Strategy Management

The industrial revolution of the eighteenth and nineteenth century, which began in Britain and later spread worldwide, marked a substantial turning point in the way in which society exists and how people earned a living. Prior to the industrial revolution it is estimated that between 80-90 per cent of the population lived in rural areas where small scale subsistence farming was the primary economic activity. Skilled craftsmen such as shoemakers usually worked from home, creating the entire product independently. As a result of technological advances and the emergence of machinery during the industrial revolution the factory system was created. This system turned the job of a shoemaker into a more mechanised approach. Division of labour in the factory system meant that apart from skilled mechanics employed to maintain machinery, low and unskilled labourers could be employed to produce a higher quality product. The system also allowed products to be produced using less man power, more consistently, more efficiently and at a lower cost. The factory system had a massive impact on numerous other industries. A shift in population density from rural areas to towns occurred with people now depending on industrial operations to earn a living. Large organisations emerged leading to increased problems in the management of employees and work processes. Relationships between employees and employers were often volatile as employers sought to impose strenuous working conditions in order to increase productivity. There was a need to develop management approaches that would minimise tension and increase productivity. These approaches would give management the ability to have more control over work processes, its members and also to increase their capacity to initiate change where necessary. During the early twentieth century a number of comprehensive theories of management emerged. The following assignment will examine the main features of the Classical approach and the Human Relations approach to the management of organisations and discuss why the Human Relations approach is superior.
The Classical approach sometimes referred to as the Scientific-rational approach came about as organisations sought to identify common management practices that would increase the overall efficiency and productivity of the organisation. The classical approach shares three common concepts. Firstly, organisations are viewed as rational entities. Organisations are structured collections of individuals who come together to achieve targeted goals. Secondly, the design of organisations is considered a science. The resulting structure of organisational bodies into their most efficient form is a consequence of learning from past experience, reflection and experimentation. Thirdly, people are thought to be economic beings. The belief that human beings sole motivation is money and will therefore aim to achieve the maximum reward for minimum effort. In order for managers to increase control over employees they must design jobs in a way that inhibits the employee’s ability to affect the procedure. The Classical approach incorporates three complimentary theories developed by three men, Frederick Taylor’s Scientific Management approach, Henri Fayol’s Administrative Management approach and Max Weber’s Bureaucracy approach (Burnes, 2009).
Frederick Taylor’s scientific management theory had a number of core concepts which aimed to increase employee’s productivity. Taylor recognised that traditional methods of management were fundamentally flawed for a particular reason. He recognised that in many cases, organisations workers had a greater knowledge of the work processes than management. As a result, management’s ability to implement change and control output was diminished (Miles, 1965).Taylor believed that in order to increase productivity management must acquire as much knowledge of work processes as possible. This increased knowledge meant management could more accurately develop procedures to carry out jobs as efficiently as possible. These procedures could then be formulated into a step by step guide to be given to workers to follow. Management could then accurately evaluate how long jobs should take to complete and monitor employee performance. Taylor also believed workers’ pay should be tied to their performance as an incentive (Miles, 1965). All of these ideas aimed to increase management’s control of the work environment and conversely minimise the workers control over what they do. He viewed the workforce as a mechanical component of the organisation used solely to increase profit (Burnes, 2009; Taylor, 2013). Taylors approach was often controversial as he set out to directly challenge not only workers but managers as well (Scott, 1987).
Whereas Taylors approach was focused on increasing productivity at the ground level of the organisation, Henri Fayol’s Administrative management approach focused on increasing productivity by better organisation at the upper levels of the group. In order to achieve this Fayol highlighted six primary functions of management; forecasting and planning, organising, commanding, coordinating and controlling (Burnes, 2009). Fayol believed in order to increase the organisations efficiency management’s core responsibilities were to implement strategic plans for the future, to understand the required resources necessary to carry out the functions of the organisation, to effectively lead, supervise and motivate individuals in order to complete tasks, to successfully manage different work processes and ensure they worked in unison and to adequately control all the work processes of the organisation through governance (Fayol, 1949). Fayol adopted a more calculated approach in order to get his message across to management. As he came from an academic background he believed the best way to get his theories put into practice would be through education and often held meetings with his peers to compare ideas. Both Fayol and Taylor shared similar views with regard to how organisations should be managed. Whilst Taylor’s approach was considered a ground up approach, Fayol’s was considered a top down approach (Burnes, 2009).
