4 Classical Business Practices That Are Still Evident in Today's Business

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The classical management approach to control is still evident in management and accounting thinking today. Administrative managerial tactics and bureaucratic theory are branches of classical management and this essay focuses on how these theories are still used in contemporary business practices. Control is defined as “the power to influence or direct people's behaviour” (Oxford Dictionaries, 2011) and is the driving force for which the administrative principles were procured. There are fourteen administrative principles that were derived from the work and writings of Henri Fayol, this essay will focus on division of labour, scalar chain and esprit de corps principles. I will also be talking about the bureaucratic principle of management being separate from ownership. To give a greater insight into the use of the administrative and bureaucratic business practices, I will be referring to Navman, Deloitte and Fletcher Construction, as these existing companies are good examples of how these management theories are still in use today.

Henri Fayol was one of the founders of Administrative theory and advocated a universalistic approach to management. That is, that Fayol prescribed a rigid and inflexible set of principles designed to suit all organizations, in all circumstances, at all times (Parker & Ritson, 2005). One of his fourteen administrative principles and one that is still evident in today’s management systems is the idea of division of labour amongst the work place. This principle proposes that work can be performed more efficiently and more productively if it is divided into smaller elements and assigning specific elements to specific workers (Rodrigues, 2001). One of the thoughts behind this was that workers could specialise more into their working element, therefore perform their job more efficiently. Although, some present day managers have found that greater efficiency and productivity can be attained by their employees performing multiple functions (generalisation), there are still traces of the division of labour principle throughout most production organisations. Fletcher Construction undertakes civil engineering projects all around New Zealand (Smith, 2009) and is a good example of how a business is separated into specific divisions to run more efficiently. Fletcher Construction is divided into eight separate divisions: Building, Engineering, Interiors, South Pacific, Brian Perry Civil, Piletech, PipeWorks and Seovic (Fletcher Construction, 2011). Each division is responsible for a specific section of the business, this means specialisation can occur and the over all business will function better as a whole. This also ties into Fayol’s principle of unity of direction, where similar activities in an organisation should be grouped together under one manager. (Samson & Daft, 2009). Fletcher Construction gains greater efficiency by this separation, as each worker will have specific skills and knowledge that relate to their division.

Another one of Henri Fayol’s fourteen administrative principles is the scalar chain principle, which states how an uninterrupted chain of authority should extend from the highest level to the lowest position in the organisation (Rodrigues, 2001). It provides a certain level of initiative at all levels of authority and aims to facilitate formal organisational controls. Fayol noted that it was important that each person in authority at every hierarchical level must always be familiar with what is going on in all areas under him (Daniel & Bedeian & Breeze, 2002). This is very important, as the business will lose efficiency if knowledge of a business’s engagement is lost. A good example of where the scalar chain is still present in the modern business structure is at Deloitte. Deloitte is a multinational professional services firm (Deloitte, 2011). Fayol’s scalar chain principle can be seen in Deloitte’s ranking system, which depends on a workers level of knowledge...
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