Management Theories & Concepts at the Workplace (2024)

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 circ*mstances.

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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