Management Theories –  Managerial skills, Technology knowledge, and

similar expertise are necessary to succeed in the workplace. Possessing a

management skill is imperative to be part of the manager profile. The
management theories assist in increasing the service quality and organizational
productivity.

Understanding the management theories is the only way to find out which
theory is suitable and beneficial in accordance to the circumstance at your
workplace.
Important Management theories
There are several management theories for the purpose of the managerial activity at
the office. However the most commonly used theories to manage the work and the
functioning by the managers are as follows:

Contingency Theory:

This theory emphasizes that the decisions made by the manager are based on the
present circumstances rather than following the method one size fits all. An
appropriate action is taken by the manager depending on the features significant to
the present situation. A leader in the army would want to utilize an autocratic
approach while the manager in the university would want to use a leadership
approach that embraces participation from employees.

https://study.com/academy/lesson/contingency-
theory-definition-and-significance-to-organizati
onal-behavior.html
Features of Contingency Theory:

1. Management is situational in nature. The technique of management depends on

complexity of the situation.
2. It is the ‘if and ‘then ‘approach to management, ‘If’ represents the independent variable
and ‘then’ represents the dependent management variable or the technique to be adopted in
that situation. ‘If’ workers have strong physiological needs, ‘then’ financial motivators
should be adopted and ‘If’ they have strong higher-order needs, ‘then’ non-financial
motivators should be adopted.
3. Management principles are not universal in nature as there is no best style of
management. Management is situational and managerial actions depend upon the
environmental circumstances.
4. It helps in understanding the complex organizations as it focuses on multivariate nature
of organizations. It helps an organization to operate under different environmental
conditions. Rather than having a specific solution to solve problems, it provides a
framework where every solution depends upon the environmental conditions. Same
problem can have different solutions at different points of time and different problems can
have same solution at the same point of time.
5. It provides insight into organization's adaptability to both internal and external
environment. It is a matter of fitting the internal environment to its external environment.
Evaluation of Contingency Theory:

This theory has proved useful for practicing managers as:

1. It is an integration of different schools of thought; classical, behavioral and systems
approach. It integrates the principles of different schools of thought and applies them
contingent upon the needs of the situation.
2. It is pragmatic in nature as solution to every problem is found after analyzing the
situation.
3. It follows the technique of multivariate analysis. It thinks of all possible variables or
factors that affect the situation and adopts the best.
4. It is adaptive in nature. It does not presume a pre-designed structure of the organization
but adopts a structure that helps the organization adapt to the environment.
5. It helps to design the organization structure and plan the information decision systems.
A small-sized organization may be centralized and a large-sized organization may be
decentralized in structure.
6. It helps to devise motivational and leadership approaches to motivate the workers.
Autocratic style may be adopted to deal with unskilled workers and participative style to
deal with skilled workers. Contingency approach to management is considered as a
leading branch of management thought today.
 https://study.com/academy/practice/quiz-works
heet-contingency-theory-in-organizational-beha
Limitations of Contingency Theory: vior.html

Despite the best that contingency theory offers to the management thought, it is not free
from criticism.
The critics assert that:
1. It does not follow the concept of ‘universality of principles’ which often apply to
specific management situations.
2. It is argued that what contingency theory asserts was asserted by Fayol also. He also
talked of flexibility of management principles. Therefore, the theory has added nothing
new to the management thought.
3. As there is no definite solution to a problem, managers think of alternatives to arrive at
the right choice. This is costly in terms of time and money. It also does not provide
theoretical foundation upon which management principles will be based.
4. It is not possible for managers to determine all the factors relevant to the decision­
making situation. Because of constraints of time, money and ability, managers can
neither collect complete information about the environment nor analyze it completely.
Besides, it is not possible to establish perfect relationship amongst these factors.
Application of this theory may, therefore, be a complicated task as decisions are based
on limited information. These criticisms are only theoretical in nature. The theory
contributes to the development of management thought if applied rationally.
Systems Theory:

Managers with a good understanding of systems theory identify how an employee affects
the system around them and how different systems influence a worker. A system comprises
of variants of parts that function together to achieve the objective. The theory of system is a
broad viewpoint that enables managers to observe the events and patterns in the office
space. Which in turn helps the managers to match up programs to perform as a combined
whole for the complete mission or goal of the business rather than the isolated departments.

https://www.youtube.com/watch?v=uHL-l_Iz_sA

https://study.com/academy/practice/quiz-works
heet-features-of-the-systems-approach-to-mana
gement.html
Key terms of System Theory:

 Boundary: An imaginary line focusing around the system. It regulates the energy ie:
resources, information into and out of the system.
 Subsystem: A part of the focal system. Eg: In a family it could be a parent or the
children. It is referred as a parental subsystem or sibling subsystem.
 Focal System: The system on which the focus is upon at any given time. E.g.: the
main manufacturing plant.
 Open system: Open system have a relatively freer exchange of information and
resources within the system. It also enables relatively free passage of energy from
and to the outside of the system.
 Suprasystem: It is an external part of the focal system, it is part of the environment
of the focal system.
 Closed system: This system are more self-contained and isolated from their
surroundings.
 
