Management Theory

By Sean Stevenson – Latest Revision April 14th, 2021

Learning Management Theory

Management theory is essential to creating and developing organizational success.  By understanding how to best manage and guide others, you will be in a uniquely powerful position of leadership. 

You can use the varied approaches of management theory to help your organization grow and prosper.

Management theory is often equated with various leadership strategies.  This is not a coincidence, as many of these ideals coincide with one another.

Applying management theory to your career or business takes a great deal of practice. 

Understanding Management Theories and Models

Management theory is essentially a compilation of business-related best-practices and guidelines.  Specifically, how to best manage your business or the organization you serve.

Everything from achieving goals, to implementing strategies, and dealing with employees, are all considered carefully.  Each business element can be addressed by meticulous use of management theory.

It should be noted that there is no “one-size-fits-all” management theorem.  On the contrary, every manager or leader will have their own way of doing things.  So, never become discouraged if a particular theory is not appealing to you personally.

The key to making management theory work for you, is to first think on the needs of your company culture.  Ask yourself:

  • Where are the weaknesses in our company?
  • What strengths do we currently enjoy?
  • How can I quickly make a positive impact?
  • What longer term courses of action will most benefit our productivity?

By researching these questions thoroughly and developing powerful strategies, you will already be well on your way to creating your own management theory.


Developing your productive processes and the employees who operate them is a matter of enabling productivity. 

If an employee is given all the tools and resources to do an exceptional job, then they are far more likely to succeed and thrive.    

Conversely, an employee who is “left to their own devices” will most likely prove ineffective.  This is often due to having little in the way of resources, tools, or training at their disposal.

Application and Benefits of Management Theories

The principles of management theory tend to yield staggering benefits over time.  When executed effectively. some of these benefits include:

Frameworks for decision-making – A framework for making decisions effectively can save the company and its personnel a great deal of time, money, and stress.  The use of ready-made strategies and tactics offers the leadership a much faster response time.  Rather than developing their ideas, they will already have a precedent to draw from.  Ideally, there are even procedures already in place to help further speed the ongoing process.

Heightened productivity options – Management theory is useful in delegating different tasks to a varied and specialized workforce.  Making the most of each individual or team can dramatically increase performance levels.  Moreover, learning to “mix” compatible personalities and skillsets together can provide a boost for employee morale.

Facts-first analysis – A key component of management theory is that it forces leaders to face the hard facts.  The application of stringent sciences and mathematics, helps to keep the company moving forward in a meaningful fashion.  This also ensures that inaccurate accounts or documentation are eliminated quickly, in favor of absolute objectivity.

Increased teamwork and participation – Another important aspect of management theory, is the education it offers managers and leadership toward inspiring productive habits in their subordinates.  Participation in extracurriculars and teamwork in general, both stand to make hefty gains from the studious application of management theory. 

Management Theory

Different Types of Management Theories

There are many different types of management theories.  Below are some of the most prominent of these, along with any relevant information or history that coincides with their practical application(s):

Bureaucratic Management Theory

Originally created by one Max Weber, bureaucratic management theory is much as its name would imply.  This theorem focuses on the structure of an organization and its hierarchy. 

The goal of bureaucratic management theory is to create clear rules of administration and authority.  Max Weber specified that such a decisive system required a division of labor and a chain of command.  Moreover, he was specific in stating that the owner’s own personal and organizational assets must be kept separate.  This was to ensure the solvency of the company, and ideally prevent the owner from liquidating assets to cover needless debts.

Moreover, consistency in procedures, rules, and regulations, were to be upheld.  Along with recordkeeping and enforced documentation, there was to be a clear paper trail for future reference (useful for both tax purposes and auditing).

Finally, the promotion and selection of employees was to be entirely based on merit.  That is, their on-the-job performance and qualifications would be the greatest concern.

Most organizations today would tout Max Weber’s bureaucratic management theory as an ingrained part of their business model.

There have since been several additions to this theory, including a greater desire for diversity amongst workplace cultures.

Classical Management Theory

This management theory is based on the idea that employees have only economic and physical needs.  In short, it takes a very limited view of subordinates.  The notions of job satisfaction and socialization for example, are not taken into account whatsoever.

The focus of classical management theory rests on specialization of labor and the centralization of leadership.  Its sole interests are the streamlining of operations.  This gives it the benefit of maximizing a company’s profitability. 

It is still used in manufacturing settings.  Though, some of its more dated aspects have mostly been phased out.

Contingency Management Theory

Created by Fred Fiedler, this aspect of management theory states that no single system will be effective for every organization.  There will always be outlier scenarios and factors that require contingency management theory. 

