Classical Management Theory: Ford, Fayol, Gulick, and Urwick

Henry Ford and Vertical Integration

Henry Ford utilized a system of vertical and horizontal integration, managing the process from initial raw materials to the finished product, supported by a network of company-owned commercial distribution agencies.

Henri Fayol: Administrative Functions

Henri Fayol defined administrative functions as the act of administration, which includes:

• Planning: Visualizing the future and charting programs of action.
• Organizing: Building the material and social structure of the company.
• Commanding: Guiding and orienting personnel.
• Coordinating: Linking, merging, and harmonizing all acts and collective efforts.
• Controlling: Verifying that everything happens according to established rules and orders.

Classical Management Theory (1916)

Emerging in France in 1916, classical theory focuses on the organizational structure and the search for efficiency. Key aspects include the division of labor, authority and responsibility, unity of command, unity of direction, centralization, and the scalar chain (hierarchy).

Fayol's Administrative Principles

Fayol identified several core principles:

• Division of labor, authority, discipline, unity of command, unity of direction, subordination of individual interest to the common good, remuneration, centralization, hierarchy, order, stability, equity, initiative, and esprit de corps (team spirit).

Key Concepts

• Unity of Command: Each employee should receive instructions regarding a particular operation from only one person.
• Initiative: Subordinates must be given the freedom to plan and carry out their tasks, even if mistakes occur.
• Unity of Direction: Operations with the same objective should be managed by one manager using a single plan.

Administrative Elements: Luther Gulick

Gulick proposed seven elements as the primary functions of an administrator:

1. Planning: Charting the broad outlines of tasks and methods to achieve company objectives.
2. Organizing: Establishing a formal structure of authority through the subdivision of work.
3. Staffing: Preparing and training staff while maintaining favorable working conditions.
4. Directing: The continuous task of making decisions and issuing general and specific orders; acting as a leader.
5. Coordinating
6. Reporting (Information)
7. Budgeting

Lyndall Urwick's Principles of Administration

Urwick sought to synthesize the views of classical authors of his time.

Urwick's Principles

• Specialization: Each person should perform a single function to determine a specialized division of labor.
• Authority: There must be a clearly defined line of authority, known and recognized by everyone from the top of the organization to the base.
• Span of Control: The administrative amplitude of management.
• Differentiation: The duties and responsibilities of each position, and their relations with other roles, should be defined in writing and communicated to all.

Elements of Administration

1. Investigation
2. Forecasting
3. Planning
4. Organization
5. Coordination
6. Command
7. Control