What Is Systematic Management

Josie is a daycare worker. On any given workday, she has a small group of ten preschoolers to look
after. Her coworker, Mary, has a second small group of ten preschoolers. Josie comes to work one
Monday morning to quite the surprise. Poor Mary has suffered a fall over the weekend and has a
broken leg. She will be out of work for several weeks. Josie is told by the daycare manager that the
decision has been made to combine the groups. Instead of ten preschoolers, Josie will have 20.
How will she manage ten more children, especially when the goal is to provide quality childcare for
each one? She foresees a number of chaotic days until she can find a routine that works for her and
the kids.

Josie's current situation is a lot like management systems of the past. In the beginning of the 19th
century, growth in business was centered on the manufacturing sector. Managers were faced with
explosive demand. The increase in demand led to an increase in the labor pool. In a time where the
focus was on machines and not on people, managers simply did not know the value of human
capital. This, along with the fact that communication between those in charge and the workers was
all but broken down, led to an organizational environment with no structure and in a constant state of
disarray. It was during this period of time that the systematic approach to management was born.
Systematic management is an approach to management that focuses on the management process
rather than on the final outcome. The goals to this approach to management were:

 To create specific processes and procedures to be used in job task completion

 To ensure that organizational operations were economical
 To ensure that staffing was adequate for the needs of the organization
 To maintain suitable inventory so that the demands of consumers could be met
 To establish organizational controls

This type of management approach was the first to directly link orderly operations, human resource
management, and communication to organizational success.

Major Theorist
There are several key individuals who can be credited with the development of the systematic
approach to management. Adam Smith was the earliest theorist to contribute to the idea of a need
for a system in management. His book 'Wealth of Nations', published in 1776, brought about the
initial belief that division of labor was the best way to increase productivity.

Adam Smith

Following Smith were four more theorists who added to the systematic approach. Robert Owens, a
theorist in the early 1800s, strongly believed that human resources were much more important than
the focus on machinery that existed during this time. He felt that a proper management system could
place the needs of the employees above all else.
 Robert Owen

Charles Babbage was the author of the book On the Economy of Machinery and
Manufacturers. This book analyzed the state of manufacturing during the mid-1800s and gave
suggestions to improve practices by the use of division of tasks.

Charles Babbage

Henry Towne was the president of the Yale and Towne Manufacturing Company. During the late
1800s, he proposed the idea that management needed to be a separate field of study and that
principles needed to be established to guide managers in various managerial situations.
 Henry Towne

The last theorist to mention in the area of systematic management may very well be known as the
father of the school of systematic management. His name is Henri Fayol, and he was a major player
in the field of management theory. Fayol was a staunch supporter for managerial education. Having
served many years in the field of management, he was well versed in what worked and didn't work,
and felt that managers were not born. Instead, with training and education, they could be created.

CLASSICAL APPROACH

INTRODUCTION

The classical approach to management was developed in the period between the 1880s to the 1920s.
Classical approach of management professes the body of management thought based on the belief that
employees have only economical and physical needs and that the social needs & need for job
satisfaction either does not exist or are unimportant. Accordingly it advocates high specialization of
labor, centralized decision making and profit maximization.

Taylor insisted that management itself would have to change and further, that the manner of change
could be determined only by scientific study. Hence, term ‘Scientific Management’ evolved. Taylor
suggested that decisions based on rules of thumb and tradition be replaced with precise procedures
developed after careful study of individual situations

In this approach, it was recommended that production can be increased by improving the
efficiency of an organization. Thus, managers must focus on determining the best ways to perform jobs.
The classical approach to management can be studied under three main areas, which are shown in
Figure 1:

Figure 1: Classical Approach to Management

Let us discuss these three areas in detail in the subsequent sections. Scientific management focuses on
the “one best way” to do a job. Administrative management focuses on the manager & basic managerial
functions. BUREAUCRACTIC MANAGEMENT focuses on the guidelines for structuring with formalization
of rules, procedures and a clear division of labour.

SCIENTIFIC MANAGEMENT

The scientific management approach was developed by Frederick Winslow Taylor (1856-1915), who was
an American engineer. Thus, scientific management is also popular by the name of Taylorism.

