Discuss the various theories of management with special reference to scientific school of management. Which theory is better in terms of feasibility and pragmatism. Justify by illustrating live examples from the current business situation?
Answers
The theories of management are a set of general rules which guide the managers in the management of an organization.
There are four general management theories. They are:
1. Frederick Taylor - Theory of Scientific Management
This theory aims at improving economic efficiency, especially the productivity of labour. According to it money motivates people to work. So a worker should get a fair day's pay for a fair day's work. Frederick Taylor introduced the Differential Piece Rate system for paying wages to the workers.
Differential Piece Rate plan - Workers should be paid 120% of the Normal Piece Rate if the Efficiency is greater than the defined Standard. They should be paid 80% of the Normal Piece Rate if the Efficiency is less than the Standard.
Principles of Scientific Management
i. Study of time and motion - Study the way in which the work is done and find new ways of performing work.
ii. Teach the improved methods of doing work to the workers. Codify the improved new methods into rules.
iii. Harmonize the interests of the employer and the employees. Foster a mutual understanding between them.
iv. Set up fair levels of performance. Pay a premium for better performance.
2. Henri Fayol - Administrative Management Theory
Henri Fayol is known as the Father of Management. He laid down 14 principles of management. They are:
i. Division of work ii. Equity iii. Discipline iv. Initiative v. Authority and responsibility vi. Esprit De Corps vii. Subordination of individual interest to general interest viii. Stability of tenure ix. Remuneration x. Unity of direction xi. Centralization xii. Scalar chain xiii. Unity of command
3. Max Weber - Bureaucratic Theory of Management
He made a distinction between authority and power. According to him individuals obey the regulations because of the force or threat of force exerted by power. In an organization there are three types of power:
i. Traditional power ii. Charismatic power iii. Bureaucratic power or legal power
Features of bureaucracy:
a. Division of labor b. Formal hierarchical structure c. Selection based on technical expertise d. Management by rules e. Written documents f. Only legal power is important g. Formal and impersonal relations
4. Elton Mayo - Behavioral Theory of Management (Hawthorne Effect)
His experiments showed that worker productivity increased by the psychological stimulus of being involved, made to feel important and singled out. According to the Hawthorne Effect employees respond positively to novel changes in the work environment like relocating workstations, clean work stations and better illumination. Employees are more productive when they know that they are being studied.
The scientific theory is better in terms of feasibility and pragmatism. Some of the current business organizations which follow it are:
1. Toyota Motor Corporation - Influenced by Taylor's approach Toyota's production system produces quality products and at the same time increases the efficiency of its workers.
2. McDonalds - Scientific management is followed and the layout of equipments are measured and calculated to maximize efficiency. They are similar in all the outlets.
3. Burger King - Taylor's theory guides and supports the human resources department, advertising and finances of Burger King.
4. Ford - The scientific management theory enabled it to develop the assembly line and achieve the goal of making car travel available to the masses.
The industrial Revolution laid the foundation of various theories. Each theory has attempted to explain the concept of management from different aspect. Some of the theories are :
1. Scientific management theory : The theory was developed by Frederick Winslow Taylor. His contribution can be studied under the following categories ;
a. Time and Motion study : In this technique the employee productivity standards were defined. After that the tasks performed by the employees were observed to determine and eliminate the waste motions.
b. Differential Piece Rate Plan : Under this, the workers have different capabilities to perform work and must be paid accordingly.
c. Supervision : Performance of workers should be supervised and work should be specialized.
d. Scientific Recruitment and Training : Workers should be trained so that their skills are developed and would perform better.
2. Administrative Management Theory : The theory was developed by Henri Fayol. The laid down 14 principles of management which act as a guide for developing management practices.
The 14 principles are--Division of Work, Equity, Discipline, Initiative, authority and Responsibility, Esprit de Corps, Subordination of Individual interests to general interests, Stability of Tenure, Renumeration, Unity of direction, Centralization, Scalar chain and Unity of command.
3. Bureaucratic Theory Of Management : The theory was developed by Max Weber. His contribution can be studied includes :
a. Management by standard rules : Organisation must be governed by a set of rules.
b. Division of labour : He focused on specialization for better performance.
c. Hierarchical Organisational structure : Lower level of employees must be under the supervision of higher employees.
The Taylor's Theory of scientific Management is considered better in terms of feasibility and pragmatism. Some of live examples from the current business situation which justify the theory are :
Ford and Toyota Motor corporation--quality production and efficiency of workers.