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 man 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.
the infographic.

Scientific theory by Frederick W. Taylor

This one is a classic. Taylor's scientific theory poses some fascinating questions by diving deeper into
the efficiency of work processes. Taylor was an engineer, and he experimented in various ways to
determine the most efficient and effective ways to get tasks done.

On the surface, this theory held great value. The scientific theory aimed to make work more efficient.
Unfortunately, the theory had some major flaws as well.

Taylor created four principles of his scientific management theory. First, each task should be studied
to determine the most efficient way to do the task. This disrupts traditional work processes. Second,
workers should be matched to jobs that align with both their abilities and motivation. Third, workers
should be monitored closely to ensure they only follow best working practices. Fourth, managers
should spend time training employees and planning for future needs.

There are a few positives of this theory. Maximizing efficiency is a great idea. Assigning workers to
jobs based on their abilities and motivation levels is also an interesting idea that could have beneficial
effects in some areas.

Major flaws in the theory include the de-emphasis on teamwork. An incredible focus on specific and
individualized tasks eliminates creative problem-solving and makes teamwork obsolete. The scientific
management theory also encourages micromanagement that could drive today's employees crazy.

Administrative theory by Henri Fayol

Fayol developed six functions of management that work in conjunction with 14 management
principles. This theory has a few core ideas that live on today, but you'll rarely find a workplace
swearing by Fayol's 14 principles.

The six functions are as follows:

 Forecasting
 Planning
 Organizing
 Commanding
 Coordinating
 Controlling

Some people combine forecasting and planning into one function, simplifying the theory down to five
functions. The functions are straightforward, with Fayol saying managers need to plan for the future,
organize necessary resources, direct employees, work collaboratively and control employees to make
sure everyone follows necessary commands.

The 14 principles are as follows:

  Division of work – Employees should have complementary skill sets that allow them to
specialize in certain areas.
 Authority – Management needs authority to give employees orders. This authority must be
agreed upon.
 Discipline – This gets to the idea of employees listening to commands and being disciplined in
getting work done. If a manager sets a deadline, an employee should have the discipline to
meet it.
 Unity of command – Employees answer to their managers, and there aren't a bunch of
unnecessary people involved with the process. Going over your manager's head would be an
example of breaking this principle.
 Unity of direction – Teams should be striving for common goals.
 Subordination of individual interests – The team comes before the individual.
 Remuneration – There are monetary and non-monetary versions of remuneration. Both are
needed to motivate employees.
 Centralization – There should be a balance between decision-making power. For example, a
company's board of directors should have a say, but the midlevel managers shouldn't be
overpowered.
 Scalar chain – Each company should have clear hierarchical structures.
 Order – This refers mostly to cleanliness and organization within a workplace. An office
shouldn't be disgustingly messy.
 Equity – Employees should be treated well.
 Stability of tenure of personnel – This principle suggests that businesses should try to limit
turnover and keep employees around as they accumulate knowledge and improve.
 Initiative – Employees should share ideas and be rewarded for innovative thinking and taking
on new tasks.
 Esprit de corps – Employee morale matters. This principle suggests that managers should
work to keep employees engaged and interested.

There are quality aspects of this theory. Remembering all 14 principles can be challenging and
makes more sense for a test on management than an entrepreneur running their business, but the
principles apply in today's workforce. Things like equity and remuneration are important aspects of
management. Other principles, like scalar chain, aren't always necessary. Some businesses find
success without clear hierarchies, and the organizational setup depends largely on the business and
the size of the company.

Bureaucratic theory by Max Weber

Weber created the bureaucratic theory, which says an organization will be most efficient if it uses a
bureaucratic structure. Weber's ideal business uses standard rules and procedures to organize itself.
He believed this strategy was especially effective for large operations.