THE FOUR PRINCIPLES OF SCIENTIFIC MANAGEMENT

 Taylor was a believer in the rational–economic needs concept of motivation. He believed that if
management acted on his ideas, work would become more satisfying and profitable for all concerned.
Workers would be motivated by obtaining the highest possible wages through working in the most
efficient and productive way. Taylor was concerned with finding more efficient methods and procedures
for co-ordination and control of work. He set out a number of principles to guide management. These
principles are usually summarised as:

1. ■ the development of a true science for each person’s work; Replace working by "rule
of thumb," or simple habit and common sense, and instead use the
scientific method to study work and determine the most efficient way to
perform specific tasks. Rather than doing things how they’ve always
been done, Taylor wanted each job to be studied scientifically to identify
the most efficient way to do that job.
Taylor advocated using time and motion studies as the way to do this.
This often involved looking at the most efficient workers to identify why
they were so efficient.
The ultimate aim is to describe in a repeatable way how to do the job in
the most efficient manner. That way, everyone in the organization doing
this job can be trained to do it in the most efficient way.
2. ■ the scientific selection, training and development of the workers; Rather than simply
assign workers to just any job, match workers to their jobs based on
capability and motivation, and train them to work at maximum efficiency.
Don’t allow employees to train themselves. Instead, each employee
should be taught exactly how each task should be performed.
Taylor didn’t want employees thinking for themselves, he simply wanted
a simple task performed as quickly (as efficiently) as possible. In a
nutshell, workers should be paid for doing, not thinking.

3. co-operation with the workers to ensure work is carried out in the prescribed way;
Monitor worker performance, and provide instructions and supervision
to ensure that they're using the most efficient ways of working. There
are two parts to ensuring that the most efficient ways of working are
being used:

 Monitor: Monitor worker production to ensure that they are efficient.

 Cooperate: Work with employees to retrain and recalibrate them, so that they
are exactly following the most efficient way to perform their job.
One consequence of this was that organizational structures had to change.
Rather than a factory having one single foreman, Taylor advocated several,
each one specifically focused on efficiency for a particular area of the factory.

The aim of this step is to maximize production, unlike in situations where

‘soldiering’ occurs. That is situations where workers naturally slack off
because they are not being monitored.

4. the division of work and responsibility between management and the workers. Allocate
the work between managers and workers so that the managers spend
their time planning and training, allowing the workers to perform their
tasks efficiently. Work should be divided almost equally between
managers and employees.
Managers should be responsible for developing the processes, ways of
working and monitoring employees. Employees should be responsible
for executing a task as quickly as possible.

In his famous studies at the Bethlehem Steel Corporation, Taylor, who was appointed as a management
consultant, applied his ideas on scientific management to the handling of pig iron. A group of 75 men
were loading an average of 12 1/2 tons per man per day. Taylor selected a Dutch labourer, called
Schmidt, whom he reported to be a ‘high-priced’ man with a reputation for placing a high value on
money, and a man of limited mental ability. By following detailed instructions on when to pick up the pig
iron and walk, and when to sit and rest, and with no back talk, Schmidt increased his output to 471 /2
tons per day. He maintained this level of output throughout the three years of the study. In return
Schmidt received a 60 per cent increase in wages compared with what was paid to the other men. One
by one other men were selected and trained to handle pig iron at the rate of 471 /2 tons per day and in
return they received 60 per cent more wages. Taylor drew attention to the need for the scientific
selection of the workers. When the other labourers in the group were trained in the same method, only
one in eight was physically capable of the effort of loading 471 /2 tons per day, although there was a
noticeable increase in their level of output.

Whilst Scientific Management, sometimes simply called Taylorism, may sound

obsolete, it is actually still in use today. This is especially so if you need to
remain competitive in a labor-intensive industry by keeping costs as low as
possible. Examples include:
 Amazon: Pay certain warehouse staff using a piece rate basis according to
how productive they are. In fact, Amazon is even using a wrist-based tracking
system to monitor staff. You can read more about this here.
 McDonald’s: Every McDonalds across the globe looks the same, and the
instructions to create a burger are exactly the same in every branch across
the globe. Even the process of mopping the floor is exactly the same across
the globe. This breaking down jobs into bite-sized chunks and then describing
the most efficient way to do that job is an example of Taylorism in use today.

Frank and Lilia Gilbreth

Taylor’s and the Gilbreth’s work with Time and Motion Studies was their focus. Taylor was focused
with achieving efficiency through the quickness of a task being done, the scientific tool he is often
associated with being the stopwatch. The Gilbreth’s on the other hand were more focused on
reducing the number of motions needed to achieve a goal or task. They did use the stopwatch, but
they were more interested in finding ways to reduce motion and were more concerned with the well
being of the worker. Taylor interests were more directed toward production and profit and the
workers were able to see the difference between Taylor’s approach and the Gilbreth’s approach.

