Classical Management Theory

Introduction

• Classical management refers to the initial significant period of management study and theory development.
• Earliest management studies emerged in the first quarter of the 20th century.
• Understanding these theories requires knowledge of the cottage industry and the Industrial Revolution.

Cottage Industry

• In a classic cottage industry:
  • Farmers sold cotton, linen, or wool to cottages.
  • Cottages would spin yarn and weave fabric.
  • Additional components (e.g., buttons) were sourced from other cottages.
  • Required little investment and employed few people.

Industrial Revolution

• Started in Great Britain; marked a major historical turning point.
• Led to the demise of the cottage industry due to:
  • Technological innovations and new manufacturing processes.
  • Shift from hand production to machinery-based production.
• Introduction of factories:
  • Factories required labor for operation; workers typically did not own enterprises.
  • Workers were paid daily wages.
  • Production was broken down into stages; machines enabled larger scale production.

Characteristics of Factories

• Utilized unskilled labor instead of relying on skilled artisans.
• Central factory complexes designed for machinery and material flow.
• Factories produced goods on a much larger scale, benefiting from economies of scale.
• Key products included cotton, silk, textiles, iron, brass, cement, glass, paper, and chemicals.

Challenges for Business Owners

• New larger and complex organizations required management.
• Need to reduce costs and improve efficiency.
• Consideration of technology and machinery alongside workforce productivity.

Key Contributors to Classical Management Theory

Henri Fayol

• Published major work on management in 1916.
• Outlined key management activities:
  • Forecasting and planning
  • Organizing
  • Commanding
  • Coordinating
  • Controlling
• Presented fourteen principles of management.
• First to achieve a genuine theory of management.

Frederick Taylor

• Early practical management theorist.
• Focused on efficiency issues at the shop floor level.
• Believed workers exerted minimal effort in their work.

Max Weber

• Academic and sociologist, not a practicing manager.
• Examined organizations from the perspective of authority structures.
• Introduced the term "bureaucracy" to describe a rational organizational form:
  • Hierarchy of authority
  • System of rules
  • Specialization of work.

Taylorism and Fordism

• Taylorism led to Fordism:
  • Reorganization of production processes using moving assembly lines.
  • Associated with the manufacture of standardized, low-cost goods in large volumes.

Summary

• Classical management encapsulates theories from Fayol, Taylor, and Weber during the early 20th century.
• Driven by challenges from the Industrial Revolution, focusing on management laws and efficiency rather than worker welfare.