CPU COLLEGE MASTER OF BUSINESS ADMINISTRATION

INDIVIDUAL ASSIGNMENT ON

THE IMPACT OF CLASSICAL AND HUMAN RELATIONS

MANAGEMENT THEORIES ON TODAY’S MANAGEMENT OF
ORGANIZATIONS

For the courses of

MANAGEMENT THEORIES AND PRACTICES

BY
Shewangizaw Shibru
ID No EMBA /407

/14

SUBMITTED TO Girmaw Assemie (PhD)

DATE: - DECEMBER 25, 2021

 ACKNOWLEDGEMENTS
I would like express my special thanks to my instructor, Dr. Girmaw Assemie
for giving me a chance to get knowledge and experience of reading literature
journals in addition to class lecture beside this I would like to thank the author of
the book which I tried to review and helped me to understand and realize the
history and evolution of management theories, their relevance to today’s business
organization.
2. Introduction
Management as in English language descends from the Latin language; “manus” which means
“hand” and, “agree” which means “to act”. While management today has many similarities with
management in the past decades yet today’s constant change of an organization environment -
internal or external- and globalization (competitive nature of global economy) among other
factors; organizational structure (flat or hierarchical), technology advancement and transition to
knowledge based organization, have called for broader management approaches other than those
dominated in the last decade.
On the other hand, the similarity between today’s management approaches (modern and post-
modern theories) and those of the past decade are the three main faces of management; (1)
Leadership, (2) Control and (3) Developing the organization business. While great emphasis is
on effective leadership -to motivate and coach subordinates- one can’t neglect the other faces for
successful management; to control the business efficiency and to develop the business -strategize,
i.e. present application of decision-making, policies and practices to insure future business
success (Karlof and Loevingsson, 2005, pp.4). Not shockingly, all three faces have their impact
on the organization performance to which each manager seeks to achieve (Safferstone, 2005).
Karlof and Loevingsson asserts on efficiency and effectiveness outputs of management
approaches -although not directly stating them- especially when we view their work with
Michael Porter’s value chain theory. Karlof and Loevingsson noted that “The basis of all
organized business is actually to create a value that is higher than the cost of producing this
value” (Karlof and Loevingsson, 2005, pp.6), a statement that lends itself to efficiency and
effectiveness in management leading so that the organizational performance creates a unique
value (see appendix a)
In early adopted theories of management. A s indicated by Cole and Kelly, “The classical
approach to management was primarily concerned with the structure and activities of formal or
official organization” (Cole and Kelly, 2005, pp.16) that is to say, their concern was “how
efficient work is done”. For Human-Relations theories, they were more interested in the human
factor at work; their focus was on the individual satisfaction & motivation as much as efficient
use of resources (human resources among them) which leads to effectiveness of operations
(tasks); Michaelson (2005) connects between worker motivations and individual/group
performance (Cole and Kelly, 2016, pp.62).
In this paper, I tried to seek to examine the impact of Classical and Human Relations
management theories on today’s management of organizations.
3. Review of Classical Theories
Safferstone summarizes the history of early ages of management theories and theorists and
says, There was need to assure efficient and effective use of traditional factors of production (e.g.
Land, Labor and Capital) during the twentieth century due the evolution of work from
independent activities (e.g. farmers) to more coordinated work (e.g. factories) and the lack of
definition about management at that time (Safferstone, 2005, pp.4).
Those early theorists mentioned above are Henry Fayol, Frederick Winslow Taylor, The
Gilbreths, Henry Gantt, Lyndal Urwick, Brech, Max Weber and Alvin Gouldner form a group
whom we can label their theories as Classical and/or Scientific approaches to management
(prescriptively). While Fayol and Taylor are regarded as the fathers of that group, during this
same time span, Weber existed (an academic person) where his interest was not ‘how work is to
be done’, but ‘what form of authority structure of an organization’ that attains efficiency. In the
next lines we will focus on Fayol and Taylor theories only for a comprehensive critical review
into these theories as the rest of them are to some extend a tailored copy of either one of them
with some modifications inserted except for Max Weber whose theoretical contribution resulted
in the well-known ‘Bureaucracy’ theory of an organization form.
3.1. Fayol’s Administrative Theory
Henri Fayol is a French Engineer. He worked at Chamberbault, a French mining company,
starting as an engineer until he became the company CEO when it was near bankruptcy. Fayol
was more concerned with the administrative principles of managing the
activities and resources of an organization. Fayol’s contribution to management is identified in
three main themes as indicated below (Pryor and Taneja, 2010).
3.1.1. Elements or Functions of Management