Frank Bunker Gilbreth

Like Taylor, Gilbreth started out by working with his hands, in this case as a bricklayer.
He started to optimize bricklaying methods, significantly improving the speed of
bricklaying, and found himself soon working as a consultant in the field of Taylorism.
 Gilbreth’s 18 Therbligs
His major contribution was to divide all human work up into a number of individual
motions, which he called Therbligs, and then optimize these motions to improve
efficiency. For example, with bricklaying he created an adjustable scaffold so that the
bricks, the worker, and the wall are always at the same height, and hence the worker
does not have to bend over or reach up.

He also optimized surgeons’ work, establishing the now-common method of a nurse

handing the instruments to the surgeon rather than the surgeon turning around and
looking for the right tool. By reducing the duration of operations, he increased the
chances of patient survival, saved thousands of lives, and pissed off the surgeons after
they found out that he used the same methods for bricklayers. Surely those holier-than-
thou doctors deserved better than to be compared to a bricklayer. 😉

Overall, his work was the basis for any system of predetermined motions in use
nowadays. His work was also a perfect addition to Taylorism.

Time Study or Work Measurement:

Time study is the technique of observing and recording the time required by a workman of reasonable
skills and ability to perform each element of the tasks in a job. Through time study, the precise time
required for each element of a man’s work is determined. It helps in fixing the standard time required to
do a particular job.

The purpose of time study is to scientifically determine the standard time for doing a job under given
condition. It helps to measure the efficiency of workers. It creates time consciousness among workers.
Saving in time leads to cost reduction and increased efficiency.

1. Reduce the number of motions in a task.

Frank and Lillian coined the term "therbligs," or elemental motions required for tasks in the
workplace. They used these 18 units to analyze how tasks were completed – searching for an object
with eyes or hands, grasping an object with hands, assembling and disassembling two parts, etc. From
there, they'd figure out which motions were necessary, then eliminate any unnecessary motions to
increase efficiency.

2. Focus on the incremental study of motions and time.

As engineers, Frank and Lillian closely studied motion and time to calculate the most efficient way to
complete a given task. Taking the scientific approach, they measured time and motion to 1/2000 of a
second to understand what works best. Their insight was unlike that of most other theorists, as they
channeled physical science rather than psychology.

3. Increase efficiency to increase profit and worker satisfaction.

Your main goal as a leader should be increasing efficiency in each individual employee, and in the
organization as a whole. Not only will this method save time, it will also afford you a higher profit and
happier workers.

Henry Gantt

Gantt developed graphic methods of depicting plans and making possible better managerial control. He
emphasised the importance of time as well as cost in planning and controlling work. This eventually led
to the development of famous Gantt Chart which is in wide use today and was the forerunner of such
modern technique as Programme Evaluation and Review Technique (PERT).

 Task and bonus system - This is a system that pays employees in a company a
standard rate, but it allows them to earn more if the tasks set by management
are achieved.
 The employee received a bonus in addition to his regular day rate if he
accomplished the task for the day…It helped to….
1. Improve performance…
2. Increase efficiency…
3. Increase production
 Perspective of the worker - This expands on the previous idea to also reward
workers if the task is completed quicker than the allocated time. The
perspective of worker reward the worker if the task is completed quicker than
the allocated time… Hence a worker could receive a 3 hours pay for doing a 2
hour job in two hour or less… Also bonus for supervisor , if all the workers met
the required standard
  Social responsibility of business - Gantt believed that businesses have an
obligation to community and to society.

Henri Fayol, developed a set of 14 principles:

1. Division of work: Work must be divided. Specialization labour produces more and better work with
the same effort.

2. Authority: The right to give orders. where authority is exercised responsibility arises.

3. Discipline: Member of an organization need to respect the rules, agreements that governed by the
organization.

4. Unity of command: One man and one superior.

5. Unity of direction: One head and one plan for a group of activities with the same objective.

6. Subordination of individual interest to general interest: The interests of one individual or one group
should not prevail over the general interest.

7. Remuneration: Pay should be fair to both the employee and the firm.Fayol suggested many modes of
payment (Time rates, Job rates, Price rates, Bonus rates, profit sheery, Non financial rewards)

8. Centralization: Managers should retain final authority but also need to give their subordinates enough
authority to do their jobs properly.

9. Scalar chain: The line of authority from top to bottom of the organization.

10. Order: A place for everything and everything in its place; the right man in the right place.

11. Equity: A combination of kindness and justice towards employees.

12. Stability of tenure: Suitable condition should be created to minimize employee turnover.

13. Initiative: Within the limits of authority and discipline, all levels of staff should be encouraged to
show initiative.

