What is the importance of management theories in an organization?

Managers play significant role to success of an organization. The competence of managers play considerable role in every section of an organization and determine its competitive advantage. In a typical modern organization, sales managers oversee sales, personnel managers ensure a productive workforce, while operations managers ensure that all operations work.

In fact, most of development in the society can be associated with solid supply of managers. The main objective of managers is to lead an organization to achieve its objectives. All organizations have goals and purposes for which they are created and managers take the responsibility of bringing together and using all available resources to realize the goals (Griffin 2007). Successful managers are therefore those that help an organization to achieve its goals more effectively and efficiently.

There are many management theories that try to explain the best way that managers can accomplish their roles. Sadly, however, there is perception that management theories and practice are irreconcilable. Some managers find various management theories as not applicable and choose to carry out their managerial roles in their own way. In this paper, I will try to show the relevance of management theories to managers in contemporary organizations.

Origin of management theories

Management theories are reasonably recent. The origin of management theories can be traced to industrial revolution of 1800s. As factories developed, it became imperative to organize and coordinate the large workforce involved in producing goods. Because of dire need to ensure factories operated efficiently and effectively, some individuals began to formulate ways to do so.

The industrial revolution led to pre-classical management theories that tried to propose the best management practices for specific situations. The pre-classical contributions were followed later by other more developed schools of management theories such as classical, behavioral and quantitative. Classical school of management theories developed from individuals seeking solutions to various problems facing factories in 19th century.

Classical management theorists tried to come up with the best way to increase productivity and solve various problems facing factories and that time. Two branches of classical management theories: scientific and administrative developed in quest for solutions. Classical scientific theories such as Taylor, Gantt and Gilbreth were interested with the best way to increase productivity and efficiency (Griffin 2007).

Administrative classical theorists such as Weber, Follett and Fayol, on the other hand, paid more attention to productivity of individuals. Classical management theories were interested more on increasing productivity but failed to address the needs of workers, this led to behavioral management theories.

Unlike classical management theories, behavioral management theories paid more attention to the best way to influence employees’ behavior toward productivity. It focused on issue such as motivation and job satisfaction. Quantitative management theories on the other hand focus on application of scientific tools such as mathematics in making managerial decisions

Relevance to managers

Every management theory is relevant to managers in one way or the other. All the management theories address some aspects of management and shed light into the best way to handle management (Heller 2006). It is many years since some of the management theories but they form important foundation to management decisions and practice.

The world today is very much different from the world when classical management theories were developed. Advancement in knowledge and technology, and globalization make management aspects today to be different. However, the classical management theories form important base for managerial practice despite of various criticism against them. The situation during industrial revolution made close supervision, impersonal bureaucracy and focus on rules and regulation, to be necessary.

When assessing classical theories, one should therefore consider the period and conditions on which they were developed. For instance, Taylor’s scientific management was developed when United States was moving from a state of civil war to industrialization. Taylor’s recommendation for every segment of an organization to be specified and management to be impersonal and neural can be understood in context of the time in which the theory was formulated (Taylor 1947).

When applying classical management theories in contemporary organizations, managers should consider the great difference in time frame but borrow important principles from the theories. For instance, a manager can benefit from the main object of classical management theories, ensuring an organization operates efficiently and effectively, to implement the best management practice in context of their organizations.

Knowledge on management theories can broaden a manager’s competence in management. Most of the issues addressed by various management theories are relevant to modern organizations. Modern organizations need to maximize productivity, motivate its employee and be ready for change. Beginning with classical management theories, subsequent theories try to improve on existing theories or address issues not addressed in previous theories (Roth1994).

For instance, while classical theories try to improve performance of an organization through supervision, training and compensation, human behavioral theories try to achieve the same by addressing issues such as job satisfaction (Grandy 2004). Trying to reconcile classical and human behavioral theories, McGregor proposed Theory X and Theory Y, which improves on latter theories (McGregor 1960). A manager can therefore pick important management concepts from the various management theories.

Managers can take advantage of well tested and upcoming management theories. The main reason as to why managers lose confidence on management theories is multiplicity of the theories and various criticisms to the theories. It is prudent to appreciate that management is more an art than science and there are many channels to good management.

Management theories therefore try to suggest the best approach to management in a particular context. Managers must not reject a management theory just because it has been shown not to be accurate or applicable at a particular situation. In context of technological advancement and global environment, modern organizations have to adopt management practices that are consistent with their situations (Drach-Zahavy 2004).

In context of modern organizations, a manager is not expected to implement some management theories developed in 19th century and early 20th century as they are. Instead, manager should borrow from various management theories to come up with the best approach. For instance, contingency management theory can be very applicable in context of highly changing and competitive environment today.

Conclusion

Management theories are very relevant to managers in modern organizations. The various management theories try to address various aspects of management from increasing productivity, motivating employees to effective managerial decisions making. Understanding the management theories helps a manager to be effective in management roles.

