In the corporate world, there are many management theories. Some are old, and some are new. Most of them are, however, based on one of the 11 management theories listed below – in some form or another.
What is their significance? Isn’t it better to focus on running your business instead of reading up on old ideas? Yes, you should focus on making your business successful. Nevertheless, your employees’ success depends largely on how you lead them.
The reason you need these management theories is that they give you concrete ways to inspire your team to greatness.
The purpose of this article is to give you an overview of the management theories every manager should be aware of. Decide which one you like, do a bit more research, and then incorporate it into your business.
Related: Organizational Culture 101: The Basics of Building an Effective Organization
Table of Contents
Management Theories in Business
Management Theories are an important part of any business. It helps managers plan for the future, set goals, and keep employees motivated. But how exactly do management theories work? This article will explain the different types of management theories and how they apply to businesses.
Management Theories in Business #1: Systems Theory
A system theory is a model of organization that focuses on the interrelationships between people, processes, technology, and other systems within an organization.
Management Theories in Business #2: Principles of Administrative Management
An administrative management theory is based on the idea that organizations are made up of individuals who work together to achieve organizational goals. This means that managers must understand how employees think and act to effectively manage them.
Management Theories in Business #3: Bureaucratic Management
A bureaucratic management theory is based on an organization being run by a hierarchy of people with authority. It emphasizes rules and regulations as well as the need for clear lines of communication between top management and lower levels of the organization.
Management Theories in Business #4: Scientific Management
Scientific management was developed by Frederick Taylor in 1911. He believed that workers were not intelligent enough to perform tasks without supervision. Therefore, he proposed that managers should supervise employees and set goals for them. This would allow them to work efficiently and effectively.
Management Theories in Business #5: Theories X and Y
There are two main schools of thought when it comes to management theory. One school (Theory X) believes that managers should focus on controlling the behavior of people. They believe that managers should control everything that happens within an organization. Managers should also make sure that everyone follows the rules and regulations.
The other school (Theory Y) of thought focuses on empowering employees. These managers believe that employees should be given the freedom to make decisions. Managers should provide guidance and support, but let employees take responsibility for their actions.
Management Theories in Business #6: Human Relations Theory
Another popular theory is called “human relations theory.” This theory focuses on how employees feel about their jobs and what motivates them. It also looks at how managers treat their employees.
Management Theories in Business #7: Classical Management
Classical management theory was developed by Frederick Taylor (1856–1915). He believed that managers needed to understand how people worked and how to motivate them. This theory emphasizes the importance of planning and control. It also focuses on the idea that workers should be treated fairly and with respect.
Management Theories in Business #8: Contingency Management
Another popular theory is called contingency management theory. This theory suggests that employees will work harder when they feel valued and appreciated. They will work less hard when they feel undervalued or disrespected.
Contingency management theory says that people will work harder when they believe they will receive positive reinforcement for good behavior. If they believe they will not receive any reward for good behavior, they will work less hard.
Management Theories in Business #9: Modern Management
Modern Management Theory developed as a direct response to Classical Management Theory. Modern-day businesses are faced with navigating rapid change and complexities that seem to grow exponentially overnight. Technology is both the cause of and the solution to this dilemma.
As such, businesses that incorporate the Modern Management Theory into their operations seek to meld technology and, to some extent, mathematical analysis with the human and traditional elements of their organization.
This combination of scientific and social variables creates a dual-pronged approach to management, organization, and decision-making. Modern Management Theory emphasizes:
- Using mathematical techniques to analyze and understand the relationship between managers and employees.
- That employees don’t work for money alone (in contrast to Classical Management Theory). Instead, they work for happiness, satisfaction, and the desired lifestyle.
Modern Management Theory embraces the idea that people are complex. Their needs vary over time, and they possess a range of talents and skills that the business can develop through on-the-job training and other programs.
At the same time, management can use mathematical techniques such as statistical, cost, revenue, and return-on-investment (ROI) analysis to make rational decisions unaffected by emotion.
