12 Essential Management Theories Used By Managers

Managers and Supervisors in big and small businesses lead and motivate their teams. They might use a specific Management Theory or a mix of theories to bring out the best in their employees. This blog will explain and describe 11 Management Theories and their essential elements. We will also explore the benefits of each theory when applied in today's workplaces. 

Table of Contents 

1) What are Management Theories?   

2) 11 Management Theories   

   a) Scientific Management Theory   

   b) Systems Management Theory   

   c) Contingency Management Theory   

   d) Theory X and Theory Y   

   e)  Administrative Management Theory   

   f) Bureaucratic Management Theory   

   g) Human Relations Theory   

   h) Administrative Management Theory   

   i) Classical Management Theory   

   j) Modern Management Theory   

3) Why Management Theories are Essential for Managers and Organisations?  

4) Conclusion    

What are Management Theories? 

Management Theories are conceptual frameworks that provide strategies for effectively managing a company. These theories offer a range of guidelines and principles that can be applied to modern businesses.  

While professionals often adopt elements from multiple management theories, they tend to select and integrate the ideas that align most closely with their specific organisational culture and the needs of their employees. This tailored approach allows them to create a management style that is both effective and adaptable, ensuring the best possible outcomes for their company.
 

12 Management Theories 

Even though some Management Theories were created long ago, their principles can still work well in today's tech-savvy business world. Let's dig into 12 theories that you should know about: 

1) Scientific Management Theory 

In the late 1800s, Frederick Taylor was one of the first to take a scientific approach to Management Theory, which was all about maximising productivity. He thought using the scientific method to perform workplace tasks instead of relying on team members' judgment could boost productivity.  

Taylor also believed that simplifying tasks, giving team members thorough training, and promoting cooperation between supervisors and employees could improve productivity. 

2) Systems Management Theory 

Systems management offers an alternative approach to organisational planning and management. It proposes that businesses, like the human body, consist of multiple components that work harmoniously so that the more extensive system can function optimally. According to the theory, an organisation's success depends on several key elements: synergy, interdependence, and interrelations between various subsystems. 

Employees are one of the company's most critical components. Other elements crucial to a business's success are departments, workgroups, and business units. In practice, Managers must evaluate patterns and events in their companies to determine the best management approach. This way, they can collaborate on different programs to work collectively rather than as isolated units. 

3) Contingency Management Theory 

Fred Fiedler came up with the Contingency Management Theory, which suggests that a leader's traits directly affect their effectiveness. According to Fiedler, a leader must be adaptable and flexible because leadership traits apply to every situation.  

Here are the main points of the theory:  

a) There's no one-size-fits-all technique for managing an organisation.  

b) A leader should be able to quickly figure out the right management style for a specific situation.  

c) The critical component of Contingency Theory is LPC, the Least Preferred Co-worker scale, used to assess a Manager's orientation. 

4) Theory X and Theory Y 

In 1960, Douglas McGregor introduced Theory X and Theory Y in his book "The Human Side of Enterprise" to describe two types of workers and the required leadership styles. Theory X workers need structure and direction, while Theory Y workers are self-motivated and thrive in a participative environment. 

McGregor's idea of different management styles still makes sense, but in real life, employees and Managers usually don't fit into the extreme categories he described. This view also ignores how Managers and workers can affect each other. For example, someone naturally driven can lose motivation if they're micromanaged too much. 

5) Administrative Management Theory 

This 19th-century theory by Henri Fayol outlines 14 principles for Managers: 

1) Division of Work: Splitting up project tasks among team members lets them concentrate on specific jobs without spreading themselves too thin. 

2) Authority and Responsibility: To obtain the best results, a balance between authority, the right to make management decisions, and the employee’s responsibility over their tasks should exist. 

3) Unity of Command: This rule says employees should only take orders from one boss to avoid conflicting requests and keep things organised. 

4) Unity of Direction: This principle ensures that all employees on the same project aim for the same goals. It's up to the department Managers to coordinate and give clear directions to their teams. 

5) Equity: The equity principle is about ensuring everyone is treated fairly and with kindness. 

6) Order: This idea ensures smooth operations by placing the right person in the right job, improving the work environment, and ramping up productivity. 

