Alteration of companies structures
In the past, before the Industrial Revolution, management didn’t exist as a theory; in practice, it fell on one person, most likely the business owner or their family members that produced the items and delivered them. This happened due to small businesses that answered to a particular niche of customers with few options and therefore few demands.
With the invention of machinery that would replace human employees’ jobs, mass production appeared. Mass production led to more affordable products, enlargement of local markets due to an ability to consume the surplus, and shifting customer behavior by giving them diverse options including quality and price differences. Mass production also required restructuring the firm, starting with the inclusion of sales departments. Initially, sales departments were taking on orders and handling logistic issues. Later on, call centers appeared to facilitate consumer-producer communication. Also, firms extended outside the local market, so business owners had to come up with a centralized system.
The centralized system of a company was defined by a main office or factory with additional offices opened across the market – locally, nationally and globally. One person could not handle all of that, so business owners hired employees specialized for different tasks – production, accounting, advertisement, delivery, customer support. The advertisement, delivery and customer support departments blossomed after the technological revolution as more people had telephones, radios, and other mass communication channels. Major global events also drove the birth of firm structuring.
Firm structuring, or as we call it today, management, began by spreading the physical form of the business – establishing more branch offices. These branch offices required a team of organized employees to answer to the clients within that area. Branch offices appear with mass production and the extension of the market; business owners had to contract more people and open more business locations to manage the surplus of products. Even at that stage, management meant the division of labor and cooperation. Through the division of labor, the business owner shared tasks with the employees from production to distribution and marketing.
With the shared tasks, the business owner had to keep in touch with employees and supervise their actions. To efficiently fulfill the daily tasks and customer orders, cooperation channels had to exist between all levels of the firm structure. Employees must cooperate among themselves and communicate with the employer, and the employer must cooperate with his business partners, producers, distributors, and employees; therefore, the management of a firm is based on multiple webs of cooperation.
The very first management practice evolved around sharing and handling tasks in the most efficient way; these tasks referred mainly to controlling and planning, resource sharing, coordinating and rewarding. Coordination has existed since ancient times because the construction of pyramids or citadels required precise coordination. In the pre-industrial revolution era, business owners had only one or two persons around to help, and therefore management revolved around sharing tasks and handling orders.