which led to less output.

So, Taylor saw the need to make management scientific with well-defined ideas and fixed principles rather than depending on hazy ideas.

Principles of Scientific Management by Taylor

THERE ARE 4 PRINCIPLES BY TAYLOR.

(1) SCIENCE NOT RULE OF THUMB:

--This principle says that we should not get stuck in a set routine with the old techniques of doing work, rather we should be constantly experimenting to develop new techniques which make the work much simpler, easier and quicker.

--Taylor believed that there was one best method to maximise efficiency and that even  a small production activity like loading pigs of iron into boxcars can be scientifically planned and managed .

--This method involved investigation of traditional methods through work-study , unifying the best practices and developing a standard method , which would be followed throughout the organization.

2) HARMONY , NOT DISCORD:

 --As per this principle, such an atmosphere should be created in the organisation that labour (the major factor of production) and management consider each other indispensable.

--There should be complete harmony between the managers and the workers .

--Taylor has referred to such a situation as a ‘Mental Revolution’ and firmly believed that the occurrence of a mental revolution would end all conflicts between the two parties and would be beneficial to both of them.

-- Management should share the gains of the company and at the same time workers must work hard to change the company for good .

EXAMPLE :In Japanese companies paternalistic style of management is in practice . There is a complete openness between management and workers . If at all the workers go for a strike they wear a black badge but work more than normal working hours to gain the sympathy of management . 

(3) COOPERATION, NOT INDIVIDUALISM :

--According to this principle, all the activities done by different people must be carried on with a spirit of mutual cooperation.

--Competition should be replaced by Cooperation.

--Taylor has suggested that the manager and the workers should jointly determine standards. This increases involvement and thus, in turn, increases responsibility. In this way we can expect miraculous results.

--This can be achieved by :

• Rewarding the employees  for their suggestions .
• Workers not going on unnecessary strikes and making unreasonable demands.
• Open communication between management and all staff .
• Equal division of work and responsibility between workers and management .

(4) DEVELOPMENT OF EACH AND EVERY  PERSON TO HIS OR HER GREATEST EFFICIENCY AND PROSPERITY :

--According to this principle, the efficiency of each and every person should be taken care of right from his selection

--A proper arrangement of everybody’s training should be made.

--It should also be taken care that each individual should be allotted work according to his ability and interest. Such a caring attitude would create a sense of enthusiasm among the employees and a feeling of belongingness too.

TECHNIQUES OF SCIENTIFIC MANAGEMENT :

THERE ARE 7 TECHNIQUES OF SCIENTIFIC MANAGEMENT 

1. FUNCTIONAL FOREMANSHIP-

Taylor advocated separation of planning and execution functions. 

Under planning the following activities took place by the 4 personnel-- 

• The personnel would draft instructions for workers- Instruction card clerk
• Specify the route of production- Route clerk .
• Prepare time and cost sheet - Time and cost clerk .
• Ensure discipline- Disciplinarian 

Production function would ensure : 

• Timely and accurate completion of job- Speed boss .
• Keeping machines and tools ready for operation by worker- Gang boss .
• Ensure proper working conditions of machines and tools- Repair boss .
• Check quality of work -Inspectors . 

Foremen should have intelligence ,education, tact , grit , judgement ,special knowledge, manual dexterity and energy,honesty , good health . 

Since all these qualities cannot be found in a single person so Taylor proposed eight specialists.

2. STANDARDISATION AND SIMPLIFICATION OF WORK-

• Standardization refers to the process of setting standards for every business activity . It is a means of achieving economics of production . 
• It implies the physical attitude of products should be such that it meets the requirements & needs of customers. 
• Taylor advocated that tools & equipments as well as working conditions should be standardized to achieve standard output from workers. 

The Objectives of Standarisation are 

1 .To reduce the given line or product to fixed and predetermined type, form, design, size, weight, quality etc 

2. To ensure the manufacture of identical parts and components. 

3. To ensure that the quality & standards of excellence have been maintained. 

4. Standard of performance are established for all workers and machines at all levels. 

Simplification is method of eliminating unnecessary diversity of  products .

It results in saving of cost of labour , machines , tools etc .

Simplification aims at eliminating extra varieties , sizes and dimensions , sizes while standardisation implies devising new varities instead of existing one.

