In the 19th century, America was undergoing rapid growth and expansion. Midwestern and western lands were sparsely inhabited and contained large quantities of untapped minerals, forest reserves, and fertile farmland. As the population moved westward, new markets were opened for enterprises, and the need for power, transportation, and communication became critical. With the development of rail systems and the establishment of telegraph lines, entrepreneurial activity was abundant and highly competitive. The need to develop management techniques that would integrate technology, materials, and worker activities in a productive and efficient manner was a central concern during this period. Because of these events in the United States and the impact of the Industrial Revolution in Europe, classical management theory evolved in an effort to develop techniques that would solve problems of organizational efficiency in the production of goods and services.
Classical management theory can be divided into two perspectives distinguished by the issues and problems that they address. One perspective, administrative theory, evolved from a concern by both European and American academicians and managers with the nature and management of the total organization. Issues and problems that they sought to address focused on the technical efficiency of the organization. A second perspective, scientific management, emerged primarily among American scholars and managers and focused on issues involved in the management of work and workers.
Administrative theory focuses on the total organization and attempts to develop principles that will direct managers to more efficient activities. Prominent writers in this perspective were Henri Fayol, Max Weber, and Chester Barnard.
Henri Fayol (1841-1925) was a French mining engineer who spent many of his later years as an executive for a French coal and iron combine. In 1916, as director of the company, Fayol penned the book General and Industrial Management. In this book, Fayol classified the study of management into several functional areas which are still commonly used in executive training and corporate development programs. The functional areas identified by Fayol are planning, organizing, directing, coordinating, and controlling.
Fayol set down specific principles for practicing managers to apply that he had found useful during his years as a manager. He felt these principles could be used not only in business organizations but also in government, the military, religious organizations, and financial institutions.
Fayol's principles were not meant to be exhaustive. Rather, his aim was to provide managers with the necessary building blocks to serve as guidelines for managerial activities. In sum, the principles emphasize efficiency, order, stability, and fairness. While they are now over 80 years old, they are very similar to principles still being applied by managers today. The problem with Fayol's principles of management is knowing when to apply them and how to adapt them to new situations.
Max Weber (1864-1920) was born to a wealthy family with strong political ties in Germany. As a sociologist, editor, consultant to government, and author, Weber experienced the social upheaval brought on by the Industrial Revolution and saw the emerging forms of organization as having broad implications for managers and society. Adhering to a perspective that viewed society as becoming increasingly rational in its activities, Weber believed that organizations would become instruments of efficiency if structured around certain guidelines. In order to study this movement towards "rationality" of organizations, Weber constructed an ideal type, termed a bureaucracy that described an organization in its most rational form.
Because of the emphasis on efficiency that had developed around the turn of the 20th century, many management scholars and practitioners interpreted Weber's writings on bureaucracy as a prescription for organizing. Weber, however, was more interested in developing his bureaucratic type as a method for comparing organizational forms across societies. While he did not believe any organization would perfectly conform to the dimensions that compose his bureaucratic model, Weber felt that some organizations would come closer than others. The closer to the bureaucratic type, the more rational society was becoming, and it was Weber's interest in the rationality of social life that directed his attention to the study of organizations.
Chester Barnard (1886-1961) drew on his own experiences as a manager and his extensive reading of sociological theory in constructing a theory of the organization. Born on a farm in Massachusetts, Barnard received a scholarship to attend Harvard which he supplemented by tuning pianos and running a small dance band. He completed the requirements for an economics degree in three years but was denied a degree for failing to attend a science laboratory section. Even without a degree, however, he was hired by American Telephone and Telegraph in 1909 and became the president of New Jersey Bell in 1927. A tireless "organization man," Barnard was very active in volunteer work. Barnard's most famous work, The Functions of the Executive, viewed the organization as a "cooperative system" of individuals embodying three essential elements: (1) willingness to cooperate, (2) a common purpose, and (3) communication.' The absence of any one of these three elements would lead to the disintegration of the organization, according to Barnard.
Like Weber, Barnard viewed the distribution of authority as an important process within the organization. However, he felt that the source of authority did not reside in the person who gave the orders; rather, authority resided in the subordinates who could choose to either accept or reject directives from their superiors. Subordinates would assent to authority when four conditions were satisfied: (1) they could and did understand the communicated directive; (2) they believed that the directive was consistent with the purpose of the organization; (3) they believed that the directive was compatible with their own personal interests; and (4) they were mentally and physically able to comply with the directive.' This view of authority has become known as acceptance theory.