Management Theory

When holding a job, there are usually certain people that have specific “titles” that describe the work that they do.  With those titles, comes the chain of command, which can be looked at as a flow chart:

The CEO –> who oversees Management –> who oversees Associates.

These managers organize and coordinate the activities of the business to achieve specific goals. While the chain of command is fairly straightforward, the middle part, or Management, has many different ways of functioning.

Defining Management

pyramidWhat exactly is management? Is there only one way to manage?  Management is the organization and coordination of the activities within a business to meet specific goals.  Management creates policy and organizes, plans, controls, and directs a company’s resources to complete the objectives of that policy.  Do all managers manage the same way?  Do they all follow the same guidelines to meet their goals?  As a matter of fact, management can be done in a number of different ways to achieve different goals within a business. The different ways managers define guidelines, set goals, and organize the company is collectively known as “Management Theories“, while the ideas behind ways managers interact with associates and lower-level managers are known as “Motivational Theories“. Some of the most prevalent management theories were first formulated by by Frederick Taylor, Max Weber and Henri Fayol, while some of the most potent motivational theories were formulated by Abraham Maslow, and Frederick Herzberg.

Management Theories

Management theories are implemented to help increase productivity and service in the business environment.  Frederick Taylor, Max Weber, and Henri Fayol all had different views on management and how employees should work and how a business should run.

Frederick Taylor – Scientific Management

Frederick Taylor’s theory of scientific management developed techniques for improving the efficiency of the work process. He set up a systematic study of people, tasks and work behavior to break down the work process into small units or sub-tasks.  He did this so he can determine the most efficient method possible for the completion of a specific job.  Taylor was focused on finding a method that can get the most amount of work done in a certain time frame.  This management theory is using employees based on their optimal performance.  What this means is that he found what employees are good at and made them stick to that one task.  This is like an assembly line for the production of furniture or cars.  Employee 1 will assemble the back of the chair while employee 2 does the legs, and so on and so forth.  This improved productivity because each person focused on one task at hand and this was able to speed production.  Taylor also had a reward system for improved productivity.  Through this management theory, there had been development for current management theories: Setting up bonus programs, commission based jobs, better personal practices, departmentalization, and widespread improvements in quality control.

Max Weber – Bureaucratic Management

managementMax Weber had a bureaucratic management theory built on principles of Frederick Taylor Weber focused on making a system based on standardized procedures and a clear chain of command. The chain of command is top-down management where employees answer to their department managers, who answer to their managers who then answer to the CEO in a pyramid structure.  Weber stressed efficiency and while he focused on a bureaucratic way of doing things, he stressed the dangers that a true bureaucracy could face. Max Weber feared that a company would hire someone who will not be qualified for the job, so he stressed that employees only be hired if they possess the skill set of the job. While this may seem obvious, the reason this is important is because Weber’s management theory puts in place to make sure the employees being hired are competent, or can be weeded out of the company. Through this management theory, there had been development for current management theories: Job roles, authority hierarchy, strict record keeping, standardized procedures and hiring employees if their skills match those that are needed in the job.

Henri Fayol’s 14 Principles

Henri Fayol Management Theory- Henri Fayol’s Management theory is a simple model that displays how management interacts with personnel. His management theory is based on 14 principles of management which are as follows:

  1. Division of work – Departmentalizing the business to promote efficiency of the workforce to increase productivity. The specialization of the workforce increases accuracy and speed.
  2. Authority and responsibility – Managers have the authority to give orders to employees and are responsible for that employee to get the job done. It is necessary to make agreements about this because the responsibility can be traced back from performance.
  3. Discipline – This principle is about the obedience of management and is a core value of the company’s mission statement. This is an essential principle to run the organization smoothly
  4. Unity of command – This means that an employee should receive orders from one manager and answers to that manager. If more than one manager gives tasks to one employee, it can lead to confusion and conflicts.
  5. Unity of direction – Employee’s work in teams directed by a plan of action and monitored by management to get the job done. The manager is responsible for the performance of the group.
  6. Subordination of individual interest – Fayol stressed that personal interests are subordinate to the interest of the organization and the primary focus is of the organization not the individual.
  7. Remuneration – Ultimately, this is about rewarding the efforts of the employees. Rewards can come in a non-monetary form (compliments, credits) or monetary form (bonus, compensation).
  8. The degree of centralization – This implies the concentration of decision-making authority at the top of the management pyramid, But also depends on the size of the organization.
  9. Scalar chain – Top-down hierarchal management, which varies from senior management to low levels of management. This can also be seen as a type of management structure.
  10. Order – Employee’s must have the right resources at their disposal so that they can function properly. Managers must also function in an orderly way.
  11. Equity – Employees must be in the right place in the organization to do things right. This increases production efficiency (if John is good at making spreadsheets and is nervous talking to people, management wouldn’t have John answering phones).
  12. Stability of tenure personnel – Minimize employee turnover by investing in the right staff and putting them in the right department.
  13. Initiative – Principle employees should be allowed to express new ideas to add value to the company, encouraging employees to be involved.
  14. Esprit de Corps – Striving for the involvement and unity of the employees. Managers are responsible for the development of morale in the workplace.