Fayol believed that organizational and business life was a combination of six activities. These
activities are technical, commercial, financial, security, accounting and managerial. These
functions are the different sections that make up an organization in his believe.
3.1.2. Definition of Management activities

Fayol identified five activities that comprise the managerial function. These activities are
forecasting and planning, organizing, coordination, command and control of available resources
to achieve a given objective.
3.1.3. General Management Principles

Fayol advocated fourteen principles as a guide to performing managerial functions claiming

that his list is not exhaustive. They are clearly listed and defined by Cole and Kelly (2016,
pp.25); Division of work, Authority, Discipline, Unity of command, Unity of direction,
Subordination of individual interests to general interest, Remuneration, Centralization, Scalar
chain, Order, Equity, Stability of tenure of personnel, Initiative, Esprit de corps.
3.1.4. Important Notes about Fayol’s Principles

According to Pryor and Taneja analysis for these fourteen principles, Fayol was the first to
distinguish between technical and managerial skills. Division of labor requires specialization of
labor enabling people to work efficiently. Fayol differentiated between authority and
responsibility. Where ‘authority’ is the right to give orders and the power to exact obedience,
‘responsibility’ is a corollary of authority. Fayol’s initiative principle lends itself to organizations
encouraging and rewarding employees who possess the energy to create innovative ideas and to
take the initiative to implement them. All in all, his view to an organization was top down one
(Pryor and Taneja, 2010, pp.491-492).
Today’s concerns about fairness, or the bona fide conflict of interests between groups relate to
Fayol’s ‘individual’ versus ‘general interests’, ‘remuneration’ and ‘equity’. Also, ‘initiative’ and
‘esprit de corps’ indicates Fayol’s sensitivity to people’s needs as individuals and as groups and
indicates Fayol’s awareness of the today’s need to avoid an excessively mechanistic approach
towards employees. The difference is that he saw these principles in the context of rational
model of an organization rather than in terms of adapting structures and changing people’s
behavior –today’s view- to achieve the best fit between the organization and its customers. The
effect of Fayol’s principles on organizational effectiveness has been subject to increasing
criticism since such principles were not designed to cope with modern conditions of rapid
change, flatter structures and increased employee participation in the decision-making processes
of the organization (Cole and Kelly, 2016, pp.25). Exponents of Taylor’s theory like Brunsson
(2008) postulates that Taylor’s theory would have prevailed if Fayol’s ideas were better
scrutinized, as cited by Pryor and Taneja (2010, pp. 496).
3.2.Taylor’s Theory of Scientific Management
Frederick Winslow Taylor, like Fayol, was a practical manager-theorist. During Taylor’s time,
management left the working methods to the initiative of their employees, a behavior called
‘rule-of-thumb’ by Taylor. He suggested that for efficient performance, management would take
this role from workers – which lead to separation of planning and control from doing the job
itself nowadays. Taylor’s themes were based directly on his own experience at work, initially as
a shop-floor worker himself and later as a manager in steel companies. Taylor analyzed work and
observed steel workers’ minimal output and discovered the reason for inefficient work practices
and related this to the concept of ‘soldiering’ and ‘rule-of-thumb’- problems which could be
solved scientifically. He calculated the most efficient way—the one best way—to perform every
job by observing the most skilled craftsman. This in turn resulted in work study; to break the
work processes into smaller simpler tasks that could be taught to inefficient workers. According
to Cole and Kelly, Taylor “studied the jobs of a sample of especially skilled workers, noting each
operation and timing it with a stopwatch. All unnecessary movements could then be eliminated in
order to produce the best method of doing a job. The best method would become the standard to
be used for all like jobs.” (Cole and Kelly, 2016, pp. 27). We can summarize Taylor’s principles
(Taylor, 1919, pp.36-38) as;
i. Replace ‘rule-of-Thumb’ by developing laws and scientific principles for work tasks.
ii. Scientifically select workpeople and progressively train, teach and develop them to achieve
their maximum level of efficiency and prosperity in the jobs that are required.
iii. Matching skills level to the designated work task.
iv. Work and responsibility are equally divided among worker and employee with management
taking the part of planning and control.

