12 Management Theories and How They’re Used

Management theories are collections of ideas that influence how an organization, business or team is guided and run. Leaders in business management are primarily responsible for laying out strategies to help their teams meet their goals. This often requires finding ways to motivate their team and pool resources for them. 

It’s up to managers to apply the management theory that best suits their organization’s culture. They can also select specific characteristics from different theories to arrive at a style that makes sense for them, their company culture, their employees and the work at hand.

By studying established management theories managers may be able to find ways to increase productivity and improve their team members’ performance, simplify decision making and increase collaboration. 

Theories like the ones we’ll discuss in the next section may also help leaders maintain objectivity, and make informed, data-supported changes rather than relying exclusively on their own judgment or preferences. 

Although some management theories were conceptualized long ago, their principles can still be applied effectively in today’s technologically advanced business landscape. 

Let’s take an in-depth look at 12 theories you should be aware of:
 

In the late 1800s, Frederick Taylor was one of the first to take a scientific approach to management theory in terms of how to maximize productivity. His principles suggested that the scientific method should be used to perform workplace tasks, rather than a system that relied upon team members’ judgement or personal discretion. 

Taylor theorized that by simplifying tasks, training team members thoroughly and encouraging cooperation between supervisors and employees, productivity could be increased.
 

This 19th-century theory was developed by mining engineer and senior executive Henri Fayol, who believed that managers should utilize a specific set of values to get the most out of their workforce.

Fayol outlined 14 principles for managers to use to organize and interact with their teams:
 

In creating his bureaucratic management theory, German sociologist Max Weber thought that the ideal business structure was based on a hierarchy with a clear chain of command. He also believed this structure should feature:

Developed by Australian psychologist and researcher George Elton Mayo, this management theory was the result of experiments for how to improve workplace conditions and productivity. Mayo’s work advanced the theory that employees may be more motivated by receiving personal attention and having a sense of belonging than they are by favorable working conditions or compensation alone. 
 

The systems management theory asserts that for a large organizational system to function at an optimal level, its multiple components must all work together in harmony. That means the employees, departments, work groups and business units all play a crucial role in the system’s success. To ensure success, collaboration between managers and business units should be prioritized.

Developed in the 1960s, the Fiedler’s contingency theory is based on the belief that managers need to be flexible, as different situations demand different leadership traits. Rather than applying a single theory to every situation in every organization, variables like the organization’s size, technology used and leadership at all business levels should be considered. 

Managers subscribing to this theory must be flexible and ready to identify the management style that suits a particular situation as new conditions in the market, business and team emerge, and to apply that style quickly and effectively.
 

In his book, The Human Side of Enterprise, social psychologist Douglas McGregor introduced the X and Y theories. His conclusion was that managers are guided by their perception of their team members’ motivations, and therefore use two different theories.

Managers who conclude employees are apathetic or not happy in their work use Theory X, which is a more authoritarian approach. Managers who see employees as responsible, self-motivated and committed use Theory Y, which leads to a more collaborative work environment.

McGregor’s conclusion was that large organizations may rely on Theory X as a means of keeping everyone focused on meeting their organization’s goals, while smaller businesses tend to use Theory Y, which he preferred, and may be a better fit for their inclusive and creative culture.
 

Focusing exclusively on the economics of workforce management, classical management theory tends to view employees as parts of a machine. The rationale behind this theory is that the physical needs of workers can be met with compensation, so social needs or job satisfaction are not prioritized.

In short, classical management theory states that employees will work harder and produce more if they are incentivized by higher wages or bonuses. Instead, profit maximalization, an emphasis on productivity, streamlined operations and a clear leadership hierarchy are its central tenets. 

While certainly not an ideal management theory by the standards of today’s business environment, a few aspects like a clear managerial structure, division of labor and clear definition of employee roles can be beneficial.
 

In sharp contrast to the classical, the modern management theory is built on the idea that employees don’t work for money alone, but are motivated by happiness, satisfaction and work that supports their lifestyles. 

Managers using this style use technology to make decisions about their employees and to analyze their needs, which can help them put measures in place that support their needs and further develop their abilities. 
 

Quantitative management theory was developed post World War II, resulting from a need to make strategic and tactical decisions backed by data.

This approach to management prioritizes disciplined thinking, and centers around finding an optimal solution to a problem and focused decision making. Mathematical models may be used to collect data to assist in those decisions, coupled with scientific reasoning strategies.
 

Sometimes called the integral theory or the organizations as learning systems theory, the holistic management theory is based on the idea that businesses are stronger when all parts are integrated and working together. 

In this theory, management’s responsibility is to provide transparency, provide clear goals and align their workforce toward a common purpose. Under this theory, learning and change are the order of the day, with an emphasis on teamwork, information sharing and empowerment of the individual.
 

Developed by Peter Drucker, the knowledge worker management theory became popular in the latter half of the 20th century as organizations began incorporating his ideas of balancing business needs with community.

In his theory, the employee is seen as an asset, with skills that must be managed and developed. Management is responsible for training employees or providing learning pathways through outside resources to close skill gaps.