Management Theories & Concepts at the Workplace

by Hashaw Elkins; Reviewed by Michelle Seidel, B.Sc., LL.B., MBA; Updated March 27, 2019
Whether they are motivating employees, making decisions,
allocating resources or negotiating deals, managers are vital
for business. Managers have been an integral factor for
business success since the Industrial Revolution.
Management theories have been developed and used since
management first became a standard part of business
practices. While older theories still hold relevant, new theories
continue to be developed to keep up with current trends in
business.

The workplace has changed dramatically since the first management theories were
conceived. Modern management is not a one-size-fits-all practice. Therefore, it is
helpful to gain an understanding of management theories and their applications.

Common Concepts in Management Theories

Management theories all revolve around similar concepts. Managers are expected to
handle processes, people, information and other duties as necessary. A manager may
need to motivate their subordinate employees or determine how best to improve
operational processes. Management theories provide frameworks for successfully
handling those responsibilities.

Managers must be responsible for the performance of their teams toward

organizational goals. Reaching business goals might include reducing human error or
standardizing processes. Management theories help to clarify these types of goals for
managers and inform on how best to realize those goals.

Where Did Management Theories Originate?

Mass production and the Industrial Revolution brought about new requirements for
managing people and processes. As companies began to grow in size and production,
business owners increasingly needed managers to run their daily operations. Prior to
the Industrial Revolution, only a few organizations and militaries required theories for
management. As a result of expanding industry, the practice of management became
a major theoretical consideration in the study of business.

How Are Management Theories Classified?

Certain management theories have become integral to modern business practices.

There are three major classifications for management theories: Classical
Management Theory, Behavioral Management Theory and Modern Management
Theory. These classifications represents a different era in the evolution for
management theories. Each of these classifications further contain multiple sub-
theories.
Classical Management Theory centers around execution and maximizing production.
Behavioral Management Theory focuses increasingly on human elements and
viewing the workplace as a social environment. Modern Management Theory builds
on the previous two theories, while incorporating modern scientific methods and
systems thinking.

Classical Management Theory

Classical Management Theory is the oldest management theory. Classical

Management Theory focuses on operations and the creation of standards to increase
production output. In Classical Management Theory, compensation is considered the
primary motivation for employees. A manager practicing Classical Management
Theory would be focused on improving output and rewarding high-performing
employees through wages or bonuses.

There are three primary theories that comprise the Classical Management Theory:

Scientific Management Theory

Scientific Management Theory is a very early management theory focused on

minimizing waste and reducing production times. It was developed by Frederick
Taylor, who attempted using a scientific approach for improving operations. Taylor’s
theory emphasizes incentivizing employee performance and reducing “hit and trial”
practices.

Administrative Management Theory

Administrative Management Theory was developed by Henri Fayol, who is considered

to be a founder of management theory. This theory considers all of the many
activities that a business must conduct. Management is considered a primary
business activity and this theory provides detailed guidelines for managers.

Bureaucracy Theory

Bureaucracy Theory promotes reason to guide management decisions, rather than

charisma or nepotism. Developed by sociologist Max Weber, this theory emphasizes
formal authority systems. Unity and the authority of organizational hierarchies are
central to Bureaucracy Theory.

Behavioral Management Theory

Increasingly complex industries and organizations gave rise to more human interests
in the workplace. Management theories began to include more people-oriented
methods. Human behavior and satisfying the interpersonal needs of employees
became more central to management. A manager practicing Behavioral Management
Theory might motivate teamwork through fostering a collaborative atmosphere.

There are two major theories that make up Behavioral Management Theory:

Human Relations Theory

Human Relations Theory considers the organization as a social entity. This theory
recognizes that money alone is not enough to satisfy employees. Morale is
considered to be integral to employee performance. The major weakness of this
theory is that it makes several assumptions about behavior.

Behavioral Science Theory

Behavioral Science Theory combines elements of psychology, sociology, and

anthropology to provide a scientific basis. It examines why employees are motivated
by specific factors, such as social needs, conflicts and self-actualization. This theory
recognizes individuality and the need for managers to be sociable.

Modern Management Theory

Modern organizations must navigate constant change and exponential complexities.

Technology is an element that can change and upend businesses very rapidly.
Modern Management Theory seeks to incorporate these elements with human and
traditional theories. A manager practicing Modern Management Theory might use
statistics to measure performance and encourage cross-functional cooperation.

Three major modern theories comprise Modern Management Theory:

Quantitative Theory

Quantitative Theory arose out of the need for managerial efficiency during World War
II. It was developed using experts from multiple scientific disciplines to solve the
issues around integrating systems of people, materials and systems. This theory was
developed primarily to enhance and support military decision-making.

Systems Theory

Systems Theory views management as an interrelated component of the

organization. Instead of viewing the organization as a series of silos, each
department is part of an overall system or organism. Management must support
goals and process flows that serve the overall organizational health.

Contingency Theory

Contingency Theory was developed by sociologist Joan Woodward after she

examined why some companies performed better than others. She found that high
performing organizations make better use of technology and their managers made
better decisions in situational contexts. This theory recognizes that effective
managers must be adaptable to unique situations and circumstances.

How to Select a Management Theory?

Each management theory provides valuable insight into managerial requirements.

There is no single model or theory that will work for every organization. Many modern
organizations apply a combination of theories to realize management success. This
has led to the creation of newer organizational models with less structured
hierarchies.

Effective management is the backbone of any business. It is important to consider

several factors when deciding which theories are most ideal for a small business.
Often, small businesses are less rigidly hierarchical and must operate with minimal
staff. It is important to select management theories and practices that are
sustainable, especially if business resources are limited.
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References (4)
Management’s Three Eras: A Brief History
Classification of Management Theories: 4 Schools of Thought
Management Theories Every Small Business Owner Should Know
Concepts, Theories, and Classifications
About the Author

Hashaw Elkins is a certified business analyst and project management consultant.

She has led projects across multiple industries and sectors, ranging from the Fortune
Global 500 to international nongovernmental organizations. Hashaw holds a master's
degree in project management and is a professionally certified PMP, PMI-PBA, CSM,
CSPO, and Lean Six Sigma Black Belt Her undergraduate studies were in international
affairs. Hashaw is further certified in organizational change management, diversity
management, and cross-cultural mediation.

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