OVERVIEW OF MANAGEMENT

THEORIES
 DEFINITION

• Management Theories are set of general rules that

guide the managers to manage an organization.
Theories are an explanation to assist employees to
effectively relate to the goals and implement
effective means to achieve the same.
 GENERAL MANAGEMENT THEORIES

1. Frederick Taylor – Theory of Scientific

Management
2. Henri Fayol – Administrative Management Theory
3. Max Weber – Bureaucratic Theory of Management
4. Elton Mayo – Behavioral Theory of Management
(Hawthorne Effect)
 1. FREDERICK TAYLOR’S THEORY OF
SCIENTIFIC MANAGEMENT:

• Aims at improving economic efficiency,

especially labor productivity.
• Taylor felt that workers should get a fair day's
pay for a fair day's work, and that pay should
be linked to the amount produced. Therefore
he introduced the, DIFFERENTIAL PIECE
RATE SYSTEM of paying wages to the
workers.
 PRINCIPLES OF SCIENTIFIC
MANAGEMENT

• Time and motion study: Study the way jobs are performed
and find new ways to do them.
• Teach, train and develop the workman with improved
methods of doing work. Codify the new methods into rules.
• Interest of employer & employees should be fully
harmonized so as to secure mutually understanding
relations between them.
• Establish fair levels of performance and pay a premium for
higher performance.
 2. HENRI FAYOL’S ADMINISTRATIVE
MANAGEMENT THEORY:

Henri Fayol, known as the Father of Management, laid down

the 14 principles of management:
Division of work Stability of Tenure
Equity Renumeration
Discipline Unity of Direction
Initiative Centralization
Authority and Responsibility Scalar Chain
Esprit De Corps Unity of Command
Subordination of Individual Interest to
Order
General Interest
 3. MAX WEBER’S BUREAUCRATIC
THEORY OF MANAGEMENT:

Weber believed that power educes obedience through

force or the threat of force which induces individuals to
adhere to regulations. According to him, there are three
types of power in an organization:
1. Traditional Power
2. Charismatic Power
3. Bureaucratic Power or Legal Power
 PRINCIPLES OF THE THEORY:

• Task specialization
• Hierarchical of authority
• Formal selection
• Rules and requirements
• Impersonal
• Career orientation
 4. ELTON MAYO’S BEHAVIORAL
THEORY OF MANAGEMENT:

Elton Mayo's experiments showed an increase in worker

productivity was produced by the psychological stimulus
of being singled out, involved, and made to feel
important.
Hawthorne Effect, can be summarized as “Employees
will respond positively to any novel change in work
environment like better illumination, clean work
stations, relocating workstations etc. Employees are
more productive because they know they are being
studied.”
 OTHER MANAGEMENT THEORIES

1. Systems Theory
2. Theories X and Y
3. Classical Management Theory
4. Contingency Management Theory
5. Quantitative Management Theory
 SYSTEMS THEORY

• An organization is a system consisting four subsystems

namely task, structure, people, and environment.
• The subsystems are interconnected and interdependent on
one another - maintaining the balance.
• An organization is an open adaptive system which
continuously interacts with its environment.
• Management regulates and modifies the system to optimize
performance.
• An organization is more than just the aggregate of various
parts. This is called ‘synergy’.
 THEORIES X AND Y

Each style is guided by a manager’s perceptions of their

employees’ motivation.
• Theory X: Employees are assumed as apathetic or
dislike their work. Managers are often authoritarian and
will micromanage everything.
• Theory Y: Employees are assumed as self-motivated,
responsible, and want to take ownership of their work.
Managers include their employees in the decision-
making process and encourage creativity at all levels.
 CLASSICAL MANAGEMENT THEORY

Based on the belief that workers only have physical and economic
needs. It does not take into account social needs or job satisfaction.
Classical Management Theory advocates seven key principles:
• Profit maximization
• Labor specialization
• Centralized leadership
• Streamlined operations
• Emphasis on productivity
• Single-person or select-few decision making
• Priority to the bottom line
 CONTINGENCY MANAGEMENT
THEORY

Fiedler based his theory on the idea that effective leadership

was directly related to the traits the leader displayed in any
given situation. He suggests that there is no one management
approach that suits every situation and every organization.
Instead, three general variables determine management and
structure. They are:
• The size of the organization
• The technology employed
• The leadership at all levels of the business
 QUANTITATIVE MANAGEMENT
THEORY

Considers solving complex business problems in

financial management, inventory valuation,
inventory control, production scheduling, human
resource planning and other areas where quantifiable
data can be obtained.
The clear-cut, numbers-oriented approach to
management helped decision makers calculate the
risks, benefits, and drawbacks of specific actions.
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