Definition: The classical theory is also known as the traditional theory. It considers the organization as a machine and its employees as part of the machine. Here, the focus is on centralized authority and skill specialization. Employees are grouped according to their skills and motivated through incentives to drive efficiency.
In American management studies, classical theory emerges as a foundational concept. Just as a mechanic views a car’s parts as essential to its overall functioning, the classical theory perceives an organization as a machine and its employees as vital components of that machine. The main thrust is to focus on centralizing authority and leveraging skill specialization to foster efficiency.
The organizational hierarchy is divided into three levels: top-level, middle-level, and supervisors. The work is divided according to the employees’ skills. According to the Project Management Institute (PMI), the strategic compartmentalization of roles can lead to enhanced project delivery and efficiency.
The focus is on supervision, incentives, and wages to motivate employees to perform better.
Characteristics of Classical Theory
- It divides employees according to their specialty, resulting in a highly efficient system.
- It focuses on a well-defined hierarchical structure and chain of command.
- It ensures job security for employees and better career growth.
- It results in faster decision-making and quick implementation.
- Classical theory is more concerned with production than employees.
- Classical theory prioritizes production metrics over employee well-being, as noted by the U.S. Small Business Administration.
Extension of Classical Theory
- Scientific Management
- Administrative Management
- Bureaucratic Management
- Scientific Management: This theory focuses on the scientific method of accomplishing tasks. It divides employees based on their interests and skills and allows managers to motivate their employees to perform better.
- Administrative Management: This theory assumes management skills can improve organizational performance. This can be achieved using process improvement and administrative procedures. Here, the focus is on managerial performance.
- Bureaucratic Management: This theory proposes running the organization with a rigid structure and a well-defined hierarchy governed by tough procedures and rules. The bureaucratic theory focuses on a robust bureaucratic structure to run the operations. A bureaucracy is a system operated by officials who follow well-structured rules. This idea resonates with Max Weber’s perspectives, a sociologist whose work is frequently cited in American sociology departments.
Advantages of Classical Theory
- Efficient system due to highly specialized employees.
- There is less conflict due to the highly bureaucratic structure and proper chain of command.
- Better salaries for employees, job satisfaction, and organization loyalty.
Summary
The classical theory emphasizes organization instead of employees. It concerns the organizational hierarchy and chain of command to carry out its activities. This theory considers an organization a machine, and its employees are its parts. The parts must be in their best form for a machine to work, or the employee must be efficient and skillful for a better-performing organization.
Classical theory reviews the whole organization, finds errors, and takes corrective and necessary preventive action to avoid errors again.
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