It provided cheaper and more efficient power and it allowed factories to produce more goods at cheaper price, increasing the market for such goods. It replaced water power so that new factories could be located anywhere instead of only near rivers.
At about the same time, the growth of transportation began with the railroad industry so that by 1860, there were over 30,000 miles of railroad track. By providing rapid movement of raw materials and finished goods, the railroads were responsible for operations at a national level rather than at a local level. This resulted in the development of urban and industrial centers closer to railroad stations and a truly national market evolved.
The third aspect of industrial revolution in America was the extent of communication. Samuel F.B. Morse invented the telegraph in 1844. Using the telegraphic facilities, managers could coordinate and communicate with speed and efficiency.
Thus by 1860, the three facets of industrial revolution in America, namely, power, transportation and communication had sufficiently advanced as to build a solid foundation for industrialization.
Change came at a dizzying pace. According to Bateman and Zeithaml.
“Steel production which provided the structural underpinnings for industrial growth soared from 19,000 tons in 1867 to 11.4 million tons in 1900. Only 36,000 patents had been issued in the United States prior to 1860; from 1860 to 1890, 440,000 were granted. The new inventions included the telephone, the light bulb, the typewriter, the phonograph, barbed wire, the adding machine and the cash register…. Along with these trends, the need for more and better-skilled management became apparent to everyone.”
The phenomenal industrial growth brought in the widespread need to coordinate the efforts of large number of people employed in industries and auxiliary services. A number of individuals began to focus on developments of techniques that would apply to specific situations and solve specific problems. These techniques and strategies laid the ground work for subsequent study of broader management theories. Some of the early contributors, according to Wren and Hayare:
Robert Owen. (1771 – 1858):
Robert Owen was a successful British entrepreneur who recognized the importance of human resources. He believed that the returns from investment in human resources would be far superior than the investment in machinery and equipment. He considerably improved the working conditions of his own employees while running a cotton mill in Scotland.
He believed that workers should work because they want to work and not because they have to work. He strongly emphasized the need for the manager to take the worker into his confidence and should not only tell him what is expected of him but also why, because an enlightened worker is a better worker. His ideas and philosophy could be considered as a prelude to the development of the behavioural approach to management.
Charles Babbage (1792 – 1871):
An English mathematician, he is widely known as the “father of modern computing, While he believed in and emphasized the importance of human factor in the success of organizations and suggested that the interests of employees and management, are closely linked and advocated the idea of profit sharing and participating decision making, his major contribution is the introduction of science and mathematics in the manufacturing operations. He was the proponent of the division of labour and intelligent organization of workers. He was perhaps the first to propose that the decision be based upon investigation and accurate knowledge, rather than opinions and intuition.
He is also credited with anticipating the mechanism of time and motion study where an operation is performed with minimum number of motions and minimum time in order to simplify operations and reduce costs. According to Garbut, Charles Babbage was a pioneer in operations research and use of quantitative methods and industrial engineering techniques in improving manufacturing operations.
He himself expressed his views in his own book, “On the Economy of Machinery and Manufacturers. He laid considerable emphasis on specialization, work measurement, optimum utilization of machines and tools, wage incentives and discovery of improved methods for the purpose of reducing costs and improving efficiency.
Henry R. Towne (1844-1924):
A mechanical engineer, Henry Towne articulated the need to consider management as a separate field of “systematic” inquiry on a par with engineering. He outlined the importance of management as a science and called for the development of management principles.
He expressed his view in his paper entitled, “The Engineer as an Economist” that he delivered and discussed at a conference of American Society of Mechanical Engineers in 1886, that engineering skills and management skills go hand in hand in running an organization effectively.
The paper called for development of management concepts and skills as a discipline that could be applied across management situations. One person who attended that meeting became highly impressed and was subsequently instrumental in developing management and came to be known as the “Father of Scientific Management.” His name was Fredrick Taylor.
Even though, these pre-classical thinkers laid the groundwork for development of management principles and applications which are even current today, the serious scientific study of management did not begin until early part of this century when Fredrick Taylor’s “The Principles of Scientific Management” was published in 1911.
This was partly due to the fact that it was an era of technology and the emphasis was more on technical and commercial aspects of running a firm. Managing a company reflected the characteristics of individuals rather than any generalized set of management principles and skills that could be applied across all organizations.
Classical Approaches to Management:
The industrial revolution brought about an unprecedented growth in productivity and this gave rise to three types of contemporary management theories, which collectively are known as “classical approach” to management. These are: scientific management, administrative management theory and bureaucratic theory. The major contributors to these theories are shown as follows:
The classical approach to management is based upon the ideas similarly generated in the late 1800’s and early 1900’s and is primarily based upon the economic rationality of all employees.