Though Modern Management Theory isn’t perfect by itself, it does, like Classical Management Theory, offer some useful points that you can combine with other theories to create a structure that is just right for your business.
Management Theories in Business #10: Quantitative Management
Quantitative Management Theory is an offshoot of Modern Management Theory developed during World War II in response to managerial efficiency.
Quantitative Management Theory brought together experts from scientific disciplines to address staffing, materials, logistics, and systems issues for the U.S. military. The clear-cut, numbers-oriented approach to management (which applies to business as well) helped decision makers calculate the risks, benefits, and drawbacks of specific actions.
This shift toward pure logic, science, and math is tempered by the belief that these mathematical results should be used to support, not replace, experienced managerial judgment.
Management Theories in Business #11: Organizations as Learning Systems
In comparison to many of the other theories on this list, Organizations as Learning Systems Management Theory is fairly new. Organizations as Learning Systems Management Theory – sometimes called Integral or Holistic Management Theory – arose as a postmodern response to many older management theories.
The idea is that business is a system made up of a succession of subsystems. For the business to run smoothly and efficiently, each subsystem must also work smoothly and efficiently within itself, but also with the other subsystems around it.
In this theory, managers are responsible for coordinating the cooperation necessary to ensure the larger “organism” continues to function successfully.
Learning and change are major components of this theory, and learning is encouraged and made available to everyone — not just middle and upper management. The emphasis in this theory is on teamwork, participation, information sharing, and individual empowerment.
FAQs
Management Theories
Management Theories are an important part of any business. It helps managers plan for the future, set goals, and keep employees motivated.
Management Theory Y
The other school of thought known as Theory Y focuses on empowering employees. These managers believe that employees should be given the freedom to make decisions. Managers should provide guidance and support, but let employees take responsibility for their actions.
Management Theories Classical/ What Is the Classical Management Theory?
The classical management theory places emphasis not on employees’ job satisfaction or social needs but rather on physical needs. This theory holds that these physical needs can be met through income and monetary incentives and uses the opportunity for wage increases to motivate employees.
Management Theories of Leadership
Change Management Theories Kotter
Management Theories X and Y
There are two main schools of thought when it comes to management theory. One school (Theory X) believes that managers should focus on controlling the behavior of people. They believe that managers should control everything that happens within an organization. Managers should also make sure that everyone follows the rules and regulations.
The other school (Theory Y) of thought focuses on empowering employees. These managers believe that employees should be given the freedom to make decisions. Managers should provide guidance and support, but let employees take responsibility for their actions.
Management Theory Peter Drucker/ Peter Drucker’s Theory of Management
- Peter Drucker revolutionized the approach to business management by suggesting that successful leaders should put people and ethics first rather than focusing entirely on profits and rigid rules and work structures.
- The pillars of Drucker’s theory of management are decentralization, prioritization of knowledge work, management by objectives, and SMART goals.
- By implementing Drucker’s approach, managers can empower their employees, improve the company’s culture, encourage innovation, increase efficiency, create a nurturing and ethical work environment, and ultimately boost the business’s success.
Management Theories in Business/ Management Theories Business/ Management Theories and Practices/ Management Theories Nursing/ Management and Theory Practice/ What Are the Top Six Management Theories? / Management Theories Healthcare
Management theory has evolved over the years, and there are many different approaches that managers use to achieve success. This section of the article will discuss the most popular theories and how they affect businesses.
Theory X Vs Theory Y
Theory X states that people who work hard and do what they are told will succeed. It emphasizes individualism and competition. Theory Y, on the other hand, focuses more on cooperation and teamwork. It believes that employees should be treated fairly and given opportunities to learn new skills.
Systems Theory
A system is an interconnected set of parts that interact with each other to produce a result. This theory suggests that systems are self-regulating and tend to evolve naturally.
Systems thinking is based on the idea that everything is connected to everything else. It focuses on how things work together rather than on individual parts.