3. METHOD STUDY

This technique determines the best way of doing the job .

There are various methods of doing the job . 

To determine the best way there are several parameters . Right from the procurement of the product to the final delivery of product to the customer every activity is a part of method study .

The objective of method study is to minimise the cost of production and maximise thr quality and satisfaction of the customer .

Examples of method study are :

Operations Research and

Assembly lines and Process Charts :

4. MOTION STUDY

In this study, movement of body and limbs required to perform a job are closely observed.

In other words, it refers to the study of movement of an operator on machine involved in a particular task.

The purpose of motion study is to eliminate useless motions and determine the bet way of doing the job.

By undertaking motion study an attempt is made to know whether some elements of a job can be eliminated combined or their sequence can be changed to achieve necessary rhythm.

Motion study increases the efficiency and productivity of workers by cutting down all wasteful motions. 

EXAMPLE :

It is possible to find out :

Motions that are productive 

Motions which are incidental ( going to stores ) 

Motions which are unproductive .

Taylor used stopwatches and various symbols and colours to identify different motions .

5. TIME STUDY

It is a technique which enables the manager to ascertain standard time taken for performing a specified job. Every job or every part of it is studied in detail. 

This technique is based on the study of an average worker having reasonable skill and ability. 

Average worker is selected and assigned the job and then with the help of a stop watch, time is ascertained for performing that particular job.

Taylor maintained that Fair day’s work should be determined through observations, experiment and analysis by keeping in view an average worker. 

  Standard Time × Working Hours = Fair Day’s Work 

EXAMPLE :

On the basis of several observations it is determined that standard time taken by the worker to make one cardboard box is 20 minutes. So in 1 hour he / she will make 3 boxes.

Assuming  that a worker has to put in 8 hours of work in a shift and deducting one hour for rest and lunch , it is determined that in 7 hours a worker makes 21 boxes @ 3 per hour . This is the standard work a worker has to do .

6. FATIGUE STUDY

A person is bound to feel tired physically and mentally if he / she does not rest while working .

The rest intervals will help one to regain stamina and work again with the same capacity . This will result in increased productivity .

Fatigue study seeks to determine the amount and frequency of rest intervals in completing a task .

EXAMPLE :

A plant , work takes place in 3 shifts of 8 hours each .Even in a single shift a worker has to be given some rest interval for their lunch and some other small pauses from the work .

7. DIFFERENTIAL PIECE WAGE SYSTEM

This technique of wage payment is based on efficiency of worker. The efficient workers are paid more wages than inefficient one. 

On the other hand, those workers who produce less than standard number of pieces are paid wages at lower rate than prevailing rate i.e. worker is penalized for his inefficiency. 

This system is a source of incentive to workers who improving their efficiency in order to get more wages. 

It also encourages inefficient workers to improve their performance and achieve their standards. 

It leads to mass production which minimizes cost and maximizes profits.

ADMINISTRATIVE MANAGEMENT

The Administrative Theory of Management was first generalized by Henri Fayol (1841-1925) with his work and publications, Fayol's 14 Principles of Management (1888).

Fayol was a French Mining Engineer who recorded his industry methods. He ultimately became a management theorist with perhaps the greatest effect of all prior management theorists. 

Fayol is considered the father of Administrative Management Theory, often called Process Theory or Structural Theory. 

Fayol's 14 Principles of Management

Division of Labor - The division of labor within an organization allows for specialization. Individuals can become more proficient in the accomplishment of a limited set of activities - thus improving their output.

Authority - Managers must have the authority to issue commands, but with that authority comes the responsibility to ensure that the work gets done.

Discipline - There must be a clear line of authority. Subordinates must fully obey instructions from superiors. Managers must have the ability to instill discipline through punishment.

Unity of Command - There should be only one boss from whom a worker receives instructions?

Unity of Direction - Each workgroup or department is working under a singular plan that coordinates efforts. Work efforts should be guided by one supervisor.

Subordination of Individual Interest - The interests of individuals are subordinate to the general interests of the group or department or company.

Remuneration - Compensation is used to incentivize worker performance. Remuneration can include both financial and non-financial forms of compensation.

