Classical Management Theory: What is It and How Does It Work?

Management theories are often separated into three broad categories: classical management theory, behavioral management theory, and modern management theory.

Classical management theory was the first to emerge as a response to the Industrial Revolution, and the behavioral and modern theories both arose to address additional work experience elements that weren't addressed or prioritized under the classical theory.

What is classical management theory, and how does it work? Is it still applicable in modern work environments or simply outdated?

What Is Classical Management Theory?

Classical management theory first emerged during the Industrial Revolution in the late 19th century. At this time, work shifted to factory production from family-led home production. Hundreds or even thousands of workers could be employed by these factories to mass produce standardized goods in a much more cost-effective, efficient, and standardized way possible with home production.

Problems quickly began to appear as a result of the factory system, and classical management theory arose from attempts to find the "one best way" for tasks to be performed and managed.

This management style is less common than it once was, but some organizations still might benefit from its structure.

To maximize productivity and efficiency in the workplace, the classical management theory emphasizes hierarchy, single leadership, and specialized roles.

Here are the principles upon which the theory of classical management is based:

• The skills and specializations of employees are used to determine who performs which tasks.
• The most efficient way to do each job should be determined using scientific management theory.
• As much as possible, operations should be streamlined.
• Priority is given to increasing profit.
• The primary goal is productivity.
• A single person or a select few figures make decisions.

Let's look at three primary concepts implemented by an ideal workplace under the classical management theory.

Hierarchical Structure

Three levels of leadership ideally oversee a workplace in the classical management theory.

The top of the hierarchy is the executives or business owners. They have the ability and authority to set long-term goals for the organization.

Below them is middle management. This group of managers sets department-level goals and oversees the third level of the hierarchy.

The final level is the managers or supervisors responsible for overseeing the company's day-to-day operations.

Specialization

Organizations that are structured based on classical management theory focus on an "assembly line" style of setup. That means that large projects or tasks are broken down into smaller tasks that are then assigned to individual employees or groups of employees.

Rather than having a wide range of duties and tasks to take care of, workers will usually only be responsible for one specific task. This can increase efficiency and productivity by preventing time loss from multitasking.

Incentives

Finally, this idea doesn't focus much on employees' social needs or job satisfaction. Instead, it emphasizes the physical needs of workers.

For this reason, classical management theory involves offering monetary and income incentives to employees for increased production and efficiency. The belief is that by incentivizing people through the opportunity to increase their wages, they will be motivated to be more productive and work as efficiently as possible.

The Branches of Classical Management Theory

There were three main proponents of the classical management theory– Henri Fayol, Frederick W. Taylor, and Max Weber.

Out of the work of these individuals, three primary branches of the theory can be identified: administrative management, scientific management, and bureaucratic management.

Administrative Management

The French industrialist Henri Fayol was the primary proponent of this branch of classical management theory. The aim here is to improve organizational productivity via methods managers can utilize to make internal processes work synchronically.

Fayol believed that managerial practices were one of the main keys of driving organization efficiency. The focus of this branch, therefore, is to elevate the performance of managers as opposed to focusing on the efficiency of individual workers.

Scientific Management

Known as the father of scientific management, Frederick W. Taylor believed that business inefficiency stemmed from worker autonomy. He held that when employees decide on their own working methods and management isn't involved in the strategies they use, the company will ultimately be less productive.

He promoted the idea that a specific power structure should be imposed and the modes of operation should be changed in this type of circumstance. Rather than leaving the methods of production up to the individual worker, work should be scientifically organized.

Using empirical research and the scientific method, Taylor proposed that the most efficient methods to accomplish specific tasks should be examined. The goal here is to assign jobs based on employee competency and skill set to extract the absolute best out of every worker.

In this branch of classical management theory, employees perform their assigned roles, and managers strategize, train, and supervise workers. 

Bureaucratic Management

Max Weber, recognized as one of the fathers of modern sociology, was a German sociologist, political economist, historian, and jurist. Social theory and research are still profoundly influenced by the ideas of Max Weber. Thanks to him, the bureaucratic management branch of classical management theory exists.

Weber proposed that the most efficient way to compose and manage an organization was through bureaucracy. For larger companies, he believed bureaucracy was necessary to achieve maximum productivity.

Work responsibilities are clearly defined in this model, and all employees are treated equally. There is a clear hierarchy to the management system under this theory, with a clear division of labor and defined lines of communication.

An individual's achievements and qualifications are the only things that help to determine their potential for advancement within the company. This is opposed to a person being promoted due to factors other than their qualifications or because they are personally connected with someone influential.

Uniformity, efficiency, and a well-defined distribution of power are essential parts of the ideal bureaucracy, as imagined by Max Weber. In this model, work relationships are strongly discouraged, and the environment is ideally impersonal and professional.

Similarly, employees should only be chosen based on their competencies and technical skills, and no additional factors should be utilized to make a hiring decision. Another significant aspect of bureaucratic management theory is that there should be meticulous record-keeping to reduce misunderstandings, notice patterns, and have a reference to look at later.

Advantages of Classical Management Theory

The modern workplace is much less likely to utilize classical management theory, but it can still be appropriate in some organizations.

