LMC EXPLAINS 6 MANAGEMENT THEORIES

IN THE 19TH AND 20TH CENTURY, SOME MANAGEMENT THEORIES WERE DEVISED BY INDIVIDUALS IN ORDER TO ACCURATELY DESCRIBE THE DIFFERENT WAYS MANAGEMENT CAN BE CONDUCTED OR FORMULATED. MANY OF THESE RELATE DIRECTLY TO THE BUSINESS ENVIRONMENT.

FREDERICK W. TAYLOR1. SCIENTIFIC THEORY

Short Definition: “Simplify Tasks, divide work equally and use monetary incentives.”

This theory states that goals can be easily achieved with the correct combination of labour and management. The aims are

to increase production efficiency, lower costs, raise profits and increase the workers’ salaries through increased

productivity.

MAX WEBER2. BUREAUCRATIC THEORY

Short Definition: “A Hierarchical structure adhering to strict rules.”

Weber’s theory describes how management should be led from top to bottom, in the sense that every “level” in the

hierarchy has to answer to the “level” that is above it. The importance of having a structured hierarchy is essential for a business to run smoothly according to Weber. Another part of

the bureaucratic theory is that the organisation and its members are governed by predefined rational-legal decision-

making rules, which is a set of objective policies and procedures that governs exactly how an organisation should

function.

LUDWIG VON BERTALANFFY3. SYSTEMS THEORY

Short Definition: “System-wide coordination between every department.”

The systems theory is one widely used across different fields of study (philosophy, economy, mathematics, social sciences, etc.) which tries to look at the nature of complex systems. For

example, many different subsystems form together in the human body to form one system. In business terms, an organisation is a system because it is formed by many

different subsystems, such as the stakeholders, initiatives, departments, etc. This theory essentially explains how the bigger picture functions by looking at every small element

which makes up the bigger picture.

HENRI FAYOL4. ADMINISTRATIVE THEORY

Short Definition: “Upper management controls and commands.”

Henri published his “14 Principles of Management” in 1916, it was one of the earliest theories of management that was created and it is still considered to

be comprehensive, even to this day.

3 of the top 14 principles of management are as follows:

Division of work - Employee output increases as the skill level and efficiency increases.

Authority - Managers must have the authority

Discipline - This is, by all means, is not an exhaustive list.

ELTON MAYO5. HUMAN RELATIONS THEORY

Short Definition: “The promotion of social interactions within an organisation.”

This theory states how people are more likely to join a team that is supportive of their growth and development. If employees were to be treated highly and encouraged to participate in activities, they

would believe their work to be of significance and are more likely to be more efficient and productive, which leads to higher quality

work.

Elton Mayo’s results from his Hawthorne studies also stated how the factor that influences productivity the most are relationships,

this proved that working in a supportive team did yield better results for an employee.

DOUGLAS MCGREGOR6. X & Y THEORY

Short Definition: “The unmotivated (x) are controlled and the motivated (y) are rewarded.”

This famous theory was developed by Douglas McGregor in the 1960s, it still remains a valid principle from which to develop positive management styles and techniques. It states the basic rules as to which managers should aim to

follow in everyday people management.

Theory X - The main idea of this theory is that employees must be forced with the threat of punishment in order for them to work effectively, this is based off the idea that the average person dislikes work and will tend to avoid it if possible. Douglas McGregor said that people like this must be directed because of how unambitious and non pro

active they can be.

Theory Y - This is called the ‘participative management’ style and assumes the opposite to that of theory X, it believes people are self motivated to work as hard as they can, have the self-control and self-direction to guide them

to work towards organisation and personal goals and that these people are the ones that tend to seek and accept responsibility.

These theories were devised in order to illustrate how important it is to correctly understand your assumptions about the motivation level in employees in order to manage more effectively. A book that we recommend which dwells

deeper into this subject is “Douglas McGregor, Revisited: Managing the Human Side of the Enterprise” by Gary Heil.