14. Esprit de corps: Harmony is a great strength to an organization; teamwork should be encouraged.

1. Division of Labour: allows for job specialization. • Fayol noted firms can have too much specialization
leading to poor quality and worker involvement.

2.. Authority and Responsibility: Fayol included both formal and informal authority resulting from special
expertise.
3. Discipline: obedient, applied, respectful employees needed

4. Line of Authority: a clear chain from top to bottom of the firm[ ‘Gang Plank’]

5. Centralization: the degree to which authority rests at the very top.

6.Unity of Direction: One plan of action to guide the organization.

7. Unity of Command: Employees should have only one boss.

8. Order: Each employee is put where they have the most value.

9. Initiative: Encourage innovation.

10. Equity: Treat all employees fairly in justice and respect.

11. Remuneration of Personnel: The payment system contributes to success.

12. Stability of Tenure: Long-term employment is important.

13. General interest over individual interest: The organization takes precedence over the individual.

14. Esprit de corps: ‘Union is strength’- refers to harmony & mutual understanding among the members
of an organization.

Luther Gulick and Lyndal Urwick gave more importance to the structure of administration, neglecting
the role of human beings in the organization.

 Division of work

 Departmentalization

 Coordination through hierarch

 Coordination through committees

 Deliberate coordination

 Unity of Command

 Decentralization

 Delegation

 Span of Control

 Line and Staff

1. Division of work

2. Departmentalization: He identified 4 basis of departmentalization  purpose(function of organization)

 process(skills)  persons(clients)  place(area)

3. Coordination: It means interrelating and unified the various part of work in a whole.

4. Unity of command

5. Decentralization

6. Delegation

7. Span of control: It means the number of subordinates or the unit of work that a superior can
effectively control. It depends on 4 factors:

a) Function (nature of work)

b) Stability of the organization.

c) Place of work.

d) Personality of the superior.

8. Line and staff: The line agencies directly work for the achievement of the organizational objective.
They are given authority to make decision, issue, orders and directions. The staff agencies includes
specialist who perform secondary or supportive function. They assist the line agencies in the
accomplishment of organizational purpose.

Urwick’s principles are 8 types:

1. Principle of objective: an organization should have a definite purpose or objective.

2. Principle of correspondence: Authority and responsibility must go together at all levels.

3. Principle of responsibility: The supervisor must take the responsibility of his subordinate workers.

4. Principle of Scalar

5. Principle of span of control

6. Principle of specialization / division of work

7. Principle of coordination

8. Principle of definition: Clear description of duties, authority and responsibility of each position and its
relationship and other positions.
Mooney and Riley developed the theory of organization in their work “Onward Industry”. In their work,
they argued that all organizational structures are based on a system of superior subordinates
relationships arranged in a hierarchical order.

The 4 major principles developed by Mooney and Raily is:

1. Coordination

2. Scalar process

3. Functional differentiation / division of work.

4. Line and staff

Pre-Classical Contributions

A number of individuals in the pre-classical period of the middle and late 1800s offered ideas that laid
the groundwork for subsequent, broader inquiries into the nature of management. Among the principal
pre-classical contributors are Robert Owen, Charles Babbage and Henry R Towne.

ROBERT OWEN (1771-1858): A successful British entrepreneur was well ahead of his time in recognizing
the importance of human resources. He became particularly interested in the working and living
conditions of his employees while running a cotton mill in New Lanark, Scotland. As was common, the
mill employed 400 to 500 young children, who worked 13-hour days that included 1 hour off for meals.
Although his business partners resisted some of his ideas, Owen tried to improve the living condition of
the employees by upgrading streets, houses, sanitation and the educational system in New Lanark. At
the time, Owen was considered to be radical, but today his views are widely accepted. His ideas laid the
groundwork for the human relations movement, which is discussed later in this chapter.

CHARLES BABAGE (1792-1871): An English mathematician is widely known as the father of modern
computing. His projects produced the world‘s first practical mechanical calculator and an analytical
engine that had the basic element of a modern day computer. Difficulties in directing his various
projects, however, helped him to explore new ways of doing things. In the process, he made direct
contributions to management theory.

Babbage was enthralled with the idea of work specialization, the decree to which work was divided into
various jobs. He recognized that not only physical work but mental work as well could be specialized.
Babbage also devised a profit- sharing plan that had two parts, a bonus that was awarded for useful
suggestions and a portion of wages that was depended on factory profit.

