Friday, June 21, 2013

Classical and contemporary management theory

The world has undergone several changes leading to various changes in management practices. Globalization brings along some changes in the way people leave and interact. The business processes are also altered due to various factors. The contemporary management practices are different from those that were used a few decades back (Kanter, 1992). The concept of management has gone through systematic investigation which has enabled it to acquire a common body of knowledge. Changes in organizational structures have led to the alterations in the management practices in order to suit into the current system. This essay seeks to analyze how today`s management practices have changed from those being used a generation or two ago with reference to the classical and contemporary management theory.
It is indeed true that a 1960s Chief Executive Officer (CEO) would undoubtedly be amazed at the 24/7 customer service and real-time supply chains but he or she would find many of today's management practices little changed from those being used a generation or two ago. Globalization has brought about dynamic changes in business. The level of competition in the world has increased and companies have embarked on innovations to gain a global competitive advantage (Kouvelis et al, 2006). Human resources managers have a task to help their organizations change. Introduction of new products and services and change in organizational strategies calls for a change in culture. A company needs to implement the new values and notions of what the employees should do and what they should not do. Employees are forced to adapt to technological changes and the ever increasing customer demands. Structural change may be required to reorganize the departmental structure, reporting relationships, decision-making procedures and employee` tasks (Bartlett & Ghoshal, 1995). This calls for the support of a competent workforce that is motivated.

The field of management has undergone several changes over years. The traditional organizational structure used in the 1960s was generally casual in nature and it was goal oriented. Under this system, the organizational objectives and incentives were clearly defined and easily controlled because everything within the business practice was predictable (Butler, 1986). The traditional organization model establishes managerial control over subordinates and managers provide subordinates with instructions. The organization is run by hierarchy, control, rules and authority. This system was similar to an effective machine that has clearly differentiated functions working in timely and reliable manner to accurately accomplish set goals.

However, the modern organization has significantly changed and emphasis is now on strategic management. This model takes into consideration development of a decentralized organization. The organization undergoes drastic changes due to creativity, motivation, political and power influence (Lim et al, 2010). There is increased flow of information in the current organization which moves in both directions. Communication between the organization`s management and employees can take place towards any direction. The modern organization has different variables as opposed to clearly defined objectives under the traditional system. This makes the organization simpler and less structured. The modern organization has few layers which limits the complexity of hierarchy among the staff. The chain of command in the modern organization is not clear making it difficult for managers to regulate and control their subordinates.

Adam Smith is one of the people that have con
tributed to the growth of the management field. During the 1776 Wealth of Nations meeting, Smith argued that the society and organizations would get many economic advantages from division of labor (Drucker & Drucker, 1999). He proposed subdivision of jobs into narrow and repetitive tasks. Smith held that division of labor increases productivity by improving each worker`s dexterity and skill, saving the time that is normally lost when changing tasks as well as creating labor-saving machinery and inventions. The industrial revolution significantly contributed to the change in management practices. This revolution started in Great Britain in the late 18th century when human power was being substituted by machine power. This led to rapid development of big organizations across the world. Responsibilities were delegated to different people who worked towards attainment of a common goal.

The roots of the contemporary management practices lie in classical management. The classical management approach is a term that is used to refer to the general administrative theorists and scientific management theorists. The General administrative theorists were mainly concerned with the entire organization and the ways through which it can be made more effective (Bartlett & Ghoshal, 1995). The scientific management theorists on the other hand viewed the field of management from a perspective of how productivity of operational employees can be improved. The scientific management approach which was used in 1900s was authoritarian whereby the employees were expected to implement what they are told by their managers. This approach emphasized on experimentation, timed studies and research as opposed to labor co-operation and rule of thumb management which emphasizes on individualism, simplification of the task and economic efficiency.

The human resources approach started in 1930s with a backlash to the mechanistic view of employees that was held by classical theorists. The Great Depression also contributed to development of the human resources approach. The classical management approach treated employees and organizations as machines while the managers were viewed as engineers(). However, the contemporary approach offers the managers solutions on how to minimize this kind of alienation and how to improve productivity of the worker. The workplace has become more humanized as compared to previous times when employees were viewed as machines.

The classical management theory was based on four principles which include: Identifying the most efficient way through a task can be accomplished, matching each employee with the task in which he or she is most qualified, close supervision of employees, and careful planning (Ugland & Shepard, 1978). These principles were strictly followed by organizational managers in the 1900s in order to increase productivity and at the same time maximize profits. However, the situation has changed in the current world with the introduction of the contemporary organizational theory. More emphasis is put on the idea that a business organization will be able to prosper provided its employees are kept happy. The contemporary theory emphasizes on the needs of individual employees and requires that managers should be able to study closely what the workers want (Bartlett & Ghoshal, 1995). This theory led to establishment of the human resources departments within organizations.

The hierarchical levels that used to be in the traditional organizations have been removed as organizations embrace teamwork. Employees in the current organizations are given an opportunity to participate in organizational decision-making as opposed to the past when only the top managers had the authority to make decisions (Jacobides, 2007). Important decisions were made by senior managers without consulting the middle level managers and subordinates. Once decisions are made, employees were expected to follow instructions without questioning. This was more oppressive as the employees could not raise their views even if they are not comfortable with the decision.
There were so many hierarchical levels that hindered effective flow of information within the organization. However, the situation has completely changed in the current world whereby employees at all levels of the organization take part in decision-making. The level of competition is very high and innovation has become a very important tool for survival. Employees are therefore encouraged to be creative and come up with new ideas on how to perform specific tasks. The final decision is arrived at after taking into consideration different views raised by members of staff.

Technological advancements brought about by globalization have also changed the way business organizations operate. There are improved communication networks which allow individuals and business organizations to interact with each other easily (Clark, 1998). Barriers to trade between nations have been removed and several companies are able to conduct business in various parts of the world. Increased usage of the internet allows organizations to conduct online business. Real-time supply chains have been established whereby customers are able to sample the products and services on the company website, make inquires, place orders and even make payments. Information send through the internet is received and acted upon instantly by the company. This real-time supply system enables the enables the companies to receive and process a huge number of orders as the customers are not required to travel to the company (Kouvelis et al, 2006).

Some of the services can be offered through the internet thus improving efficiency. This is totally different from the traditional system that was used in the 1960s whereby customers had to travel to the company in order to make any purchase. An increase in demand brought about by in creased population growth and interconnectivity of the market has also led to establishment of a 24/7 economy in most parts of the world. Several countries have developed a 24-hour economy whereby organizations provide services around the clock in order to meet an ever increasing demand (Cherrunilam, 2003). Customers are able to access services ant any time of day or night as opposed to the 1960s when people could only access services during daytime. Employees work in different shifts to ensure continuity of services at all times. This has helped in increasing sales and profitability for many organizations while at the same time customers are given an easier access to services.

It is true that the management practices used in the 1960s have changed. This is mainly due to the fact that the organizational structures have significantly changed. The traditional structures had several hierarchical levels and the decision was made by the top management. However, the contemporary organizational structures are more horizontal with very few hierarchical levels. Teamwork is encouraged and decisions are made by majority. Every member of the organization is given a opportunity to participate in the decision-making process. Technological advancements have also led to introduction of the internet which is utilized by organizations to offer real-time supply systems. Online business has become a common practice whereby customers are able to place orders and make payments through the internet. The 24/7 economic structures also allow business organizations in the current world to operate around the clock.

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