The Scientific Management theory is “the development of a science to replace the rule-of-thumb knowledge of the workmen.” It is reflected in a financial statement analysis as labor costs, concerning matters like the employees salaries, benefits, training and loans. Scientific knowledge is organized, systematized and approved knowledge; knowledge with a reason for it. Frederick Winslow Taylor is the father of this theory, which was given birth during the later years of nineteenth century. According to him, what the industry needs is efficiency instead of forbearing inefficiency. This was possible through the success of sciences-experiment, measurement and hope. Other names are Taylor’s Principles or Taylorism.

How should it be followed by a company? The principle of Scientific Management’s key advantages can be seen in Taylor’s four principles on revolutionizing labor advancements, which are in financial ratio analysis covering more of costs in running a company. During the dialogue he conducted to the New England Railroad Club back in 1977, he said that: firstly, it should progress the current system used by workers; secondly, the employees scientific selection, training and development should be done carefully as horse specialists study their horses; thirdly, management must incorporate the science of tasks with the precisely selected employees, in order to direct these men to perform work in accordance with the laws of the science; and lastly, the company should have an equivalent number of managers versus workers.

Going further, the disadvantages of the Scientific Management theory being applied to a company operation are the misuse and abuse of information by management. According to Deming, W.E., in running a business, the proprietor should maximize profits without retrenchment of the human workforce. Together with Taylor, they think that if the theory is to be properly followed, there would be enhanced productivity in terms of efficiency and quality. Taylor saw the place his argument during his foreman years at Midvale Steel Company, “I realized that I had not more than one tenth of the knowledge of the men, and we set out deliberately to find out, that is, to make some kind of an accurate study which would give the foremen of that shop a knowledge somewhat commensurate with the knowledge of the men”.

He, also, said that economic competition in itself would not generate organizational efficiency and thus, leading to inefficiency if the business still fails to organized and orchestrated scientifically. Scientific methods were came about through patterns followed from sciences-experiment, measurement and generalization. During this process, his studies were goaled on unearthing the principles of the management law. More importantly, this should be unbiased and comprehensible.

On a modernist activist opinion, if the company initiated a Scientific Management, it pledges, as part of financial analysis, cost effectiveness and waste diminishments as well as elevated regulation and standardization on its process. They also said that production and human resources will be hindered on efficiencies if there are organizational conflicts, disarray, excessive surpluses and idling. The management’s failures will not also escape this indictment. Their work yielding might also be encumbered by being illogical, insatiable and unwieldiness. A scheme was suggested by modernists in solution to these and they call it the “mental revolution.” It was then deemed that the traditional modes of thought, such as “orthodox intellectual activity” and “academic design,” set barricades on the rationalization and social liberation.

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