3.2.1. Important Notes about Taylor’s Theory

Taylor’s theses was that; (1) the average worker preferred to be given a definite task with clear-
cut standards that adoption of his scientific approach would lead to increased prosperity for both
the employee and the employer. (2) The employer will rest assured that work is efficiently done
with optimized tasks ‘standards’. (3) Rewarding the efficient employee without a limit since the
work output is measured against standards and the fact that wages were preset based on scientific
bases. (4) Employees will accept that management controls them since all management actions
are based on scientific study of work tasks. (5) Taylor took for granted the degree of trust and
mutual cooperation between management and employees. (6) This approach will eliminate the
soldiering effect, thus increases the overall productivity of individuals resulting in more profits to
the organization. (7) Employees will cooperate with management to advance the science; they
will be trained on new methods and accept redesigned processes/tasks.
For the opponents of Taylor’s theory; they say (1) Taylor took the employee-employer trus for
granted which never existed when it mattered hindering any financial incentive schemes to be
ineffective because employees thought that the “management was attempting to ‘pin them down’,
and to management’s feelings that the workers had succeeded in ‘pulling the wool over their
eyes’ (Cole and Kelly, 2016, pp. 28), (2) and that this approach –based on low education level of
workers back at Taylor’s time- converted the workers to automatons leaving no room for
workers to innovate; a perfect case for frustration and job dissatisfaction for a professional
worker. (3) Taylor regarded the rewarding system –relating to employee motivation- to be only
as monetary incentives. (4) Work break down into smaller simpler tasks may result in employee
dissatisfaction or to be deskilled- a debatable point that Taylor argues that it will increase the
task efficiency by repetitively doing the same task.
3.3. Comparing Fayol’s & Taylor’s Theories
Comparing the shared ideas as well as the differences of both theories will enlighten our
understanding of them.
3.3.1. Ideas Uniting Both Theories
Pryor and Taneja summarize those ideas in four points as follows (2010, pp.495-496)
“(1) Work processes, organizational structures, and an emphasis on a hierarchical division of
labor. (2) Creation of the concept of the organization as a whole (Fayol delineated clear lines of
authority into a conceptual and functional unity, and similarly Taylor emphasized formalization
of work processes into a total organization). (3) Emphasis on formal rationality by supporting
scientific techniques, order, and efficiency. (4) The role of managers
is to work with and encourage their workers. Taylor (1947) indicated that managers should work
along with the workers, helping, encouraging, and smoothing the way for them. However, he
also sought to change their mental attitudes and behaviors on the basis of scientific principles so
as to improve operational efficiency. Along this same line, Fayol (1949) noted that managers
need to determine their workers abilities, encourage and train them, and reward enthusiasm,
initiative and success.” (Pryor and Taneja, 2010, pp.495).
3.3.2. Differences between Both Theories
(1) Brunsson (2008), states that Taylor’s theory is contingent, bottom up view of organization
while Fayol’s is top-down perspective, (2) “Taylor’s contingent notion of management describes
managerial practice more accurately than Fayol”, (3) “Taylor believed that managers and
workers should specialize, but he expected the management activities to vary depending on the
types of production and the specific organization. On the other hand, Fayol’s concept of general
management specifically defines the activities of managers” as cited by Pryor and Taneja (2010,
pp.496).

