Administrative Management Theories

Introduction
We have chosen to discuss Administrative Management Theory because it plays a vital role in the development of every business and organization. As per the book , Administrative Management is the study of how to create an organizational structure and control system that leads to high efficiency and effectiveness based on Max Webber¶s Theory of Bureaucracy and Fayol¶s Principles of Management

(Textbook / Contemporary Management . this type of theory is not very common. a German professor of sociology. a manager¶s formal authority derives from the position he or she holds in the organization. Principle 1: € In a bureaucracy. . moral worth.the power to hold people accountable for their actions and to make decisions in reference to the use of organizational resources. and the ability to lead and to generate commitment from subordinates. we see more of an informal authority approach in which there is personal expertise. without the use of this absolute power from one individual.6th Edition) In today¶s business models.The Theory of Bureaucracy Developed by Max Weber (1864-1920). € Authority . Nowadays. technical knowledge.

play a very important part in moving up the corporate latter and being able to maintain a managerial position requires the utilization of staying current on up to date techniques and information.6th Edition) The old ways. are still around in today¶s society. people should occupy positions because of their performance. but it can only get you so far. influence hiring and promotional decisions. Principle 2: € In a bureaucracy. not because of their social standing.The Theory of Bureaucracy Developed by Max Weber (1864-1920). € Some organizations and industries are still affected by social networks in which personal contacts and relations. but who you know. . In today¶s business world. not job-related skills. what you know and educational knowledge. a German professor of sociology. of not what you know. (Textbook / Contemporary Management .

6th Edition) Most organizations should and are clearly defining task and position responsibilities. . Clarification of one¶s job expectations is essential for all five business functions in order to manage and maintain a high level. € When the task and authority associated with various positions in the organization are clearly specified. a German professor of sociology. Job descriptions should include all facets of an employee held position. Principle 3: € The extent of each position¶s formal authority and task responsibilities. and measurable level of success for all organizations. managers and workers know what is expected of them and what to expect from each other. and its relationship to other positions in the organization should be clearly specified. (Textbook / Contemporary Management .The Theory of Bureaucracy Developed by Max Weber (1864-1920).

6th Edition) Today¶s business models utilize the initiative factor in which employees are given the ability to act on their own. . a German professor of sociology. without direction from a superior. The balance between a vertical and horizontal organizational structure is more widely used in today¶s business models. Principle 4: € Authority can be exercised effectively in an organization when positions are arranged hierarchically.The Theory of Bureaucracy Developed by Max Weber (1864-1920). This empowerment of employees relieves the stress of constant supervision and allows supervisors and managers to concentrate more on other administrative duties. 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. (Textbook / Contemporary Management .

6th Edition) Most companies have SOPs and require employees to learn and follow them. . € Standard Operating Procedures (SOPs) are specific sets of written instructions about how to perform a certain aspect of a task. Guidelines are needed and common sense is always important. and norms so that they can effectively control behavior within an organization. (Textbook / Contemporary Management .The Theory of Bureaucracy Developed by Max Weber (1864-1920). We have seen how in addition to following rules and regulations. standard operating procedures. but have an open line of communication to new ideas and thoughts is essential in today¶s business society. ³rules are rules and they could never be broken´. many organizations have allowed for creativity and innovation to supersede the common way of conducting business where it was once said. a German professor of sociology. Principle 5: € Managers must create a well defined system of rules.

Possible downside: Boredom that could drop quality.Henri Fayol·s 14 Principles of Management Division of Labor € € Job Specialization and well divided labor should increase efficiency. How Does this Apply Today? This is a potentially good practice for institutions whose workers deal with highly technical or repetitive tasks. Tasks that require innovation and a creative exchange or with workers who are required to have crossdepartmental knowledge may not benefit from Division of Labor. and flexibility. . worker initiative.

and ability to lead and generate commitments from subordinates (informal). . Managers gain authority derived from expertise. moral worth. technical knowledge. much can be gained by supervisors whose subordinates naturally follow those who they perceive as a leader (characterized by informal authority). however. How Does this Apply Today? Formal authority can be used or perceived as totalitarian shutting down the much needed two way communication.Henri Fayol·s 14 Principles of Management Authority and Responsibility € € Managers have the right to give orders and demand obedience (formal).

How Does this Apply Today? Leads to less opportunities for confusing or conflicting directives. . Very appropriate as long as subordinate managers are able to interpret directions from their leaders and disseminate the directions to their subordinates.Henri Fayol·s 14 Principles of Management Unity of Command € An employee should receive orders from only one superior.

limiting the line of authority maintains overhead to its minimum and allows for quicker reaction to directives in a marketplace requiring speed. € Allows for cross departmental interaction of middle managers to speed decision making. € How Does this Apply Today? In a competitive market place. .Henri Fayol·s 14 Principles of Management Line of Authority Clearly defined and limited chain of command from the top to the bottom levels.

it may be vital to assure that all but the most trivial decisions be made at the top. In cases where an organization needs to operate in a crisis mode. How Does this Apply Today? When authority is concentrated at the top of the organization¶s chain of command. This funnels the workload through a small number of managers causing delays. . centralization at the top trains middle managers to quickly pass on the problems and they simply follow orders.Henri Fayol·s 14 Principles of Management Centralization € € Authority should not be concentrated at the top of the chain of command because it slows down decision making. Centralization at the top may be necessary when it is vital that the organization¶s strategy be firmly adhere to. Also. only those at the top can make decisions.

not all of the organization¶s resources are used towards the legitimate goal. How Does this Apply Today? An organization that does not have a single purpose and plan becomes inefficient and unfocused. If managers and workers have a different focus or direction. .Henri Fayol·s 14 Principles of Management Unity of Direction € An organization should have a single plan of action to guide managers and workers.

