Business Administration: History and Principles
Business Administration: A Comprehensive Historical Analysis
Business administration is a social science that studies the organization of companies and how resources are managed, including the processes and outcomes of their activities. It can be said to manage the planning, organizing, managing, and controlling of all resources in an economic entity to achieve a clearly defined purpose.
Classical Theory of Business Administration
The school of administration developed in the U.S. during the administrations of Presidents T. Roosevelt and Wilson. Around 1900, several entrepreneurs attempted to create scientifically based theories. Examples include:
- Science of Management by Henry Towne (1890)
- Scientific Management by Frederick Winslow Taylor
- The Applied Study of the Movement by Frank and Lillian Gilbreth (1912)
Yoichi Ueno introduced Taylorism to Japan and became the first consultant in business administration, creating the Japanese style of management. His son, Ichiro Ueno, pioneered Japanese quality assurance. In the 1930s, Fordism made its appearance, following the ideas of Henry Ford, the founder of the Ford Motor Company.
The Management School and Henry Fayol’s Principles
The first comprehensive theories of management appeared around this time. Henry Fayol, recognized as the founder of the classical school of administration, was the first to systematize management behavior. He established 14 principles of management in his book Industrial and General Administration:
- Subordination of Individual Interests: The interests of the company are above the interests of employees.
- Unity of Command: An employee should only receive orders from one superior.
- Unity of Direction: One head and one plan for all group activities with a single objective. This is essential for achieving unity of action, coordination of effort, and focus. Unity of command cannot exist without unity of direction but does not follow from it.
- Centralization: The concentration of authority in the higher echelons of the hierarchy.
- Hierarchy: The string of leaders ranging from the highest authority to the lowest level, and the root of all communication goes to the highest authority.
- Division of Labor: Tasks should be specialized to develop staff in their work.
- Authority and Responsibility: The ability to give orders and expect obedience from others creates more responsibilities.
- Discipline: This depends on factors like the desire to work, obedience, dedication, and proper behavior.
- Personnel Remuneration: There must be fair and guaranteed satisfaction for employees.
- Order: Everything must be properly put in its place, both materially and humanly.
- Equity: Kindness and justice for the loyalty of staff.
- Stability and Duration of Staff in Charge: Stability must be given to the staff.
- Initiative: The ability to visualize a plan to follow and ensure its success.
- Team Spirit: Getting everyone within the company to work with ease and as if it were a team is the strength of an organization.
Human Relations School of Management
The Human Relations school emerged partly because the traditional approach could not sufficiently achieve productive efficiency and harmony in the workplace. This caused increased interest in helping managers manage the human resources of their organizations more effectively. Many theorists tried to strengthen classical organization theory with elements of sociology and psychology.
Bureaucratic School of Management
The German sociologist Max Weber (1864-1920) believed that any organization aiming to achieve goals and composed of thousands of individuals required close monitoring of their activities. He developed a theory of government bureaucracies that stressed the need for a hierarchy defined very broadly and governed by strict rules and clearly defined lines of authority.