Key Management Theories: Classical and Modern Approaches to Organizational Effectiveness

Imagine a company with inefficient operations, disengaged employees, and declining productivity. On the other hand, company B, where employees are motivated and performing at their peak potential. What’s the difference? The answer boils down to effective management.

In simple terms, management theories are defined as how organizational structure works to increase effectiveness. It helps organizations to focus, communicate, and evolve. Management theories also allow leaders to focus on the core aspects of the organization.

In this blog, we dive deep into the theories and how they can be applied to enhance organizational effectiveness.

Classical Management Theories 

Classical management theories are based on the worker's efficiency. It is designed to fulfill the worker's only physical and economic needs. This theory advocates a specialization of labor, centralized leadership, and profit maximization. 

Scientific Management Theory (Taylorism)

Taylor's scientific management theory is focused on efficiency. As per the Taylor mindset, employers should appreciate workers for the increased product rather than scold them for every minor mistake. This theory is based on 4 core principles. 

• Each part of a work has a science to it. 
• Employers should hire, train, and cultivate employees using a scientific approach. 
• There should be a healthy collaboration between employees and employers. 
• Employers should divide work and responsibilities among employees. 

Implementation of Taylor’s Management Theory 

Here are some tips for the successful implementation of this theory: 

Break Down the Tasks into Subtasks: Managers or employers who follow Taylor's theory break the entire project into tasks and assign them accordingly. This makes the entire process more organized and efficient. 

Delegation and Training Workers: According to Taylor, employers should find the most efficient way to complete the given tasks and then delegate them as per the employee's skills and abilities. Management should train those workers in whatever method was identified to complete the assignment more efficiently.

Measure Performance: Managers should track the performance to ensure efficiency for your business and your workforce. This helps to achieve Taylor’s goal of maximum prosperity. 

Bureaucracy Theory (Max Weber)

Max Weber's Bureaucracy Theory is one of the most efficient classical theories. It is designed for private businesses and public offices. According to this theory, everyone is treated equally, and work responsibilities are divided by each team’s area of expertise. This theory is based on the 6 major principles. 

• Formal hierarchical structure
• Rule-Based Management
• Functional Specialty Organization 
• Up-focused or in-focused mission
• Impersonal Communication
• Employment Based on Technical Qualification 

Implementation of Weber’s Theory in Small and Medium-Sized Businesses 

Here are a few tips that you should consider. 

Stress Relief and Fairness: This theory gives employees peace of mind and fairness in business. This can be helpful to boost morale. For example, clearly defined rules for your company (employee handbook) can help protect the business and its employees. 

Use SOPs: Consideration of standard operating procedures enhances the efficiency of the employees. For example, in the manufacturing business, having a set of rules in place, such as how equipment should be operated, can reduce workplace injuries.

Modern Management Theories 

Modern management theories were made in the mid-20th century. It is built upon the foundations of the classical theories. They provide a holistic understanding of organizations and management practices. This theory breaks down the complexities of human behavior and the dynamics of the business environment.

Human Relation Theory 

Human relations theory is based on the belief that people want to be part of a team that focuses on development and growth. Therefore, if employees get special attention and are encouraged to participate, they are motivated to do productive work, which leads to high-quality work.

Human Relation Skills 

There are 3 core human relations skills that you should have to consider 

• Communication is an essential skill to practice human relations. Effective communication ensures employees are on the same page as well as feel motivated and valued at work. The mode of communication should be anything verbal or written. 
• Conflict Skills. As a manager, you have to deal with the different personality types, worldviews, and goals that make universal agreement difficult. Therefore you must be comfortable and well versed in conflict resolution. 
• Multitasking: Managers face lots of issues and questions to solve daily. They are accountable for themselves as well as the success of their team. A good leader has the skill to manage multiple tasks at once. It can be through prioritization,

Implementation of this theory in SMB is easy. As a manager, you can easily develop these skills and implement human relations management practices in your organization. 

Systems Approach Theory 

It is commonly considered the foundation of organizational development. In this approach, we look at organizations as systems and sub-systems that interact with one another to create an overall organizational system. In the system approach, employees are more focused on achieving a collective goal for an organization rather than operational output. 

Applications of the Management Theories to Enhance Organizational Effectiveness

Improving Decision Making 

With the help of scientific management, we can understand deeply the work processes and identify inefficiencies. This helps organizations to make more informed decisions. For instance, analyzing employee productivity data can help determine the optimal staffing levels or identify areas for process improvement.

Boosts Employee Morale 

The application of human relation theory helps to create a positive work environment and increase employee recognition, which can significantly boost employee motivation. It also provides the opportunity for social interaction, regular feedback, and appreciation.

Enhancing Organizational Flexibility 

The application of bureaucratic structures can provide stability and order. It helps to introduce more flexible roles and encourages employees to experiment and innovate. 

Final Thoughts 

This blog highlights the evolving nature of management theories and how they help to enhance organizational effectiveness. Effective management requires a holistic approach. It embraces continuous learning, adapting new technologies, and prioritizing employee well-being. Organizations can easily navigate the challenges of the modern business landscape and achieve sustainable success.