Principles of Organisation and Management - Coursework Example

Principles of Organisation and Management Introduction The present day marketplace is different from what it was few decades ago. Changes in the business environment have warranted a change in thinking as to how organizations should be managed. Various management thinkers have put forth their views concerning management during different times in the past. The most noteworthy of these views have taken the form of management theories. Management practitioners benefit from these theories as they are relevant, in varying degrees, even today. While a few aspects of some theories overlap, others are radically different. The discussion explains some prominent management theories, their similarities and dissimilarities and their present day relevance. Classical Theory of Management The classical theory of management is the oldest and the most widely accepted school of management. The classical theory was propounded and practiced extensively between 1885 and 1940. The genesis of the theory can be traced back to the Industrial Revolution that necessitated the need for systematic and logical methods to manage organizations. Many factories were set up during the Industrial Revolution because of which the need for proficient planning, organizing, and controlling the activities of workers arose. The classical theory of management evolved with a view to enhance the worker-level productivity and that of the entire organization. The classical theory of management consists of two major schools: Theory of Scientific Management General Administrative Theory While scientific management theory attempts to improve worker-level productivity, the general administrative theory aims to make the entire organization more effective and efficient. Theory of Scientific Management There were many contributors to the theory of scientific management. However, the most prominent work in this sphere was that of Frederick W. Taylor who is regarded as the father of scientific management. Taylor, who worked at the Midvale Steel Company, felt a pressing need to cut costs, analyze work methods and develop labor and management co-operation. On the basis of his time studies, Taylor recommended a differential piecework plan wherein workers were paid higher wage rates for above standard performance and low wage rates for below standard performance. The concept of minimum basic wage rates can also be attributed to Taylor’s works, for till that point of time, there was no guarantee of minimum wages to workers. Theory of General Administration The contribution of Henri Fayol forms the backbone of the theory of general administration. Fayol termed planning, organizing, commanding, coordinating and controlling as the basic functions of management. According to the author, all activities in industrial projects could be classified into six broad categories: technical, commercial, financial, security, accounting and managerial. Additionally, Henri Fayol propounded the fourteen principles of management, namely division of work, authority and responsibility, discipline, unity of command, unity of direction, subordination of individual interest to general interest, remuneration, centralization of authority, scalar chain, order, equity, stability of tenure, initiative and esprit de corpse. These principles featured in the world renowned book “General and Industrial Management” cover aspects pertaining to human relations, production efficiency, and administration. Critical Analysis of Classical Theory of Management The classical theory is based on certain assumptions which may not be correct. One of the assumptions of this theory is that the relationship between workers and management is defined by formal communication process, defined tasks, defined responsibility, authority and formal rules and regulations. Such assumptions work well only in uncomplicated and relatively stable organizations. Secondly, the worker is considered as an economic man who is motivated by money alone. However, in reality workers are motivated by monetary as well as non monetary incentives. Appreciation, recognition and a pat on the back can do wonders to increase the morale of the employees. Finally, workers are considered as a cog in the wheel and are therefore regarded merely as a means of production. In reality, workers are a very important human resource that helps in achieving the goals of the organization. Another limitation of the classical theory of management is that it does not take into account the external environmental forces and the impacts that these forces have on the organization. Relevance of Classical Theory The general management theory is considered to be the precursor to modern organization theory. The principles of management given by Henri Fayol find wide acceptance even today. The latest recession of 2008 has put extreme profitability pressure on many companies. As such, there is a renewed focus on cutting costs, increasing productivity and reassessing the organizational structures (Pindur, 1995). Managers have adopted the principles of classical theory of management to achieve the aforesaid objectives. The principles of scientific management have typically found application at the worker-level who either produce products manually or use machines. These days, some supermarket chains are known to be using computerized systems to devise work-schedules of employees to get maximum efficiency. Human Relations Theory The Classical management thinkers looked at organizations as automatic, motorized and mechanical systems. The role of humans was also seen as perfunctory as these theorists failed to give due importance to the sociological and psychological aspects of the worker’s behavior in the organization. These limitations of the classical theory gave rise to the human relations approach, also known as the humanistic theory or the neoclassical theory of management. Elton Mayo, an American sociologist, made significant contribution to this school of management. The other leading advocates of this theory are Abraham Maslow, F. J. Roethlisberger, W. E. Moore, and G. Friedmann. The work of Douglas McGregor who formulated Theory X and Theory Y, deserves special mention. The assumptions of Theory X state that workers inherently do not like to work and will shirk responsibility. As a result of this, workers have to be coaxed, directed, controlled and pushed towards achieving organizational objectives. The assumptions of Theory Y state that the physical and mental effort in work is as natural as play or rest. Employees learn to accept and seek responsibility if they are provided proper working conditions. Human Relations Theory and Classical Theory: Comparison and Contrast The classical management perspective was, to a considerable extent, based on Theory X assumptions as given by McGregor. The human relations theory, in general, evolved as a retort to the mechanistic approaches adopted by earlier management thinkers, especially the scientific management thinkers. The human relations school urged that human psychological and moral aspects like values, motivation and goals should be taken into consideration while devising methods to increasing labor productivity. This theory highlighted that the sweatshop methods of increasing worker efficiency, as stated in the classical approach, were not effective. The classical theory