Administrative Management Theory – Evolution of Management Thought

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Administrative ManagementAdministrative Management Theory
Theory of Bureaucracy, Fayol’s Principles of
Management | Principles of Management (POM)
BSc.CSIT | Third Semester Unit two
Tribhuvan University (TU)

Administrative Management Theory:
Side by side with scientific managers studying the person – task mix to increase efficiency, other researchers were focusing on administrative management, the study of how to create an organizational structure that leads to high efficiency and effectiveness. Organizational structure is the system of task and authority relationships that control how employees use resources to achieve the organization’s goals. Two of the most influential views regarding the creation of efficient systems of organizational administration were developed in Europe. Max Weber, a German professor of sociology, developed one theory. Henri Fayol, the French manager who developed a model of management introduced in Chapter 1, developed the other.

The Theory of Bureaucracy
Max Weber (1864–1920) wrote at the turn of the twentieth century, when Germany was undergoing its industrial revolution. To help Germany manage its growing industrial enterprises at a time when it was striving to become a world power, Weber developed the principles of bureaucracy – a formal system of organization and administration designed to ensure efficiency and effectiveness. A bureaucratic system of administration is based on five principles.

  • Principle 1: In a bureaucracy, a manager’s formal authority derives from the position he or she holds in the organization:
    Authority is the power to hold people accountable for their actions and to make decisions concerning the use of organizational resources. Authority gives managers the right to direct and control their subordinates’ behaviour to achieve organizational goals. In a bureaucratic system of administration, obedience is owed to a manager, not because of any personal qualities that he or she might possess such as personality, wealth, or social status but because the manager occupies a position that is  associated with a certain level of authority and responsibility.
  • Principle 2: In a bureaucracy, people should occupy positions because of their performance, not because of their social standing or personal contacts:
    This principle was not always followed in Weber’s time and is often ignored today. Some organizations and industries are still affected by social networks in which personal contacts and relations, not job-related skills, influence hiring and promotional decisions.
  • Principle 3: The extent of each position’s formal authority and task responsibilities, and its relationship to other positions in an organization, should be clearly specified:
    When the tasks and authority associated with various positions in the organization are clearly specified, managers and workers know what is expected of them and what to expect from each other. Moreover, an organization can hold all its employees strictly accountable for their actions when each person is completely familiar with his or her responsibilities.
  • Principle 4: So that authority can be exercised effectively in an organization, positions should be arranged hierarchically, so employees know whom to report to and who reports to them:
    Managers must create an organizational hierarchy of authority that makes it clear who reports to whom and to whom managers and workers should go if conflicts or problems arise. This principle is especially important in the armed forces, CSIS, RCMP, and other organizations that deal with sensitive issues involving possible major repercussions. It is vital that managers at high levels of the hierarchy be able to hold subordinates accountable for their actions.
  • Principle 5: Managers must create a well-defined system of rules, standard operating procedures, and norms so that they can effectively control behaviour within an organization:
    Rules are formal written instructions that specify actions to be taken under different circumstances to achieve specific goals (for example, if A happens, do B). Standard operating procedures (SOPs) are specific sets of written instructions about how to perform a certain aspect of a task. A rule might state that at the end of the workday employees are to leave their machines in good order, and a set of SOPs then specifies exactly how they should do so, itemizing which machine parts must be oiled or replaced. Norms are unwritten, informal codes of conduct that prescribe how people should act in particular situations. For example, an organizational norm in a restaurant might be that waiters should help each other if time permits.

Fayol’s Principles of Management
Working at the same time as Weber but independently of him, Henri Fayol (1841–1925), the CEO of Comambault Mining, identified 14 principles that he believed to be essential to increase the efficiency of the management process. Some of the principles that Fayol outlined have faded from contemporary management practices, but most have endured.

  1. Division of Labour: Job specialization and the division of labour should increase efficiency, especially if managers take steps to lessen workers’ boredom.
  2. Authority and Responsibility: Managers have the right to give orders and the power to exhort subordinates for obedience.
  3. Unity of Command: An employee should receive orders from only one superior.
  4. Line of Authority: The length of the chain of command that extends from the top to the bottom of an organization should be limited.
  5. Centralization: Authority should not be concentrated at the top of the chain of command.
  6. Unity of Direction: The organization should have a single plan of action to guide managers and workers.
  7. Equity: All organizational members are entitled to be treated with justice and respect.
  8. Order: The arrangement of organizational positions should maximize organizational efficiency and provide employees with satisfying career opportunities.
  9. Initiative: Managers should allow employees to be innovative and creative.
  10. Discipline: Managers need to create a workforce that strives to achieve organizational goals.
  11. Remuneration of Personnel: The system that managers use to reward employees should be equitable for both employees and the organization.
  12. Stability of Tenure of Personnel: Long-term employees develop skills that can improve organizational efficiency.
  13. Subordination of Individual Interests to the Common Interest: Employees should understand how their performance affects the performance of the whole organization.
  14. Esprit de Corps: Managers should encourage the development of shared feelings of comradeship, enthusiasm, or devotion to a common cause.

The principles that Fayol and Weber set forth still provide a clear and appropriate set of guidelines that managers can use to create a work setting that makes efficient and effective use of organizational resources. These principles remain the bedrock of modern management theory; recent researchers have refined or developed them to suit modern conditions. For example, Weber’s and Fayol’s concerns for equity and for establishing appropriate links between performance and reward are central themes in contemporary theories of motivation and leadership.

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