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Management Theories

The document discusses different management theories that were developed over the last few decades to help managers effectively lead organizations. It covers early theories like scientific management and administrative management theory as well as more modern theories focused on behavior and relationships. The document also discusses factors like social, economic, and political forces that have influenced the evolution of management theories.

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Carlos Baul David
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64 views

Management Theories

The document discusses different management theories that were developed over the last few decades to help managers effectively lead organizations. It covers early theories like scientific management and administrative management theory as well as more modern theories focused on behavior and relationships. The document also discusses factors like social, economic, and political forces that have influenced the evolution of management theories.

Uploaded by

Carlos Baul David
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Management Theories

Management theories are the recommended management strategies that enable us to better
understand and approach management. Many management frameworks and guidelines were developed
during the last four decades.

What do we mean by Management Theories?


Management theories are the set of general rules that guide the managers to manage an organization.
Management theories (also known as "Transactional theories") focus on the role of supervision,
organization, and group performance. Theories are an explanation to assist employees to effectively
relate to the business goals and implement effective means to achieve the same. In this article, we will
discuss the historical context of management, diverse views on management, and finally the theories of
management.

Early management theories base leadership on a system of reward and punishment. Managerial
theories are often used in business; when employees are successful, they are rewarded; when they fail,
they are reprimanded or punished.

Types of Management Theories


Management theories can be classified into three types.

Classical Management Theory


Behavioral Management Theory
Modern Management Theory
These management theories are explained below:

1. Classical Management Theory


Classical management theory is based on the belief that workers only have physical and economic needs
and prescribes specialization of labor. Classical theories recommend centralized leadership and decision-
making and focus on profit maximization. Three streams of classical management theory are -
Bureaucracy (Weber), Administrative Theory (Fayol), and Scientific Management (Taylor).

2. Behavioral Management Theory


The behavioral management theory is focused on the human aspects of work. They are also often
referred to as the human relations movement. These theories aspire to gain a better understanding of
human behavior at work to improve productivity. It focuses on behavioral aspects like motivation,
conflict, expectations, and group dynamics.

3. Modern Management Theory


Modern management theory emphasizes the use of systematic mathematical techniques to analyze and
understand the inter-relationship of management and workers in all aspects. Three streams of modern
management theories are - Quantitative Approach, System Approach, and Contingency Approach.

Management Theories
General Management Theories
There are four general management theories.

A. Frederick Taylor – Theory of Scientific Management


B. Henri Fayol – Administrative Management Theory
C. Max Weber - Bureaucratic Theory of Management
D. Elton Mayo – Behavioral Theory of Management (Hawthorne Effect)

1. Frederick Taylor’s Theory of Scientific Management:


Taylor’s theory of scientific management aimed at, improving economic efficiency, especially labor
productivity. Taylor had a simple view about, what motivated people at work, - money. He felt that
workers should get a fair day's pay for a fair day's work, and that pay should be linked to the amount
produced. Therefore, he introduced the differential piece rate system, of paying wages to the workers.

Taylor's Differential Piece Rate Plan:


If Efficiency is greater than the defined Standard then workers should be paid 120 % of the Normal Piece
Rate.
If Efficiency is less than standard then workers should be paid 80% of the Normal Piece Rate.
Principles of Scientific Management
Four Principles of Scientific Management are:

Time and motion study: - Study the way jobs are performed and find new ways to do them.
Teach, train, and develop the workman with improved methods of doing work. Codify the new methods
into rules.
The interest of the employer & employees should be fully harmonized so as to secure mutually
understanding relations between them.
Establish fair levels of performance and pay a premium for higher performance.
2. Henri Fayol’s Administrative Management Theory:
Henri Fayol known as the Father of Management laid down the 14 principles of Management. These 14
principles of management are used to manage an organization and are beneficial for prediction,
planning, decision-making, organization and process management, control, and coordination.

 Division of Work: Improves productivity, efficiency, accuracy, and speed


 Equity: Employees should be treated equally and respectfully
 Discipline: Makes the management job easy and make progress
 Initiative: support and encourage employees taking initiatives
 Authority and Responsibility: Efficient delivery of work with defined responsibility
 Esprit de Corps: Develop trust and mutual understanding
 Subordination of Individual Interest: Company over personal interest and respect the chain of
command
 Stability: offer job security to their employees
 Remuneration: motivating factor linked to the individual’s efforts
 Unity of Direction: Unified goals and motives for all personnel working in a company
 Centralization: Balance between the hierarchy and division of power
 Scalar Chain: Hierarchy steps should be from top to the lowest
 Unity of Command: More than one boss brings a conflict of interest and confusion
 Order: the positive atmosphere in the workplace boosts productivity
3. Max Weber’s Bureaucratic Theory of Management:
Weber made a distinction between authority and power. Weber believed that power educes obedience
through force or the threat of force which induces individuals to adhere to regulations. According to
Max Weber, there are three types of power in an organization:
Traditional Power
Charismatic Power
Bureaucratic Power or Legal Power.
Features of Bureaucracy:

Division of Labor.
Formal Hierarchical Structure.
Selection based on Technical Expertise.
Management by Rules.
Written Documents.
Only Legal Power is Important.
Formal and Impersonal relations.
4. Elton Mayo’s Behavioral Theory of Management:
Elton Mayo's experiments showed an increase in worker productivity was produced by the psychological
stimulus of being singled out, involved, and made to feel important. Hawthorne Effect can be
summarized as “Employees will respond positively to any novel change in a work environment like
better illumination, clean work stations, relocating workstations, etc. Employees are more productive
because they know they are being studied.

5 Relationship Theories or Transformational Theories of Management


Relationship theories (also known as "Transformational theories") focus upon the connections formed
between leaders and followers. These leaders motivate and inspire people by helping group members
see the importance and utility of the task. Transformational leaders are focused on the performance of
group members, but also want each person to fulfill his/her potential. These leaders often have high
ethical and moral standards.

There are different thoughts on management. According to one school of thought, history is of no
relevance to the real problems faced by modern world managers in today's dynamic environment.
However, both management theory and its history are indispensable tools for managing complex
digitally-enabled organizations in a modern context.

Forces Influencing Management Theories


The following three forces had a major influence on the concept and evolution of management theories.

Social Forces:
Social forces are the norms and values that characterize a culture. Early social forces allowed workers to
be treated poorly. However, more recent social forces have provided for more acceptable working
conditions for the workforce. Social forces have greatly influenced the management thought in the
areas of motivation and leadership.

Economic Forces
Economic factors have influenced the way businesses developed and designed their organizational
structures, workforce, etc. Examples of these economic forces are Ideas like a market economy, public
enterprise, and private ownership of property, economic freedom, competitive markets, and
globalization.

Political Forces
Political forces such as governmental regulations play a significant role in how organizations choose to
manage themselves. Government actions and political realities often influence the success and failure of
a business and most of the time political factors that affect a business are often completely out of the
company's control. Political forces have influenced management theory in the areas of environmental
analysis, planning, control, and organizational design and employee rights

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