Management Theories, Types of Management

Types of Management Theories

1. Management Theories Types of Management Theories

2. Management Theories Management theories are the recommended management strategies that enable us to better understand and approach management. Many management frameworks and guidelines were developed during the last four decades. What do we mean by Management Theories? Management theories are the set of general rules that guide the managers to manage an organization. Management theories (also known as "Transactional theories") focus on the role of supervision, organization, and group performance. Theories are an explanation to assist employees to effectively relate to the business goals and implement effective means to achieve the same. In this article, we will discuss the historical context of management, diverse views on management, and finally the theories of management. Early management theories base leadership on a system of reward and punishment. Managerial theories are often used in business; when employees are successful, they are rewarded; when they fail, they are reprimanded or punished .

3. Types of Management Theories Management theories can be classified into three types.

4. These management theories are explained below:

5. General Management Theories There are four general management theories:

6. 1. Frederick Taylor’s Theory of Scientific Management : Taylor’s theory of scientific management aimed at, improving economic efficiency, especially labor productivity. Taylor had a simple view about, what motivated people at work, - money. He felt that workers should get a fair day's pay for a fair day's work, and that pay should be linked to the amount produced. Therefore he introduced the differential piece rate system, of paying wages to the workers. Taylor's Differential Piece Rate Plan: If Efficiency is greater than the defined Standard then workers should be paid 120 % of the Normal Piece Rate. If Efficiency is less than standard then workers should be paid 80% of the Normal Piece Rate . Principles of Scientific Management Four Principles of Scientific Management are: Time and motion study : - Study the way jobs are performed and find new ways to do them. Teach, train, and develop the workman with improved methods of doing work. Codify the new methods into rules. The interest of the employer & employees should be fully harmonized so as to secure mutually understanding relations between them. Establish fair levels of performance and pay a premium for higher performance.

7. 2. Henri Fayol’s Administrative Management Theory : Henri Fayol known as the Father of Management laid down the 14 principles of Management . These 14 principles of management are used to manage an organization and are beneficial for prediction, planning, decision-making, organization and process management, control, and coordination. Division of Work: Improves productivity, efficiency, accuracy, and speed Equity: Employees should be treated equally and respectfully Discipline: Makes the management job easy and make progress Initiative: support and encourage employees taking initiatives Authority and Responsibility: Efficient delivery of work with defined responsibility Esprit de Corps: Develop trust and mutual understanding Subordination of Individual Interest: Company over personal interest and respect the chain of command Stability: offer job security to their employees Remuneration: motivating factor linked to the individual’s efforts Unity of Direction: Unified goals and motives for all personnel working in a company Centralization: Balance between the hierarchy and division of power Scalar Chain: Hierarchy steps should be from top to the lowest Unity of Command: More than one boss brings a conflict of interest and confusion Order: the positive atmosphere in the workplace boosts productivity

8. 3. Max Weber’s Bureaucratic Theory of Management: Weber made a distinction between authority and power. Weber believed that power educes obedience through force or the threat of force which induces individuals to adhere to regulations. According to Max Weber, there are three types of power in an organization:- Traditional Power Charismatic Power Bureaucratic Power or Legal Power . Features of Bureaucracy: Division of Labor. Formal Hierarchical Structure. Selection based on Technical Expertise. Management by Rules. Written Documents. Only Legal Power is Important. Formal and Impersonal relations.

9. 4. Elton Mayo’s Behavioral Theory of Management: Elton Mayo's experiments showed an increase in worker productivity was produced by the psychological stimulus of being singled out, involved, and made to feel important . Hawthorne Effect can be summarized as “Employees will respond positively to any novel change in a work environment like better illumination, clean work stations, relocating workstations, etc. Employees are more productive because they know they are being studied. 5 Relationship Theories or Transformational Theories of Management Relationship theories (also known as "Transformational theories") focus upon the connections formed between leaders and followers. These leaders motivate and inspire people by helping group members see the importance and utility of the task. Transformational leaders are focused on the performance of group members, but also want each person to fulfill his/her potential. These leaders often have high ethical and moral standards. There are different thoughts on management. According to one school of thought, history is of no relevance to the real problems faced by modern world managers in today's dynamic environment. However, both management theory and its history are indispensable tools for managing complex digitally-enabled organizations in a modern context.

10. Forces Influencing Management Theories The following three forces had a major influence on the concept and evolution of management theories. Social Forces: Social forces are the norms and values that characterize a culture. Early social forces allowed workers to be treated poorly. However, more recent social forces have provided for more acceptable working conditions for the workforce. Social forces have greatly influenced the management thought in the areas of motivation and leadership. Economic Forces: Economic factors have influenced the way businesses developed and designed their organizational structures, workforce, etc. Examples of these economic forces are Ideas like a market economy, public enterprise, and private ownership of property, economic freedom, competitive markets, and globalization. Political Forces: Political forces such as governmental regulations play a significant role in how organizations choose to manage themselves. Government actions and political realities often influence the success and failure of a business and most of the time political factors that affect a business are often completely out of the company's control. Political forces have influenced management theory in the areas of environmental analysis, planning, control, and organizational design and employee rights.