There are several advantages and disadvantages that should be weighed out before choosing to follow this structure and theory. First, let's look at some of the benefits of classical management theory.

Decision-Making By a Single Leader

The classical management theory proposes an autocratic leadership approach. That means a single leader (or a small group of authority figures) is responsible for making decisions. On top of that, they are the ones that choose how employees will be organized and directed.

With this single figure making decisions and passing their instructions down the hierarchy, time isn't lost by warring opinions on a topic. When business decisions need to be made swiftly, an autocratic leadership style can help to get the job done.

Some might consider this leadership style to be the opposite of the participative management style, which uses group feedback to make decisions.

Increased Productivity Via Incentives

Classical management theory proposes that employees will work harder and be more productive when motivated by monetary rewards. In a modern organization, this might look like offering bonuses or salary increases based on an employee's productivity.

This is a very direct way to attempt to motivate workers and is an easy system for managers to implement.

Clear Division of Labor

This management theory can help reduce confusion and time loss regarding who is responsible for what duties. The division of labor here is abundantly clear, and the responsibilities and expectations of employees are clearly communicated.

When employees are well chosen for the tasks they are asked to perform, workers don't have to multitask to get their work done, and productivity can increase.

Easy-to-Understand Organization Hierarchy

While it might sound like a very rigid system, there are some benefits to having a clearly defined hierarchy in an organization.

This is another way that each individual's expectations, responsibilities, and objectives are made clear in a way that reduces confusion and boosts productivity.

Disadvantages of Classical Management Theory

There are certainly some downsides to classical management theory, and it isn't necessarily the best choice for all organizations.

More Employee Pressure

Companies using the classical management theory can put a lot of pressure on individual workers. Usually, they are expected to complete specific tasks in a certain amount of time, which can be pretty stressful.

If managers aren't careful to set reachable goals, this can be incredibly discouraging to an employee.

Less Focus on Human Relations and Employee Job Satisfaction

Since classical management theory emphasizes the physical needs of employees rather than their job satisfaction and social needs, it doesn't necessarily provide a complete solution to motivating employees.

In a company that relies on open communication, creative contributions, and teamwork, this can put them at a significant disadvantage. Forming social connections at work is vital to many individuals, and an organization that doesn't see this as a priority can suffer from low morale, decreased productivity, and high turnover.

Stifles Creativity and Innovation

There isn't a lot of wiggle room in the classical management theory. The central idea that led to the creation of this theory was that there is one specific right way for any given task to be completed when maximum production is the goal.

While this can work well when you're focused on high output, it can be a disadvantage if your goals are to grow and keep up with a changing industry. Employees under this management style can feel there is no opportunity to share creative or innovative ideas. For certain employees, the inability to display their unique value can be detrimental to morale.

Do Any Organizations Still Use the Classical Management Theory?

Though it's less prevalent in today's workforce, many companies still successfully utilize this theory of management.

For example, Nucor Steel is the largest steel producer in the United States and the nation's largest recycler. They pay incentive bonuses to all their employees, claim to have never laid off a worker, and have an egalitarian benefits policy. The base pay for managers is also lower than for competitive companies, so managers are incentivized and motivated to help the organization perform well.

Another company that uses this theory is Costco. There, employees are paid nearly 50% more than competitive companies. On top of that, the company contributes twice as much as its competitors for health benefits. 

MillerCoors Brewing Co. is the largest single-site brewery in the world and also benefits from classical management theory. Some workers there have been with the company for decades, and incentive bonuses are given out to the workforce.

These are just a few notable examples of companies that still benefit from this management theory. 

How to Implement the Classical Theory of Management

Are you thinking about implementing the classical theory of management in your workplace?

If so, these tips can help ensure it is a success for your organization.

Provide Incentives Regularly

If you are going to expect a lot from your employees in terms of production, you'll need to offer them something that they believe is valuable enough to work as hard as they can.

That could be monetary rewards, but you also don't want to overlook the importance of providing recognition and verbal praise for employees that are going above and beyond.

Create a Standard Operating Procedure

For the classical management theory to be successful, there needs to be a clearly outlined standard operating procedure for each task. You will want written documents detailing each task's goals, how long it will take, and what steps are involved.

When you provide this information to employees where they can easily access it, it ensures that they are aware of the goals they are working toward and their responsibilities right from the get-go.

Be Considerate During the Task Assignment Process

The abilities and skills of employees must be matched with tasks that are appropriate for them. If workers are mismatched with tasks, it can reduce both productivity and morale.

Are you curious about which management styles are most commonly found among team leaders? Check out this recent post on the topic.

Knowledge Is Power When It Comes to Management Styles

Even if you don't intend to implement the structure proposed by classical management theory, learning as much as possible about the best way to run organizations and manage people can be beneficial to learn.

In the modern workplace, it is generally agreed that leaders should be proficient and comfortable in several different leadership styles to suit different situations and personalities in the workplace. 

If you want to help your management team become the best leaders they can be, check out What's My Leadership Style and What's My Communication Style.

Do you have any questions about the classical management theory, how to implement it, or anything similar? If so, be sure to drop us a comment down below, and we'll get back to you within a day or two! We make it a point to reply to each and every one of your comments, and we'd be more than happy to answer any of your potential questions.

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