4. Review of Human-Relations Theories

After World War I and Proceeding from the draw backs of the classical/scientific theories of
management; (1) neglecting well-being of workers, (2) financial reward (e.g. salaries and
wages) is the only motivator for employees to exert effort, another group of theorists (a.k.a.
Human-Relations theorists) started to understand why classical/scientific management failed to
deliver its promises (increase the worker productivity) operating under efficient control -face of
management- only. They relayed this to the other management face (leadership motivation &
coaching feature). They examined factors and conditions that motivated workers which revealed
the significance of human and social factors -people feelings, needs, perceptions, attitudes, and
relationships- in the workplace (Safferstone, 2005, pp.5-6).
Some theorists aimed to discover what drives and sustains human behavior focusing on the
effects of supervision, incentives and working conditions (Content theories of motivation- ‘What
motivates people?’) like Mary Follet, Elton Mayo, McGregor, Herzberg, Likert, Argyris and
McClelland. Other focused on the processes of motivation and “what people think when they
decide whether or not to place effort in a particular activity” – ‘How motivation occurs?’ (Cole
and Kelly, 2016, pp.56) and their theories are labeled as the “Process theory” of motivation.
Among the latter group one can identify the following contributors. (1) Victor Vroom
“Expectancy theory” where his theses is exerting effort alone doesn’t always lead to effective
performance and that individual behavior is formed by their subjective perception of the reality
not the object reality, asserting on individuals perception of the situation that is vital to his
theory. He categorized rewards into two groups; “Intrinsic” and “extrinsic” once introducing the
difference between value and valence of an individual satisfaction in his “Force” formula -
driving force to instill effort, achieve a level of performance and obtain rewards at the end- as
one of three other factors; ‘instrumentality’ and ‘expectancy’. (2) As in the case of “Expectancy
Theory”, John Stacey Adams “Equity Theory” focused on people’s perceptions, in this case of
the inputs and outcomes involved, indicated that people are not only interested in rewards, but
also in the comparative nature of rewards (applies only for extrinsic rewards). This theory
hypothesis that employees’ “sense of equity (i.e. fairness) is applied to their subjective view of
conditions and not necessarily to the objective situation” and that “part of the attractiveness
(valence) of rewards in a work context is the extent to which they are seen as comparable with
those available to the peer group” (Cole and Kelly, 2016, pp.58-59). (3) Opposite to the
mentioned ones; where a satisfactory outcome is the prime motivator, Edwin Locke introduced
the “Goal-Setting Theory” suggesting that it is the goal itself that provides the driving force. (4)
While previous theories link to human perception, Burrhus Skinner ‘Reinforcement’ theory –
driven by how to control behavior- links to the learning theory and suggests that behavior is
function of the consequences of rewards or punishments obtained from earlier behavior, which
has the effect of reinforcing current actions either positively or negatively (Cole and Kelly, 2016,
pp.60). (5) William Ouchi “Theory Z” was an attempt to adopt the Japanese practices in
approaching motivation. It combined the style of scientific management along with
behaviouralism.
As a summary for ‘Content Theories’ and ‘Process Theories’ of motivation, Locke and Latham
(2004) states that motivation affects not only the acquisition of employees’ skills and abilities but
also their utilization (how and to what extent) of those skills and abilities, as cited by Cole and
Kelly (2016, pp.61).
5. Contemporary Organization Example
5.1. Fast Food Chains
It is very obvious to us the influence of Fayol’s and Taylor’s theory upon the way most of the
fast food chains conduct their business these days. Our example is McDonald’s –which was
founded initially as a barbecue restaurant in 1940 then transformed to a chain of fast food in
1955 (Wikipedia, 2016); were we examined their business code of conduct under their corporate
governance standards (McDonald’s, 2016a) and found them a typical example of Fayol’s
management principles application.
McDonald's (2016a, pp.10) under ‘Management Commitment’, ‘Additional Responsibilities of
Supervisory employees’ and ‘Personal Accountability’ we can see Fayol’s ‘Division of work’,
‘Unity of command’, ‘Unity of Direction’, ‘Subordination of individual interests to the general
interest’ and ‘Discipline’ principles implemented; every employee does one job, and restaurant
supervisors have the authority to give orders –with discipline- and are responsible for the
functioning of the restaurant with one objective which is present in their slogan, “Our success
depends on each of us accepting personal responsibility for doing the right thing” (McDonald’s,
2016a, pp.8). Restaurant Staff has one supervisor. Centralization of decision-making is obvious
although not clearly stated. Under ‘Employee Experience’ (McDonald’s, 2016a, pp.19), rewards
are for only employees who achieve standards; a view of Schein’s ‘Rational-economic of
untrustworthy people’ model towards McDonald’s employee addressing the ‘self-needs’ in