11. Management Theories

12. Importance of Management Theories In both theory and practice, business management is at a crisis point. The world is changing — and changing quickly. There is no single management philosophy that answers every need. The best managers are flexible and blend methods. They adapt several management theories as needed to handle new situations. Some people may believe in the Great Man Theory of Leadership. Others know that management is like anything else: Practice and education improve performance. Understanding different management theories help managers prioritize the processes, relationships and information that impact an organization’s success.

13. Behavioral Management Theory Behavioral management theory places the person rather than the process at the heart of business operations. It examines the business as a social system as well as a formal organization. Therefore, productivity depends on proper motivation, group dynamics, personal psychology, and efficient processes. Behavioral management theory humanizes business. Feelings have a practical impact on operations. Team spirit, public recognition, and personal pride encourage employees to perform better. Individual relationships also play a role. Employees are more likely to go the extra mile for a boss they respect and who respects them. Shortcomings of behavioral management theory include: The difficulty of balancing personal relationships with professional conduct An inclination toward socially motivated hiring practices that can be unjust  The danger of assuming that all individuals respond the same way to the same situations and for the same reasons .

14. Human Relations Theory THEORY X AND THEORY Y Douglas McGregor primarily investigated the way managers motivate their employees. The same tactics don’t work across the board, and individuals require different types of oversight or encouragement. In 1960, McGregor developed Theory X and Theory Y in response, laid out in “ The Human Side of Enterprise.” This management theory divides workers into two camps that require two leadership styles. 1) Theory X workers lack drive . Managers need to provide large amounts of structure and direction to get them to accomplish the necessary work. These workers demand an authoritarian style of management.  2) Theory Y workers are self-motivated individuals who enjoy their work and find it fulfilling . They benefit from a more participative environment that fosters growth and development. McGregor’s theory of differentiated management practices remains relevant, but neither workers nor managers tend to exist at the extreme ends of what should be a more nuanced spectrum. The approach also neglects the reciprocal effect managers and workers can have on one another. A natural self-starter can have their ambition micromanaged out of them.

15. Modern Management Theory Modern management theory adopts an approach to management that balances scientific methodology with humanistic psychology . It uses emerging technologies and statistical analysis to make decisions, streamline operations and quantify performance. At the same time, it values individual job satisfaction and a healthy corporate culture. This category of theories is more holistic and flexible than its predecessors. Data-driven decisions can remove human bias while still accommodating employee health and happiness indicators. Modern management theory also allows organizations to adapt to complex, fluid situations with local solutions instead of positing a single, overriding principle to drive management. Shortcomings of the modern management approach include: The prioritization of information that can be difficult, expensive, and time-consuming to collect The gap between theoretical flexibility and practical agility The tendency of some strains to be descriptive rather than prescriptive

16. Systems Management Theory Two popular strains of modern management theory  are: systems theory and contingency theory . Systems Management Theory: It’s no surprise that Ludwig Von Bertalanffy , who developed systems management theory , was a biologist. This theory borrows heavily from that discourse. Systems theory proposes that each business is like a single living organism . Distinct elements play different roles but ultimately work together to support the business’s health. The role of management is to facilitate cooperation and holistic process flows. Systems management theory sometimes leans more toward metaphorical description than prescriptive application . However, you can see evidence of the approach in technological architectures and tools that standardize services and open access to information. For example, innovations such as data fabric help break down departmental silos.

17. Contingency Management Theory Contingency management theory addresses the complexity and variability of the modern work environment. Fred Fiedler realized that no one set of characteristics – no single approach – provided the best leadership in all situations. Success instead depended on the leader’s suitability to the situation in which they found themselves. Fiedler focused on three factors that determine that situation: Task structure:  How well defined is the job? Leader-member relations:  How well does the leader work with team members? Leader position power:  How much authority does the leader have? To what extent can they distribute punishments and rewards? Managers can be classified as having a task-oriented or a people-oriented style. Task-oriented managers organize teams to accomplish projects quickly and effectively. People-oriented managers are good at handling team conflict, building relationships, and facilitating synergy. Task-oriented leaders thrive in both highly favorable and unfavorable conditions, but people-oriented leaders do better in more moderate configurations. The least-preferred coworker (LPC) scale  is a common management tool developed by Fiedler to help leaders pinpoint their style. The scale asks you to identify the coworker you have the hardest time working with and rate them. Relationship-oriented managers tend to score higher on the LPC scale than task-oriented managers.

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