Major Features of Pre-classical Contributors

Robert Owen: Advocated concerns for the working and living conditions of workers

Robert Owens:
He was a textile entrepreneur and is known as the father of Personnel
Management. His emphasis was not on the process of industrialisation
or division of labour but on development of people. He advocated that
workers should be treated as human beings and their values and
beliefs should be respected. If working conditions and needs of the
workers are satisfied, they work to achieve the organisational goals.

He advocated improving living conditions (both factory and domestic

conditions) of employees by upgrading the streets, houses, sanitation
facilities etc. He also brought social and educational reforms for the
employees.

Charles Babbage: Built the first practical mechanical calculator and a prototype of modern computers:
predicted the specialization of mental work: suggested profit sharing.

One of the early British thinkers on management, Babbage, was the

forerunner of scientific management. His work was closely related to
that of Adam Smith (an economist), as he emphasised on work
measurement, cost determination, bonus plans and profit sharing
specialisation (dividing the work into various jobs) to increase
managerial efficiency. His findings are also reflected in Taylor’s
scientific management. He introduced methods like work
measurement, cost determination, bonus plans and profit sharing to
improve industrial productivity.

Henry R. Towne: Outlined the importance of management as a science and called for the development
of management principles.
re-classical thoughts:
Robert Owen (1771-1858)
He is considered as a pioneer in the field of human resource
management process. He advocated the necessity of concern for the
welfare of workers.

ADVERTISEMENTS:

Charles Babbage (1792-1871)

As an inventor and management scientist, he built the practical
mechanical calculator, which is considered as the basis of modern
computer. Further, he also advocated the ideas of specialization of
mental work and emphasized the necessity of profit sharing.

Andrew Ure (1778-1857) and Charles Duplin (1784-1873)

They emphasized the necessity of management education, which
paved the way for professionals manning the management positions.

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Henry Robinson Towne (1844-1924)

On reviewing the contributions of pre-classical theorists, it is clear that
their emphasis was more on developing some specific techniques to
solve some identified problems. Because of their obvious technical
background, they could not think of management as a separate field.

By and large, they integrated management with their respective areas

of specialization. It was Andrew Ure, Charles Duplin, and Henry
Robinson Towne who laid the foundations of the management
theories that ultimately shaped the management thoughts as we see
today.

Contribution made by some of the management thinkers is

as follows:
1. Charles Babbage:
One of the early British thinkers on management, Babbage, was the
forerunner of scientific management. His work was closely related to
that of Adam Smith (an economist), as he emphasised on work
measurement, cost determination, bonus plans and profit sharing
specialisation (dividing the work into various jobs) to increase
managerial efficiency. His findings are also reflected in Taylor’s
scientific management. He introduced methods like work
measurement, cost determination, bonus plans and profit sharing to
improve industrial productivity.

2. James Montgomery:
ADVERTISEMENTS:
He was a textile owner-manager in Scotland. He focused on planning,
organising and controlling of business and wrote management texts
for their efficient working.

3. Robert Owens:
He was a textile entrepreneur and is known as the father of Personnel
Management. His emphasis was not on the process of industrialisation
or division of labour but on development of people. He advocated that
workers should be treated as human beings and their values and
beliefs should be respected. If working conditions and needs of the
workers are satisfied, they work to achieve the organisational goals.

He advocated improving living conditions (both factory and domestic

conditions) of employees by upgrading the streets, houses, sanitation
facilities etc. He also brought social and educational reforms for the
employees.

ADVERTISEMENTS:

He believed that higher wages for workers, participation in managerial

decision-making and positive motivation can increase productivity.
His ideas on management to coordinate economic performance with
human relations are found in Hawthorne experiments also.

4. Andrew Ure:
He was an English industrialist and focused on educating managers
through training and moral education to make them contribute to
organisational goals.

5. Charles Dupin:
ADVERTISEMENTS:

He was an industrial educator in France. According to him, besides

technical knowledge for contributing to organisational output,
managers also needed broader management skills to maximise
industrial output. He emphasised more on management education
than technical education.
Evaluation of Pre-Scientific Management Theories:
These theories were primarily related to the organisational
environments. They focused on specific organisational problems in
specific ways. As each manager had his own way of viewing the
organisation, some emphasised on production and others on human
relations.

There was no single universally accepted management theory that

could apply to all organisations at all times. It was by the end of the
19th century that management became a systematic field of study. The
early contributions include those made by Taylor in the early 20th
century as scientific management.

Pre-Scientific Management Theories:

If we look at recorded history, a number of monumental examples of
management can be traced. The Sumerian civilisation, Egyptian,
Chinese, Greek and Roman civilizations represent significant practices
in management.