Scientific Management
Scientific management was developed by Frederick Taylor in the late 1800s as an attempt to improve efficiency in factories. He believed that workers should be treated with respect and dignity, but also that they should be trained to follow instructions and not make decisions themselves. This approach has been criticized for dehumanizing and treating people as machines.
Note: Please refer to the above-mentioned details for more details about Management Theories.
Management Theories Henri Fayol
Management theory is the study that examines how organizations operate and how they perform. It is also called Business Administration or Organization Studies. This section of the article will cover some of the most popular theories in management. We’ll also discuss the strengths and weaknesses of each.
Who is Henri Fayol?
Henri Fayol was born in 1841 in France. He studied law and became an attorney. After he passed the bar exam, he worked as a lawyer until he decided to pursue his interest in management. He began teaching courses in management at the University of Lyon. His first book, Essai sur la formation des connaissances et l’enseignement de la gestion (Essay on the Formation of Knowledge and Teaching of Management) was published in 1886. This book was very influential in the development of modern management thinking.
What are Fayol’s management theories?
According to Fayol, there are three main categories of management: administrative, technical, and scientific. Administrative management involves the planning, organizing, directing, and controlling of people and things. Technical management deals with the production, maintenance, and repair of products and services. Scientific management focuses on improving efficiency through the use of science and technology.
The Five Basic Functions of Management
There are five basic functions of management. These functions are planning, organizing, leading, controlling, and coordinating. Each function has its own set of responsibilities.
- Planning involves setting goals and objectives.
- Organizing involves creating systems and processes to achieve those goals and objectives.
- Leading involves motivating people to work together towards achieving the goals and objectives.
- Controlling involves monitoring and evaluating results.
- Coordinating involves making sure everything runs smoothly.
The 4 Principles of Management
Four principles of management are often used together. They are authority, responsibility, accountability, and initiative.
- Authority means having the power to make decisions.
- Responsibility means being accountable for those decisions.
- Accountability means being held responsible for what happens when those decisions are made.
- Initiative means taking charge and doing something yourself.
The Six Industrial Activities
These six activities are the basis of any organization. They are production, distribution, consumption, investment, financing, and control.
- Production is the process by which goods and services are produced.
- Distribution is the process by which products are moved from where they are produced to where they are consumed.
- Consumption is the process by which people use products.
- Investment is the process by which money is spent on new equipment, buildings, etc.
- Financing is the process by which companies raise money to invest.
- Control is the process by which an organization makes sure that its goals are met.
Knowledge Management Theories and Models/ Knowledge Management Theories
A good knowledge management system should be able to support the entire organization by providing access to information and resources. In today’s world, knowledge management has become an essential component of business success. It is important to understand the various theories and models used to manage knowledge.
Knowledge Management Theories and Models:
Theory of Constraints (TOC)
TOC theory was developed by Dr. James P. Womack and Daniel T. Jones in 1978. They defined constraints as “the limits within which people must operate to achieve desired goals.” These limits are often invisible and not obvious to those who work within them.
Theory of Mind (ToM)
ToM refers to the ability to attribute mental states such as beliefs, desires, intentions, emotions, and personality traits to oneself and others. This skill allows us to predict what other people will do based on their internal thoughts and feelings.
Theory of Organizational Structures (TOS)
TOS theory was developed by Peter Drucker in 1954. He believed that organizations were made up of three parts: structure, process, and strategy. Structure refers to the organizational design, while process refers to how work gets done within the organization. Strategy refers to the goals and objectives of the organization.
Theory of Planned Behavior (TPB)
According to TPB, people will act based on their beliefs about what others think of them. These beliefs are called attitudes. People also tend to behave according to their perceived norms. Norms refer to the standards set by society. Finally, people will act based on their own values. Values are personal preferences.
Theory of Reasoned Action (TRA)
TRA is one of the most widely accepted theories of behavior. This theory states that people make decisions based on how they believe other people would react to their actions. They do not consider the consequences of their actions until after they have made their decision.
Also Read: Management by Objectives (MBO) Definition, Benefits & Examples