Introduction to Management Theories
The emergence of practicality has always been a vast phenomenon. Especially in the 21st century, the need for practical knowledge and the applicability of learned theories have become crucial. In organizations, it is critical for managers (considered the pillars of organizations) to gather the needed experience and knowledge and make it useful for the employees and organizations.
There are numerous theories of management, but the most applicable of all these theories results in the most efficient tool for great organizations. In this blog, we will mention some of the most important management theories with their applicability and advantages.
So the question arises, why the need for management theory?
Since the Industrial Revolution, managers have been an essential component of business success. Since management became a standard part of business practices, management theories have been developed and applied. While older theories remain relevant, new theories are constantly being developed to keep up with current business trends.
Management Theory’ Common Concepts
Management theories all revolve around the same ideas. Managers are expected to manage processes, people, information, and other responsibilities as needed. A manager may need to motivate their subordinates or figure out how to improve operational processes. Management theories provide frameworks for handling those responsibilities successfully.
Managers must be accountable for their teams’ progress toward organizational goals. Reaching business objectives may entail reducing human error or standardizing processes. Management theories assist managers in clarifying these types of goals and advising them on how to best achieve those goals.
Here are some of the most important management theories and their implications:
1) System Theory
Systems Theory (or The Systems Approach) had nothing to do with business management when it was first developed, and everything to do with biology. That’s because general systems theory (GST) was founded by biologist Ludwig von Bertalanffy (1901-1972) in an attempt to refute reductionism and restore scientific unity.
The basic premise of general systems theory is that a system is made up of interacting elements that are influenced by their surroundings. The system as a whole can evolve (develop new properties) and self-regulate as a result of this interaction (correct itself).
When it comes to business, experts abbreviate “general systems theory” to simply Systems Theory. In reality, Systems Theory is more of a point of view than a fully formed practice. Systems Theory encourages you to recognize that your company is a system governed by the same laws and behaviors that govern all biological organizations.
This introduces concepts such as:
- Entropy A system’s proclivity to degrade and die (a thing to be avoided in business)
- Synergy When parts work together, they can produce something greater than the parts could produce on their own.
- Subsystem The whole (your company) is built on subsystems, which are built on even more subsystems.
Systems Theory can be used in conjunction with the other management theories on this list because it is a way of looking at your business rather than a specific management process.
Also Read: 5 Ways of Resolving Conflicts
2) Principles of Administrative Theories
Henri Fayol (1841-1925), a miner and engineer, developed his administrative management principles as a top-down approach to examining a business. He put himself in the shoes of his manager and imagined the situations they might face when dealing with their team.
As a result, he concluded that his managers, and indeed, management in general, had six responsibilities when it came to employee management:
- Organize
- Command
- Control
- Coordinate
- Plan
- Forecast
With these responsibilities in mind, Fayol developed 14 administrative principles that influence how managers lead their teams. Many of today’s most successful businesses are built on these principles, which range from the importance of keeping a clean facility to the value of initiative and teamwork.
3) Bureaucratic Management
When developing his bureaucratic management theory, Max Weber (1864-1920) took a more sociological approach. Weber’s ideas center on the importance of organizing your business in a hierarchical structure with clear rules and roles.
Weber defines the ideal business structure (or bureaucratic system) as:
- A distinct division of labor
- Separation of personal and organizational assets of the owner
- The command structure is hierarchical.
- Keeping accurate records
- Hiring and promotion should be based on qualifications and performance rather than personal relationships.
- Regulations that are consistent
Many people today regard bureaucratic management as an impersonal style that can become bogged down by rules and formalities. However, it can be extremely beneficial for new businesses in need of standards, procedures, and structure.
4) Scientific Management
Frederick Taylor (1856-1915) conducted controlled experiments toward the end of the nineteenth century to maximize the productivity of his workers. The results of these experiments led him to believe that the scientific method, rather than judgment or discretion, is the best predictor of workplace efficiency.
Standardization, specialization, ability-based assignments, and extensive training and supervision are all promoted by Scientific Management. Only by following these practices can a company achieve efficiency and productivity. This management theory seeks the most efficient way to complete a given task, frequently at the expense of the employees’ humanity.
The theory as a whole is no longer widely used, but parts of its workplace efficiency, training, and cooperation are at the heart of some of the world’s most successful businesses.
Also Read: 5 Amazing Aspects of Sharing feedback as a Manager.
5) Theories X and Y
Douglas McGregor (1906-1964), a social psychologist, published The Human Side Of Enterprise in 1960. He described two very different management styles in it (theories X and Y). Each management style is influenced by the manager’s perceptions of their employees’ motivations.
According to Theory X, employees are apathetic or dislike their jobs. Managers who follow Theory X are frequently authoritarian and will micromanage everything because they lack trust in their employees.
Employees, according to Theory Y, are self-motivated, responsible, and want to take ownership of their work. Managers who follow Theory Y involve their employees in decision-making and promote creativity at all levels.
In practice, small businesses tend to follow Theory Y, while large businesses follow Theory X.
6) Human Relation Theory
Elton Mayo (1880-1949), a psychologist, was tasked with increasing productivity among dissatisfied employees in the first quarter of the twentieth century. Mayo attempted to boost worker satisfaction by modifying environmental factors such as lighting, temperature, and break time. All of these changes were beneficial.
Mayo then experimented with changing variables that he believed would have a negative impact on satisfaction, such as workday length and quotas (he increased both). He discovered that regardless of the change good or bad worker satisfaction increased.
This led Mayo to conclude that performance was a result of the researchers’ attention to the workers. In other words, the attention made the employees feel important.
