Classical management is a theory based on the assumption that workers only have physical and economic needs. The theory does not consider social needs or job satisfaction, but advocates for the specialization of labor, centralized leadership and decision-making, and profit maximization.
There are three concepts of the theory of management outlined below.
- Hierarchical structure-classical management theory divides management into three distinct layers. At the very top are the owners, board of directors, and executives who set the long term objectives of the firm. The middle management is responsible for overseeing supervisors while setting goals for each department. At the lowest level are the supervisors, who oversee the day to day activities of the firm, address employee problems, and provide training.
- Specialization- large tasks are broken down into smaller ones that are easy to accomplish. Workers understand their roles and specialize in a single task. This helps increase productivity and efficiency by eliminating the need for the employee to multitask.
- Incentives- The classical management theory believes that employees are motivated by financial rewards. If employers motivate their employees using this tactic, it will help improve productivity, efficiency, and profits.