The 11 Most Important Management Theories for Small Business

The 11 Most Important Management Theories for Small Business

Many management theories are floating around in the business world. Some are old, and some are new. But pretty much all of them are based — in one form or another — on one of the 11 management theories on this list.

Why is that important? Shouldn’t you concentrate on running your business instead of reading up on old ideas? Yes, you should focus on making your business a success. But that success depends, in large part, on the way you lead your employees.

That’s why these management theories are so important: they give you concrete ways to inspire greatness in your team.

In this article, we’ll give you a brief overview of the management theories every manager should know. Find one you like, do a bit more research, and then incorporate it into your business.

Related: The Characteristics of Management

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Table of Contents

What is a Management Theory?

Management theory is an approach that helps managers understand how people behave in organizations. It includes concepts like motivation, leadership, organizational culture, and change.

Management Theories?

Management theories are ways of thinking about how organizations work. It is an approach that helps organizations improve performance by identifying problems, analyzing causes, and devising solutions. It has been used in business for over 100 years. They describe what managers do, why they do it, and how they interact with other parts of the organization.

There are three main categories of management theories: functionalist, human resource, and conflict theories.

  1. Functionalists believe that managers should focus on achieving goals through the use of rules and procedures.
  2. Human resource theorists emphasize the importance of understanding employees and their needs.
  3. Conflict theorists see managers as mediators between conflicting interests.

Several theories of management explain what managers do and why they do it. These theories can help you better understand yourself as a manager and others who work with you. Understanding these different perspectives will help you understand how to manage people effectively.

Why does it matter? And how can you use it to improve your business?

If you’re looking to improve your business, then understanding management theory will help you identify what needs to change and why. You can also use it to make better decisions and solve problems more effectively.

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The 11 Most Important Management Theories for Small Business:

Systems Theory

Systems theory is based on the idea that everything in the world is made up of systems. A system is a collection of parts that work together to produce a result. In business, a company is a system. So is a family, a school, a government, a city, a country, etc.

Principles of Administrative Management

Several principles of administrative management help managers make decisions. These principles include:

1) Principle of least effort – This principle states that people will do what is easiest for them to do. If something seems too hard, then it probably isn’t worth doing.

2) Principle of least surprise – People prefer to deal with things when they expect them. They avoid surprises because they feel unprepared.

3) Principle of reciprocity – People tend to give back to others what they receive.

Bureaucratic Management

In addition to these three principles, there are other ways to manage an organization. One of the most popular is bureaucratic management theory. It focuses on how organizations should operate.

Scientific Management

Scientific management theory was developed by Frederick Taylor in 1911. He believed that workers were not intelligent enough to perform tasks without being trained. Therefore, he proposed that managers should train employees and then supervise them closely. This would allow managers to control the work process and make sure that everything went according to plan.

Theories X and Y

In contrast, human resource management (HRM) focuses on how people interact with each other and the organization as a whole. HRM emphasizes the importance of employee development and training. It also recognizes that people need to feel valued and appreciated at work.

Human Relations Theory

Human relations theory was developed by Kurt Lewin in the 1920s. He believed that human behavior is influenced by three main forces: power, interest, and love. These forces influence our actions and behaviors in different ways. Power motivates us to achieve goals; interest makes us feel good about ourselves, and love makes us want to help others.

Classical Management

Classical management theory focuses on how people should behave to maximize profits. It emphasizes the importance of control and organization. This theory also suggests that managers should use incentives to motivate employees.

Contingency Management

Contingency management theory was developed by B.F. Skinner in the 1950’s. He believed that animals learn through reinforcement. If an animal receives a reward after performing a task, then it will perform that task again.

Modern Management

This theory has been applied to human behavior as well. It states that people are motivated by incentives. People who receive rewards for completing tasks will continue to complete those tasks.

Quantitative Management

A quantitative management theory focuses on numbers. These theories focus on how much money should be spent on a project, how much profit should be made, and so forth.

Organizations as Learning Systems

An organization as a learning system is an approach to organizational development that emphasizes the importance of learning and growth. It focuses on how people learn and develop within organizations and how organizations can support these processes.

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Why Study Management Theories?

1. Increasing Productivity

One of the reasons why managers should be interested in learning management theories is because it helps in maximizing their productivity. Ideally, the theories teach leaders how to make the most of the human assets at their disposal. So, rather than purchase new equipment or invest in a new marketing strategy, business owners need to invest in their employees through training.

It can be seen in Taylor’s scientific management theory. As mentioned earlier, Taylor proposed that the best way to boost workers’ productivity was by first observing their work processes and then creating the best policies.

2. Simplifying Decision Making

Another area where management theories have proven to be useful is in the decision-making process. Max Weber proposed that hierarchical systems encourage informed decision-making. A report written by the Institute for Employment Studies suggests that flattening the hierarchy paves the way for local innovation while speeding up the decision-making process. Flattening out entails getting rid of job titles and senior positions to inspire a cohesive work environment.

3. Encouraging Staff Participation

Management theories developed in the 1900s, aimed at encouraging interpersonal relationships in the workplace. One such theory that encouraged a collaborative environment is the human relations approach. According to this theory, business owners needed to give their employees more power in making decisions.

