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Management theories

Management theories are attempts to isolate and explain the key elements in the practice of management, in order to identify the most effective management methods.

Outcomes
Theories of management
Management styles
Exercise

HSC Topic 1: Business Management and Change is covered in the NSW Board of Studies Syllabus (June 1999) on pages 25 - 26. The specific outcomes for this section are:

Outcomes

The student:

H3.1	explains management theories and strategies and their impact on business
H5.3	communicates business information, ideas & issues using relevant business terminology and concepts in appropriate forms.

Theories of management

The major theories of management may be classified under four headings:

Classical/scientific approaches
Behavioural/human approaches
Systems/contingency approaches
Political/collaborative approaches

Classical/scientific approaches

Approach	Specialised efficiency-oriented systems of management
Timing	From the turn of the century, well into the 1930s. A legacy of the Industrial Revolution and the social structure of the times: a potentially large workforce of relatively uneducated, disempowered people.
Management principles	Hierarchical systems based on principles of specialisation, centralisation and formality. Specialised tasks exist in specialised departments, with responsibility formally designated. Span of control is narrow and a unitary line of command is in place.
Relevance	Great benefits from a consumer viewpoint, with the availability of a wide range of consumer goods. Problems centred on the dehumanising, autocratic nature of the efficiency-driven system and the assumption that the needs of workers matched those of management.

Behavioural/ human approaches

Approach	Changed approach to the way the work situation was seen. Managers dealt with "people" aspects of their organisation. The "group" played a more significant role.
Timing	Became important following the 1922 to 1937 Hawthorne studies of the Western Electric Company and the Great Depression of the time. Continued to the 1970s.
Management principles	Supportive leadership. Managerial focus on group support and wide spans of control in a flat organisational structure, consisting of a hierarchy of interlocking groups.
Relevance	The conflict of interest between management and workers was recognised. Practices appeared to work as prosperity continued into the 1970s, with growing domestic markets and high family incomes in Western economies. Behavioural management practices were overwhelmed by the application of systems models of management.

Systems/ contingency approaches

Approach	Systems adopted by management need to be contingent on the stability, or lack of it, in the organisation's particular environment.
Timing	Systems theory, concepts and language were in place in the 1960s and dominated management thinking in the 1970s. The rapidly changing, competitive world economy and the crisis facing western enterprises precipitated the systems approach.
Management principles	Differentiation. The organisation is a system. The way the separate parts interrelate defines the system. Integration depends on shared norms, values and beliefs, not on the commands of a superior.
Relevance	These approaches recognise that managers are dealing with complicated interactions in a volatile, competitive, international environment. Management recognises that there is no ONE way to deal with all circumstances, e.g. formal processes, such as job descriptions and scheduling, become irrelevant too quickly. Systems and contingency approaches have resulted in improved practice and significant developments in organisational design and leadership.

Political/ collaborative approaches

Approach	Approaches relate to empowerment in the external environment through loosely structured networks and alliances.
Timing	The current economic environment, which is characterised by high levels of social, economic and technological discontinuity. Political approaches recognise the speed-up in the rate of change and complexity of the current external environment.
Management principles	Empowerment and collaborative individualism. The creativity of management and its capacity to innovate are challenged. Management is increasingly willing to experiment with new strategies and cultures in search of solutions to unstructured problems. Alliances are developed inside and outside the organisation.
Relevance	The use of political power and influence in the creation of alliances is recognised. Organisations have moved increasingly towards decentralisation and chunking. Political approaches are more deliberate strategies to deal with complex and discontinuous environments.

Management styles

This is the pattern of behaviour of managers in performing their functions and in their dealings with employees. A manager's style reflects a response to a number of variables in the external and internal environments, as illustrated below:

Manager's personality and value system, e.g. education, experience.
Nature of workers, e.g. skills, needs, attitudes.
Nature of the internal environment, e.g. structure, stability, physical site.
Immediate situation, e.g. nature of problem, time and cost constraints.

Management styles can be classified as:

autocratic,
democratic,
collegial,
laissez-faire.

Exercise: Management styles

Use the following list of behaviours or characteristics to complete the table which follows.

Managers make most decisions.
Decision making is a consultative process resulting in a shared decision.
High levels of delegation occur with management support.
Power is not referred to at any stage, nor is it used by managers.
There are low levels of trust in the ideas and abilities of workers.
Workers are free to function as they wish within broadly defined guidelines.
Decisions have the broad support of the group.
Decisions are arrived at by the group.
Set standards of performance are imposed.
Performance standards are decided by mutual agreement.
Ideas and suggestions from workers are encouraged.
Sufficient time is allowed for full consideration of issues.
Specific policies and directions are discouraged.
No guidance is provided in the undertaking of responsibility.
Communication is a two-way process.
Little opportunity is allowed for workers to use initiative.

Management style	Most relevant management theory	Behaviour/ characteristic
Autocratic		1.
		2.
		3.
		4.
Democratic		1.
		2.
		3.
		4.
Collegial		1.
		2.
		3.
		4.
Laissez-faire		1.
		2.
		3.
		4.