The theory focused on:

i. The best way of doing each task/job by eliminating operations that
resulted in wastage of men and materials.

ii. Time and motion studies to find optimum time and nature of
operations for successful completion of each task.

Taylor’s theory is based on experience in three companies:

i. Midvale Steel,

ii. Simonds Rolling Machine Company and

iii. Bethlehem Steel.

(i) Midvale Steel:
Taylor joined Midvale Steel as a worker and became its chief engineer
in 6 years.

During his tenure at Midvale, he observed that workers did

not work at their full capacity because of the following
reasons:
1. Wages were paid on daily basis so that workers were present in the
factory but their output was low.
2. Workers feared to work fast because they thought that if they
finished the work fast, they would be turned out by the management
or their wages would be lowered.
3. General methods of work were based on ‘Rule of Thumb’ or ‘Hit and
Trial’. Scientific approach to work was not followed.
(ii) Simonds Rolling Machine Company:
Taylor worked as management consultant in this company. In one of
their projects, workers inspected bicycle ball bearings. Management
felt that since this work involved long hours and was also not
innovative, efficiency was low. Taylor studied and timed the
movement of best workers and motivated and trained the rest of the
workers to improve their performance upto that level.

For this, he adopted the system of ‘differential rate’ and introduced

improvements in their working schedule including rest hours. This
changed the quantity and quality of production, and workers’ earnings
and management’s profits, both rose up.

(iii) Bethlehem Steel:

At Bethlehem Steel, Taylor conducted two important experiments of
Pig-iron Handling and Shoveling. In the Pig-iron experiment, he
studied the time and movement of workers who unloaded raw
materials from the incoming railcars and loaded finished goods on the
outgoing ones. He observed that one worker could load about 12 ½
tons per day and earn $1.15 each day. Taylor selected the most
efficient worker, studied his time and motion and changed the way of
work.

He introduced rest periods during the long working hours and offered
incentive plans to workers who achieved the targeted performance. He
set the target of 47 ½ tons per day and a wage rate of $ 1.85 per day
for those who met this standard. It was found that workers managed
to meet this standard and loaded almost 48 tons of goods each day.

b. Henri Fayol’s Classical Organisation Theory

(Management Process Theory):
While Taylor emphasised on productivity at the shop level, Fayol
focused on the organisation as a whole. Fayol was concerned with
general management and control of the entire organisation and not
just supervision and control of operations at lower levels of
management. His focus was on management of the organisation and
not simply individual jobs. His work was, thus, related more to the top
level of management. He was regarded as the first person to
systematize the administrative approach to management.
Fayol (1841-1925) worked with the French Coal and Iron Company as
a junior executive and promoted as director in the same company. He
retired in 1918. There was a general belief at that time that ‘managers
are born, not made’, that is, only those who had inherent qualities of
being a manager can become managers. Managers cannot be made
through formal knowledge and training.

This view was opposed by Fayol who said that managers need not
necessarily be born; fundamental principles underlying the
managerial theory can be taught and, thus, managers can be made. He
believed that “management could be taught, once its underlying
principles were understood and a general theory of management was
formulated.”

His work on general management was first published in 1916 in

French as General and Industrial Management. This was translated in
English in 1929 and then a second English translation was done in
1949 in the United States. His ideas became famous in the field of
management after his work was translated in English.
His work can be found in business even today and,
therefore, Fayol is aptly called the father of modern
management theory. His theory can be understood under
the following headings:
(a) Activities of a business:
Fayol divided business activities into six groups:
1. Technical:
It relates to production and manufacturing of goods.

2. Commercial:
It relates to buying raw materials and selling or exchanging the
finished goods.
3. Financial:
It relates to search, acquisition and optimum use of financial
resources.

4. Security:
It relates to protecting human and non-human resources.

5. Accounting:
It relates to:
(i) Keeping accounts such as Profit and Loss account and balance
sheet,

(ii) Minimising costs, and

(iii) Maintaining statistics.

6. Managerial:
It relates to functions performed by a manager. Fayol believed that
first five activities of business (operating activities) were followed in
the organisations but they were lacking in managerial skill and,
therefore, based his theory on managerial activities of business
organisations.

(b) Functions of a manager:

Fayol classified the following functions of managers:
1. Planning:
To determine goals of the organisation and devise a course of action to
achieve them.

2. Organising:
To coordinate human and non-human resources of the organisation to
put the plans into action.

3. Commanding:
To direct and guide the workers to perform their duties well.

4. Coordinating:
To synthesise the resources and activities of the organisation to
achieve the goals.

5. Controlling:
To ensure that plans are effectively carried out and discrepancies are
checked.

(c) Abilities of managers:

These refer to the skills of managers at different levels of the
organisation, like managerial skill, technical skill, human skill etc.

