Administrative management theory is one of the theories in the classical management theory. Pioneered by Henri Fayol, the theory focuses on management of organizations in the most efficient way for the benefit of the total organization. This theory developed at the same time with the scientific theory of management and it emphasized on the functions of management. The theory “emphasized management functions and attempted to generate broad administrative principles that would serve as guidelines for the rationalization of organizational activities” (Drucker, 2007, p.132). This paper describes the administrative management theory, its initiator and the changes made to allow it to function well in today’s business world.
Reasons for developing the theory
The administrative management theory developed because of the need to focus on the total organization. There was need to develop management techniques to address the issues and problems of the technical efficiency of organizations. The initiators of this theory developed it to enable managers deal with the rapid growth and expansion in organizations. During the 19th century, organizations were undergoing rapid changes and therefore, there was need for managers to learn effective ways of management. The managers would use management techniques that would combine technology, worker activities and materials in an effective and efficient manner (Parker & Ritson, 2005). The highly competitive environment during that period led to the development of the administrative theory. The objective of this theory was to solve difficulties of organizational effectiveness and efficiency in production of goods and services. The theory was to deal with managers as the leaders of the organization. It outlined best practices for management in order to achieve efficiency.
Henri Fayol developed the administrative management theory. He was a French mining engineer that lived between 1841 and 1925. He spent many of his final years as the chief executive officer for a French mining company (Adetule, 2011). It was during his tenure as a manager that Fayol came up with the five functions of management that corporations still apply today in training executives. These functions of management include planning, organizing, coordinating, controlling and commanding. He defined planning as forecasting ahead of time to reduce uncertainties that occur due to the changes in the organization. Organizing refers having a systematic arrangement of the organization’s resources including material and human resources. Coordinating ensures that the organization’s parts move together in harmony. Controlling refers to regulating the resources of the firm to avoid wastage. Finally, commanding is the ability of the manager to have authority over the organization. These management functions are still relevant in most organizations in the contemporary society.
During his years as an executive, Fayol found specific principles that practicing managers could use to improve efficiency in the organization. Fayol observed that these principles were applicable in business organizations as well as in the government, religious organizations, and military and in financial institutions. These principles were to provide executives with the essential building blocks and serve as roadmaps for managerial activities. The principles were fourteen in number and they emphasized on order, stability, fairness and efficiency (Wren et al., 2002).
The first principle is on division of labor. Fayol emphasized on specialization where people perform those tasks that they can do most effectively resulting to increased productivity. Managerial and technical work is responsive to specialization. Next is authority, which is the ability to give orders and demand obedience. In order to carry out management duties, the manager should be able to command authority from subordinates to carry out effectively their tasks. Discipline ensures that employees observe the rules governing the firm failure to which there is punishment. In the unity of command, subordinates should receive orders from a single superior to ensure effectiveness. The next principle is unity of direction. This principle states that employees in the organization should be in groups headed by one person and having one objective. This is essential to ensure that reporting lines are clear and there is order in the firm.
The subordination of personal interests to the general interest is principle six. The interests of an individual should not override the overall interests of the firm. This is because the organization is greater than an individual is. Remuneration refers to the wages that an employee gets for his or her input in the workplace. This compensation should aim at rewarding good performance. The degree to adopting centralization or decentralization depends on a specific organization (Drucker, 2007). However, the managers should retain accountability to perform tasks effectively.
Scalar chain is the other principle that refers to the number of levels in a chain. It ensures systematic flow of authority from top management to the bottom employees. It is similar to the chain of command allowing for communication and free flow of information. Order ensures that people and materials are at the right place at the right time. Order minimizes losses and wastage in the organization. Equity refers to treating employees justly and kindly to achieve fairness in the organization. The organization should assure employees of stability of tenure (Adetule, 2011). Job security and career development are important in reducing employee turnover and improving efficiency in the organization.
The organization should encourage employees to be initiative. Allowing employees to pioneer activities motivates them to perform for the benefit of the overall organization. The final principle is Esprit de Corps. Managers should encourage harmony in the organization to foster strength and unity. This body of principles enables a manager to design a formal structure of the organization and supervise the structure in a rational manner.
Several changes were introduced to the administrative management theory to enable it survive through the business world. Critics of the theory argue that it was rigid and mechanistic because of the set of principles and the functional technique to management (Wren et al., 2002). Therefore, changes in the principles were necessary. The management changed the leadership style to ensure everyone participated in the decision making process. This encouraged employees to improve performance. In addition, there were changes in the motivation of employees. The administrative theory viewed economic rewards as the only motivator for employees. Other contributors added no-financial rewards to the theory as motivation for employees. In the business world, there emerged a trend where employees would quit if the organization did not motivate them. Therefore, changes in remuneration were to include career development, challenging work and job enrichment.
The administrative theory of management focuses on the general principles of management. The theory suggests that these principles are applicable in all organizations. However, because of the dynamics in the business world changes were made to tailor make the principles to fit different organizations. Besides, some principles that could not work in the modern business world such as the scalar chain and unity of command were modified. In the scalar chain, the number of hierarchical reduced and the principle of unity of command encouraged lateral communication to avoid bureaucracy.
The administrative theory of management is a success in today’s business world. The management functions developed by Henri Fayol are applicable across businesses. Most managers integrate the functions of planning, organizing, commanding, coordinating and controlling to ensure efficiency in the organization. The idea of giving authority and responsibility is the order of many organizations (Parker & Ritson, 2005). The principles of management by Fayol enable businesses to understand management from various perspectives and their activities.
Further, in today’s business world management is able to group activities in the organization into six groups as outlined by this theory. These groups found in many organizations include managerial, technical, accounting, financial, security and commercial. Each of these groups has specific functions and they work interdependently to achieve organizational goals efficiently. Because of the dynamics of the current business world, the theory enables management to manage change by referring to the principles of Fayol. Decision-making is easier because management just has to refer to the theory and learn the efficient ways of corporate governance.
Administrative management theory is one of the successful theories of the classical school of thought. It was developed to design methods that would solve the issues of an enterprise’s efficiency in the production of goods and services. Henri Fayol was the major contributor to the theory and he outlined five functions of management as planning, organizing, controlling, commanding, and coordinating. In addition, he developed fourteen principles of management. Several changes happened to the theory to make it relevant to the dynamic business world. Despite being over 80 years old, most organizations actively practice the principles of this theory in today’s business world.
Adetule, P.J. (2011). Handbook on Management Theories. Bloomington, IN: AuthorHouse.
Drucker, P.F. (2007). The Practice of Management. Butterworth-Heinemann.
Parker, L.D. & Ritson, P.A. (2005). Revisting Fayol: Anticipating Contemporary Management. British Journal of Management, 16(3), 175-194.
Wren, D.A., Bedeian, A.G. & Breeze, J.D. (2002). The foundations of Henri Fayol’s administrative theory. Management Decision, 40(9), 906-913.