Irhr Case

From 1890, there were massive changes in economic, technical, and cultural terms that affected the way how people works. People have to familiarize with these changes in order to remain exist, particularly to those in industrial world that always faced the problem of efficient and effective allocation of scarce resources. Thus, more and more theory has been developed to facilitate these changes. Each theory came out with development of understanding, according to the needs of certain period. Adam Smith, Scottish economist, is among the first to develop theories of management. Through his book, The Wealth of Nation, he claims that with specialization of labor, efficiency in an organization can be achieved. Afterwards, Frederic Winslow Taylor, a mechanical engineer, introduced the theory of Scientific Management, followed by the founder of Ford Motor Company, Henri Ford who pioneers the mass production system. In addition, Henri Fayol came out with different theories, he believed that the practice of management was distinct from other organizational functions and classified management principles into 14 rules.

Generally, the word 'management' refers to the activities taken by a person or a group to achieve its goals. These activities included planning, organizing, leading, and controlling (Jones & George, 2003). Therefore, the basis of management theories were develops around this concept. From all of the existing theories, scientific management and general administrative management theory are the most common one. Taylor focused on organization and control of operation while Fayol focused on organization and control of general administration (Wood & Wood, 2002). Based on these theories, the most appropriate theory to be applied in the modern time is general administrative management one, because of its guidance principles that can be adjusted with the current management.

Frederic Winslow Taylor was born in 1856 and known as the father of scientific management as he proposed more efficient production way at Midvale steel company. He categorized employees who contributed effort under their capability as soldiering. Furthermore, to seek the best way of settlement, he conducts the time study experiment using stopwatch which measure the time needed by the employees to finish a particular job. With his thought about scientific management, he started the period of the modern management. Under Taylor's systems, companies are directed through scientific method rather than use the 'rule of thumb' one. He believed that division of labor system can reduce the working time and effort of employees that lead to more efficiency in the company. Moreover, he designed this efficient way through the optimizing the task and simplifying the jobs so that the employee can perform a better work.

Based on his observation, Taylor developed four principles to increase efficiency; replace the rule of thumb with scientific method; select, train and develop the employees; cooperate with the employees and equally divide the work and responsibility between managements and employees. Using the time and motion study, Taylor measure the maximum output that workers can produce as a standard performance that leading to 'one best way' method. Following this concept, he also train and develop workers with an incentive techniques rather than permit personal way involves in accomplishing the goals. He noticed that workers must be equipped with clear and consistent specification of task that can dismiss them from lose in efficiency. Next step is managing workers to ensure that they follow the previous method for performing their jobs. Taylor further believed that almost equally allocation of responsibility in the workplace will ensure that each group carries out the best suited condition of jobs which is in the earlier condition, responsibility largely chargeable to workers.

General administrative management theory known in the 'Administration Industrielle et Generale' journal that was published in 1916 by Henri Fayol and becomes the most generally recognized publication (Fayol, 1949). Fayol realized that economic activities could be described and classified into a set of guiding principles. Administrative seen as a process, consist of five processes: planning and forecasting, organizing, coordinating, commanding and controlling (Fayol, 1949). Planning involves designing goals and strategy for future action at once to be alert for the future event. Organizing is the second function of administrative and defined as the process of coordinating all elements to achieve goals. Fayol addressed coordinating as the activities to ensure the function of the organization. Commanding was the way to lead people and controlling is the last process of administration which to ensure that everything goes on according to the set plans. Under these beliefs, Fayol developed fourteen principles to accompany the five's management roles.

According to Cole (2004), some of the Fayol's principles were highlighted on the structural character of formal organization or known as bureaucracy, which has to do with the principles of specialization or division of labor, unity of command and direction, centralization and scalar chain. Specialization or division of labor giving workers more specific tasks, by then it creates more efficiency in the production process. Unity of command is where employees can only accept instruction from one executive and the instruction itself must have the same intention with one another. Centralization involved in decision making process as the major decision itself is in the superior's hand and that is why there is a constant line of authority from the top to bottom which linked to the scalar chain principle.

Principles such as subordination of individual interest to general interest, equity and remuneration were recognized from the employees' personal demand. Subordination of individual interest to the general interest means that general interest must take priority over the personal interest in the workplace, so that they can give more effort to the organization. Organization also must provide a fair condition where all employees are treated equally as an action of equity principle. Furthermore, employees should be given salary that worth the effort they have been provided.

Moreover, initiative and esprit de corps or known as team spirit principles designated to the need of human being as individuals and as a groups. As an individual, employees need a medium to express their creativity or initiative as self-motivated learning which organization should encourage this process, whereas esprit de corps represent the need of employees as groups to have a good relation within the organization. With the existence of both initiative and esprit de corps, employees are expected to contribute