Nature of business

6) Management approaches

6.1 Introduction
management has changed significantly since the development of the factory system, with its mass
production and assembly lines. The 3 dominant management theories are the classical, behavioural &
contingency approaches.

6.2 Classical approach

A classical perspective on management emphasises how to best manage and organise work so as to improve
productivity. Bureaucracy (set of rules & regulations that control the business) is the most efficient form of
organisation.
- The goal of managers was to maximise employee productivity.
- The harder the employee worked, the higher output and greater the profit for the owner.
- Management focused on increasing output by increasing worker effort and saving time.

Management as planning, organising and controlling

Planning
 Planning involves deciding on the direction the business will take in, in the future, then setting goals
and objectives.
 Planning also needs to establish the course of action, strategies, managers will implement to achieve
its long-term general goals and short-term specific objectives.
 Strategies are based on the experience of managers and their technical knowledge
 Plans need to be completed for several different timeframes. These are outlined below:
1. Strategic planning: is long-term planning for the overall business, the business’s vision.
2. Tactical (medium term) planning: is flexible, adaptable planning, usually over 1 to 2 years.
3. Operational (short term) planning: day to day running of the business

Organising
 Organising involved creating the framework for the implementation of the business plan. It will
determine:
• What will be done
• Who will do it
• How it will be done

Controlling
 When controlling, managers compare the results achieved with what was planned
 External influences such as changing consumer preferences or a new product released by a
competitor could explain what happened.
 The control function needs to establish standards to use when comparing goals with results. These
standards may be based on the firm’s past performance, industry benchmarks and even world’s best
practice.

Hierarchical organisational structure

o Henry Fayol and Frederick W. Taylor developed the basis of classical management theory.
o Their goal was to work out how management could be applied better to achieve the most efficient
organisation of workers to improve productivity.
o He used ‘time and motion’ studies to divide tasks into smaller specialised activities, thus generating a
hierarchical organisational structure based on the division of labour.
Nature of business
6) Management approaches

o Division of labour refers to the process whereby each task is divided into small steps in the
production process and a worker is assigned to each.
o Classical theory had a tall, narrow hierarchical structure.
o Through division of labour, each employee is given a simple task and will earn the task quickly.

Autocratic leadership style

 in the classical-scientific management theory, employees are grouped together to perform specialised
tasks headed by a manager with a small span of control.
 Managers are autocratic under the classical approach.
 This means that the managers make all decisions without employee involvement.
 They tell employees what to do and how to do their tasks.
 A manager using an autocratic leadership style tends to:
i) Makes all decisions
ii) Dictates work methods
iii) Limits worker knowledge about what needs to be done
iv) Frequently checks employee performance
 This management style controls the organisation closely and motivates through threats and
disciplinary action.
Nature of business
6) Management approaches

6.3 behavioural approach

motivating as leading, motivating and communicating
• According to the behavioural management approach, the main management functions are:
1. Leading: having a vision of where the business should be in the long and short term and being
able to direct and motivate the human resources in an organisation to achieve its objectives.
2. Motivating: involves energising and encouraging employees to achieve the business’s goals.
• Motivation is the individual, internal process that energises, directs and sustains an individual’s
behaviour.
• Is the personal force that causes a person to behave in a particular way.
• Human factors such as recognition, self-worth and positive reinforcement are as important to
motivation as external factors such as pay rates and working conditions.
3. Communicating: exchanging information between managers and employees.

Teams
 Teamwork involves people who interact regularly and coordinate their work towards a common goal.
 Team structure framework has seen managers change their roles from controllers to facilitators.
Characteristics of effective teams include:
• Members share a common goal
• Members trust each other-each member feels valued
• Decisions are made by consensus
Advantages
• Can complete any work quicker
• More efficient and collaborative
Disadvantages
• Someone in the team may not participate
• A clash of ideas

 A manager using the behavioural approach would use a more participative or democratic leadership.

Participative and democratic leadership style

• A manager using the behavioural approach would use a more participative or democratic leadership
style.
• A participative leadership style is one in which the manager consults with employees to ask their
suggestions and then seriously consider those suggestions when making decisions.
Nature of business
6) Management approaches
Nature of business
6) Management approaches

Flat organisational structure:

The pyramid structure is commonly seen as obsolete (no longer used) by managers.
Advances in technology (such as the internet) with the significant pressures of competition due to the
forces of globalisation have resulted in changes to organisational structures-the traditional structure is:
• Slow and unresponsive to change
• Expensive to maintain
• Stifling of creativity
• Difficult to manage due to its many layers.
Flatter organisational structures have evolved due to the ‘de-layering’ of management structures resulting in
the elimination of one or more management levels:
• Greater responsibility given to individuals in the organisation.
• Wider span of control
• People are given more freedom and autonomy to carry out their tasks

Participative and democratic leadership style

Under a participative style of leadership, employees are encouraged to share their opinions and suggestions.

The manager will take responsibility for final decisions after considering the input from employees.

A democratic leadership style refers to one that is very collaborative in nature, and focuses on supportive
leadership. This approach is used with more skilled and experienced employees.

6.4 Contingency Approach

• One of the most important contemporary viewpoints is the contingency approach to management. It
stresses the need for flexibility & adaptation of management practices and ideas to suit changing
circumstances.
• Contingency theorists point out to managers that no 2 situations are absolutely identical.
• Each situation, therefore, requires its own unique solution.
• Due to unstable external business environment, managers need to be flexible and borrow and blend
from a wide range of management approaches.
Nature of business
6) Management approaches

6.5 Strengths and weaknesses of the approaches

Each of the 3 approaches to management has strengths and weaknesses

Strengths Weaknesses
1. Task analysis to increase productivity and 1. employee’s skills are under developed
reduce waste 2. quality issues due to repetition of boring
2. High degree of specialisation tasks
3. Business goals are the priority 3. lower worker satisfaction and motivation
4. Clear sets of rules, policies and etc. 4. human and social needs ignore
5. Effective in a crisis