Classical management theory became popular in the early 1900s as small businesses began to pop up with more and more problems to solve. The goal of this practice was to reduce costs, improve quality, manage specialized workers more efficiently, and establish appropriate and useful relationships between employees and management. The techniques are simple and continue to be used by organizations today.

At its core, classical management techniques establish three levels of management—upper, middle, and lower. Upper management oversees the big picture, lower level management deals with employees and day-to-day concerns, and middle management tries to balance the needs and requirements of the other two groups.

The main objectives and advantages of this system are:

• Division of Labor: By following a clearly defined division of labor, each task, problem, and project can be quickly broken into smaller pieces to be addressed by a specific group. Moreover, once the pattern is established, those working at the company will know where to go for any need, improving efficiency.
• Financial Motivation: Many modern management techniques take into account the concept that different workers are motivated by different factors. Classical management assumes that at their core, people are motivated by money. Incentives and rewards are built on this concept, encouraging employee productivity through financial motivation.
• Autocratic Leadership: At its core, classical management theory believes that having one clear leader in an organization is key to its success. All communication, as well as day to day requirements, come down from managers on each level, but are driven by the stated goal and decisions of one leader.

Classical management theory is based on Taylorism, which breaks job descriptions down into components which can be learned. Its goal is to maximize the efficiency of workers and thereby maximize productivity.

It relies on the development of a very specific job description for every employee. The classic example of this is a factory worker who carries out a job in the production line.

Classical management theory involves the careful planning of work schedules to avoid down time. For example, in a factory environment, this could involve setting up a day shift and a night shift in order to make sure that the production line is always rolling.

Human resources management plays a significant role in classical management theory, because the theory stipulates that workers need to be carefully selected for the specific skills that make them well suited to that job. For example, it would be unlikely that an accountant would be appointed to a position in the marketing department under classical management theory.

The final cornerstone of classical management theory is offering performance bonuses or incentives to encourage employees to work harder.