Democratic Styles

democraticA democratic style of management allows management and its staff to have significant responsibility. This is also sometimes called “Lateral Management”, or “Flat” organizations, since it is defined by fewer levels of middle management between associates and the top management. It gives employees a chance to have a voice and it is often combined with participatory leadership by collaborating between leaders and the people they guide. The democratic style splits responsibility between staff.

Democratic styles of management have become much more common in recent years, since lower-level associates tend to be more motivated by having a larger “voice” in the company. This has an important trade-off: since there are fewer levels of management, the higher-level managers need to choose between spending more time developing broad strategies, while risking individual associates may not be working as efficiently as they could be, or micro-managing the associates to improve efficiency on smaller projects, but at the risk of losing coherent vision.

Fayol, Weber, and Taylor all had interrelated management theories.  They all focused on one main goal – maximizing the productivity of the business.  It is said that Frederick Taylor had an autocratic style, Weber had a bureaucratic style and Fayol had more of human resource style.  Over the years, these management theories have been merged by different organizations and businesses.  Mostly all companies combine these theories to best fit the needs of the organization and its goals, and managers use combined management skills such as bureaucratic, democratic, autocratic and human relations to manage their employees.

Motivational Theories

Motivational theory is discovering what drives individuals to work towards a specific goal or outcome.  Most motivational theories differentiate between intrinsic and extrinsic factors.  The two biggest core motivational theories are the hierarchy of needs theory, which was coined by a psychologist named Abraham Maslow in 1943, and the 2-factor theory that was identified by Frederick Herzberg.

Hierarchy of Needs – Abraham Maslow

Maslow focused on the notion that “People have needs”. Those who work must have these needs met in order to increase productivity and self-satisfaction. His hierarchy of needs shows that there are five main needs that follow in order of importance to the human. One important thing to note is that Maslow’s contention that ones well being increases, as the higher level needs are met.  The hierarchy is shown as a pyramid and we start at the bottom, which is the most needed.

  1. Physiological needs – These are the basic needs of a person including sleep, hunger, thirst, shelter
  2. Safety needs – Security, protection from danger
  3. Social needs – Sometimes referred to as the “love” need. Friendship, giving & receiving love, and social activities.
  4. Esteem needs – Includes self-respect and the esteem of others
  5. Self actualization – This is the desire to reach ones full potential, to become everything you can be.

Dual Factor Theory – Frederick Herzberg

Herzberg focused on a dual factor theory which states that certain factors in a workplace cause job satisfaction with a separate set of factors cause dissatisfaction.

Factors for satisfaction

  1. Achievement – The employee’s efforts need to result in a tangible achievement, rather than a constant struggle
  2. Recognition – Employees must receive recognition for the work they do
  3. The Work – The employee must actually enjoy (or at least not despise) the actual work itself
  4. Responsibility – The employee needs to feel responsible, that their job is important and the fruit of their labors is necessarily to the organization
  5. Advancement – Employees prefer not to have “dead-end jobs”, where there is eventual possibility of advancement
  6. Growth – The employee is building new skills and competencies over time

Herzberg argued that employees work better and produce more when these 6 factors are present in the organization.  This means that the job should have challenges that utilize the full ability of the employee.  When the employee demonstrates that they can handle the challenging work, they will be given more responsibility.

Factors for dissatisfaction

  1. stressCompany policies – Company policies that seem arbitrary or “in the way” are a major cause of dissatisfaction
  2. Supervision – Over-supervised employees to not feel trusted, and productivity tends to suffer
  3. Relationship with supervisor and peers – Negative interpersonal relationships in a work environment will cause a major drain on productivity
  4. Work conditions – If employees are not happy with the conditions under which they are expected to work, their productivity will suffer
  5. Salary – Under-paid employees are less likely to take pride in their work, since it can be a reflection that their work is under-valued
  6. Status – Status within the company means how much their voice is heard. Employees who feel they are at the “bottom of the ladder” are less likely to take their jobs seriously
  7. Security – Jobs with no job security are far more stressful, which is a major drain on efficiency and productivity

If an employee doesn’t feel secure with their job, is receiving a low salary and cant support themselves, and there is too much micro managing, the employee will be dissatisfied and will not work as well and produce quality work.

It is important for companies to meet the motivational needs of their employees in order to make the company grow.  It is also important to adapt to a way of managing so that the employees are happy in their environment so they can produce high quality work.  Traditional and current management theories are applied in the business environment by combining the different types to better serve the organization and the work environment.  Depending on the type of business that the employee is in, will determine the type of management in the work place, but the employer must always make sure they meet the motivational needs of the employees in order to succeed.

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