The Classical Organizational Theories - Case Study Example

The ical Organizational Theories are not sufficient to be successful in today’s environment. ICAL ORGANIZATIONAL THEORIES In the 1800s, the factory system started to emerge. Organizations started facing issues that were not encountered previously. These problems included managing the structure of the growing organizations, scheduling complex operations and managing the growing number of workforce. This gave rise to the classical organizational theories that included famous works of different theorists and researchers under the three main categories: Scientific Management and Administrative Management. SCIENTIFIC MANAGEMENT Frederick Taylor Organizations had been facing a hard time in improving the productivity of their workforces. This gave rise to Frederick Winslow Taylor’s work known as Scientific Management. He was of the view that management practices should change and that change was to be established through scientific study and precise measures instead of just following rules of thumb. The first recommendation of Frederick Taylor’s Scientific Management was that a scientific job analysis should be used to find out that one best way to perform every job that maximizes efficiency. This should be done through using observation at the workplace, gathering relevant data and then using them devise the most efficient procedures for each job.(Daft, 2004) Scientific Management also insisted upon selecting the right people for the right job. Workers should be trained and developed. Moreover, the managers must make it a point to work closely with the workers, cooperate with them, and ensure that all work is done according to the plan introduced by the scientific management practices. Scientific Management drew a clear line between the managers and the workers in their roles. Managers’ roles included planning, organizing and decision-making, whereas, workers are only supposed to perform the jobs. (Daft, 2004) ADMINISTRATIVE MANAGEMENT Where Scientific Management talked about increasing the productivity and efficiency of individual workers, the administrative management involved the organization as a whole. The three important contributors to this approach were Max Weber, Henri Fayol and Luther Hasley Gulick. Max Weber Max Weber, a German theorist, introduced the concept of looking at organizations as a whole. This was known as the bureaucratic organizations approach (Daft, 2004). During the 1800s, organizations lacked a formal organizational structure. The family like structure in the organizations meant that employees were not devoted to the mission of the company and instead, were only loyal to individual supervisors or managers. Consequently, workers were using the resources of the organization to maximize their own gains instead of those of the organization. Max Weber recommended that organizations must be managed on a rational basis. Having a formal, unbiased authority would ensure that the organization is more adaptable to change. Management based on rationality would ensure that selection of employees and their promotions are based on performance rather than who they know. This way, loyalties of the workers would be with the organization as a whole and not individual supervisors or managers. (Daft, 2004) This type of organization would have written documents and rules that would be followed throughout the organization. Moreover, since these rules would be standardized and would not depend on individual managers or supervisors, it would make continuity possible for the organizations if those individuals were to leave the company or die. Henri Fayol Henri Fayol was a French engineer. In his most noteworthy contribution, called General and Industrial Management, he laid down 14 general principles of management which are as follows (Robbins & Coulter, 2005): 1. Division of Work – Train employees and make them specialized for different tasks. This would increase output and make them more efficient. 2. Authority – Managers have the right to give orders to subordinates and workers are responsible for carrying out the duties assigned to them 3. Discipline – Employee must respect and obey the rules that manage the operations of the organization. 4. Unity of Command – employees should receive all their orders and delegations from one superior person only. 5. Unity of Direction – similar activities and tasks that work together to achieve the same goal should be grouped together under one manager. 6. Individual Interests must be kept higher than General Interest – the interests of the organization should always have precedence over those of individuals. 7. Remuneration – payments should be a fair compensation for the employees’ services. 8. Centralization – employees have enough responsibility to achieve their objectives, but final responsibility is retained by the manager. 9. Scalar Chain – scalar chain is the line of authority starting from the top most management and going down to the lowest positions. 10. Order – resources must be present whenever and wherever needed. 11. Equity – a fair and just attitude should be maintained by the managers towards their subordinates. 12. Stability of Tenure of Personnel – long term commitments must be promoted so that the organization is stable and more successful. 13. Initiative – employees must be encouraged to think out of the box and take controlled initiatives 14. Esprit de Corps – team work and team spirit must be promoted. This will build unity and synchronization among the employees and would result in an efficiently working organization. Luther Hasley Gulick Born in the late 1800s, Luther was a specialist in administration. He proposed the following seven management functions: 1. Planning – creating an outline of the tasks to be carried out and the means to achieve them. 2. Organizing – developing the formal structure through which tasks are defined and coordinated to accomplish the plan. 3. Staffing – deals with the human resource management of the organization. 4. Directing – the task of making, communicating and implementing decisions and evaluating the performance of subordinates 5. Coordinating – reaching harmony between the tasks and activities in achieving common objectives. 6. Reporting – ensuring that activities are performed properly to achieve the goals. 