These skills vary according to the:

1. Level at which managers work, and

2. Size of the organisation.

According to the level: At higher levels, managers exercise more of

managerial skills and at lower levels they exercise more of technical
skills. Top level managers perform managerial activities more than
technical activities and lower level managers perform more of
technical work.

Importance of managerial ability increases as one moves up the

hierarchy. Fayol, therefore, advocated sound management principles
that enhance the ability of top managers to manage the organisation
effectively.

According to size of the organisation:

Managers at the same level perform duties of higher skills in a large-
sized organisation and lower skills in a small-sized organisation. For
example, general managers of a large business have managerial skills
but those of a small business have technical skills along with
managerial skills to achieve the organisational goals.

Fayol identified the qualities of managers as:

1. Physical – Health and vigour,
2. Mental – Ability to analyse, interpret and arrive at conclusions,

3. Moral – Willingness to accept responsibility, loyalty and dignity,

4. General education – Knowledge of overall affairs of the

organisation,

5. Special knowledge – Knowledge of a specific activity; technical,

commercial or financial, and

6. Experience – Knowledge gained over a period of time while working

in the specific functional area.

(d) Principles of management:

Fayol listed fourteen principles of management based purely on his
experience. He described these principles as flexible and not
exhaustive. They can be changed according to situations and usually
apply in most business situations. They were considered as
indispensable for every business and non-business organisation. The
word ‘principles’ was used by Fayol to describe their flexibility.

In his words, “I prefer the word principles in order to avoid any idea of
rigidity, as there is nothing rigid or absolute in administrative matters;
everything is a question of degree. The same principle is hardly ever
applied twice in exactly the same way, because we have to allow for
different and changing circumstances, for human beings who are
equally different and changeable, and for many other variable
elements. The principles, too, are flexible and can be adapted to meet
every need; it is just a question of knowing how to use them.”

Significance of Administrative Management:

Fayol’s theory has greatly contributed to the modern management
practices. His principles apply in the managerial world. Managers are
not born but can be made holds true as management theory is taught
in various management institutions.

Positive attributes of Fayol’s theory are:

1. Fayol pioneered in distinguishing management functions from other
functions/ activities of a business.

2. He was the first to highlight the universality of management

principles.

3. His contribution to management theory is the foundation to

development of management thought. His functions of management
provide systematic understanding to the process of management. His
theory is also known as management process approach.

Limitations of Administrative Management:

Fayol’s theory has the following limitations:
1. This theory is not well suited to modern business organisations
which operate in the fast changing environment. In this process, they
may not follow the principles of management at all times. The
principle of centralisation, for example, where subordinates are not
part of the decision-making process may not enable the organisations
to adapt to the changing environment. In fact, workers’ participation
in management is the feature of modern day organisations. The
concept of universality of management, therefore, does not hold true.

2. It over-emphasises formal structure of the organisation and ignores

informal needs of the workers.

3. The impact of external environment is not taken into consideration.

This theory was introduced when environment was more or less
stable. Contemporary management cannot work without active
interaction of organisations with the external environment. Despite
the limitations, Fayol’s contribution to management is important.
Though not always applicable in every situation, his principles are
generally in widespread use today.

Comparison of Taylor’s and Fayol’s Theories:

Points of similarities:
Taylor’s and Fayol’s theories are similar to each other with
respect to the following:
1. Both the theories represent pioneering work in the study of
management. They are the foundation to the study of management.

2. Both Taylor and Fayol found ways to increase the output.

3. They emphasise on financial needs which can be satisfied through

financial incentives.

4. They focus on formal jobs and work schedules to satisfy individual

and organisational needs.

5. They view organisations as independent units with little or no

interaction with the external environment.

6. They develop a set of management principles important for

industrial progress.

7. Both the theories are developed on practical experience in their

respective companies.

8. Both emphasise that managerial qualities can be acquired.

Therefore, organisations should attempt to develop these qualities.

Points of differences:
While Taylor focused on efficiency of operating workers, Fayol aimed
at improving efficiency of the organisation as a whole. Fayol’s theory,
therefore, has wider applicability.

The theories differ from each other on the following

grounds:
1. Taylor is known as the father of scientific management while Fayol
is known as the father of modern management. He introduced the
Administrative Management Theory.