The theory includes the following five principles:

 Task specialization – Weber stressed the importance of each employee fulfilling a specific
role within a company.
 Hierarchy – Weber wanted each company to have a clear hierarchy within the organization.
 Formal selection – When selecting leaders, businesses view a person's qualifications. They
should be appointed to certain roles based on qualifications, which means they won't be
elected by vote.
  Rules and requirements – These ensure everyone knows what's expected of them. Weber
wanted business to have uniform standards, and rules are essential to achieve this goal.
 Impersonal – The rules and regulations make a business structure impersonal. Promotions
aren't about emotions or personal ties, but rather performance.

Elements of this theory make sense. Some rules and standards are certainly necessary within every
organization. On the other hand, it's not easy to implement many of these ideas. The theory and
practice don't line up. It's almost impossible to keep emotions out of business decisions, and
sometimes emotions are needed.

If your company offers three months of paternity leave, but a new mother has complications with her
baby near the end of those three months, some managers may offer another few weeks at home to
care for the child. With Weber's mindset, a manager would coldly ask her to return to work after three
months like everyone else. Emotions shouldn't always dictate decisions, but the best managers can
relate to their employees on a personal level.

Human relations theory by Elton Mayo

In stark contrast to Weber's bureaucratic theory of management, the human relations theory
emphasizes relationships. Mayo believed that productivity increases when people feel like they are
part of a team and valued by their co-workers.

The human relations theory emphasizes praise and teamwork as motivational factors. This is
basically the opposite of the bureaucratic theory. While emphasizing personal factors is a good idea,
there can be too much of a good thing. Valuing relationships above all else can lead to tricky
situations like office romances and promotions based on personality rather than job
accomplishments.

A happy medium between the bureaucratic theory and human relations theory might be a better goal
for managers. Some rules are necessary, but you shouldn't dehumanize employees either.

Systems theory by Ludwig von Bertalanffy

The systems theory of management believes that each business is a system, much like a living
organism, with numerous things going on to keep the operation rolling along. A business isn't just its
CEO, and a person isn't just a brain. A person needs its other organs and other key features to live. A
business needs more than just a CEO to survive.

While the organism idea is a little extreme – most business operations aren't life-or-death endeavors
– the analogy applies. The systems theory says everything needs to work together for a business to
succeed.

There is some truth to this theory, as businesses can benefit from getting different departments on
the same page. If a business's sales team is struggling, it can hurt the whole operation. On the other
hand, a sales team struggling doesn't necessarily hurt the accounting department. Many businesses
have separate entities within their organization, so this theory isn't completely accurate.  
X&Y theory by Douglas McGregor
The X&Y theory of management assumes there are two different types of workers. Theory X workers
lack ambition and drive and need to be ordered around by bosses to do anything. Theory Y workers,
on the other hand, enjoy work and strive for self-fulfillment.

Both views of employees are a bit extreme, as most workers fall somewhere between X and Y.
Employees don't need to be ordered to do every task, but there is some need for discipline and rules
for most employees. Many employees do enjoy work, but it doesn't always come naturally and
requires some encouragement at times. There should be a middle ground for implementing this
theory.

"This theory is largely considered to be obsolete today, as few managers begin from a starting
position of being highly polar or binary in terms of their management style being just one of two
options at opposing ends of a spectrum," said Polly Kay, marketing manager at English Blinds.

The bottom line on management theories

Management theories popularized in the early to mid-1900s weren't perfect. That's unsurprising, as
different theories of management have gained steam in recent decades. Popular management
theories from the past often touch on important aspects of management but ignore other crucial
points. When studying or implementing these theories, it's important to know the pros and cons of
each and how those might apply to your business, even if you aren't directly using a certain style.

"In the real working world, few managers and business leaders consciously use management
theories as rigid frameworks to adhere to or as long-term guiding principles," said Kay. "That said,
many do attempt to consciously incorporate individual elements of their preferred management
theories into their broader management style."

When it comes to implementing management theories, it's important to understand that no two
employees or businesses are the same. A certain style may offend one employee, while another
employee may respond beautifully. Management is both art and science, and being an effective
manager requires more than an understanding of certain theories. How they put them into practice is
what separates good and bad managers.