7. Budgeting – deals with the financial planning of the organization. CRITICISMS OF CLASSICAL ORGANIZATIONAL THEORIES Scientific Management Although it is evident that scientific management made it possible for the management to utilize the resources with maximum efficiency, there has been a considerate amount of criticism against the approach. Firstly, scientific management does not take into consideration the needs of the workers. Human beings have psychological and social needs as well and they cannot be expected to work efficiently if those needs are not fulfilled at the workplace. Also, it does not consider the differences in the workers. It assumes that managers are superior in every aspect and can make better decisions than their subordinates. Therefore, employees feel left out and are not provided a platform to raise their suggestions and ideas. (Daft, 2004) Furthermore, there are more concerns from the workers’ point of view. Workers view this approach as increasing unemployment because as productivity of the workers increase, lesser employees are needed to complete the same number of tasks. Exploitation and Monotony are also major concerns in scientific management. Firstly, the approach promotes specialization among the workers. This reduces initiative and innovation for the employees and they feel bored with their work. Moreover, even with the productivity high, the workers feel that they are not being compensated justly for their efforts. As the concept of performance related pay had not been a part of scientific management, the increase in productivity would result in a decrease in the motivation of the employees. (Juneja, 2008) Even from the employer’s point of view, scientific management appears to be an expensive and a time consuming system to implement. (Juneja, 2008) Administrative Management Administrative Management takes into perspective the organization as a whole. However, it does not take into account the effects it has on the work environment. Workers in a work place where administrative management theories are practiced have very limited control over the way they work. They do not have the freedom to take initiatives and are hugely dependant on what task is delegated to them. (Argyris, 1957) The approach does not consider the long term commitments of the employees and focuses only on the short term objectives and profitability of the organization. Moreover, employees are not provided with their basic psychological needs and are treated as though they are incompetent and do not have the ability to make innovative decisions on their own. (Argyris, 1957) LIMITATIONS OF ORGANIZATIONAL THEORIES IN TODAY’S WORLD The most significant flaw in the theories that were provided to us by researchers and theorists discussed above was that they assumed their principles could be universally applicable. This was not the case. For instance, bureaucracy could be applicable to many circumstances, but in many other cases, other structures are simple more successful. All organizations are different in terms of their operations and therefore require different methods to manage them. And adapting management practices according to the differences in the different organizations, as opposed to the standardized classical organizational approaches, is known as the contingency approach. (Robbins & Coulter, 2005) The world today has changed. The management practices that were followed in the 19th and 20th centuries cannot be followed in today’s environment. Management today faces many new challenges and must constantly evolve in order to maintain their competitive edge over others. Globalization Today, physical boundaries have dissolved as far as business is concerned. Multinational companies have to deal with many different cultures and environments as they expand into different regions of the world. For instance, Mc Donald’s opening its franchise in India must ensure that it adapts to the local tastes and includes offerings that cater to the demands of the local consumers. (Robbins & Coulter, 2005) Globalization has eradicated the concept of monopolies in the business environment. Companies today, face fierce competition and management must make sure that they keep a check at what their competition is doing and change their strategies, whenever necessary, to stay on top. Organizations today are not confined to their own towns, cities, or countries. They spread over different countries all over the world to maximize the use of their resources and minimize costs. This expansion results in encountering different cultures and employees of different ethnic backgrounds, giving rise to a well known issue of today called Workforce diversity. Today’s workforce is made up of people with different race, age, ethnicity and other characteristics. Management must ensure that there are no ethical problems within the workforce and that fair and just practices are followed throughout the organization to guarantee efficiency. Customer Relationship Management Scientific Management focused improving efficiency of individual workers and Administrative Management focused on the organization as a whole. However, none of the theories took into perspective the importance of customers in today’s world. Because customers today have several different sellers to choose from, organizations must differentiate their offerings by providing greater customer service to keep the customers coming back to them. As organizations, today, find it hard to differentiate on the basis of the product offerings, they must follow relationship building with the customers to provide a unique experience to the customers. Internet and E-business The advent of Internet has made way for numerous opportunities for businesses today, and at the same time created many challenges for the management. Internet has provided a whole new way of doing business: E-Business. Early Management thinkers could not have thought of such a change in the way business is done and, therefore, their theories hold little significance in the way management incorporate technology in their practices to maximize efficiency. Technology advancements have aided management in many ways. In the 19th and 20th century, the manager would have to be physically present at the work place to supervise the employees, messages and letters would have to be delivered physically and planning and scheduling would have to be carried out manually. Today, however, there are automated planning tools and other technological solutions present to help the managers supervise, or communicate with the employees remotely. CONCLUSION Management today is practiced very differently than how it used to be at the time when the classical organizational theories, discussed in this paper, were introduced. Even though it is extremely important to realize the contributions of those researchers and theorists in laying out the basic principles and the fundamental management practices, it must be noted that in today’s environment, following only those basic practices would lead to the demise of any business. The changing trends today cannot be ignored. Managers must make sure that they adopt the contingency approach and tailor their management practices to fit the needs of their respective organizations. They must constantly evolve and make necessary changes in their practices and strategies to maintain and improve their position in the market. BIBLIOGRAPHY Books Argyris, C. (1957) Personality and organization: The conflict between system and the individual, Harper. Daft, R.(2004) Management. Seventh Edition. South-Western Pub Robbins, S. & Coulter, M.(2005). Management. Eighth Edition. London. Pearson Education, Inc. Weihrich, H. & Koontz, H.(1994). Management: A Global Perspective. New York. McGraw Hill Website Juneja, H.(2008). Criticism of Scientific Management. Ezine Articles [Internet]. Available from http://ezinearticles.com/?Criticism-of-Scientific-Management&id=1639903 [Accessed February 24, 2010] Read More