Centralization - Decision making should be either centralized (management makes all decisions) or decentralized (employees also make decisions) depending upon the characteristics of the organization and worker competency.

Line of Authority (Scalar Chain) - There must be a hierarchy of authority that places workers below managers in the reporting structure. The degree of authority is higher at each stage of the organizational hierarchy. The organizational hierarchy should be well understood throughout.

Order - There must be well-defined rules and standards for the work environment and work responsibilities. A safe and orderly environment leads to greater coordination.

Equity - The organization must be run based upon principles of fairness. Employees should be treated with a combination of kindliness and justice.

Stability of Tenure - Organizations need low turnover. This allows employees time to learn their jobs, develop skills, and acquire loyalty.

Initiative - Managers must promote initiative by allowing employees to create plans and carry them out.

Esprit de Corps - Establishing a sense of belonging within the organization creates a sense of unity and moral.

Remember, the objective of Fayol's principles was to guide managers to efficiently organize and interact with employees.

Fayol's Five Functions of a Manager

Henri Fayol, in his classic 1916 book, Administration Industrielle et Generale, Fayol laid out an informative categorization of managerial functions. These functions include:

Planning

Organizing

Commanding

Coordinating

Controlling

Planning - Fayol defined managerial planning as:

forecasting future conditions,

setting objectives, and

developing means to attain objectives.

Notice that the planning function is flexible in nature to allow for contingencies that arise in the process. 

Organizing - Fayol defined organizing as structuring activities and organizing individuals within the firm. This includes recruiting, equipping, and training individuals. 

Commanding - According to Fayol, commanding as a managerial function concerned the:

Direct supervision of employees, and

Motivating their efforts toward a common objective.

Fayol recognized the need for managers to recognize and understand the behaviors of employees and to set an example for them. 

Coordinating - Fayol identified coordination as identifying, arranging, and scheduling all activities carried out by subordinates. This coordination allows for the collective accomplishment of plans. 

Controlling - Concerns the constant supervision of activities to identify accomplishment or goals and objectives. Derivation from the identified plan allows the manager to take corrective action.

The functions of commanding and controlling have generally been collapsed under the function Leading. The result is the modern-day P-O-L-C framework of managerial functions. 

GULICK'S CONTRIBUTION

Gulick is perhaps best known for the functions of the chief executive represented in the acronym POSDCORB. 

Each letter stands for 

Planning, 

Organizing, 

Staffing, 

Directing, 

Co-ordinating, 

Reporting and 

Budgeting.

The 7 Elements of POSDCORB

Here's how you can use each part of the POSDCORB acronym to cover your organizing tasks in the most efficient way.

Planning – Establish what your objective is and work out what you and your team need to do to achieve it. For example, you might want to ensure that all customer orders are despatched within 24 hours of receipt. Planning involves identifying each task that you need to carry out to do this.

Organizing – Organize your team so that it can work at its best. Look at its structure, and at how its subdivisions are arranged and coordinated. Think about the reporting lines that you have in place and the number of people in each team or role. Is this the most efficient way of working, or could you improve it?

Staffing – Capable members of staff are key to a productive organization. It's important to appoint the right people to the right roles, so that they can work effectively. Practice effective recruitment, train and develop your people, and match their skills and expertise to the tasks that they're best suited to.

Directing – This is the ongoing job of making decisions and incorporating them into the instructions that you give to your team members. Arrange regular team meetings, one-on-ones and performance appraisals, to give them direction and make sure that they're clear about their objectives.

Coordinating – This is the coordination of your people and of their work. Gulick describes how managers have limited amounts of time and energy, and how this must be considered when deciding how many people they can successfully supervise ("span of control"). He also emphasizes that each team member should take direction from only one manager to avoid confusion ("unity of command"). By coordinating your team in this way, you can make the best use of your resources and provide your team with clear activities and processes.

Reporting – Keep people in the organization up to date with what's going on. Provide them with news, results and general information in formal reports and regular company updates, to boost their morale, productivity and commitment. This also includes team members reporting in to you with their progress, issues and concerns. (See our article on 5-15 reports for a great way to do this.)

Budgeting – Balance your expenses with your income by planning, estimating and being disciplined with your finances. Creating a budget allows you to control your organization's income and expenditure, and can determine the success of a project.