They can proceed and dedicate all of their time to the task at hand knowing that they will be treated fairly and equally. .Henri Fayol·s 14 Principles of Management Equity € All members of an organization are entitled to be treated with justice and respect. How Does this Apply Today? Equity in an organization gains its members¶ loyalty and trust.

Fayol recommended the use of organizational charts to show the position and duties of each employee and to indicate which positions an employee might move to or be promoted into the future. € .Henri Fayol·s 14 Principles of Management € Order The arrangement of organizational positions should maximize organizational efficiency. . allows for an orderly advancement from one position to the next. This form of guidance or career planning.

Henri Fayol·s 14 Principles of Management .

employees with more freedom and responsibility. This key to this principle is to promote creativity and innovation.Fayol believed that managers needed to encourage their employees to act on their own.Henri Fayol·s 14 Principles of Management Initiative € Managers should allow employees to be innovative and creative. Example: € Many retailers have empowered their cashiers to perform price overrides without the need for a supervisor to approve the change. tend to have a greater desire to accomplish the job at hand. € More and more companies are empowering their call center agents to perform one-time fee reversals without the approval of a supervisor. . . Hence. without direct supervision from a supervisor.

. then they may be more willing to oblige to the managers request.Fayol believed that discipline resulted from respectful relations between organizational member and reflects the quality of an organization¶s leadership and a manager¶s ability to act fairly and equitably. If the manager has always been courteous and respectful of the employee. . Example: € A manager may ask an employee to stay late or work weekends in order to complete an assignment.Henri Fayol·s 14 Principles of Management Discipline € Managers need to create a workforce that strive to achieve organizational goals.

he was cautious to state the reward system could not be the subject of abuse or bias.Henri Fayol·s 14 Principles of Management Renumeration of Personnel € System that managers use to reward employees should be equitable for both employees and the organization. Example: Company ³A´ pays up to twenty percent of an employees salary. Many companies perform six month or twelve month reviews of their employees and based on their performance figures they¶re rewarded with a bonus. . However. In other words. because he believed it encouraged productivity. employee ³X´ can make as much as $15K in annual bonus. Employee ³X´ annual salary is $75K. € . Typically the amount of the bonus is a percentage of their annual salary.Fayol was a big proponent of bonuses and profit sharing plans.

since the employee has already been exposed to the environment. they develop skills that improve the organization¶s ability to utilize its resources. .Henri Fayol·s 14 Principles of Management Stability of Tenure of Personnel € Recognition that long-term employees develop skills that can improve organizational efficiency. Example: € Consider employees that grow within a company. he/she may be more well equipped to come up with the right approaches to handle certain situations. which usually leads to a lower cost of training. Companies are often more willing to hire and promote from within because employees may already possess certain job function skills and technical knowledge of the applications. Furthermore. -Fayol believed that when employees stayed with an organization for extended periods of time.

some players tend to make more money than some of those positions above them. GM). in order to ensure that employees were being treated fairly and rewarded for their performance. consist of upper management executives (CEO. remember Fayol believed that there needed to exist a harmonious relationship between the organization and its members.Henri Fayol·s 14 Principles of Management Subordination of Individual Interests to the Common Interest € Employees should understand how their performance affects the performance of the whole organization. . Keep in mind though that in this business. President. managers (coaches) and players (employees). . Example: € Sports teams. unwilling to adapt and change to the philosophy set forth by the teams management may find themselves being released or traded. Having said that. like any other business. Players that are selfish.No one individual or group is above the organization.

be hired to facilitate communication and ultimately satisfy the needs of both departments. knowing that their boss is willing to listen to their opinions. The employee. Example: A compliance officer notices that communication between the compliance department and the business unit is lacking cohesiveness. someone with experience in both areas of the business.Comes about by encouraging communication between managers and workers to solve problems and implement solutions. or devotion to a common cause. . . enthusiasm.Henri Fayol·s 14 Principles of Management Esprit de Corps € Managers should encourage the development of shared feelings of comradeship. can suggest that a liaison.

. The management process of Fayol¶s fourteen principles of management has influenced efficiency in today¶s business society. administrative management theory such as. bureaucracy is a formal organizational system that is applied in today¶s business industry throughout the world.Conclusion All in all.

G. NY: McGrawHill/Irwin.M (2009). New York. The Evolution of Management Thought. George.References Jones. J.R. Contemorary Management (pp 38-71).. .

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