SPECS: (Chapter 2 - Management Theories)

Management Theories

are ideas and principles that help managers make effective decisions and manage organizations. These theories have changed over time as society, technology, and business environments have developed. Studying their evolution helps us understand the foundation of modern management and how managers can adapt to today’s rapidly changing world.

9 Theories

Systematic, Scientific, Bureaucracy, Administrative, Human Relations, Quantitative, Organizational Behavior, Systems, Contingency

Systematic Management Theory

Classical Management Theory emerged during the 18th-century Industrial Revolution to meet the growing need for mass production. It focused mainly on efficiency, productivity, and increasing production output. Managers prioritized products and operations over employee welfare, often resulting in work overload, poor working conditions, and weak relationships among workers. Poor coordination also caused workplace problems and inefficiency.

Key Characteristics:

• Focus on mass production

• Increase efficiency and productivity

• Product-oriented management

• Limited concern for workers’ welfare

• Poor coordination and workplace relationships

Scientific Management

Frederick Winslow Taylor introduced __________, which used scientific methods instead of traditional “rule of thumb” practices to improve worker efficiency, productivity, and cooperation. He believed that every task should have the most efficient method and should be assigned to the right person.

Scientific Management

Key Principles:

• Time-and-Motion Study – Study workers’ movements to remove unnecessary actions.

• Standardization – Use standard tools and procedures for consistent work.

• Worker Welfare – Provide rest breaks to reduce fatigue.

• Differential Piece-Rate System – Give higher rewards to workers who exceed production targets.

Frederick Winslow Taylor

Father of Scientific Management

Time-and-Motion Study

Analyze work to eliminate unnecessary movements.

Standardization

Use standardized tools and work methods.

Worker Welfare

Provide rest breaks to reduce fatigue.

Differential Piece-Rate System

Reward employees who exceed production targets.

Bureaucracy Theory

introduced an organizational structure based on rules, hierarchy, and specialization. It emphasized standardized jobs so the organization could continue operating smoothly even when employees change. Authority should come from a person’s official position, not personal influence, while decisions should follow formal rules to ensure fairness, consistency, and order.

Bureaucracy Theory

Key Characteristics:

• Hierarchical structure (clear chain of command)

• Division of labor and specialization

• Formal rules and procedures

• Impartial and fair decision-making

• Authority based on position, not the individual

Max Weber

Father of Bureaucratic Management

Administrative Management Theory

focuses on how managers can organize and manage the entire organization effectively. It divides organizational activities into six functional areas.

Henri Fayol

Father of Modern Management Theory

Technical, Commercial, Financial, Security, Accounting, and Managerial.

Six functional areas of Administrative Theory

Planning → Organizing → Commanding → Coordinating → Controlling

Five Functions of Management

Division of Work

14 Principles of Management: work should be divided according to workers capabilities and specialization

Authority and Responsibility

14 Principles of Management: authority refers to managers’ positions who are chosen based on intelligence, values and experience.

Discipline

14 Principles of Management: the practice of “respect for agreements”, being obedient to rules and commands.

Unity of Command

14 Principles of Management: every group created in the organization should have only one superior who will be followed by his/her subordinates.

Unity of Direction

14 Principles of Management: refers to one head and one plan and relates to the organization of the “body corporate”, rather than to personnel.

Subordination of Individual to General Interest

14 Principles of Management: management should reconcile the interest of the management and the workers differ.

Remuneration

14 Principles of Management: This refers to fair methods of payment which means maximum satisfaction for employees and employers.

Centralization

14 Principles of Management: refers to the extent to which authority is concentrated to “produce the best overall yield.”

Scalar Chain

14 Principles of Management: refers to the “chain of superiors” from the highest to the lowest ranks.

Order

14 Principles of Management: refers to arrangement of things and people in an organization to put into order.

Equity

14 Principles of Management: this encourages management to deal employees with kindness and justice to elicit their loyalty and commitment

Stability of Tenure

14 Principles of Management: high turnover of employees reflects poor management and stresses its dangers and costs. Management should aim to minimize employee turnover and the right person should be placed in the right position.

Initiative

14 Principles of Management: This principle encourages employees to be involved and engaged in the firm‟s growth and development. They are allowed to contribute new ideas to create added value to the company.

Esprit de Corps

14 Principles of Management: means “in unity, there is strength”. Management should provide an environment that will lift the morale of its employee and develop mutual trust and understanding among members of the organization.

Human Relation Management

focuses on the psychological and social needs of employees. It views workers as an important resource and recognizes that employee satisfaction, good relationships, and a positive workplace can improve performance and productivity.

Key Concepts:

• Employee Well-being improves productivity

• Good supervisor–employee relationships increase motivation.

• Teamwork and workplace culture affect performance.

• Hawthorne Effect – Employees may perform better when they feel valued, noticed, and appreciated.

Elton Mayo

Father of Human Relations Management

Hawthorne Effect

Employees may perform better when they feel valued, noticed, and appreciated.

Quantitative Management Theory

uses mathematics, statistics, and computer models to help managers make better decisions. It allows managers to analyze data, solve problems, predict future situations, and choose the best possible solution.

Key Techniques:

• Statistical Analysis

• Forecasting

• Inventory Models

• Queuing Theory

• Break-even Analysis

• Simulation & Linear Programming

Applications:

• Production

• Marketing

• Finance

• Human Resources

• Distribution

• Research and Development

Organizational Behavior Theory

focuses on understanding how individuals and groups behave in an organization to improve employee performance and overall organizational effectiveness. It emphasizes motivation, leadership, teamwork, and employee participation.

Key Contributor:

Douglas McGregor

• Theory X – Assumes employees are lazy, avoid work, and need close supervision.

• Theory Y – Assumes employees are self-motivated, responsible, and enjoy meaningful work.

Douglas McGregor

Key Contributor of Organizational Behavior Theory

• Theory X – Assumes employees are lazy, avoid work, and need close supervision.

• Theory Y – Assumes employees are self-motivated, responsible, and enjoy meaningful work.

Systems Theory

views an organization as a system made up of interconnected parts or subsystems that work together toward a common goal. The success of the organization depends on how well these parts communicate and work with one another.

Key Concepts:

• Interdependent Subsystems

• Open System interacts with the external environment.

• Input–Process–Output (IPO)

• Feedback is used to improve future results.

Contingency Theory

states that there is no single best way to manage an organization. Effective management depends on the situation, environment, and conditions surrounding the organization. Managers should adjust their approach based on different circumstances.

Key Factors:

• External Environment

• Organizational Strengths and Weaknesses

• Employees skills, values, and attitudes.

• Tasks, Resources, and Technology

• Leadership Style

Fred Edward Fiedler

Founder of Contingency Theory