Together, focusing on individual employee productivity and managing the overall firm comprise the

1. Career Development
2. 7 Types of Workplace Management Theories

By Indeed Editorial Team

June 9, 2021

This article has been approved by an Indeed Career Coach

 

Understanding and applying the best practices from management theories can help you be more effective in guiding your team to success. Many of these theories gave rise to the leadership approaches commonly used to guide and grow organizations today, and you can choose from among them to identify the strategies that will work best for you and your team. Understanding and applying management theories takes practice and possibly some trial and error. In this article, we explain the most common management theories and share some tips for how you can apply them in the workplace.

What are management theories?

Management theories are a collection of ideas that recommend general rules for how to manage an organization or business. Management theories address how supervisors implement strategies to accomplish organizational goals and how they motivate employees to perform at their highest ability. Typically, leaders apply concepts from different management theories that best suit their employees and company culture. Although many management theories were created centuries ago, they still provide many beneficial frameworks for leading teams in the workplace and running businesses today.

Related: Management Skills: Definition and Examples

Benefits of management theories

There are several reasons why leaders should study and apply management theories, including:

• Increased productivity: Using these theories, leaders learn how to make the most of their team members, improving performances and increasing productivity.

• Simplified decision-making: Management theories give leaders strategies that speed up the decision-making process, helping those leaders be more effective in their roles.

• Increased collaboration: Leaders learn how to encourage team member participation and increase collaboration in the workplace.

• Increased objectivity: Management theories encourage leaders to make scientifically proven changes rather than relying on their judgment.

Related: Management Styles: Overview and Examples

Types of management theories

Here are seven important management theories to be aware of:

1. Scientific management theory

Developed by Frederick Taylor, he was one of the first to study work performance scientifically. Taylor’s principles recommended that the scientific method should be used to perform tasks in the workplace, as opposed to the leader relying on their judgment or the personal discretion of team members. His philosophy emphasized that forcing people to work hard would result in the most productive workplace. Instead, he recommended simplifying tasks to increase productivity. He suggested that leaders assign team members to jobs that best match their abilities, train them thoroughly and supervise them to ensure they are efficient in the role. 

While his focus on achieving maximum workplace efficiency by finding the optimal way to complete a task was useful, it ignored the humanity of the individual. This theory is not practiced much today in its purest form, but it demonstrated to leaders the importance of workplace efficiency, the value of making sure team members received ample training and the need for teamwork and cooperation between supervisors and employees.

2. Principles of administrative management theory

Henri Fayol, a senior executive and mining engineer, developed this theory when he examined an organization through the perspective of the managers and situations they might encounter. He believed that leaders had six main functions, to forecast, plan, coordinate, command and control, and he developed principles that outlined how leaders should organize and interact with their teams. He suggested that the principles should not be rigid but that it should be left up to the manager to determine how they use them to manage efficiently and effectively. The principles he outlined are:

• Initiative: This refers to the level of freedom employees should have to carry out their responsibilities without being forced or ordered. 
  

• Equity: This principle implies everyone in the organization should be treated equally and that it should be an environment of kindness.
  

• Scalar chain: This principle says there should be a chain of supervisors from the top level of management to the lower level and that communication generally flows from top to bottom. He emphasized that there is no hard rule regarding the communication process through the chain of command.
  

• Remuneration of personnel: This principle refers to the assertion that there should be both monetary and non-monetary remuneration based on performance levels to create a bond between the employee and the organization.
  

• Unity of direction: This principle asserts that there should be only one manager per department who is in charge of coordinating the group activity to attain a single goal.
  

• Discipline: According to this principle, employees should be respectful and obedient, and an organization should outline rules and regulations that clarify rules, good supervision and a reward-punishment system.
  

• Division of work: This principle asserts that the overall action of management should be divided and that team members should be given responsibilities based on their skills and interests to make them more effective and efficient.
  

• Authority and responsibility: According to this principle, there should be a balance between authority⁠—the right to give commands and make decisions⁠—and responsibilit⁠y⁠—the obligation of an employee to perform the tasks they’re designated. 
  

• Unity of command: This refers to the assertion that employees must get orders from only one immediate supervisor and be accountable to that person only.
  