Considering most of management theories were developed in difference context as in modern organizations, managers should only use the management theories as framework to come up with their management practice specific to their situations.

Reference List

Drach-Zahavy, A. 2004. The Proficiency Trap: How to Balance Enriched Job Designs and the Team’s Need for Support. Journal of Organizational Behavior Vol. 25, No. 8, pp. 979–997.

Grandy, A. 2004. Emotions at Work: Theory, Research and Applications for Management. Human Relations Vol. 57, No. 10, pp. 1351–1356.

Griffin, R. 2007. Fundamentals of Management. New York: Cengage Learning

Heller, R. 2006. Effective Management: Taking responsibility. Web.

McGregor, D. 1960. The Human Side of Enterprise. New York: McGraw-Hill Book Company, 1960.

Roth, W. 1994. The evolution of management theory: past, present, future. New York: Roth & Associates

Taylor, F. 1947. Scientific Management. New York: Harper

1. Career development
2. 7 Types of Workplace Management Theories

By Indeed Editorial Team

Updated May 23, 2022 | Published December 12, 2019

Updated May 23, 2022

Published December 12, 2019

This article has been approved by an Indeed Career Coach

 

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Jenn, an Indeed Career Coach, explains the top leadership styles in management and how to identify the one that's right for you and your team.

Understanding and applying the best practices from workplace management theories can help you more effectively guide your team to success. Many of these theories gave rise to the leadership approaches commonly used to lead and grow organizations today, and you can choose from among them to identify the strategies that will work best for you and your team.

In this article, we explain the most common management theories and share some tips for how you can apply them in the workplace.

What are management theories?

Management theories are a collection of ideas that recommend general rules for how to manage an organization or business. They address how supervisors implement strategies to accomplish organizational goals and how they motivate employees to perform at their highest ability.

Typically, leaders apply concepts from different management theories that best suit their employees and company culture. Although many management theories were created centuries ago, they still provide beneficial frameworks for leading teams in the workplace and running businesses today.

Related: Management Skills: Definition and Examples

Benefits of management theories

There are several reasons why leaders should study and apply established management theories in the workplace, including:

• Increased productivity: Using these theories, leaders learn how to make the most of their team members, improving performances and increasing productivity.

• Simplified decision making: Management theories give leaders strategies that speed up the decision-making process, helping those leaders be more effective in their roles.

• Increased collaboration: Leaders learn how to encourage team member participation and increase collaboration among an entire group.

• Increased objectivity: Management theories encourage leaders to make scientifically proven changes rather than relying on their judgment.

Related: Management Styles: Overview and Examples

Types of management theories

Here are seven important management theories to be aware of:

1. Scientific management theory

Frederick Taylor, who was one of the first to study work performance scientifically, took a scientific approach to management in the last 1800s. Taylor’s principles recommended that the scientific method should be used to perform tasks in the workplace, as opposed to the leader relying on their judgment or the personal discretion of team members.

Taylor recommended simplifying tasks to increase productivity. He suggested leaders assign team members to jobs that best match their abilities, train them thoroughly and supervise them to ensure they remain efficient in the role. 

While his focus on achieving maximum workplace efficiency by finding the optimal way to complete a task was useful, it ignored the humanity of the individual. This theory is not practiced much today in its purest form, but it demonstrated to leaders the importance of workplace efficiency, the value of making sure team members received ample training and the need for teamwork and cooperation between supervisors and employees.

Related: What Is a Micromanager? Definition and Signs

2. Principles of administrative management theory

Henri Fayol, a senior executive and mining engineer, developed this theory in the 19th century when he examined an organization through the perspective of the managers and situations they might encounter.

Fayol believed leaders had five main functions—to forecast, plan, coordinate, command and control—and he developed principles that outlined how leaders should organize and interact with their teams. He suggested that the principles should not be rigid but that it should be left up to the manager to determine how they use them to manage efficiently and effectively. The principles he outlined were:

• Initiative: This refers to the level of freedom employees should have to carry out their responsibilities without being forced or ordered. 
  

• Equity: This principle implies everyone in the organization should be treated equally and that it should be an environment of kindness.
  

• Scalar chain: This principle says there should be a chain of supervisors from the top level of management to the lower level and that communication generally flows from top to bottom. He emphasized there is no hard rule regarding the communication process through the chain of command.
  

• Remuneration of personnel: This principle refers to the assertion that there should be both monetary and non-monetary remuneration based on performance levels to create a bond between the employee and the organization.
  

• Unity of direction: This principle asserts that there should be only one manager per department who is in charge of coordinating the group activity to attain a single goal.
  

• Discipline: According to this principle, employees should be respectful and obedient, and an organization should outline rules and regulations that clarify rules, good supervision and a reward-punishment system.
  

• Division of work: This principle asserts that the overall action of management should be divided and that team members should be given responsibilities based on their skills and interests to make them more effective and efficient.
  

