The Scientific Management theory is “the development of a science to replace the practical knowledge of workers.” It is reflected in a financial statement analysis as labor costs, relating to matters such as employee wages, 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 born during the last years of the 19th century. According to him, what the industry needs is efficiency instead of tolerating inefficiency. This was possible thanks to the success of science: experimentation, measurement and hope. Other names are Taylor Principles or Taylorism.

How should it be followed by a company? The principle of scientific management key advantages can be seen in Taylor’s four principles for revolutionizing job advancements, found in the analysis of financial ratios that cover a greater share of the costs in running a business. During the dialogue that led to the New England Railroad Club back in 1977, he said that: first, the current system used by the workers must be advanced; secondly, the scientific selection, training and development of employees must be carried out carefully, as horse specialists study their horses; third, management must incorporate the science of tasks with precisely selected employees, to direct these men to perform work in accordance with the laws of science; and finally, the company must have an equal number of managers versus workers.

Going further, the disadvantages of applying scientific management theory to the operation of a business are the misuse and abuse of information by management. According to Deming, WE, when running a business, the owner should maximize profit without reducing human labor. Along with Taylor, they think that if the theory is followed correctly, it would improve productivity in terms of efficiency and quality. Taylor saw the place of his argument during his years as a foreman at the Midvale Steel Company: “I found that I had not more than a tenth of the knowledge of men, and we deliberately set out to find out, that is, to make some kind of a accurate study that would give the foremen of that shop a knowledge somewhat commensurate with the knowledge of men”.

He also said that economic competition in and of itself would not generate organizational efficiency and thus lead to inefficiency if the business is not yet scientifically organized and orchestrated. Scientific methods arose through patterns followed by the sciences: experimentation, measurement, and generalization. During this process, his studies were oriented to unravel the principles of management law. More importantly, this must be fair and understandable.

In a modernist activist opinion, if the company initiates a Scientific Management, it commits itself, as part of the financial analysis, to the reduction of costs and waste, as well as to a greater regulation and standardization of its process. They also said that production and human resources will be hampered in efficiency if there are organizational conflicts, disorder, excessive surplus and idleness. Management failures will not escape this accusation either. Your performance at work can also be hampered by being illogical, insatiable, and hard to handle. The modernists suggested a scheme in solution to these and call it the “mental revolution”. Traditional modes of thought, such as “orthodox intellectual activity” and “academic design,” were then seen as barricades for rationalization and social liberation.