Explore the 8 Management Theories and How They Help Organisations

Explore the dynamic landscape of how organisations become efficient through employee relationships by looking at management theories. You will discover that classical principles still shape modern management practices.  

Management theories provide a framework for varying working environments and company cultures. And, it is not just one management theory that applies to all settings. Some companies may blend two or more theories to adapt the styles of management and leadership for the employees. 

Let’s look at the most popular theories in the management domain today. 

1. Scientific Management Theory
2. Classical Management Theory
3. Administrative Management Theory
4. Human Relations Theory
5. Contingency Management Theory
6. Bureaucratic Management Theory
7. Systems Management Theory
8. Theory X and Theory Y

1. Scientific Management Theory 

In his monograph, The Principles of Scientific Management, Frederick Winslow Taylor advocated the scientific management theory around 1911. According to this theory, he proposes that working hard is not a determining factor for improving business goals. Instead, tasks can be simplified systematically to meet goals.  

There are four scientific management principles in this theory of management. 

1. Science, Not Rule of Thumb – Finding an objective approach to complete a job, through constant experimentation
2. Harmony, Not Discord – Creating a positive atmosphere for employees and employers
3. Cooperation, Not Individualism – Both managers and employees should be involved in deciding and determining standards. 
4. Development of each Individual’s Efficiency & Prosperity – From the moment the employee is hired, they should be put into training and development. Work should be allocated based on their skills and interest. 

2. Classical Management Theory 

It follows a hierarchical structure where one leader makes the decisions. This management theory is based on the assumption that employees/workers have only financial needs. If the company can fulfil the employee’s financial needs, that is motivation enough for increased productivity. 

While there is a clear division of labour and clarity in management, some criticisms are involved. It does not factor in developing relations with employees and fails to provide ground for innovation. 

3. Administrative Management Theory 

Known as Fayolism, as introduced by Henri Fayol, this theory consists of 14 principles. They are popularly known as the 14 principles of management. 

1. Division of labor
2. Authority and Responsibility
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of Individual Interest
7. Remuneration
8. Degree of Centralization
9. Scalar Chain
10. Order
11. Equity
12. Stability of Tenure of Personnel
13. Initiative
14. Esprit de Corps

Also check out What is Administration? to find out how these principles are advocated. 

These 14 principles are based on six types of managerial responsibilities. 

1. Organise
2. Command
3. Control
4. Coordinate
5. Plan
6. Forecast

4. Human Relations Theory

Developed by Professor Elton Mayo, this theory looks into human needs. As part of business management back in the day, this theory evolved out of the Hawthorne Studies conducted by Professor Mayo and colleagues. 

There are four factors in this theory. Employee, group of employees, supervisors and the company/organisation. These four factor contribute to six different elements. 

1. Treating employees people with a focus on building human relations as opposed to considering them as machines
2. Promoting positive values through encouraging interaction at workplace
3. Providing effective supervision and removing stress and fatigue among employees
4. Creating healthier working conditions

5. Contingency Management Theory

Emerging in the 1970s, this theory was proposed by Fred Fiedler. It suggests that leadership should be adaptable to any situation. There is not one way for organising, but multiple. In this case, the responsibility falls on the leader, who should be able to adapt according to internal and external factors.

Some of the most crucial factors in the contingency management theory are 

• Structure of Work/tasks 
• Leader-employee Relationship
• Leader’s power

Fiedler developed a least-preferred coworker (LPC) scale where the leader can highlight the employee who is the hardest to work with and then rate them. 

A similar read would be the Hersey Blanchard model, well known as the Situational Leadership Theory.

6. Bureaucratic Management Theory

Developed by German sociologist, Max Weber, bureaucratic management theory is based on the systematic formation of an organisation that bases itself on efficiency. There are six characteristics or principles to explore in this theory. 

1. Hierarchical structure
2. Management based on rules
3. Specialisation of tasks
4. Impersonal approach based on rationality 
5. Career orientation
6. Hiring based on employee’s ability and skills

7. Systems Management Theory

This management approach considers that an organisation consists of many subsystems. They need not work together but work for the whole. The different components 

This theory originated in the 1950s and provided a holistic perspective on management that the classical management theory could not. 

8. Theory X and Theory Y

Social psychologist, Douglas McGregor developed this management theory in the 1960s. Theory X and Theory Y are two contrasting motivational methods that managers should be aware of. 

In theory X, the assumption is that employees dislike work because of which they must be coerced to meet organisational goals. In theory Y, the assumption is that the employee is already interested in the work. And that, they can already meet business goals through self motivation, provided they get enough motivation to work. According to McGregor, Theory Y should be adopted in organisations. 

To learn about motivation in the workplace, you may check on the commonly known and practised theories of motivation.  

Parting Thoughts

These are the eight management theories that are popularly used. Whether you are new to organisations as a fresher or are switching jobs, you will notice the management styles are a mix of these theories. Hopefully, understanding these will help you answer general management interview questions and help you deal with complex managerial situations.

Make sure to check out some management courses as well.