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Classical Management Theory: How Does It Work?

Classical Management Theory: How Does It Work
Summary: Classical management theory was established during the Industrial Revolution as a way to improve productivity. Why is it not as relevant in today's business world, and which industries can still benefit from it? Stick around to read all about this theory.

What Is Classical Management Theory?

Classical management theory rose when people shifted from family-based businesses to factory jobs and the need for better organizing became evident. It focuses on a hierarchical structure, specialized job roles, and one single leader who picks skilled employees to perform specific tasks. High productivity and increased profits are the main goals, while only material and monetary employee needs are satisfied. The theory suggests that procedures should be streamlined as much as possible to address challenges in production. Unlike modern approaches, it does not take into account mental exhaustion or stress levels and pushes team members to produce at a high level at all times. Job satisfaction is not on the agenda—rather, leaders concentrate on numbers and production rate.

Different Branches Of Classical Management Theory

Bureaucratic Management

The bureaucratic management theory was built by Max Weber, a sociologist and political economist. He believed that all big organizations should be organized similarly to the government and legal system, with more rational and objective thinking. He thought that family-led businesses were too disorganized and made decisions based on favoritism. So, he proposed every employee get a specific title that corresponds to their role. Job titles also have to mirror one's authority, while hiring or firing is decided based on strict guidelines. This theory's goal was to treat everyone with equality.

Administrative Management

This classical management method focuses a lot more on managers and their efficiency in managing different teams rather than one leader for everyone. Henri Fayol, the inventor of this method, believed that managers must supervise and train team members until they reach their potential. Specifically, they should plan and organize courses for employees and arrange the latter based on their skills and career trajectories. They should also oversee all activities, resolve tensions, communicate effectively, and ensure compliance with company rules and objectives.

Scientific Management

Frederick Taylor was more interested in removing worker autonomy and focusing on scientific research to properly organize factory work. Instead of allowing people to perform their tasks with their unique methods, he suggested a standardized process. He would note down how much time each task took and how many motions were needed. Based on his findings, he would find the right approach for each activity that improved both speed and productivity. Employees could then do their jobs in a specified way, and managers would supervise them to ensure compliance.

4 Main Characteristics

1. Centralized Structure

In classical management theory, there are three levels: top, mid, and low. The top levels include executives and business owners who make crucial decisions. The mid level oversees managers and the performance of separate teams and departments. The low level involves managers and supervisors who lead their teams of employees in their day-to-day activities. These levels cooperate in an organized and harmonious way through continuous communication, well-defined goals, and effective decision making. Everyone is well aware of their job role and place in the organization.

2. Job Specialization

Based on the assembly line structure, employees are not given entire projects to complete on their own. Instead, every project is broken down into smaller tasks before managers distribute them to team members depending on their skills. This way, they avoid multitasking and can concentrate on one thing at a time. Each professional's job title helps distribute tasks effectively without creating confusion regarding anyone's responsibilities.

3. Incentives

According to the classical management theory, monetary rewards and bonuses are the primary motivational force behind employee engagement and satisfaction. Team members strive for the best outcome and work harder when they know that they are fairly rewarded and their needs are met.

4. Single Leadership

Also known as autocratic leadership, in this model all decisions are made by one leading figure who oversees everything and has the final say in every process. No existing board conducts meetings and resolves issues democratically. The single leader concludes all business-related matters, communicates their decisions to all lower levels, and expects everyone to be compliant. While this method has many drawbacks, it can be successful when urgent decisions are needed and there is no time for team meetings.

Advantages Of Classical Management Theory

While most of what classic management theory stands for is outdated and has been replaced by collaborating efforts, some sectors still benefit from it. For example, manufacturing, food services, and farming rely on defining clear job roles and following an assembly-line type of production. This means everyone focuses on their specific tasks but can ask their manager for guidance whenever the need arises. These standardized operations ensure smooth functionality, solid organizing, and reduced error. In this context, automation—including AI—can be beneficial, helping processes to become seamless and companies to maintain their competitive advantage. Additionally, since employees focus on one small task at a time, they can be more accurate and productive and less prone to error. Consequently, organizations cut costs and complete projects within estimated time frames, for which they reward their employees, increasing satisfaction and motivation to keep working hard. Lastly, this theory relies on data-driven and evidence-based decisions instead of allowing empirical formulas to prevail.

Disadvantages Of Classical Management Theory

The 21st century has created a workplace that desperately needs to address employees' social needs. By focusing so much on efficiency and profit, classical management theory tends to disregard people's mental and emotional well-being and creativity. Strict procedures make companies unable to adapt to the ever-changing market and attack new challenges with flexibility and creativity. Also, the lack of autonomy and control over their work causes employees to disengage. They may even feel devalued and unappreciated, as the only reward they receive is monetary. In other words, individuals are viewed as machines that are required to perform perfectly at all times. The pressure applied to them can be immense, leaving them little time or energy to build professional relationships. Another drawback to this theory is that standardized procedures leave little to no space for diversity and inclusion since not everyone can fit or follow the strict uniform orders. The one-size-fits-all approach and reliance on prior experience automatically exclude some people from getting a fair opportunity.


Classical management theory has many flaws that couldn't and shouldn't be implemented in today's workforces, where well-being is a top priority. However, it offers certain advantages that can have a wonderful impact on companies in specific sectors, such as the food and manufacturing industry. Therefore, classical management theory shouldn't be thrown away but instead modified to fit this generation's needs.