DIFFERENT MANAGEMENT THEORIES

There are three major classifications for management theories: Classical Management Theory,
Behavioral Management Theory and Modern Management Theory. These classifications represent 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.

I. 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:

1. 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.

2. 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.

3. 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.

II. 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:

1. 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.

2. 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.

III. 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:

1. 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.
2. 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.
3. 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 circumstances.