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Are our management theories outdated?

Are our management theories outdated? In this article, we’ll look at five reasons why they might be.

Management theory has been around for decades, but many companies still use outdated methods that could be hindering their success.

The Industrial Revolution.

The industrial revolution was a period of rapid technological development during the 18th century. It began with the invention of new machines and tools that allowed people to work more efficiently. This led to an increased demand for goods and services, and eventually, the creation of large factories.

The Information Age.

Today, the internet has become one of the most powerful forces in business. As a result, many businesses now operate online. This means that they must adapt to the new environment.

The Knowledge Economy.

The knowledge economy is an economy based on ideas and intellectual property. It’s also known as the “creative economy” because it relies heavily on creativity and innovation.

The Digital Era.

The digital era has changed how people work, learn, communicate, shop, play, and live. This means that traditional business models are being challenged by new ways of doing things.

The Fourth Industrial Revolution.

The fourth industrial revolution (4IR) is upon us. It’s an age where technology is changing everything. From manufacturing to transportation, healthcare to education, the 4IR will impact every aspect of life.

Modern financial management theories and small businesses?

You may have heard about modern finance theories before but don’t know what they mean or how they apply to your business. Read on to discover more about them.

Modern finance theories are based on the idea that people should be able to earn money by working hard and investing in assets. This means that people should be able to invest in stocks, bonds, real estate, and other types of investments.

Margin Analysis.

Margin analysis is an essential part of any financial management system. It helps you understand where your company stands financially. If you’re not sure how to calculate margin analysis, check out our guide here.

Capital Budgeting.

A capital budget is a plan for investing money into a business. This includes things like buying new equipment, hiring employees, and paying off debt.

Cash Flow Forecasting.

One of the most common mistakes small businesses make when planning their cash flow is not forecasting enough money coming in. If you don’t forecast enough money coming in, then you won’t have enough money to pay out. This will cause your company to go broke.

Time Value of Money.

A good rule of thumb is to spend no more than 20% of your income on fixed costs. Fixed costs are those expenses that do not vary with changes in sales volume. Examples of fixed costs include rent, utilities, insurance, and salaries.

Cost Accounting.

In cost accounting, we track our costs as they occur so that we can determine whether we’re spending too much money on certain things. We also use cost accounting to help us make decisions about where to allocate our limited resources.

Understanding four key classroom management theories?

Understanding four key classroom management theories are essential if you want to be an effective teacher. In this article, we’ll explain them all!

There are many different ways to teach students, but there are four key/main approaches. Four key classroom management theories are used by teachers around the world. These four key classroom management theories include factors like behavioral psychology, cognitive psychology, and social psychology. Learn more about each one here!

1. Behaviourism: The Skinner Model

This theory says that students will learn best when they are rewarded for good behavior and punished for bad behavior. Students should be given rewards and punishments based on how well they perform in class.

In the Skinner model teachers strongly guide learner behavior to reach desired outcomes. Within the context of classroom management, behaviorism is firmly established in practice.

  1. Constant, consistent reinforcement of the rules is required to make it work properly.
  2. Good behavior has to be rewarded, whereas bad behavior must either be ignored or –preferably – punished without delay.
  3. The theory provides the theoretical support behind such practices as Behavioral Intervention Plans, learner contracts being a prime example. Any teachers who use classroom rules are engaging in the behaviorist practice of negative reinforcement.

2. Choice Theory: The Glasser Model

The Glasser Model views the role of teachers as helpers to those in their learning environment. The idea behind it is that all behavior is an issue of choice; teachers should merely serve to facilitate the making of good decisions.

  1. Teachers create environments – and curricula – that cultivate appropriate behavior through meeting learners’ needs for belonging and the feeling of empowerment.
  2. Classroom rules and their enforcement remain a key factor in making learners responsible for their behavior choices.
  3. Discussion, reflection, and even making amends are positively encouraged, rather than the administering of simple rewards and punishments.

Choice Theory was designed to assist learners in understanding the motivations behind their behavior so that they might learn to make better choices.

3. Learner-Directed Learning: The Jones Model

Learner-directed learning is a teaching method where students take responsibility for their learning. Students are given choices regarding how they learn and what they learn. They choose what they need to learn and how they learn it.

The Jones model is a learner-directed approach to teaching. It was developed by Dr. Robert E. Jones, a professor of education at the University of California, Berkeley. He believed that teachers should help students make decisions about their learning rather than telling them what to learn.

Jones’ model includes three steps:

1. The teacher provides clear objectives for the lesson.

2. The teacher helps the student understand the objectives.

4. Assertive Discipline: The Canter Model

An assertive discipline is an effective form of classroom management. This type of discipline involves using positive reinforcement to encourage good behavior while punishing bad behavior.

It is based on the principles of operant conditioning. Operant conditioning is a behavioral theory that states that people will behave in certain ways because of rewards or punishments. In other words, people will do things that lead to rewards (positive reinforcements) or avoid doing things that lead to punishment (negative reinforcements).