‘Maslow Hierarchy of needs Theory’ theory as a motivation. Scalar chain: employees know
where they stand in the hierarchy of the organization, and it is obvious that the organogram
structure is top-down in hierarchy as well as the chain of command. Under ‘Safe Workplace’
(McDonald’s, 2016a, pp.21), order is present; a safe workplace for employees. Under ‘Respect
and Dignity’, ‘Human Rights’ and ‘Inclusion and Diversity’ (McDonald’s, 2016a, pp.20-21), we
can see how they applied Fayol’s ‘Equity’ principle. Under ‘Protection Against Retaliation’
(McDonald’s, 2016a, pp.19), we sense how they deal with Fayol’s ‘Stability of tenure of
personnel’ and under ‘Values’ & ‘We believe in McDonalds’ system’ (McDonald’s, 2016a,
pp.5), we can see Fayol’s ‘Esprit de corps’ principle. Under ‘Inclusion and Diversity’
(McDonald’s, 2016a, pp.21), there is a vague relation to Fayol’s ‘Remuneration’ principle;
which justifies the strike done by McDonald’s employees at some point (Wikipedia, 2016) and
asserts on the hypothesis of ‘Equity Theory’; “attractiveness (valence) of rewards in a work
context is the extent to which they are seen as comparable with those available to the peer
group” (Cole and Kelly, 2016, pp.59).
Although we didn’t see any sign of Fayol’s ‘initiative’ principle implemented anywhere inside
their reports, we did find a recent commitment towards motivating their employees by providing
eligible ones with assistance in tuition costs of academic programs (extrinsic rewards) through
their ‘Archways to opportunities’ an academic program initiative which include giving fifty
annual scholarships as well (McDonald’s, 2016b), thus mixing between the use of both intrinsic
and extrinsic rewards; we relate this practice to ‘Maslow Hierarchy of needs’ (intrinsic reward to
produce job satisfaction: self-actualizing) and McGregor theory Y which see people under the
lens of Schein ‘Rational-economic of trustworthy people’. A motivation that matches the needs
of such type of employees (high school age range) hired by McDonalds in their home land
(U.S.A).
It is worth mentioning that all four principles of Taylor’s scientific management do exist at the
core of the fast food chains, as they (1) separated planning from the actual work, (2) every
task has a specific time and skill requirement, and (3) they replaced the ‘rule-of-thumb’ in
preparing their food; any McDonalds restaurant will serve that same hamburger sandwich each
time you order it approximately in the same time period with the same ingredients and taste.
McDonald’s fast food chain has been able to show a unique value through their
implementation of efficient and effective blind of strategies (practices and policies) influenced
by classical and human-relations theories.
6. Conclusion
Despite that classical and human-relations theory are becoming obsolescent our examination to
a contemporary organizations like McDonalds displayed their great relevance to today’s business
operations. Our evaluation to the impact of of classical and human-relations theory on today’s
management is that they are deeply rooted inside modern management styles.
7. Appendix (a)
As published by Insightsquared,
“Effective” (adj.) is the adequateness to accomplish a purpose; producing the intended or
expected result. “Efficient” (adj.) is Performing or functioning in the best possible manner with
the least waste of time and effort. (Insightsquared, 2013)
Fig. (1)
Insightsquared illustrates the impacts of both factors on organization performance (desired
output & Value) via a 2x2 grid chart which is depicted here in Figure (1). As a summary to this
point, being efficient is to do things right and being effective is to pursuit the right goals- Value
(Insightsquared, 2013).
8. References
Cole, G. and Kelly, P. (2016) Management theory and Practice. UNICAF edn. Hampshire: Cengage
Learning EMEA
Insightsquared (2013) The Difference Between Effectiveness And Efficiency Explained. Available at:
http://www.insightsquared.com/2013/08/effectiveness-vs-efficiency-whats-the-difference/ (Accessed: 10
October 2016)
Karlof, B. and Loevingsson, F. (2005) A to Z of Management Concepts & Models. London: Thorogood
Publishing Ltd.
McDonalds (2016a) Standard of Business Conduct. Available at:
http://corporate.mcdonalds.com/content/dam/AboutMcDonalds/Investors/Standards_of_conduct/
US_English_14356_SBC_May%202016.pdf (Accessed 20 October 2016).
McDonalds (2016b) Employee Training and Education. Available at: https://www.mcdonalds.com/us/en-
us/careers/training-and-education.html (Accessed 20 October 2016).
Pryor, M. and Taneja, S. (2010) 'Henri Fayol, practitioner and theoretician – revered and reviled'. Journal
of Management History, 16(4), pp. 489 - 503. Emerald [online]. Available at:
http://www.emeraldinsight.com/doi/pdfplus/10.1108/17511341011073960 (accessed: 10 October 2016)
Safferstone, M. (2005) ‘Organizational Leadership: Classic Works and Contemporary Perspectives’,
Choice, 42(6), pp. 959-975. ProQuest [Online]. Available at:
http://search.proquest.com.ergo.southwales.ac.uk/docview/225789200/fulltext/8F0813679EEC49F8PQ/
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https://ia800205.us.archive.org/23/items/cu31924085713331/cu31924085713331.pdf (accessed: 10
October 2016)
Wikipedia (2016) McDonald’s. Available at: https://en.wikipedia.org/wiki/McDonald%27s#Wages
(Accessed 20 December 2016).