What is Classical Management Theory?
Classical management theory is the theory that is considered to increase the efficiency and productivity of an organization through autocracy, division of labor, clear hierarchal structure, and incentives. It holds the belief that workers only have physical and economic needs and incentive is the key to motivating them to work more.
Classical management’s objective is to create an efficient production system, increase productivity, and achieve maximum profit. By this theory, an organization i.e. factory is viewed as a production machine and its workers (employees) are parts who must work at their best to bring productivity. This theory has ignored the employee’s job satisfaction and social needs.
The classical theory of management is a concept that was propounded early days of management thoughts. Industrialists and technicians were looking for unique ideas and information to operate those factories efficiently and effectively in the late 19th century after the development of enormous factories in Europe and the USA with the goal of mass manufacturing of goods.
Generally, classical theories describe the essential nature of management and its relationship to its production process. Scientific management theory, administrative management theory, and bureaucracy theory are taken as classical theories of management. These theories have evolved for the efficiency and productivity of employees and the entire organization.
Characteristics of Classical Management Theory
The classical theory of management can be characterized by its four main features. They are:
Hierarchy of Authority
According to the classical concept of management, an organizational hierarchal structure of three levels – top-level, middle-level, and lower-level. All three levels work in a coordinated manner to achieve desired results.
Top-level includes top executives-managers who oversee the overall operation of the company and supervise subordinates. Departmental managers are part of the middle management team; they report to executives and are in charge of managing and setting goals for various departments. Additionally, the lowest level consists of supervisors who oversee daily operations, report to middle and top managers, and ensure the execution of their goals.
Related: The 3 Levels of Management
The division of labor is a key component of classical management, which emphasizes the attainment of task specialization. Achieving the desired goals most effectively entails breaking a major task into smaller segments and assigning a specific task to a certain employee.
It holds that when employees are only given certain tasks to complete, they clearly understand their jobs and often specialize in one area. This reduces the need for employees to multitask while boosting productivity and efficiency.
Incentives As Motivation
This classical theory believed that incentive i.e. financial reward is the main motivating factor for workers. It holds that workers should be incentivized based on how they perform. This theory typically ignores the other factors of workers’ motivation.
The autocratic leadership style is also the foundation of traditional management theory. According to traditional management theory, an organization needs a single leader to oversee, direct, and manage all of its operations. All significant choices should be made at the executive level and communicated to lower levels.
Classical Theories of Management
Types/examples of classical management theory: Scientific management (F.W. Taylor), administrative management (Henri Fayol), and Bureaucracy (Max Weber) are the main theories of classical management.
Each classic theory has different principles for managing organizational affairs. These theories are the means to achieve organizational efficiency and productivity. For this, these theories focus on the one best way, universally applicable management principles, and formal relationships based on a hierarchy of jobs.
Let’s look at them separately.
Related: The 12 Theories of Management
Scientific Management Theory
Scientific management theory means applying different scientific tools, techniques, and procedures in the management of business activities to increase efficiency and productivity. This theory has proved how scientific tools can certainly improve the productivity of a business.
It is F.W. Taylor (1856-1915) who propounded this theory. He holds the view that increasing the efficiency of lower-level workers in the organization ultimately increases the efficiency and productivity at the top and of the whole business.
He has given five principles of scientific management:
- Science, Not Rule of Thumb
- Harmony, Not Discord
- Cooperation, Not Individualism
- Maximum Output In Place of Restricted Output
- Development of Employees For Their Greatest Efficiency and Propensity
Administrative Management Theory
Administrative management focuses on strengthening managerial performance instead of individual workers’ efficiency as in the above-mentioned theory.
This theory of classical management is propounded by Henri Fayol, a French Industrialist. This theory focuses on improving organizational performance by synchronizing all the internal elements of organizations. This theory believes that improving managerial performance i.e. top-level managers is essential to drive efficiency in the whole organization which ultimately increases lower-level employees too.
This classical theory has given universally accepted 14 management principles to manage and run organizations most effectively and efficiently. Henri Fayol has stated that understanding the depth of these principles and the appropriate implementation of these principles is the key to achieving all organizational goals. They are:
- Division of Work
- Authority and Responsibility
- Unity of Command
- Unity of Direction
- Subordination of Individual Interest to General Interest
- Remuneration of Personnel
- Centralization and Decentralization
- Scalar Chain
- Stability of Tenure
- Espirit De Corps
Bureaucratic Theory of Management
The bureaucratic theory of classical management states that an ideal organization has a hierarchal structure, clear rules, and regulations, and proper division of rules. It emphasizes that an organization should have clear rules and regulations that must be followed by every organizational member in order to achieve the desired goals.
A German Socialist, Max Weber is the propounder of the bureaucratic theory of management. Weber is strictly in opposition to traditional emotional attachments in the workplace. He rather highlighted impersonal relationships in the workplace.
Weber has given us six principles of bureaucracy for bureaucratic organizations.
- Hierarchy of Authority
- Division of Labor (Specialization)
- Clearly Defined Rules and Regulations
- Impersonal Relationships
- Formal Selection of Employees
- Career Development
Advantages and Disadvantages of Classical Management Theory
Some of the pros of classical management can be pointed out below:
- It has given us the concept of division of labor which is certainly an effective way to get specialization and productivity.
- The proper hierarchal structure has provided clear tasks and responsibilities for employees have to do.
- Given that financial incentives boost the employee’s performance.
- Concentrates on decision-making at the top which reduces the time on decision-making.
The classical theory of management might not be applicable to all organizations. Some of its cons may include:
- Classical management ignores the human aspects of factory operations as it views humans as the only tools for production.
- Holds the view that money is the only means to motivate workers which is not suitable in today’s business environment.
- Although the division of labor ensures specialization workers might also get bored while doing repetitive tasks again and again.
Read Next: Contingency Theory of Management