Business Administration-An Introduction

The aim of this module is to provide an understanding of the principles of business administration and marketing.   Over the next twelve weeks or so the focus will be on understanding the various elements associated with business administration. 

 

Understanding Business Administration
Often there is confusion over the difference between management and business administration.  Business administration requires not only an understanding of the principles of management such as planning, organising, controlling, commanding and motivating but also an understanding of the functional aspects of a company (such as production, informatoin technology, marketing, purchasing and finance). 

 

We are all familar with the term management but are we aware of the theories associated with management?  So this is the first step-understanding the history of management.  There are four main stages in the evolution of management thought.

 

Firstly there are the early influences on management mainly the Roman and Egyptian influences which mainly focused on construction and the ability to manage, what we refer today as large scale projects. For these projects to be successful it is necessary that managers are able to plan, organise, command and control all elements involved in building these pyramids.

 

 

 

The second stage was the industrial revolution. 

 

During this era there was a focus on productivity and economies of scale(the more a manufacturer produced the cheaper it should be for the manufacturer to produce the item).  The focus was now on efficiency and how to save on costs such as labour and waste. 

 

This leads on to the the third stage of management development.  At this stage a number of theories were devised to try and understand the practice of management in an organisation.  There are four main theories associated with classical management.  These are:

• Scientific Management 
• Administrative Management 
• Bureaucracy
• Hawthorne Experiments

 
Scientific Management



Frederick Taylor devised the theory of scientific management and was later referred to as the Father of Scientific Management .  During his observations in the workplace he identified the term 'soldiering' (employees working slower than they should).  Taylor's theory focused on how to improve productivity in the workplace. The following are some of the key principles of Scientific Management. 

• Scientific selection-a system was devised to ensure that people were selected for particular jobs in an organisation.  Workers were also trained to carry out particular tasks in an organisation.  The idea then was when the workers was trained they would become an expert in their jobs and therefore, employees could produce more which in turn meant that the company would benefit from an increase in production output.
• The best way of performing each task in an organisation.  This is where each task is broken down, each stage involved in the task is documented and timed.  The idea here was to identify the more efficient way of carrying out each task in the organisation no matter how complex or simple that task is.
• Workers and managers-There should be a clear division between workers and managers.  Therefore, management should allocate tasks to workers; ensure that tasks are carried out on time and with minimal waste.  The workers job was complete each task.  Workers were rarely consulted workers were often deemed ignorant and uneducated.

Taylor also devised the 'piece rate' system where workers were paid per item they produced.  There was the idea that employees were only motivated by money-therefore if you rewarded them for producing more this would motivate them to work harder and ensure that they would stay with the company. 

So what are the main benefits or advantages of Taylor's Scientific Management Theory?

1. Task times were greatly reduced, therefore increasing efficiency and productivity in an organisation
2. For the first time tasks were broken down into a step by step process where each step was clearly identified and timed.
3. Employees were paid by results-i.e. the more they produced the more they got paid. 

What are the main criticisms of the theory

1. There were also questions in relation to whether money truly motivated employees in the long term?
2. Because employees were producing more this led to organisations needing less workers and during this period there were large scale redundancies in some manufacturing organisations. 
3. Workers were trained to do the same task over and over again.  This led to employees becoming bored and detached in the workplace

Administrative Management

Henri Fayol was responsible for devising the theory of administrative management. Unlike Taylor's theory-the focus of this theory was not on the worker but on the total company.   He also devised the five key principles of management which were known as the POCCC (Planning, organising, control, commanding and co-ordinating.

Fayol was responsible for grouping business activities into the following categories

• technical
• commercial
• financial
• security
• accounting
• managerial

The next blog will deal with the remaining classical theories: bureaucratic management and the human relations approach.