To this end, those in positions of authority must learn to master their own leadership skills.  This will allow them to attain better outcomes in a fluctuating business landscape.

Fiedler strongly believed that there were universal leadership traits that could be applied to every situation, no matter how dramatic the changes that occurred.  He underscored that every work environment is in a constant state of flux.  This meant that a leader must adapt and change accordingly, staying ahead of the shifting trends for the most optimal outcomes.

Human Relations Management Theory

Originally developed by one Elton Mayo, who vigorously studied the effect of workplace conditions such as break times, lighting, and the lengths of a given workday.  His experiments hoped to produce results which would help unravel the mysteries of productivity and how to improve it.

The changes Elton Mayo introduced to his test subjects, unanimously saw an increase in their productive capabilities.  Ironically enough, Elton concluded that the changes themselves were not what had yielded the impressive increases in productivity.  Rather, it had all ben the result of his research team making the employees feel valued by listening to their wants and needs as workers.

It was from this experience that Elton Mayo developed his management theory.  Human relations theory -as it was dubbed- was the result.  It suggests that every manager should carefully motivate their workers by offering them personal attention. 

This offering of personal attentiveness seemed to be even more important than financial gains or even the working conditions themselves!

Scientific Management Theory

Conceived by Frederick Taylor, who advocated for work performance to be studied from a scientific perspective.  In fact, he is commonly believed to have been the first to conduct this sort of research into the nature of productivity.

Taylor’s management theory opposed the idea of relying on the judgement of leaders or team members.  Instead, he philosophized that people only work hard when it is demanded of them.

Taylor ultimately tried to simplify work-related tasks to increase productivity.  He also proposed that organizational leadership assign tasks to individuals that best matched their capabilities.  Once matched to their new role, these individual workers would then be trained and supervised to ensure optimal efficiency.

While scientific management theory can certainly enhance productivity under the right circumstances, it undoubtedly ignores the human-side of productivity. 

In modern times, this theory tends to be “watered down” to a more people friendly format.  The focus is now more upon adequate training of employees, along with cooperation at all levels and within every department.

Systems Management Theory

This theory focuses on the larger systemic nature of a given organization.  The various components involved in its process, must work with effective synergy in order to achieve optimal results.

Every organization must depend on its systemic synergy to survive and prosper.  The interdependence of its systems and subsystems are crucial to this end.

This management theory states that employees are the most important of all the components that exist within a given organization.

From a leadership perspective, this means that management must collaborate with one another to use their departmental “components” effectively.  Whether it is the teams they manage, or the systems of production themselves, synergy must be promoted at every level.

Administrative Management Theory

Refined by Henri Fayol during his time as a senior executive and mining engineer.  His theory thoroughly examined an organization from the lens of an administrator or manager.  From this unique perspective, he developed numerous case-studies to serve as a guide for leadership.

Fayol strongly believed that leaders had six primary functions.  These functions were to forecast, plan, coordinate, command, and ultimately control the outcome.

Further developing his understanding of these functions as he observed them, he developed key principles for organizing and interacting corporate players.  From top-to-bottom, an organization could be refined into a well-oiled profit-making machine.  However, Fayol insisted that the use of these principles should remain flexible and not become too stringent.  This was to allow the manager or leadership to determine how to leverage their use as effectively as possible.

Henri Fayol’s principles are defined below:

Initiative – The personal prerogative employees have to complete their duties.  This means they are not compelled or disciplined into behaving a certain way whatsoever.

Unity of direction – This principle states that each department should have no more than one manager.  This is to ensure that coordination efforts remain grounded towards completing singular objectives.  Conversely, too many managers could create confusion and hinder productivity.

Equity – Equity relates to a workplace culture and how everyone is treated.  Fayol’s equity principle strongly advocated for equality, fairness, and a general environment of benevolence.

Scalar chain – A scalar chain suggest that communications flow from the very top to the utmost bottom within an organization.  To this end, there should be supervisors at every level, who can help emphasize the importance of these communications between different departments.  The actual method of ensuring that the communications were received and understood however, was left open for consideration.  This is likely due to the varied nature of workplace cultures (ex: what may work well in one organization, might not work in another).

Discipline – An organization must outline its own regulations and rules.  There must also be a reward-punishment system in place, which all employees are aware of.  By design, these structures promote a healthy workplace.  Employees have incentive to be both respectful and obedient toward one another.