• Authority and responsibility: Per this principle, there should be a balance between authority⁠—the right to give commands and make decisions⁠—and responsibility⁠—the obligation of an employee to perform the tasks they’re designated. 
  

• Unity of command: This refers to the assertion that employees must get orders from only one immediate supervisor and be accountable to that person only.
  

• Subordination of individual interest to general interests: There must be harmony between the interests of the individual and the organization, although the organizational interest should be given priority since it will bring rewards for the individual.
  

• Centralization: According to this principle, the topmost level of authority should be centralized to the top level of management, who has the power to make the most important decisions in an organization.
  

• Order: This principle asserts that for an organization to run smoothly, the right person must be in the right job and that, therefore, every material and employee should be given a proper place.
  

• Stability of tenure: This principle says employees must have job security to be efficient.
  

• Espirit de corps: This refers to the belief that there must be a unified team contribution and that cooperation is always greater than the aggregate of individual performances.

Related: 9 Steps To Create a Collaborative Culture at Work

3. Bureaucratic management theory

Developed by Max Weber, bureaucratic management theory focuses on structuring organizations in a hierarchy so there are clear rules of governance. His principles for creating this system include a chain of command, clear division of labor, separation of personal and organizational assets of the owner, strict and consistent rules and regulations, meticulous record-keeping and documentation and the selection and promotion of employees based on their performance and qualifications. 

This theory has played a key role in establishing standards and procedures that are at the core of most organizations today.

Related: Complete Guide to Bureaucratic Organizations (With Example)

4. Human relations theory

This theory was developed by Elton Mayo, who conducted experiments designed to improve productivity that laid the foundation for the human relations movement. His focus was on changing working conditions like lighting, break times and the length of the workday

Every change he tested was met with an improvement in performance. Ultimately, he concluded the improvements weren’t due to the changes but the result of the researchers paying attention to the employees and making them feel valued. 

These experiments gave rise to the theory that employees are more motivated by personal attention and being part of a group than they are by money or even working conditions.

Related: 35 Examples of Motivation in the Workplace

5. Systems management theory

This theory asserts businesses consist of multiple components that must work in harmony for the larger system to function optimally. The organization’s success, therefore, depends on synergy, interdependence and interrelations between subsystems. According to this theory, employees are the most important components of a company, and departments, workgroups and business units are all additional crucial elements for success. 

Per the systems management theory, managers should evaluate patterns and events within the organization to determine the best management approach. They need to collaborate and work together on programs to ensure success.

Related: A Guide to Retaining Talent and Why It Matters (With Tips)

6. Contingency management theory

Developed by Fred Fiedler, this theory’s primary focus is that no one management approach works for every organization. Fiedler suggested a leader’s traits were directly related to how effectively they lead their team. He asserts there are leadership traits that apply to every kind of situation and that a leader must be flexible to adapt to a changing environment.

Related: Leader vs. Manager: 7 Key Differences

7. Theory X and Y

American social psychologist Douglas McGregor introduced X and Y theories in his book, “The Human Side of Enterprise,” where he concluded two different styles of management are guided by their perceptions of team member motivations. Managers who assume employees are apathetic or dislike their work use theory X, which is authoritarian. Theory Y is used by managers who believe employees are responsible, committed and self-motivated. This is a participative management style that gives rise to a more collaborative work environment, whereas theory X leads to micromanaging.

He concluded large organizations may rely on theory X to keep everyone focused on meeting organizational goals. Smaller businesses, where employees are part of the decision-making process and where creativity is encouraged, tend to use theory Y.

Related: Guide to People Management: Definition, Tips and Skills

Tips for using management theories in the workplace

Here are some tips to help you apply the best practices from these management theories in your workplace:

Invest in employee training

As Frederick Taylor proposed in his scientific management theory, you can boost employee productivity by observing work processes and then creating policies recommending best practices. Invest in training for your employees to help them be more effective in their respective roles. You will generally find such training boosts their productivity and improves overall on-the-job performance. Human relations theory can impact productivity as well, since the attention you give team members and the interest you pay in their performances can increase their productivity.

Related: 14 Effective Tips for Developing Employees

Give employees power in making decisions

Take a cue from the human relations theory by encouraging interpersonal relationships and creating a collaborate environment. Give your team members more power in making decisions. This could mean giving them more control within their roles or allowing greater contribution to departmental goals and strategies. Consider creating sub-groups within your department and allowing those teams greater decision-making abilities to reach organizational goals.

Related: Guide To Delegation in Leadership

Flatten the organizational hierarchy

Research suggests that flattening the hierarchy can increase local innovation and speed up the decision-making process. This could mean getting rid of titles or senior positions to inspire a cohesive, collaborative work environment. It could also mean empowering team leaders with more decision-making capabilities and eliminating the need to fully move up the chain of command to receive approval on decisions.

Related: What Makes a Good Leader? Best Tips & Growth Strategies

Jenn, a career coach, explains what leadership is, essential leadership behaviors, skills and styles, and how to identify the right approach for your workplace.