recommended that workers could be motivated only through monetary incentives while the human behavior approach suggested that workers also craved for recognition and appreciation. The human relations theory highlighted the importance of informal relations in the organisation along with formal relations whereas the classical school of management took into account only the formal relations. The human relation theory of management, unlike the classical approach, suggested that workers needed job security, job satisfaction, good communication from managers, and also wanted to participate in decision making, especially, in matters that have an impact on their interests (McLean, 2005). Application of Human Relations Theory The application of human relations theory has done wonders to Cisco Systems which was founded as a bureaucratic organization with a strict top-down command and control mindset. The dotcom bubble of the early 2000s changed it all. In order to recover from the crisis, the company empowered its employees and encouraged them to take initiatives. The multi-billion dollar StadiumVision business is a result of the company having adopted the human relations approach to management (McGirt, 2008). Modern Management Theories Over a period of time, the modern management theories have evolved by integrating with the earlier theories on the subject. The modern approaches to management include: The Systems Theory The Contingency Theory The Systems Theory The systems theory suggests that an organization is a system, a collection of sub parts those affect and are affected by each other. The sub-parts are thus interrelated and interdependent. When there is coordination among the sub-parts, it creates synergy for the organization. There are two basic types of systems: open systems and closed systems. By definition, closed systems do not interact with the external environment and are thus not impacted by it. On the other hand, the open systems interact with the external environment and are thus impacted by it. In the closed systems model, the emphasis is on everyday tasks and job specialization. Importance is attached to the means by which objectives are achieved. Knowledge is found at the top which is where decisions are taken. A lot of stress is laid on following set policies and procedures and managing top-down conflict. The communication is vertical and adheres to the chain of command. Closed systems operate best when conditions are stable. Since open systems interact with the outside environment, they have to deal with sudden, unexpected and non-routine tasks. To manage such situations, knowledge flows across levels and is not restricted to the top management. Dispute resolution also happens along horizontal lines, i.e. among peers. The structure of the organization is informal and the responsibility of developing solutions to problems rests with the entire organization. The flow of communication is vertical as well as horizontal. The organization strives for creating, maintaining and enhancing goodwill. Open systems function under unstable conditions. Such systems depend on the external environment for inputs and outputs. It is important to remember that both open and closed models are concerned with production and efficiency. Relevance of Systems Theory The classical theory and the behavioral theory have integrated with the systems theory and have formed the present day framework of the modern management (Pindur, 1995). The systems theory of management appears apt for the present day organizations. Be it any industry, organization are impacted by a host of external forces in addition to the internal forces. An organization is affected by its competitors, suppliers and other business partners. In addition to this, the organization is affected by various macro environmental forces like economic factors, demographic factors, social-cultural factors, political-legal factors, technological factors as well as the natural environment. The closed systems model includes scientific management theory, Weber’s bureaucratic theory and Gulick’s administrative principles. In the 1930s Chester Barnard emphasized that organizations were open systems and were linked to the business environment. The human relations theory, which emerged later on, views management as an open system (Pindur, 1995). The Contingency Theory The contingency theory is essentially a problem-solving approach that takes into account all factors in a situation before arriving at the decision. This theory has gone on to replace the one-dimensional principles of management with more sophisticated doctrines that are situation specific. The theorists who propounded the contingency theory realized that the efficacy of their methods varied from one situation to the other. They concluded that each organization is unique and is confronted with a different set of circumstances. The contingency approach is sometimes also referred to as the ‘if’ ‘then’ approach. This suggests that managers take decisions after a thorough environmental scanning. The following statement epitomizes the contingency theory; ‘If’ this is the situation, ‘then’ we will do this. Application and Relevance of Contingency Theory The contingency theory has attempted to employ a vast array of concepts from earlier approaches to management. The theory has tremendous application as present-day organizations are confronted with different set of circumstances and challenges. Such organizations are what the systems approach terms as ‘open systems’ and therefore organizations have to be managed individually by devising tailor made solutions. Marxist Labor Process Theory The concepts developed by Harry Braverman in the 1970s form the basis of the Marxist Labor Process Theory. This theory criticizes the scientific management thought as propounded by F.W. Taylor (Jaros, 2000). The Marxist labor process theory terms scientific management principles as exploitative. Attempts have been made in recent years to explain the workers’ bargaining power with the help of labor process theory. Conclusion While many management theories have been put forth by various experts to overcome the limitations of earlier schools, there have been instances where the new school of management thought has had a propensity to complement or coexist with previous ones. The divergence in views of various management theories can be attributed to the fact that organization operate in and confront an ever changing business environment. This warrants the development of new management practices and techniques which have to be used by managers to remain efficient and effective. Reference List Anderson, M.H., 2007. “Why Are There So Many Theories?” a Classroom Exercise To Help Students Appreciate the Need for Multiple Theories of a Management Domain. Journal of Management Education, 31 (6), pp. 757-765; 767; 769-776. Jaros, S. J., 2000. Labor process theory. International Studies of Management & Organization, 30 (4), pp.25-39. McGirt, E., 2008. Revolution in San Jose: A Hard-Core Republican Turns Cisco into a Socialist Enterprise. Mansueto Ventures LLC, Boston, United States, Boston. McLean, J., 2005, Management techniques and theories. The British Journal of Administrative Management, 17 (1), p.17. Pindur, W., Rogers, S.E. and Kim, P.S., 1995. The history of management: a global perspective. Journal of Management History, 1 (1), pp.59-77. Read More