7) Discipline: This principle concerns keeping things organised and setting up rules for the team. It also means Managers must behave disciplined and set an excellent example for others. 

8) Initiative: Employees can devise and start new projects that inspire them if they respect the company's rules and values. 

9) Remuneration: This is all about ensuring that employees are compensated, which boosts productivity and loyalty. It's also about the value employers see in their workforce. 

10) Stability: The stability principle states that employees need to feel like they have job security to work well. This helps them stay longer and be more productive. 

11) Scalar Chain: This helps employees know who to contact as they move up the management chain and sets up the company hierarchy. 

12) Subordination of Interest: To keep things running smoothly, Managers must prioritise the organisation's needs rather than focusing solely on individual employees. 

13) Esprit de corps: This phrase is all about feeling proud. To boost that pride, Managers should find ways to build teamwork, get everyone excited, and acknowledge great work. 

14) Centralisation and Decentralisation: In simple terms, centralisation means a select few people make decisions for everyone, usually at the top levels of leadership. Decentralisation, on the other hand, means the whole organisation makes decisions.  

6) Bureaucratic Management Theory 

Max Weber's bureaucratic Management Theory emphasises a hierarchical structure with a transparent chain of command. Its key features include: 

a) Clear division of labour 

b) Hierarchical structure prioritising communication and responsibility 

c) Worker selection based on education and technical skill 

d) Consistent regulations and rules 

e) Impersonal working relationships to prevent favouritism 

f) Achievement-based advancement, regardless of personality traits 

7) Human Relations Theory 

George Elton Mayo, an Australian Psychologist and Researcher, developed this Management Theory. He conducted experiments to improve workplace conditions and productivity. He found that employees might be more motivated by personal attention and a sense of belonging than by favourable working conditions or compensation alone. 

Mayo found that when researchers paid attention to the workers, it led to the "Hawthorne effect," which suggests that researchers' attention affects study results. The Hawthorne studies highlighted the importance of human relations in business operations for business management. Mayo and subsequent theorists drew related conclusions from this. 

8) Classical Management Theory 

The Classical Management Theory only cares about making money and treating workers like cogs in a machine. It's all about raising as much profit as possible, upping productivity, streamlining operations, and having a straightforward leadership setup. It thinks giving out fat paychecks or bonuses will make people work harder and get more done.  

While there are better fits for today's businesses, things like a transparent chain of command, splitting up tasks, and spelling out everyone's job can still be helpful. 

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9) Modern Management Theory 

Modern Management Theory is different from classical management. It's about the idea that employees aren't just in it for the paycheck; they're also into being happy and satisfied and having work that fits with their lifestyle.  

So, Managers using this style tap into technology to figure out what their employees need and to implement things that support them and help them get even better at what they do. 

10) Holistic Management Theory 

The holistic Management Theory, also known as integral theory or the organisations as learning systems theory, is based on the idea that businesses work better when all the parts are connected and working together.  

According to this theory, management should be transparent, set clear goals, and unite employees around a common purpose. This approach focuses on continuous learning and change, emphasising teamwork, sharing information, and empowering individuals. 

11) Knowledge Worker Theory 

Peter Drucker developed the Knowledge Worker Theory, which became popular in the latter half of the 20th century as organisations began to adopt his ideas of balancing business needs with the community.  

According to this theory, employees are seen as valuable assets with skills that must be managed and developed. It is up to management to train employees and provide them with learning opportunities through external resources to fill any skill gaps. 

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Why Management Theories are Essential for Manager and Organisations? 

Management Theories help companies focus, communicate, and grow. By applying Management Theory in the workplace, leaders can zero in on their main goals. When a management style or theory is implemented, it automatically streamlines the organisation's top priorities. 

Management Theory also makes it easier to communicate with coworkers, helping us work more efficiently. Understanding Management Theory allows us to make assumptions about management styles and goals, saving time during daily organisational interactions and meetings. 

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Conclusion 

Management Theories can only go so far—there's no one-size-fits-all theory. What works for one organisation might not work for another, so it's important to consider developing new, more relevant theories when needed. Some theories stand the test of time, while others become outdated and are replaced by new ones.