Authority and responsibility – There must be a balance in the authority invested into leaders.  Every management theory states that the need for commands and decision-making must coexist with the rights of the worker.  A balanced authority and responsibility understands the obligations of the employees.

Unity of command – This refers to the structure of authority.  Orders must be doled out by one central figure.  Employees receiving this order must be able to focus on one immediate supervisor, who will hold them accountable.

Renumeration of personnel – This principle states that there must be both monetary and non-monetary compensation for employees.  This should be based entirely on performance levels.  Ideally, this act promotes the relationship between the organization and the employee.

Subordination of individual interests to general interests – The collective interests of the organization must always come first.  However, some priority must also be given to the interests of the individual who operates within the organization.  This includes paid holidays, sick leaves, and other gestures of goodwill towards a general workforce.

Division of work – Actions undertaken by management must remain subjectively divided and focused by necessity.  One department must focus on quality, another on production, and another on administration.  This creates a body or total structure for the workforce.  The organization can now dole out responsibility based on merit and capability.  Such a structure is the basis for virtually every company today.  It allows for a dynamic and engaged workforce to operate sensibly.

Stability of tenure – This principle states that every employee must enjoy security within their employment.  This ensures that they can perform at their best throughout their tenure.

Centralization of authority – The highest levels of the organization must consolidate authority.  This centralizes the top levels of leadership and management.  Through centralization of powers important decisions can be readily made on an informed basis, using the best resources available.

Order within – Every organization must assign the correct individual or team to the appropriate job.  This ensures that the organization can run efficiently and effectively.

Espirit de corps – This principle states that a unified team effort is the greatest ideal to pursue.  A collective effort is always greater than any individual performance.

Management Theory X and Y

Douglas McGregor -an American social psychologist- was the first to coin the X and Y management theories.  In his book, “The Human Side of Enterprise,” he contended that the two primary styles of management theory are guided by the perception of team member capabilities and motivations. 

Managers who assume the worst of their employees, tend to use management theory X, which is highly authoritarian (often leading to micromanagement).  Conversely, managers who think positively of their employees, tend to use management theory Y, which is more synergetic in nature.

McGregor felt that larger organizations tend to rely on management theory X by default.  The perception of their sheer size seems to limit the idea that everyone can work together without the need for authoritarianism.

For smaller organizations, McGregor noted that many seemed to be naturally inclined toward management theory Y.  This was believed to be due to the fact that employees in smaller companies have more autonomy, along with more opportunities to offer their own creative ideas.

Management Theory

Remember that management theory extends to working with other leaders in your industry!  The value of networking and professional relationships is certainly a priceless commodity!

Using Management Theories

Have some ideas about how you can go about improving your own organization or workplace culture?  Still not totally sure how to define them?

No problem. 

Below are some management theories to help you get started:

Encourage Employees to Become Active Stakeholders

Rather than simply behave dismissively towards your employees, instead encourage them to take on active roles within your organization.  Develop powerful interpersonal relationships and work towards creating a collective push towards synergistic work-ethics.  This means making teamwork come first, before any individual accomplishment.

Moreover, approach those who show an interest in extracurricular activities.  Offer them opportunities within their current role, including the development of new strategies and goals. 

The idea of creating workplace councils, such as a safety council or a discussion group, can go a long way to promoting your workplace conversations.  This can lead to significant improvements being made, all through the efforts of your own workforce!

Level the Playing Field

Organizational hierarchy can pose a problem for employees who feel left out or ignored.  Many management theories show that this can have a terrible effect on productivity.  It can even halt innovation before it has a chance to happen.

Consider removing unnecessary titles.  Instead, have only streamlined descriptions for different positions.  Any titles should be limited to “department manager,” or “supervisor.”  This gives a greater sense cohesion, without the need for lengthy or flashy verbiage.  Moreover, for external meetings, you can still use the desired title for appearances!

Lastly, try to encourage decision-making and creative thought amongst every department.  From top-to-bottom, everyone should get the impression that their ideas are valued.  If you can, promote from within.  Several studies have shown that the practice of promoting from within is a sure-fire way to improve your workplace culture and ramp up productivity!

Encourage Employee Education and Additional Training

Scientific management theory shows us that productivity only stands to gain from investing in your employees.  This not only makes them more effective in their current roles, but it also allows them to grow within your company.

Consider human relations management theory also.  By showing attentiveness to the educational and training needs of your employees, you will be setting a powerful precedent.  You can become engaged in the growth of those who fuel the expansion of your own business.  This will only further your own prospects, by creating powerful interpersonal relations.  At the same time, it will inevitably spur your organization’s growth to new heights!

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