This evolved around the classical assumption of Adam Smith that people are motivated by economic incentives and that they will rationally consider opportunities that provide for them the greatest economic gain. The three branches of classical approach to management which feed on similar underlying principles are explained as follows:
Scientific management which focuses on production efficiency is primarily attributed to the ideas and works of Fredrick W. Taylor (1856 – 1915) who is known as the “father of scientific management.” He is well known for his famous work “The Principles of Scientific Management”, published in 1911, which became the foundation of the scientific management movement. He criticized the methods of traditional management which were composed of the following elements.
i. Managerial decisions were made on the basis of intuition, feelings, and opinions and traditional past experience, rather than scientific investigation.
ii. Jobs were performed by rule of thumb rather than standard times, methods or motions.
iii. The prevalent practices were assumed to be correct and no efforts were made to introduce new and novel techniques of management or operations.
iv. Training was generally under an apprentice system and no formal techniques for skills and professional development existed.
v. Management was considered as a group of overall supervisors rather than a group performing unique duties.
Taylor was interested in replacing traditional management by scientific management by developing the most scientific and rational principles for handling people, machines, materials and money and to secure maximum benefits for the employers as well as employees. He offered 4 principles as basis for scientific management.
1. Every job should be broken into its elements and a scientific method to perform each element should be established.
2. Workers should be scientifically selected with right attitudes for the job and ability and then properly trained to perform the work.
3. Management should cooperate with the workers to ensure that all work is done in accordance with the scientific principles.
4. The work and responsibilities are to be so divided between management and workers that such work assignments result in interdependence between management and the workers. The management should design the work, set up and supervise the work and the workers are free to perform the work.
Scientific management became the accepted management philosophy about the relationship between people and work. It was a complete mental revolution for both management and employees towards their respective duties and towards each other.
The Contributions of Gilbreths:
Frank Gilbreth (1868 – 1924) and Lillian Gilbreth (1878 – 1972), as husband and wife team, contributed extensively towards scientific management and were .primarily responsible for analysis and study of time and motion of work performance of workers, thus improving upon time and motion elements of operations by eliminating unnecessary motions.
Frank Gilbreth conducted a motion study of bricklayers. He identified eighteen individual motions that a bricklayer used in placing a brick with cement on the wall. By thoroughly studying these motions and changing the task structure, he was able to reduce the eighteen motions to five, which increased the productivity by over 200 per cent.
This also promoted the individual worker’s welfare in the sense that every motion that was eliminated reduced fatigue. By using motion picture cameras, they tried to find the most economical motions for each task in order to upgrade performance and reduce fatigue.
In this area of motion study, the Gilbreths identified 18 basic hand motions by breaking down the task into its fundamental elements. They called these motions “therbligs” (Gilbreth” spelled backward, with the “t” and “h” reversed). These therbligs included such motions as search, select, grasp, hold, position and so on.
Lilian Gilbreth emphasized that the scientific study of management should include both analysis and synthesis. Analysis involves breaking down a task into its essential elements and with synthesis, the task is reconstituted to include only those elements that are necessary for efficient work and eliminate the other elements. This would help workers to reach their maximum potential by developing their skills and abilities and by improving efficiency.
Henry L. Gantt (1861-1991):
Henry Gantt worked with Fredrick Taylor on several projects. He differed with Taylor’s approach to scientific management. While Taylor supported a much more mechanistic view of workers which meant driving workers to increase their output, Gantt supported a more humanistic approach where the workers are to be trained to become more skilled and that it is the management’s responsibility to help workers learn and acquire these skills.
Gantt was responsible for introducing “Task and Bonus Plan”, which was aimed to provide extra wages for extra work in addition to a guaranteed minimum wage. This differed from Taylor’s “piece-rate” pay system where wages were directly related to output.
In Gantt’s plan, workers received a bonus for completing all their daily tasks. Bonuses were also awarded to supervisors who were successful in getting their workers to meet the output goal.
Gantt also developed and introduced the “Gantt Chart” which served as a simple visual device for comparing actual performance to planned work performance. It is a kind of a progress report in visual form that identifies stages of work. It aids in planning, scheduling and control of work operations. The Gantt chart is still commonly used today and has been adopted for computerized scheduling applications.
Based on the writings of Max Weber (1864-1920), who was a German sociologist, a bureaucratic form of an organization refers to a management approach which is based on a rigid formal organizational structure with set rules and regulations.
