What are Management Theories?

Management theories are concepts surrounding recommended management strategies,

which may include tools such as frameworks and guidelines that can be implemented in
modern organizations. Generally, professionals will not rely solely on one management
theory alone, but instead, introduce several concepts from different management
theories that best suit their workforce and company culture.
At a Glance
Until the day that machines are able to think, talk, and experience emotions, humans
will remain the most complicated beings to manage. Humans can never achieve the
kind of error-free performance that machines provide. On the upside, there are tons of
things that machines aren’t capable of doing, making humans indispensable assets. For
such reason, proper management is one of the most crucial things for an organization.

For a long time, theorists have been researching the most suitable forms of
management for different work settings. This is where management theories come into
play. Although some of these theories were developed centuries ago, they still provide
stable frameworks for running businesses.

Popular Management Theories

1. Scientific Management Theory

American mechanical engineer Frederick Taylor, who was one of the earliest
management theorists, pioneered the scientific management theory. He and his
associates were among the first individuals to study work performance scientifically.
Taylor’s philosophy emphasized the fact that forcing people to work hard wasn’t the
best way to optimize results. Instead, Taylor recommended simplifying tasks so as to
increase productivity.
The strategy was a bit different from how businesses were conducted beforehand.
Initially, a factory executive enjoyed minimal, if any, contact with his employees. There
was absolutely no way of standardizing workplace rules and the only motivation of the
employees was job security.
According to Taylor, money was the key incentive for working, which is why he
developed the “fair day’s wages for a fair day’s work” concept. Since then, the scientific
management theory has been practiced worldwide. The resulting collaboration between
employees and employers evolved into the teamwork that people now enjoy.
2. Systems Management Theory
Systems management offers an alternative approach to the planning and management
of organizations. The systems management theory proposes that businesses, like the
human body, consists of multiple components that work harmoniously so that the larger
system can function optimally. According to the theory, the success of an organization
depends on several key elements: synergy, interdependence, and interrelations
between various subsystems.
Employees are one of the most important components of a company. Other elements
crucial to the success of a business are departments, workgroups, and business units.
In practice, managers are required to evaluate patterns and events in their companies
so as to determine the best management approach. This way, they are able to
collaborate on different programs so that they can work as a collective whole rather than
as isolated units.
3. Contingency Management Theory
The main concept behind the contingency management theory is that no one
management approach suits every organization. There are several external and internal
factors that will ultimately affect the chosen management approach. The contingency
theory identifies three variables that are likely to influence an organization’s structure:
the size of an organization, technology being employed, and style of leadership.
Fred Fiedler is the theorist behind the contingency management theory. Fiedler
proposed that the traits of a leader were directly related to how effectively he led.
According to Fiedler’s theory, there’s a set of leadership traits handy for every kind of
situation. It means that a leader must be flexible enough to adapt to the changing
environment. The contingency management theory can be summed up as follows:
There is no one specific technique for managing an organization.
A leader should be quick to identify the particular management style suitable for a
particular situation.
The primary component of Fiedler’s contingency theory is LPC – the least preferred co-
worker scale. LPC is used to assess how well oriented a manager is.
4. Theory X and Theory Y
Do you believe that every individual gets maximum satisfaction from the work they do?
Or are you of the opinion that some view work as a burden and only do it for the
money? Such assumptions influence how an organization is run. The assumptions also
form the basis of Theory X and Theory Y.
Douglas McGregor is the theorist credited with developing these two contrasting
concepts. More specifically, these theories refer to two management styles: the
authoritarian (Theory X) and participative (Theory Y).
In an organization where team members show little passion for their work, leaders are
likely to employ the authoritarian style of management. But if employees demonstrate a
willingness to learn and are enthusiastic about what they do, their leader is likely to use
participative management. The management style that a manager adopts will influence
just how well he can keep his team members motivated.
Theory X holds a pessimistic view of employees in the sense that they cannot work in
the absence of incentives. Theory Y, on the other hand, holds an optimistic opinion of
employees. The latter theory proposes that employees and managers can achieve a
collaborative and trust-based relationship.
Still, there are a couple of instances where Theory X can be applied. For instance, large
corporations that hire thousands of employees for routine work may find adopting this
form of management ideal.

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 so as 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.
Key Takeaway
Throughout history, companies have been putting different management theories into
practice. Not only have they helped to increase productivity but they have also improved
the quality of services. Although these management theories were developed ages ago,
they help in creating interconnected work environments where employees and
employers work hand-in-hand. Some of the most popular management theories that are
applied nowadays are systems theory, contingency theory, Theory X and Theory Y, and
the scientific management theory.