Popular Management Theories Decoded

What are management theories?

Management theories, or collections of ideas that provide the framework for effective management strategy, are implemented in modern workplaces to motivate and bring out the best in employees. Theorists have long speculated on what type of management is best for humans in the professional setting. 

Management theories, at their core, encompass a set of general principles that guide managers in overseeing a business. These theories revolve around supervision, organization and group performance — serving as a tool employees can use to align with business goals and implement the strategies to achieve them.

Early management theories were rooted in a system of rewards and punishments, where success received recognition and failure led to reprimands. These theories have been widely adopted by business leaders to manage their employees’ performances. 

Here are the three most commonly used theories in business management today:

1. Classical management theory is based on an employee’s physical and economic needs. It advocates for labor specialization, centralized leadership and maximized profit. 
2. Behavioral management theory, or the human relations movement, emphasizes understanding human behavior at work for enhanced productivity. It focuses on motivational factors like conflict resolution, expectations and group dynamics. 
3. Modern management theory uses techniques in math, such as the quantitative approach, system approach and contingency approach, to analyze manager-employee relationships.

It’s common for managers to use more than one theory to achieve productivity or organizational goals. Managers should understand these different theories and know how to implement them, while also realizing past management theories leave gaps when it comes to effective leadership. [Read how to turn change management into personal development] 

What are popular management theories?

Although many management theories have emerged over the years, some have gained significant traction due to their effectiveness. Managers can use a combination of these theories to guide them through the process of motivating their team and increasing performance and productivity. 

Here are six of the most popular management theories that still exist today:

1. Scientific theory by Frederick W. Taylor

This one is a classic. Frederick W. Taylor’s scientific theory poses some fascinating questions by diving deeper into the efficiency of work processes. Taylor was an engineer, and he experimented 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, it had some major flaws as well.

Taylor created four principles of his scientific management theory. 

• Each task should be studied to determine the most efficient way to complete it. This disrupts traditional work processes. 
• Workers should be matched to jobs that align with both their abilities and motivation. 
• Workers should be monitored closely to ensure they only follow best working practices.
• Managers should spend time training employees and planning for future needs.

Pros and Cons

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 can also 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 up the wall. 

2. 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 Henri 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: Fayol said 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 outlined below.

1. Division of work: Employees should have complementary skill sets that allow them to specialize in certain areas.
2. Authority: Management needs authority to give employees orders. This authority must be agreed upon.
3. 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.
4. 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.
5. Unity of direction: Teams should be striving for common goals.
6. Subordination of individual interests: The team comes before the individual.
7. Remuneration: There are monetary and nonmonetary versions of remuneration. Both are needed to motivate employees.
8. Centralization: There should be a balance between decision-making powers. For example, a company’s board of directors should have a say, but the mid-level managers shouldn’t be overpowered.
9. Scalar chain: Each company should have clear hierarchical structures.
10. Order: This refers mostly to cleanliness and organization within a workplace. An office shouldn’t be disgustingly messy.
11. Equity: Employees should be treated well.
12. 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.
13. Initiative: Employees should share ideas and be rewarded for innovative thinking and taking on new tasks.
14. Esprit de corps: Employee morale matters. This principle suggests that managers should work to keep employees engaged and interested.

Pros and Cons

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. 

However, the principles apply in today’s workforce. Concepts like equity and remuneration are important aspects of management. Other principles, like the 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.

3. Bureaucratic theory by Max Weber

Max 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 five principles described below.

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

Pros and Cons

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 parental leave, but a new mother has complications with her baby near the end of those three months, some managers might 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.

4. Human relations theory by Elton Mayo

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

Pros and Cons

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 bureaucratic theory and human relations theory might be a better goal for managers. Some rules are necessary, but you shouldn’t dehumanize employees either.

5. 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 activities 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 their 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.

Pros and Cons

There is some truth to this theory, as businesses can benefit from keeping 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.

6. 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.

Pros and Cons

Both views of employees are extreme, as most workers fall somewhere between X and Y. Employees don’t need to be ordered to do every task, but most have some need for discipline and rules. 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, copywriter and marketing consultant.

What management theories teach us about business

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 implementing management theories, you should understand no two employees or businesses are the same. A certain style may offend one employee, while another employee may respond beautifully. Management is both an art and a science, and being an effective manager requires more than an understanding of certain theories. How they put those theories into practice is what separates good managers from bad ones.

Lauren Kubiak contributed to this article. Source interviews were conducted for a previous version of this article.