Weber looked for rules to eliminate managerial inconsistencies that contribute to ineffectiveness. He further believed that every deviation from the formal structure interferes with efficient management. He believed in strict adherence to rules which would make bureaucracy a very efficient form of organization founded on principles of logic, order and legitimate authority. Weber describes it as follows.
“The purely bureaucratic type of administrative organization…. is from a purely technical point of view capable of attaining the highest degree of efficiency…. It is superior to any other form in precision, in stability, in the stringency of its discipline and in its reliability.
It thus makes possible a particularly high degree of calculability of results for the heads of the organization and for those acting in relation to it. It is finally superior both in intensive efficiency and in the scope of its operations and is formally capable of application to all kinds of administrative tasks.”
The various requirements for an effective and efficient bureaucracy, according to Weber are : division of labour by functional specialization, a well defined hierarchy of authority, a system of rules covering the duties and rights of employees, certain obedience to a superior’s command, appointments and promotions purely on the basis of merit, separation of personal lives from organizational positions, a system of procedures dealing with work situations and implementation of an adequate control system.
Bureaucracy, even through necessary for large organizations, has come to be associated with red tape and excessive rules and regulations and hence delay in getting changes done or proposals approved. In the competitive global market of 1990s, organizations are moving towards participative management, team work and employee innovation and creativity.
This approach to management, also known as functional or process approach, is primarily based on the ideas of Henry Fayol (1841-1925). He observed the organizational functions from managerial point of view.
He believed in universality of management and reasoned that those who acquire general knowledge of managerial functions and principles can manage all types of organizations. He proposed the breaking of the complex management process into separate interdependent areas of responsibility. He divided the administrative activities into six groups, all of which are closely dependent on one another. These six areas of operations are:
This area is concerned with manufacturing products.
It involves purchasing of raw materials for the products and selling the finished products.
This area involves searching for and acquiring capital and allocating it to various functions in an optimal manner and keeping an overview control of the flow of capital.
Security operations are designed to take the necessary and adequate steps for the production and safety of goods and people.
This area covers all accounting aspects of the organization including recording and taking stock of costs, profits, liabilities, assets, preparing balance sheets and compiling accounting statistics.
Fayol’s primary concern was with the managerial functions of planning, organizing, command, coordination and control.
In addition to these areas of operations, Fayol proposed 14 principles of administration which he believed would be most often applied for more efficient managerial behaviour and more logical organizations. These 14 principles are summarized as follows.
1. Division of labour:
This means that a worker is given only a small element of work, in which he becomes a specialist and the more people specialize, the more efficiently they can perform their work. Division of labour improves productivity by simplifying the tasks required of each worker. This can be applied to all kinds of work, technical as well as managerial.
2. Authority and responsibility:
Authority is the right to command and the power to exact obedience in order to get the work done. Responsibility is the accountability of authority so that the official authority is not misused.
Fayol considered discipline as “outward marks of respect” observed in accordance with the employment agreements and organizational rules. These rules and agreements should be clearly specified and understood by all. Also, these rules and regulations should be enforced fairly and judiciously.
4. Unity of command:
Each organizational member should receive orders from only one superior, otherwise conflict and confusion in authority and instructions would result.
5. Unity of direction:
This principle states that “there should be one head and one plan” for a group of activities having the same objective. For example, the personnel department should have only one personnel manager with a specified plan for personnel policies, feeding personnel to all departments.
6. Subordination of individual interest to organizational interest:
While the individual interests should be integrated with the organizational interests as much as possible, the interests of the organization must take priority over the interest of an individual or a particular group, whenever there is a conflict between the two.
7. Remuneration of staff:
All employees should be fairly paid with appropriate additional incentives for additional efforts.
Fayol believed that while some authority should be given to the subordinates to make operational decisions, all major policy decisions should be made at the top management level.
9. Scalar chain:
There should be a clear chain of command from the top to the bottom of the organization and the line of authority should run in the order of rank from the top management downwards. This helps to ensure the orderly flow of information and communication.
A place for everything and everything in its place. Materials and people should be in the right place at the right time for maximum efficiency. People in particular, should be in the jobs they are most suited for.
Managers should be both fair and friendly to the subordinates. Equity results when friendliness is coupled with justice. This will help in soliciting loyalty and devotion from subordinates.
12. Stability of staff:
Employee turnover should be minimized. Tenure and long term commitment should be encouraged. It results in a sense of belonging to the organization.
Employees should be given the freedom to be innovative. They should be encouraged to initiate new ideas and carry out their plans, even when some acceptable mistakes result.
14. Esprit de corps:
Employees should work as a team because there is strength in unity and the management should promote this team spirit.