These findings gave rise to Mayo’s Human Relations Theory, which states that social factors, such as personal attention or being part of a group, motivate employees more than environmental factors, such as money and working conditions.
7) Classical Management
Classical management theory is based on the assumption that employees only have physical needs. Classical Management Theory focuses solely on the economics of organizing workers because employees can satisfy these physical needs with money.
As a result, classical management theory ignores the personal and social needs that influence employees’ job satisfaction as a result of this narrow view of the workforce. As a result, Classical Management Theory promotes the following seven key principles:
- Maximization of profits
- Specialization in the workplace
- centralized administration streamlined operations
- The emphasis is on productivity.
- Decisions are made by a single person or a small group of people.
- Priority is given to the bottom line.
When these seven principles are followed, they result in an “ideal” workplace with a hierarchical structure, employee specialization, and financial rewards.
Control of the company is held by a small group of people who have complete authority over the company’s decisions and direction. Middle managers govern the day-to-day activities of employees at the bottom of the pecking order beneath those select few.
And it all revolves around the idea that if employees are rewarded in larger and larger increments, they will work harder and be more productive (via wages or benefits).
While this may not appear to be an “ideal” management theory by today’s standards, it did work well for many years prior to the early twentieth century. And, while the system isn’t as widely used as it once was, there are several strong points that managers can use in the twenty-first century.
They are as follows:
- A distinct management structure
- Labor division
- Employee roles are clearly defined.
These three principles, when combined with the other management theories on this list, have the potential to improve the way your employees and your business operate in the modern era.
8) Contingency Theory
Contingency Management Theory was developed in the 1950s and 1960s by Fred Fiedler and others. Fiedler’s theories were based on the idea that effective leadership was directly related to the traits displayed by the leader in any given situation.
From that concept arose the belief that there is a set of traits that are effective in every situation and that different situations necessitate different leadership traits. As a result, leaders must be adaptable and adapt to changing markets, business, and team demands.
Fiedler then expanded that concept from a management-focused individual to a much broader organizational-focused theory. According to Fiedler’s theory, there is no single management approach that is appropriate for every situation and organization.
Instead, three broad factors influence business management and structure. They are as follows:
- The organization’s size
- The technology used
- Leadership at all levels of the organization
That means that an individual manager who believes in Contingency Management Theory must be able to identify the appropriate management style for any given situation. They must also be willing and capable of quickly and effectively implementing that management style when necessary.
In a broader sense, businesses and managers who intentionally or unintentionally adhere to Contingency Management Theory will be concerned, above all, with maintaining team alignment and achieving a good fit in all projects and situations.
Finally, there is no single best way to do things, according to contingency management theory. The way a company organizes itself will be determined by the environment in which it operates.
Also Read: Team Building Tips for Managers
9) Modern Management
As a direct response to Classical Management Theory, Modern Management Theory evolved. Modern businesses must navigate rapid change and complexities that appear to grow exponentially overnight. Technology is both the source of and the solution to this quandary.
As a result, businesses that implement Modern Management Theory seek to integrate technology and, to some extent, mathematical analysis with the human and traditional elements of their organization.
This confluence of scientific and social variables results in a two-pronged approach to management, organization, and decision-making. Modern Management Theory emphasizes the following:
- Analyzing and comprehending the relationship between managers and employees through the use of mathematical techniques.
- Employees do not work solely for monetary gain (in contrast to Classical Management Theory).
- Instead, they strive for happiness, fulfillment, and a desired lifestyle.
- People are complex, according to modern management theory. Their requirements change over time, and they have a variety of talents and skills that the company can develop through on-the-job training and other programs.
- Simultaneously, management can use mathematical techniques like statistical, cost, revenue, and return-on-investment (ROI) analysis to make rational, emotion-free decisions.
Though Modern Management Theory is not perfect in and of itself, it does, like Classical Management Theory, provide some useful points that you can combine with other theories to create a structure that is tailored to your business.
10) Quantitative Management
Quantitative management theory is a branch of modern management theory that emerged in response to managerial inefficiency during World War II.
Quantitative Management Theory brings together experts from various scientific disciplines to address military staffing, materials, logistics, and systems issues. The straightforward, numbers-oriented approach to management (which also applies to business) aided decision makers in calculating the risks, benefits, and drawbacks of various actions.
This shift toward pure logic, science, and math is balanced by the belief that mathematical results should be used to supplement, rather than replace, experienced managerial judgment.
What is the Relevance of these Management Theories?
1. Productivity growth
The ability to increase productivity is one of the reasons managers should be interested in learning about management theories. The theories are supposed to show leaders how to utilize their available human resources to their fullest potential. Therefore, business owners should spend on their employees’ training rather than buying new machinery or launching a new marketing campaign.
In Taylor’s scientific management theory, it is evident. Taylor argued that the greatest approach to increasing workers’ productivity was to first observe their work processes before developing the appropriate rules, as was already discussed.
2. Decision-Making Made Simple
The decision-making process is another area where management theories have shown to be helpful. Max Weber argued that hierarchical structures promote thoughtful decision-making. According to a report from the Institute for Employment Studies, lowering the hierarchy encourages local creativity while accelerating the decision-making process. To promote a cohesive workplace, flattening out means getting rid of senior roles and job titles.
3. Promoting Staff Engagement
In the early 1900s, management theories emerged with the goal of fostering human interactions at work. The human relations approach is one such idea that promotes a collaborative setting. This approach suggested that business owners should offer their staff members more discretion over decisions.