Max Weber’s Bureaucracy theory shared Fayol’s view that management control should be maintained at an administrative level. Weber believed that the best approach to manage an organisation was to develop a clear hierarchical structure. He believed that standardised procedures, rules and regulations should be developed in order for members to follow. These minimise the risk of human error occurring and also create an environment of authority (Burnes, 2009). Further to these he also believed that interpersonal relationships within the organisation should be kept strictly professional and that there should be a distinct separation between the organisation and its members. Weber viewed the entire organisation and its members as mechanistic and consequently that the organisation and its members should be treated with this in mind. By ensuring unbiased formal selection procedures were carried out and employment procedures should be strictly merit based it is evident that Weber believed it was important to minimise the chance of errors occurring as a result of human fallibility (Weber, 2009).
The Human relations approach aimed to solve the same problems as the classical approach had, but done so under very different assumptions. Unlike the classical approach, the human relations approach recognised that factors affecting individual’s performance in the workplace are not solely based on monetary gain but can also be influenced by what they receive emotionally and socially from the job. It also suggests that individuals view the workplace as an element of their social life and by attempting to inhibit social aspects in the workplace leads to animosity amongst workers and counterproductive activity. The human relations approach identifies that by implementing rules and removing interpersonal relationships results in negative work practices. It generally curtails productivity because of human’s natural instincts to create bonds and friendships (Burnes, 2009).
A leading contributor to the human relations movement was Elton Mayo. Mayo conducted experiments in Western Electrics Hawthorne’s Works in Chicago in the 1920’s and 1930’s. The experiments later became known as the Hawthorne tests (Burnes, 2009). The Hawthorne tests set out to examine the effect that increased lighting would have on the performance of employees working at the factory. Two test groups were set up. One control group where no changes to lighting levels were made and another group where changes to the lighting levels were made. Mayo and his colleagues expected to find a variation in the productivity levels of the group where lighting levels had been affected. The results of the test eventually showed that both groups productivity had risen, even in the group were on occasion lighting levels had been reduced (Rice, 1982). Mayo came to the conclusion that the reason for the increase in productivity was a result of both groups simply being singled out by management to take part. They felt a stronger emotional connection to the job and had an increased sense of belonging, because the test subjects had simply been given attention, this increased their morale and made them feel more important, consequently increasing productivity. Mayo later conducted further tests using different test cases which produced the same results. The effect of the studies later became known as the Hawthorne effect (Burnes, 2009; Rice, 1982). The results of these tests challenged views held by proponents of the classical approach in which they recognise individuals to be solely motivated by money.
Another important figure in the human relations approach was Charles Barnard. Barnard had a close relationship with Elton Mayo. Barnard maintained that an organisation should be treated as a cooperative system. He ascertained that in order for organisations to function effectively it was important for management to breed an environment whereby all its members had a shared sense of belonging. Management authority, he concluded could only be achieved if all members of the organisation from the ground up were active in engaging in healthy forms of communication. He recognised that monetary gains were not the sole incentive in obtaining increased productivity. By creating an atmosphere whereby members feel valued, appreciated and respected was a key incentive for increasing productivity (Burnes, 2009).