The assertive discipline uses positive reinforcement to reward good behavior and negative reinforcement to punish bad behavior. Positive reinforcement means giving something as a reward for the desired behavior. Negative reinforcement means removing something unpleasant when a behavior occurs.

Greatest management theories models?

Great managers know what they’re doing, but they also know when to listen to their employees. Read on to discover more about these five management models!

The best managers understand that people are different and that each employee has strengths and weaknesses. They use this knowledge to create an environment where everyone feels valued and respected.

The Command Model

This model is based on the idea that leaders should give orders and expect obedience. Employees who follow orders will perform better than those who do not. Leaders must make sure that they communicate clearly with their subordinates so that they know exactly what’s expected of them.

The Contingency Model

In this model, leaders set goals and objectives for their teams. They then provide feedback to help employees understand how well they’ve done. If an employee does something wrong, he or she receives negative feedback. However, if an employee performs well, he or she gets positive reinforcement.

The Coercive Model

This model focuses on the leader’s role as a coach. Leaders use rewards and punishments to motivate their team members. Employees who do well receive praise and recognition. Those who fail to meet expectations face consequences such as demotions, pay cuts, or even termination.

The Collaborative Model

In this model, leaders work with their teams to achieve common goals. They encourage open communication and collaboration among team members. Team members share ideas and feedback and they help each other solve problems.

The Transformational Model

This model focuses on developing people’s potential. Leaders focus on helping others develop their skills and talents. They provide opportunities for growth and development by encouraging employees to take risks, learn new things, and try new things.

Management theories strategic practices decision?

There are several different approaches to making decisions.

  1. One approach is called “decision analysis.” This method involves analyzing the situation at hand and identifying the options available.
  2. Then, using logic and data, one option is chosen as the best choice. Another approach is called “heuristic decision making.” Heuristics are rules of thumb that help people make quick decisions. They often involve intuition rather than logic.
  3. A third approach is called “scenario planning.” Scenarios are stories that describe possible future events. By thinking through these scenarios, managers can anticipate what might happen and plan accordingly.

In addition to choosing an appropriate strategy, managers must also choose the right tactics. Tactics are actions taken by individuals within a company to achieve its goals. Managers use tactics to accomplish tasks such as creating new products, hiring employees, and managing finances.

A manager’s job is to make sure that the organization achieves its goals. To do so, he or she needs to understand how to manage the business effectively. This includes understanding the different theories of management and the strategies used to implement them.

There are several theories of management that help managers understand how to run an organization. These include the following:

  1. Theory of constraints – This theory suggests that organizations must work within certain limits. If these limits aren’t met, then the organization will not succeed. Managers need to identify what those limits are and find ways to meet them.
  2. Theory of constraints and strategy – This theory combines the previous two theories by suggesting that managers should use both constraint and strategy when making decisions.
  3. Theory of the firm – This theory states that businesses exist because people want to buy things. It also says that businesses are more than just the sum of their parts. They are made up of people who interact with each other.

Note: A manager needs to make sure that he or she has the right skills and knowledge to lead an organization. In addition, managers need to think strategically about how to manage the business.

Management Theories Book and resources

A collection of the best books on management theories from around the world.

The Art of War by Sun Tzu

In his classic work “The Art of War,” Chinese military strategist Sun Tzu wrote, “If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”

The Five Dysfunctions of a Team by Patrick Lencioni

This book explores five common dysfunctions that occur within teams and how these dysfunctions affect team performance. It provides practical advice on how to identify and avoid them.

The Goal by Eliyahu Goldratt

The Goal by Eliyahu Goldratt is an excellent book on business strategy. In his book, he explains why businesses fail and what managers need to do to prevent failure. He also offers strategies for improving productivity and profitability.

The Lean Startup by Eric Ries

If you’re looking for a book on how to start a company, read The Lean Startup by Eric S. Ries. This book will help you understand the principles behind lean startup methodology. It will teach you how to build a product with minimum features and maximum customer value.

The Manager’s Path by Jeff Bezos

In his book, The Manager’s Path, Amazon founder Jeff Bezos shares his thoughts on leadership and management. He explains why managers should focus on building trust among employees rather than focusing on themselves.

What are the five theories of management? What are the seven theories of management? The four major management theories? What are the three main theories of management?

We have compiled a list of the 11 most important management theories one can ever learn to make good managerial decisions within an organization. The article explains each of the above-mentioned management theories in more detail.

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Different management theories have been used by companies throughout history. Besides increasing productivity, they have also improved service quality.

These management theories were developed ages ago, but they assist in creating interconnected work environments where employers and employees work together. Nowadays, systems theory, contingency theory, Theory X and Theory Y, and scientific management theory are some of the most popular management theories.

The process of implementing changes to your management style and theory is challenging. However, your business will benefit both now and in the future, if you take the time to accommodate your employees’ attitudes and habits.

Employee engagement and morale improve when you manage your team in a way they understand (and that appeals to them). The results are well worth the effort.

To learn more about managing your business, organizing and scheduling your team, and tracking and calculating labor costs, visit

Also Read: How to Meditate for Concentration?

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