Management Theory

In this entry, I will be talking about a few different theories, hence it would probably be longer than my previous posts; however, this has to be done so as to ensure that the explanation of each theory is not compromised.

I will be talking about Management Theory (MT). MT is clearly very important, as it is essentially a study of how to make all the people in your organization more productive. The theory provides a basis for action where companies can act upon to bring about the desired results from their employees. To me, such an understanding would only increase my knowledge as to how I should be running my business, which would be essential if I want my business to succeed! With management, you have to balance a multitude of tasks daily and being familiar with MT can help greatly.

Within the MT, there are 4 main schools, the Classical School (CS), the Human Relations School (HRS), the Systems Approach (SA) as well as the Contingency Theory (CT).  

CLASSICAL SCHOOL 

The CS owes its roots to several major contributors, including Frederick Taylor, Henry Gantt, Henri Fayol and Max Weber. Part of CS included the Scientific Management Theory, introduces by Mr Taylor. He believed that organizations should study tasks and develop precise procedures that specializes workers to match those tasks. They would be motivated almost entirely by the pay that would range according to the quantity and quality of their output. A success story would be how Ford reduced the production time of their cars drastically by following the Scientific Management theory. Another prominent theory would be Weber’s Bureaucracy which were based upon 5 main characteristics:

1. Tasks are allocated as official duties

2. Clear division of labour and high levels of specialization

3. Use of hierarchical authority

4. A fixed system of rules and regulations and a structure of authority

5. Employment is based on technical qualifications

However, there were lots to criticize about the CS despite its many successes. Firstly, there was the case of untested assumptions where the basic assumption is that workers are primarily motivated by money and that they work only for more money and that productivity is the best measure of how well a firm is performing, failing to recognize the different want and needs of employees unrelated to the workplace or may view their jobs only as a necessary evil.

In their stress on formal relationships in the organization, classical approaches tend to ignore informal relations as characterized by social interchange among workers, the emergence of group leaders apart from those specified by the formal organization. Hence, it is likely that many important factors affecting satisfaction and performance, such as letting employees participate in decision making and task planning, will never be explored or tried. These are just some of the many criticisms regarding the CS.

HUMAN RELATIONS SCHOOL

The HRS focuses more on the individuals in a workplace than the rules, procedures and processes. Instead of directives coming directly from management, a human relations theory provides communication between employees and managers, allowing them to interact with one another to help make decisions. Instead of giving workers quotas and requiring certain procedures, workers are exposed to motivational and emotional tactics to get them to increase productivity. The focus of this style is creating fulfilled, productive workers and helping workers invest in a company.

Although this sounds fantastic, there are a few drawbacks when applying the HRS. Companies risk workers becoming too social or easily swayed by personal emotions and opinions when making decisions, rather than relying on hard data. It may be more difficult to reprimand employees for poor performance or dismiss them once they have become invested in the company. 

SYSTEMS APPROACH 

The SA by direct definition is, “Management thinking that emphasizes the interdependence and interactive nature of elements within and external to an organization.” Therefore, system in simple terms in respect to management, it is a set of different independent parts working together in interrelated manner to accomplish a set of objectives.

The SA is an attempt in bringing together both the CS and the HRS where managers are encouraged to view organizations as part of the larger environment and as a whole; while focusing on the interrelationship between structure and behavior.

The problem with the SA is that it does not fully recognize the stark differences in systems that it tries to bring together making it rather unpractical. It cannot be easily and directly applied to practical problems.

CONTINGENCY THEORY

Finally the CT. This theory recognizes that there is no universal or one best way to manage. Therefore the most appropriate structure and system of management depends on the contingencies of each situation. Hence an organization that effectively applies the CT would not only have a proper ‘fit’ with the environment but also between its subsystems.

It is hard to critique a theory that is very flexible, however, that in itself is the flaw. The logical extension of the CT is that all situations are unique. Assuming this is true, then management can only be practiced by intuition and judgement, thereby negating the value of prior knowledge regarding management.

So maybe…

We may not need to study Business to actually have a successful one! (:P HAHA)

Material Links: 

1. http://smallbusiness.chron.com/difference-between-classical-management-theory-human-relations-theory-35928.html

2. http://www.cliffsnotes.com/more-subjects/principles-of-management/the-evolution-of-management-thought/classical-schools-of-management

3. http://en.articlesgratuits.com/article.php?id_article=1592

4. http://wiki.answers.com/Q/Why_is_management_theory_important?#slide=22

5. http://www.slideshare.net/artinsane/systems-approach-to-management

6. http://www.businessdictionary.com/definition/systems-approach.html

7. http://www.slideshare.net/arunnaikvs/contingency-theory-of-management