Management Approaches: Classical, Behavioral, and Contingency Theory
Business Management: Management Approaches
Evolution of Management Theory
Current management theory has not simply materialized but has evolved over centuries.
This evolution is a response to various issues, including:
Improving the productivity of labor.
Enhancing the overall effectiveness of the organization.
Better managing workers.
Treating the business as a system.
Classical Approach
Summary: The Classical Approach began with the Industrial Revolution, focusing on how best to manage and organize workers to improve productivity (output per unit of input). It is divided into two perspectives: Classical-Scientific, which deals with factory floor organization, and Classical-Bureaucratic, which focuses on business structuring.
Goal: Stresses how best to manage and organize workers to improve productivity (output per unit of input).
Origin: Began with the Industrial Revolution.
The invention of reliable steam-powered machines allowed businesses to mass-produce goods in year-round factories.
This led to a focus on mass production and specialization to increase labor productivity.
Two Perspectives:
Classical-Scientific Approach: Focused on organizing workers and production methods directly on the factory floor.
Classical-Bureaucratic Approach: Emphasized how businesses should be structured and organized.
Classical-Scientific Approach
Frederick W. Taylor (1856-1915): Developed the principles of scientific management, which studies a job in detail to find the best way to perform it.
Principles:
Scientific examination: Analyze each task part to determine the most efficient method.
Worker selection and training: Select suitable workers and train them in the scientifically developed methods.
Cooperation: Ensure workers use scientific methods through cooperation.
Division of work and responsibility: Management plans, organizes, and controls methods; workers carry out tasks as planned.
Belief: A poorly skilled workforce could be trained for effective simple, repetitive tasks.
Tools: Used time and motion studies (examining each step of a procedure and its duration) to analyze tasks, aiming to reduce them to an effective minimum standard.
Advantages:
Increased efficiency and productivity through optimized methods.
Clear roles and precise targets for workers.
Reduced waste and lower production costs.
Specialization can lead to higher skill levels in specific tasks.
Disadvantages:
Can lead to worker alienation and demotivation due to repetitive, monotonous tasks.
Ignores the human/social aspects of work; treats workers as cogs in a machine.
Lack of flexibility and innovation; rigid adherence to established procedures.
Can foster an autocratic management style, limiting worker input.
Henry Ford: Applied scientific management principles in to develop a mechanized assembly line for mass-producing T-model cars.
Process: Chassis moved on a conveyor belt, small teams fitted components laid out along the line.
Result: Reduced car assembly hours from to just hours.
Classical-Bureaucratic Approach
Pioneers: Max Weber and Henri Fayol.
Bureaucracy: Defined as the set of rules and regulations that control a business.
Max Weber's view: A bureaucracy is the most efficient form of organization, characterized by:
A strict hierarchical structure.
Clear lines of communication and responsibility.
Jobs broken down into simple tasks; specialization.
Rules and procedures.
Impersonal evaluation of employee performance to avoid favoritism and bias.
Advantages:
High degree of control and accountability due to clear rules and hierarchy.
Consistency and fairness in decision-making and treatment of employees (impersonal).
Stability and predictability, making it suitable for large, complex organizations.
Specialization can lead to expertise in specific areas.
Disadvantages:
Rigidity and resistance to change; difficulty adapting to new environments.
Slow decision-making processes due to multiple layers of approval and adherence to rules (red tape).
Dehumanizing for employees; creativity and initiative are often stifled.
Can lead to a lack of communication across departments and a focus on rules over goals.
Classical Management Functions (Henri Fayol)
According to Henri Fayol, management involves three main functions:
Planning
Definition: The process of setting goals and deciding on methods to achieve them.
Operation: Planning the tasks that need to be performed.
Types of Planning:
Strategic (long-term) planning: For the next years, focusing on market position and competitive achievements (e.g., fully privatize over four years, develop new production facilities in three countries, undertake extensive restructure).
Tactical (medium-term) planning: Flexible, adaptable, usually over years, implementing strategic plans and allowing quick responses to change, emphasizing resource allocation to achieve goals (e.g., build a new warehouse, marketing department relocating to a new city).
Operational (short-term) planning: Specific details for short-term business operation, controlling day-to-day activities contributing to short-term goals (e.g., regular weekly production meetings, stocktake tomorrow, monitor team's performance over two months, install a new computer system, increase sales by over six months).
Organizing
Definition: The process of arranging the resources of the business to achieve the goals.
Operation: Organizing work and workplace to maximize productivity and efficiency.
Key activities:
Determining work activities: Breaking down work into smaller steps.
Classifying and grouping activities: Improving efficiency by allocating resources appropriately.
Assigning work and delegating authority: Determining who does the work and who is responsible for its completion.
Controlling
Definition: The process of evaluating and modifying tasks to ensure set goals are achieved.
Operation: Changing production procedures if goals are not being achieved.
Key steps:
Establish standards: Align with firm's goals and influenced by employees, management, industry, and government.
Measure performance: Determine how comparisons against standards or benchmarks will be made.
Take corrective action: Change activities, processes, and personnel to ensure business goals are met.
Hierarchical Organizational Structure (Pyramid-shaped)
Characteristics:
Rigid lines of communication.
Numerous levels of management (from managing director to supervisors).
Clearly distinguishable organizational positions, roles, and responsibilities.
Hierarchical, linear information flow, mostly downwards.
Specialization of labor, dividing tasks into separate jobs.
Chain of command showing reporting structure.
Centralized control with strategic decisions made by senior management.
Levels of Management:
Top/Senior/Executive Management Team: Board of directors, CEO, Managing Director (highest authority, responsibility, accountability).
Middle Management Team: Department head, Divisional head, Plant manager.
Frontline/Supervisory Management Team: Store manager, Team manager, Supervisor, Team leader (lowest authority, responsibility, accountability).
Autocratic Leadership Style
Characteristics: A manager using this style tends to:
Make all decisions.
Dictate work methods.
Limit worker knowledge to only the next step.
Frequently check performance and sometimes give punitive feedback.
Appropriate situations:
Times of crisis requiring immediate compliance (e.g., in the army).
Meeting unexpected deadlines where speed is crucial.
Advantages:
Clearly defined directions and procedures, reducing uncertainty.
Clear employee roles, allowing management to monitor performance effectively.
Stable and consistent environment, outcomes align with management objectives.
Centralized control, efficient time use, quick problem-solving due to no discussion.
Disadvantages:
No employee input; ideas not encouraged or shared.
Employees lack skill development and feel devalued.
Ignores employee morale and motivation; decreased job satisfaction, leading to absenteeism and staff turnover.
Increased conflict as workers compete for approval.
Fosters an unhealthy work environment due to lack of trust and empowerment.
Contingency Management
Definition: An approach that asserts there is no single best way to manage an organization. Should extract most useful ideas and practices from a wide range to suit business
Core Idea: The most effective management approach depends on the unique circumstances or 'contingencies' of the situation.
Flexibility: Requires managers to adapt their leadership styles, organizational structures, and strategies to fit the prevailing internal and external factors.