Psychologist, Abraham Maslow’s theory of human motivation published in 1943 added further evidence that supported theorists in the human relations approach. His studies drew conclusions that human beings are motivationally driven, fuelled by a number of different needs. These needs could be divided into five categories ranging from top to bottom, psychological needs, safety needs, social needs, esteem needs and self- actualisation needs. Maslow's hierarchy of needs as they became known described that human beings have different levels of needs that must be met. Maslow indicated that individual’s most basic needs, psychological needs, which include hunger, thirst and sleep, must be met first and foremost. When these needs have been satisfied, individuals will then progress to seeking other needs. This continues up through the levels. When Maslow's theory is put into the context of an organisation, individuals will initially seek to acquire monetary gain, considered a psychological need. Once this is met, they will pursue safety needs, i.e. job security, safe working conditions. When these are attained, individual’s social needs, i.e. healthy interaction with colleagues, will come to the fore. This will be followed by esteem needs, i.e. the need for appreciation and respect. And finally self-actualisation needs, i.e. the freedom to reach an individual’s peak potential. Maslow recognised that unlike the classical approaches view that individuals are economic beings, solely motivated by money, they are highly complex beings requiring multiple incentives to effectively attain goals (Burnes, 2009; Maslow 1943).
Another leading proponent of the human resource approach was Douglas McGregor. McGregor’s personal experience led him to believe that there were fundamentally two different types of managers in organisations. He believed that managers instinctively held preconceived assumptions on human behaviour, having either a positive or negative outlook. McGregor’s Theory X and Theory Y reflected this. Theory X represents management who have a negative view on human behaviour. Because of their innate beliefs in human nature, they will ultimately adopt approaches to management similar to classical approach theorists whereby individuals should be considered mechanisms of the organisation. An increased level of control is enforced on individuals as their involvement in the organisation is seen as purely for monetary reasons. Theory Y is the opposite of Theory X. Management tend to have a more positive view on human behaviour and ultimately adopt a more human resource approach. They believe that human interaction and engagement in an organisation is necessary in order to increase productivity (Burnes, 2009; McGregor, 1960).
Although there are positive aspects involved with the Classical approach, unlike the Human Relations approach it fails to take into account the impact of behavioural science in relation to the workforce. The intention to organise and structure more efficient work procedures was well founded; however it lacked a broader understanding of the impact of such measures on the human behaviour within the workplace. The implementation of the Classical approach in the workplace had adverse reactions. It resulted in gross negligence and exploitation of the workforce, solely for increased productivity and financial gain. Fordism, which is based around the Classical approach, is a perfect example of how this method was shown to be unsustainable. Ford used financial incentives to motivate his workforce, offering much more attractive wages than the norm. However, staff turnover continued to increase dramatically. This challenged the assumption that individuals were solely motivated by money (Druker, 1954). As a consequence of studies by proponents of the Human Relations approach, it has been shown that individuals need to be valued as key components of an organisation. As Miles (1965) suggests, in order to create a successful enterprise workers need to feel valued, respected and treated with dignity. These important characteristics were never considered by the Classical approach. Another positive aspect of the Human Relations approach was communication between management and staff. The structure of the Classical approach was more authoritarian in comparison to the Human Relations more democratic approach (Dubin, 1958). Increasing lines of communication between management and staff helps to promote inclusion. By encouraging all members to contribute to processes, an atmosphere of togetherness is created whereby members strive for common goals. All of these are fundamental principles of the Human Relations movement.
As large organisations emerged out of the industrial revolution, numerous different managerial theories arose. The Classical approach aimed to increase managements control over all work processes including individuals. Under the belief that by doing so it would increase managements influence on change and on productivity. Although it has some benefits, it is greatly outweighed by a number of negative connotations. It failed to consider crucial aspects such as behavioural considerations. The continuing drive to increase output without considering working conditions eventually led to unrest. One of its fundamental flaws was that it failed to recognise the levels of needs sought by the workforce. Contrastingly the Human Relations approach highlighted the importance of satisfying the wants and needs of the workforce. The Classical approach can be considered naïve, as it didn’t take into consideration human behaviour. As time has passed, more organisations have adopted Human Relations strategies.

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