2. Taylor emphasised on increasing productivity at the workers’ level

while Fayol emphasised on managing the organisation as a whole.
3. Fayol’s principles of functional management focus on the entire
enterprise while Taylor’s principles of scientific management focus on
a segment of the enterprise — operating level.

4. Taylor emphasised on organisational productivity through increase

in worker’s efficiency while Fayol emphasised on overall
administration of the organisation.

Taylor (Father of Scientific Management):

1. The aim is to increase production at the shop level.

2. The focus is on improving output through work simplification and

standardisation.

3. The theory studies management from bottom to top.

4. It is based on scientific observation and measurement.

5. It covers narrow perspective of management theory.

Fayol (Father of Principles of Management):

1. The aim is to increase overall production of the organisation.

2. The focus is on developing principles that can be applied to

coordinate internal activities of the organisation.
3. Management is viewed from top to bottom.

4. It is based on personal experience later translated into universal

truth.

5. It has wider perspective and, therefore, wider applicability.

They represent management concepts that helped in smooth

administration of these civilizations. Though famous even today, they
do not provide significant information about the way these
civilizations were managed.

These concepts did not provide important insight into management of

business (or economic) institutions. No important techniques were
available to solve organisational problems until the end of 15th century.
It was in 1494 that the technique of double entry book-keeping was
introduced to maintain financial records of the business. In 1800s,
management theories developed as a systematic field of knowledge.
Until formal management theories developed, pre-scientific
management theories contributed to the management thought.
Pre-scientific Management Period
The advent of industrial revolution in the middle of the 18th century had its impact on management.
Industrial revolution brought about a complete change in the methods of production, tools and
equipments, organization of labour and methods of raising capital.

Employees went to their work instead of receiving it, and so, the factory system, as it is known today,
become a dominant feature of the economy. Under this system, land and buildings, hired labour, and
capital are made available to the entrepreneur, who strives to combine these factors in the efficient
achievement of a particular goal. All these changes, in turn, brought about changes in the field of
management. Traditional, conventional or customary ideas of management were slowly given up and
management came to be based on scientific principles. In the words of L. F. Urwick- "Modern
management has thrown open a new branch of human knowledge, a fresh universe of discourse".
 During the period following the industrial revolution, certain pioneers tried to challenge the
traditional character of management by introducing new ideas and character of management by
introducing new ideas and approaches. The notable contributors of this period are:
a. Professor Charles Babbage (UK 1729 -1871): He was a Professor of Mathematics at
Cambridge University. Prof Babbage found that manufacturers made little use of science and
mathematics, and that they (manufacturers) relied upon opinions instead of investigations and
accurate knowledge. He felt that the methods of science and mathematics could be applied to
the solution of methods in the place of guess work for the solution of business problems. He
advocated the use of accurate observations, measurement and precise knowledge for taking
business decisions. He urged the management of an enterprise, on the basis of accurate data
obtained through rigid investigation, the desirability of finding out the number of times each
operation is repeated each hour, the dividing of work into mental and physical efforts, the
determining of the precise cost for every process and the paying of a bonus to the workers in
proportion to his own efficiency and the success of enterprise.
b. James Watt Junior (UK 1796 - 1848) and Mathew Robinson Boulton(1770 - 1842): James
Watt Junior and Mathew Robinson Boulton contributed to the development of management
thought by following certain management techniques in their engineering factory at Soho in
Birmingham. They are:-
c. Robert Owens (UK 1771 - 1858): Robert Owens, the promoter of co-operative and trade
union movement in England, emphasized the recognition of human element in industry. He
firmly believed that workers' performance in industry was influenced by the working
conditions and treatment of workers. He introduced new ideas of human relations - shorter
working hours, housing facilities, training of workers in hygiene, education of their children,
provision of canteen etc. Robert Owen, managed a group of textile mills in Lanark, Scotland,
where he used his ideas of human relations. Though his approach was paternalistic, he came
to be regarded as the father of Personnel Management.
d. Henry Robinson Towne (USA 1844 -1924): H.R Towne was the president of the famous lock
manufacturing company "Yale and Town". He urged the combination of engineers and
economists as industrial managers. This combination of qualities, together with at least some
skill as an accountant, is essential to the successful management of industrial workers. He
favoured organized exchange of experience among managers and pleaded for an organized
effort to pool the great fund of accumulated knowledge in the art of workshop management.
e. Seebohm Rowntree (UK 1871- 1954): Rowntree created a public opinion on the need of
labour welfare scheme and improvement in industrial relations. The Industrial Welfare
Society, The Management Research Groups and the Oxford Lecture Conferences in the U.K
owed their origin and progress to the interest and zeal of Rowntree.