Discuss 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 situations.
Answers
Management theories 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. McDonalds - Scientific management is followed and the layout of
equipments are measured and calculated to maximize efficiency. They are similar
in all the outlets.
2. 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.
3. Ford - The scientific management theory enabled it to develop the assembly line and achieve the goal of making car travel available to the masses.
4. Burger King - Taylor's theory guides and supports the human resources department, advertising and finances of Burger King.