• Subordination of individual interest to general interests: There must be harmony between the interests of the individual and the organization, although the organizational interest should be given priority since it will bring rewards for the individual.
  

• Centralization: According to this principle, the topmost level of authority should be centralized to the top level of management, who has the power to make the most important decisions in an organization.
  

• Order: This principle asserts that for an organization to run smoothly, the right person must be in the right job and that, therefore, every material and employee should be given a proper place.
  

• Stability of tenure: According to this principle, employees must have job security to be efficient.
  

• Espirit de corps: This refers to the belief that there must be a unified team contribution and that cooperation is always greater than the aggregate of individual performances.

3. Bureaucratic management theory

Developed by Max Weber, bureaucratic management theory focuses on structuring organizations in a hierarchy so there are clear rules of governance. His principles for creating this system include a chain of command, clear division of labor, separation of personal and organizational assets of the owner, strict and consistent rules and regulations, meticulous recordkeeping and documentation and the selection and promotion of employees based on their performance and qualifications. 

This theory has played a key role in establishing standards and procedures that are at the core of most organizations today.

4. Human relations theory

This theory was developed by Elton Mayo, who conducted experiments designed to improve productivity that laid the foundation for the human relations movement. His focus was on changing working conditions like lighting, break times and the length of the workday. Every change he tested was met with an improvement in performance. Ultimately, he concluded that the improvements weren’t due to the changes but the result of the researchers paying attention to the employees and making them feel valued. 

These experiments gave rise to the theory that employees are more motivated by personal attention and being part of a group than they are by money or even working conditions. 

5. Systems management theory

This theory asserts that businesses consist of multiple components that must work in harmony for the larger system to function optimally. The organization’s success, therefore, depends on synergy, interdependence and interrelations between subsystems. According to this theory, employees are the most important components of a company, and departments, workgroups and business units are all additional crucial elements for success. 

According to this theory, managers should evaluate patterns and events within the organization to determine the best management approach. They need to collaborate and work together on programs to ensure success.

6. Contingency management theory

Developed by Fred Fiedler, this theory’s primary focus is that no one management approach works for every organization. Fiedler suggested that a leader’s traits were directly related to how effectively they lead their team. He asserts that there are leadership traits that apply to every kind of situation and that a leader must be flexible to adapt to a changing environment.

7. Theory X and Y

American social psychologist, Douglas McGregor, introduced X and Y theories in his book, “The Human Side of Enterprise,” where he concluded that two different styles of management are guided by their perceptions of team member motivations. Managers who assume employees are apathetic or dislike their work use theory X, which is authoritarian. Theory Y is used by managers who believe employees are responsible, committed and self-motivated. This is a participative management style that gives rise to a more collaborative work environment, whereas theory X leads to micromanaging.

He concluded that large organizations may rely on theory X to keep everyone focused on meeting organizational goals. Smaller businesses, where employees are part of the decision-making process and where creativity is encouraged, tend to use theory Y.

Related: Guide to People Management: Definition, Tips and Skills

Tips for using management theories in the workplace

Here are some tips to help you apply the best practices from these management theories in your workplace:

Invest in employee training

As Taylor proposes in his scientific management theory, you can boost employee productivity by observing work processes and then creating policies recommending best practices. Invest in training your employees to be more effective in their roles. You will generally find that it boosts their productivity and improves overall on-the-job performance. Human relations theory can impact productivity as well, since the attention you give team members and the interest you pay in their performances can increase their productivity.

Give employees power in making decisions

Take a cue from the human relations theory by encouraging interpersonal relationships and creating a collaborate environment. Give your team members more power in making decisions. This could mean giving them more control within their roles or allowing greater contribution to departmental goals and strategies. Consider creating sub-groups within your department and allowing those teams greater decision-making abilities to reach organizational goals.

Flatten the organizational hierarchy

Research suggests that flattening the hierarchy can increase local innovation and speed up the decision-making process. This could mean getting rid of titles or senior positions to inspire a cohesive, collaborative work environment. It could also mean empowering team leaders with more decision-making capabilities and eliminating the need to fully move up the chain of command to receive approval on decisions.