Chaos Theory:

Change is Necessary and perpetual. Specific situations and events in the company can be
effectively controlled while some cannot. With respect to the chaos theory, it is identified
that change is unavoidable and is rarely controlled. As the company advances, intricacy
and possibility for susceptible events increase. Companies increase energy to maintain
the complexity of new level. As the companies spend more energy, more structure is
required for maintaining the stability. The organization continues to develop and change.
Theory X and Theory Y: https://www.youtube.com/watch?v=NK8-LhqF
4N0

The management theory an individual choose to apply is strongly subjective to the

beliefs about the attitudes of the employee. Managers who believe Employees lack
ambition naturally and need incentives to upsurge the productivity lean towards the
style of X management theory. While believes of Theory Y is that the employees are
naturally determined and take responsibility. The managers who tend to follow the
Theory X values often use a controlling style of leadership, Theory Y leaders inspire
participation from the employees.
Equity Theory:

Nothing like the basic motivation that involves of offering a reward such as pay for the
action. The Equity Theory looks further than just the individual and comprises of factors in
the individual’s setting that may have impacted motivation through comparison. The
theory indicates clearly that when an individual compares himself to his colleague and
discovers a fair result, he will be more motivated. While on the other hand he compares
and finds the result to be unfair or unequal in comparison to his colleague he will tend to
be less motivated. The principle of Equity Theory lies in the sense of motivation through
seeming fairness.
How the Equity Theory Works:

When one individual compares his or her ratio of input and output to the ratios of input and
output of the workers around them, the individual is supporting the Theory of Equity. The
comparison of input and output ratios turns to be a point of reference for the motivation of
the person and whether that motivation will decrease or continue. Hence, the Equity theory
operates in two ways. The first involves the person assessing the ratio of input and output.
The second comprises of the person assessing the ratios of inputs and outputs of the
coworkers. Commitment, loyalty, and skill are part of the Input while praise, financial
reward and increase in the responsibility are part of the output.

Importance of Equity Theory:

The Equity theory is an imperative business tool to evaluate the satisfaction of the
employee, the relationship between productivity and motivation and how to increase
motivation to reach and enhance the objectives and goals of the company.
Human Relation Theories:

The theory of human relation are reasonably concerned with human factors. The Human
relation theory focuses on inspiration, leadership, and group motivation. At the focal point of
the efforts are assumptions about the relationship between the manager and the worker.
The emphasis was on the behavior of the human within the organization.
It is stated that people require decisive factors in achieving effectiveness in the organization.
As per the theory, the employees are descriptive and endeavored to be predictive of behavior
in the company.
A motive is a driving force or a need within a person. The procedure of motivation includes
selecting between alternative forms of action to achieve the desired goals or end.

https://study.com/academy/lesson/equity-theory
-of-motivation-in-management-definition-exam
ples-quiz.html

https://study.com/academy/practice/quiz-works
heet-equity-theory-of-motivation-in-manageme
nt.html
Classical Management Theory:

Management occurs within a structured administrative setting with recommended roles. It

is directed towards achieving the objectives and goals by influencing the efforts of others.

The Classical Management Theory:

 Marks on structure
 Strict about what is upright for the firm.
 Manage practically
 Henry Fayol was the first person to define the management that is namely familiar in
the present as to command, to organize, forecast and plan, to control and to coordinate.
The basic concepts and terminology were also given by Fayol that elaborated by the
future researchers as a scalar chain, a division of labor, centralization and unity of
command.

https://study.com/academy/lesson/classical-ma
nagement-theory-1900-1930-definition.html
Key terms of Classical Management Theory:

 Division of work: Develops practice and familiarity among the staff. Plus it

reduces the effort or attention for one person or one group.
 Discipline: A noticeable mark of respect for the informal or formal agreements
between the employees and the firm.
 Unity of Command: One man superior
 Initiative: In the limits of discipline and authority all levels of staff should be
motivated to show initiative.
 Unity of direction: One superior with one plan for a group of tasks that has
similar objectives.
 Order: A right person at the right place. Working carried out in an appropriate
order.

https://study.com/academy/practice/quiz-works
heet-classical-management-theory-1900-1930.h
tml
What Is Management by
Objectives (MBO)?

Management by objectives
(MBO) is a strategic
management model that aims
to improve the performance
of an organization by clearly
defining objectives that are
agreed to by both
management and employees.

According to the theory,

having a say in goal setting
and action plans encourages
participation and commitment
among employees, as well as
aligning objectives across the
organization.
The Basics of Management by Objectives:

 Management by objectives (MBO) is the establishment of a management information

system to compare actual performance and achievements to the defined objectives.
Practitioners claim that the major benefits of MBO are:
 It improves employee motivation and commitment and allows for better communication
between management and employees.
 However, a cited weakness of MBO is that it unduly emphasizes the setting of goals to
attain objectives, rather than working on a systematic plan to do so.

Key Takeaways:

 Management by objectives (MBO) is a strategic management model that aims to

improve the performance of an organization by clearly defining objectives that are
agreed to by both management and employees.
 According to the theory, having a say in goal setting and action plans encourages
participation and commitment among employees, as well as aligning objectives across
the organization.
 The strategy was formulated by Peter Drucker in the 1950s, following five steps that
organizations should follow.
Management by Objectives in Practice:


The first step is to either determine or revise organizational objectives for the entire
company. This broad overview should be derived from the firm's mission and vision.
 The second step is to translate the organizational objectives to employees. Drucker used
the acronym SMART (specific, measurable, acceptable, realistic, time-bound) to express
the concept.
 Step three is stimulating the participation of employees in setting individual objectives.
After the organization's objectives are shared with employees, from the top to the
bottom, employees should be encouraged to help set their own objectives to achieve
these larger organizational objectives. This gives employees greater motivation since
they have greater empowerment.
 Step four involves monitoring the progress of employees. In step two, a key component
of the objectives was that they are measurable in order for employees and managers to
determine how well they are met.
 The fifth step is to evaluate and reward employee progress. This step includes honest
feedback on what was achieved and not achieved for each employee.

https://www.investopedia.com/terms/m/manage
ment-by-objectives.asp