Classical Management Theories: Fayol, Taylor, and the Hawthorne Effect

Fundamentals of Management

The core functions of management include:

1. Planning
2. Organizing
3. Coordinating
4. Directing (Running)
5. Controlling

Efficiency vs. Effectiveness

Efficiency: Achieving results with the wise use of resources (doing things right).

Effectiveness: Achieving defined objectives, regardless of the rational use of resources (doing the right things).

Henri Fayol's 14 Principles of Administration

1. Division of Work: Work must be shared and specialized.
2. Authority and Responsibility: Authority is the power to be obeyed and delegated. Responsible risk-taking is the exercise which implies authority.
3. Discipline: Respect for the rules or standards. This requires both rigidity and flexibility.
4. Unity of Command: Each employee should receive orders from only one superior.
5. Unity of Direction: There must be a manager who knows what the company expects in the future, guiding the entire team toward a common objective.
6. Subordination of Individual Interest to General Interest: The general interest (what is good for all) must prevail over particular self-interest.
7. Remuneration of Personnel (Fair Pay): Employees must earn compensation that is fair and in relation to their work.
8. Centralization: The degree to which authority is concentrated.
9. Scalar Chain (Hierarchy): In every company, there are different levels of authority.
10. Order: A place for everything, and everything in its place (material and social order).
11. Equity: Fairness and kindness, ensuring everyone has the same opportunity.
12. Stability of Tenure of Personnel: Long tenure fosters experience and knowledge within the company.
13. Initiative (Personal Initiative): Listening to employees always increases output.
14. Esprit de Corps (Union Staff): Union makes strength; promoting team spirit.

Administration as a System

A system is a set of interrelated elements structured according to a defined framework to achieve specific objectives.

Classical Theorists: Taylor and Fayol Comparison

Shared Principles (Coincidences)

Both theorists sought efficiency and aimed to transform enterprises into more efficient organizations. Key shared concepts include:

• Division of Labor
• Personal Initiative

Key Differences

Paradigm: A model or framework for interpreting reality.

The Hawthorne Studies (Elton Mayo Experiments)

1. Illumination Studies (Lighting)

• Pilot Group: Improved lighting led to increased production.
• Control Group: Poor lighting was maintained, yet production also increased.

2. Relay Assembly Test Room

Six women were placed in a separate room (including two high-performing employees and one observer). Various changes were introduced:

• Recreational breaks (5 minutes in the morning and 5 minutes in the afternoon) increased production.
• When breaks were removed, production surprisingly continued to increase.
• Conclusion: The attention paid to the workers, rather than the physical changes, boosted morale (The Hawthorne Effect).

3. Interview Program

Employees were given a survey or interview. This process revealed the existence of informal leaders and the importance of social dynamics.

4. Bank Wiring Room Study

Fifteen workers were observed, including informal leaders. The observer knew who the informal leaders were.

• Leaders influenced the rest of the workers.
• Workers restricted output: Leaders enforced a norm where workers produced only 85% of their working capacity, meaning they were paid for 85% of their potential work. The remaining 15% was lost to avoid being seen as "rate busters."
• Management attempted to promote the leaders. Some leaders disagreed and left.
• A key finding was that social pressure could override economic incentive: a person was willing to earn less in order not to disobey the group leader.

Conclusion of the Mayo Experiments

• Classic Motivation (Taylor): Money (economic factors).
• Mayo's Findings: Motivation stems from the need to belong to a group.
• The informal group sets the rules and norms.
• Sanctions are applied to those who violate the group's rules.
• The studies highlighted the role of informal groups and trade unions in defending workers' interests.

Critique of the Hawthorne Studies

• The experiment was isolated and focused primarily on specific groups.
• The results may not be constant over time or universally applicable.