What is Modern Management

Theory?
Posted by Glassdoor Team
Career Advice Experts
Last Updated June 29, 2021
Management theories in the workplace
Finding a management theory that suits your workplace can totally change the
working environment for the better. In this article, we'll focus on the Modern
Management Theory and how its mix of hard data and human emotions can
become an efficient model for leadership. We'll also cover other management
theories and see how they compare to the Modern Management Theory. 

What are management theories?

Management theories are ideas about how people manage employees in an
organization. In order to lead a business, people must understand what
motivates and directs employees in a company. Management theories explain
what motivates employees and how leaders can use these motivators to
control and guide them. Management theories provide management
strategies, frameworks, and guidelines that employers can implement in the
office. Companies need different management for different work settings. For
hundreds of years, theorists have researched the best forms of management
for different companies. Now we can use the frameworks given in these
management theories to create a framework for management in companies
today.

Modern Management Theory

Modern Management Theory was created in direct response to the Classical
Management Theory that states employees are only motivated by money. The
Modern Management Theory recognizes that workers are complex and have
many reasons for wanting to succeed in their job. The Modern Management
Theory also believes that rapidly changing technology can both cause and
solve many problems in the workplace. 

This theory combines mathematical analysis with an understanding of human

emotions and motivation in order to create a working environment that is
maximally productive. A manager using the Modern Management Theory will
use statistics to measure employee performance and productivity and also try
to understand what makes their employees satisfied at their jobs. 

Modern Management Theory is actually comprised of three other

management theories — Quantitative Theory, Systems Theory, and
Contingency Theory.

Quantitative Theory
This theory based on efficiency and mathematical equations came out of the
necessity for managerial excellence in World War II. This is a simple number-
based theory that relies on calculating the risks, benefits, and drawbacks of
any action before it is taken. This approach applies statistics, computer
simulations, information models, and other quantitative techniques to the
management of a company. This theory is usually not used to manage a
business on its own. Instead, the Quantitative Theory must be used with more
humanistic theories, in order to run a company. 

Systems Theory
This theory treats companies like a living organism, with all parts necessary
for the company to survive. Developed by Ludwig von Bertalanffy, this theory
states that all parts of a company, from the CEO to the entry-level employee,
must work in harmony for the company to survive. Companies using this
theory think that departments and employees must work as a collective group
and not an isolated unit. Synergy and interconnectedness between
departments are key with this theory. 
While striving for harmony between departments is important in a company,
most companies don’t need to rely on synergy so much for their day-to-day
functions. For example, the accounting department of a small company
doesn’t need to be totally in sync with the HR department. This management
theory is more of a way you can view the company, not an exact management
style.

Contingency Theory
The Contingency Management Theory holds that every situation requires a
different leadership style, and therefore no one theory can work for an entire
office. Created by Fred Fiedler in the 1960s, this theory states that it is up to
the leaders of a company to assess a situation and use the best leadership
strategy. Fiedler believed there are three main variables for determining what
leadership strategy to employ — organization size, technology being used,
and the overall style of leadership in the company. 

This theory puts a lot of responsibility on the leaders of a company. Fiedler

believed that a leader’s traits directly affected how they managed people. This
theory is also a more useable theory for modern workplaces, as it
understands that as technology and companies change, so must the
leadership styles.

Benefits of the Modern Management Theory

Modern Management Theory is a great management theory for the modern
world because it recognizes and respects the changes that come with
technology. This theory understands that technology changes the workplace
and leaders must be able to incorporate these changes efficiently. For
example, a manager that uses the Modern Management Theory will look at a
development such as working from home on two fronts. They will analyze the
costs and benefits of having employees work from home, and they will also
ask individuals how working from home benefits their own lifestyle. 

This two-pronged approach to management allows for the straight facts of

hard data, and the more introspective and personal approach to leadership.
This theory treats employees as complex individuals who are concerned with
more than just their salary, while also allowing for some company decisions to
be made by rational and statistical analysis. 

Other popular management theories

Some management theories have been around for over 100 years. Here are
some of the most common management theories and why they may or may
not work in the modern office.

Classical Management Theory

The Classical Management Theory system of belief states that employees are
only motivated by physical and economic needs. It calls for a clear structure of
management where the workforce is divided into owners, middle
management, and supervisors. This theory views the workplace as an
assembly line, with each worker completing a specialized task instead of
multitasking. People who utilize this theory believe workers are motivated by
financial rewards based on the competency of their work. When companies
put this theory to practical use, they will often see an increase in productivity.
It can help streamline a company and make employees focus on the bottom
line. However, as the theory does not consider social needs, job satisfaction,
and human relationships, it can also lead to a sizable amount of burnout
among employees. This model exerts a great deal of control over human
behaviors and treats employees as a machine. For many companies,
Classical Management Theory fell out of favor in the past 60 years as more
modern theories emphasized the humanity of the workforce.
Scientific Management Theory
Fredrick Taylor came up with this theory at the end of the 19th century. He
believed that using the scientific method will get the best results out of
workers in the office. First, use the scientific method to determine the best
way to perform a specific task. Next, you assign workers to tasks that match
their abilities and train them to maximize their output. Then you must monitor
the workers constantly to ensure they are using the most efficient methods.
Finally, managers should spend their time training and planning for future
work. Parts of the Scientific Management Theory are still in use today.
Managers should offer help and advice when needed, and they should always
look towards the future. However, now workers get more say about how they
think their job should be done and are usually not hired to perform just one
specific task. The Scientific Management Theory was best suited to large
companies at the turn of the century, not small modern offices.

Bureaucratic Management Theory

The Bureaucratic Management Theory, created by Max Weber in the late
1800s, states that companies should be structured in a hierarchical system
with clear rules, roles, and procedures. This theory stresses bureaucracy in
six main areas — hierarchical structure, task specialization, formal selection,
rules, advancement based on achievement, and an impersonal working
environment. Under this theory, promotions are not about personal character
or relationships, but strictly based on performance. This management theory
has become less popular in the century due to its rigid structure. While in
theory it makes sense for an office to have rules and standards which
everyone must follow, in practice there will always be emotions and personal
relationships in an office which will go against these bureaucratic guidelines.

Theory X and Theory Y

This theory, proposed by Douglas McGregor in 1960, believes that there are
two main management styles and leaders must choose which style to employ
based on the perceived motivation of their employees. Leaders should use
Theory X when dealing with a workforce that is unmotivated and dislikes work.
Managers who use Theory X must use an authoritarian work style to get
anything done. Managers should use Theory Y when they believe their
workforce is engaged, self-motivated, and enjoy their job. Managers who use
Theory Y use a more participatory style of management. While this theory
provides two different options for management, both options are quite
extreme. Employees fall somewhere between Theory X and Theory Y, and
managers must adjust their management style accordingly. This theory of
management has become less popular over time as managers viewed their
employees in less stark terms and tried to understand their employees.
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