Management Thought & OB

Concepts of the Workplace

The theory outlines an ideal workplace as one that rests on three main concepts:

  • Hierarchical structure – Under classical management theory, workplaces are divided under three distinct layers of management. At the very top are the owners, board of directors and executives that set the long-range objectives for a firm. Middle management takes on the responsibility of overseeing supervisors while setting goals at the department level to fit within the confines of the managers’ budget. At the lowest level of the chain are supervisors, who manage day-to-day activities, address employee problems and provide training.
  • Specialization – The classical management theory involves an assembly line view of the workplace in which large tasks are broken down into smaller ones that are easy to accomplish. Workers understand their roles and typically specialize in a single area. This helps increase productivity and efficiency while eliminating the need for employees to multi-task.
  • Incentives – This theory believes that employees are motivated by financial rewards. It proposes that employees will work harder and be more productive if they are awarded incentives based on their work. Employers who can motivate their employees using this tactic may be able to achieve increased production, efficiency and profit.

The autocratic leadership model is the central part of classical management theory. In this system, there is no need to consult large groups of people for decisions to be made. A single leader makes a final decision and it is communicated downward for all to follow. This leadership approach can be beneficial when decisions need to be made quickly by one leader, rather than a group of company officials.


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Organizational Behavior by Icfai Business School is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, except where otherwise noted.