Business Notes

CHAPTER 2

Classical Management

• theory of management that focuses on the productivity, output and efficiency of workers, rather than the differences in behaviour that exist among them
• assumption: people are rational

1. Scientific Management (Frederick Taylor)
2. Administrative Principles (Henry Fayol)
3. Bureaucratic Organizations (Max Weber)

Scientific Management

        Frederick Taylor:

• believed that when workers that did their jobs in their own ways and without clear and uniform specification, this caused them to lose efficiency and underperform
• believed that if workers were taught and helped by supervisors to always do their jobs in the right ways, this problem could be corrected
• goal was to improve productivity of people at work and used the concept of “time study” to analyze the motions and tasks required in any job and to develop the most efficient ways to perform them

FOUR Guiding Principles of Scientific Management

1. Develop a “science” for every job (rules of motion standardized tools, proper working conditions)
2. Select workers with the right abilities for the job
3. Train workers to do the job and motivate them to follow the job’s “science.”
4. Help workers by carefully planning their work and by smoothing the way as they go about their jobs

        motion study - doing a task with the least amount of physical motions

               - ex. speed was the focus in a study of workers editing computer documents and copying data              among spreadsheets. It was found that people using 24-inch monitors did tasks 52%                      faster than those using 18-inch monitors. Researchers estimated that use of the larger                      monitors could save up to 2.5 labour hours per day.

                Present-day ex. - At UPS, many workers are guided by carefully calibrated productivity                                 standards. Sorters are timed according to strict task requirements and are                                 expected to load vans at a set number of packages per hour. Global positioning                         technology plots the shortest routes and delivery stops are studied and                                         carefully timed

Administrative Principles

        Henry Fayol:

• has 14 principles of management that he felt should be taught to all managers
• believed that management could be taught
• was concerned about improving the quality of management

Fayol’s 14 Principles

1. Division of labour – specializations of work will result in improvements
2. Authority – managers have the right to give orders
3. Discipline – behavior needs to be respectful and must be obedient
4. Unity of command – each employee should have only one manager
5. Unity of direction – the leader comes up with a plan and the others do their part to complete the plan
6. Subordination of individual interests – while at work, only work-relate things must be considered
7. Remuneration – all employees should receive fair payment for their work
8. Centralization – decisions are mostly made from the top
9. Scalar chain – businesses must have clear chain of command from top to the bottom of their business
10.  Order – there is a place for everything
11.  Equity – managers should be kind and fair
12.  Personnel tenure – there should be lifetime employment for workers
13.  Initiative – all managers and workers must work with initiative
14.  Esprit de corps – managers should work to build harmony among workers

FIVE Rules of Management

• closely resembles the four functions of management: planning, organizing, leading, and controlling, that we talk about today

1. Foresight - to complete a plan of action for the future
2. Organization - to provide and prepare recourses to implement plan
3. Command - to lead workers to get the best work towards the plan
4. Coordination - to work together on the plan
5. Control - to make sure things happen according to plan, if not correct it

Most-Known Principles

        scalar chain principle - clear line of communication

        unity of command principle - each person should receive orders from 1 boss

        unity of direct principle - for a activity, one person should be in charge of that activity

Bureaucratic Organizations

(bureaucratic - a form of organization based on logic, order, and authority)

        Max Weber:

• believed that organizations of his day often failed to reach their performance potential

FIVE Characteristics of the Bureaucratic Organization

1. Clear division of labour - each worker does on job and become skilled at that job
2. Clear hierarchy of authority - each worker reports to someone above them (their boss)
3. Formal rules and procedures - rules are written and followed
4. Impersonality - no worker receives special treatment
5. Careers based on merit - workers are selected and promoted based on performance

• the term “bureaucracy” or “bureaucrat” are now used negatively
• possible disadvantages are more paperwork, slowness in handling problems, resistance to change, etc.

Behavioural Management