Management Theories

The classical approach to organisation, structure and management relies on formal structure, governed by rules and red tape. These structures are usually tall, with many layers of management. Decision-making is carried out at the top of the organisation and there is a hierarchy of management and control. Classical organisations are departmentalised by specialisation and the division of labour. This is a very mechanistic approach and classed as scientific management.

Classical writers emphasise the importance of principles and rules as the mainstay of organisational effectiveness. Taylor, Webber, Fayol, Urwick, Mooney and Reiley are just a few of the many writers in the classical vein. They are sometimes criticised for not fully taking into account personality factors and for creating an organisational structure in which people exercise a very limited amount of control over their working environment. Most writers have their own set of principles and the number of principles varies between individuals. Fayol advocated 14, Urwick advocated 10 and Mooney & Reiley paid particular attention to three:

Where the classical approach takes a mechanistic view to organisations, the Human Relations approach considers and gives attention to social factors at work i.e. the behaviour of employees within an organisation. Several scholars, including Elton Mayo and Douglas McGregor, advocated this approach. Groups, leadership, and the informal organisation were all investigated and discussed in the famous Hawthorne Experiments at the Western Electric Company in America (1924-32). The results of these investigations laid the foundation for further research into communication, work groups, leadership and motivation.

Unions and government regulations reacted to the rather dehumanising effects of other theories at the time. More attention was given to individuals and their unique capabilities in the organisation. A major belief included that the organisation would prosper if its workers prospered as well. Human Resource departments were added to organisations. The behavioural sciences play a strong role in helping to understand the needs of workers, and how the needs of both the organisation and its workers could be better aligned. Various new theories were spawned, many based on the behavioural sciences (some had names like theory “X”, “Y” and “Z”). Theorist Douglas McGregor is most famously known for Theory X and Y. Theory Z was by adopted by theorist Ouchi and is sometimes known as Japanese management.

Traditional Theory X: This can also be ascribed to Sigmund Freud who was no lover of people and far from being the optimist. This theory assumes people are lazy; they hate work to the extent they avoid it; have no ambition, take no initiative and avoid taking any responsibility. All they want is security, and to get them to do any work they must be rewarded, coerced, intimidated and/or punished. Can sometimes be called the “Stick and Carrot” theory.

Theory Y: This is in sharp contrast to “X” and was developed by Douglas McGregor. He believed people want to learn and that work is their natural activity to the extent that they develop self-discipline and self-development. Reward is not in cash payment but in doing challenging and difficult tasks by themselves. Managers then need to “dovetail” the human wish for self-development into the organisations need for maximum productive efficiency.

Theory Z: This was a refreshing change from theory X. Freud’s fellow psychologist, Abraham Maslow is the main founder of the humanistic school. His theory revolves around the meaning and significance of human work, as he believed all good qualities are inherent in people from birth. A mans personality is the sum total of his works and that only his works survive a man at death. This then became the essence of Maslow’s hierarchy of needs theory. ( Contingency Theory

Contingency can be defined as a chance happening of events, this being so the contingency theory states that there is no ‘one best’ design of organisation, or style of management and leadership. The type of structure, management style and ‘success’ of the organisation is dependent upon a range of situational variables.

Fred Luthans advocated that this theory worked on the basis that certain practices work better than others for certain people and certain jobs. As an example, rigid, clearly defined jobs, authoritative leadership and tight controls lead in some cases to high productivity and satisfaction among workers. In some other cases just the opposite seems to work. It is necessary, therefore, to adapt the leadership style to that particular group of workers and the specific job in hand.

This approach is sometimes seen as an extension of the systems approach, highlights possible means of differentiating among alternative forms of organisation structures and systems of management. There is no one optimum state. The structure of an organisation and its success is dependant upon the nature of the tasks with which it is designed to deal with and the nature of environmental issues. Organisations should not seek one “right” way of doing things but consider situations and contextual factors, which should influence management decisions. ( Systems Approach

The Systems approach to organisation integrates classical and human relations approaches. What is recognised is the importance of the socio-technical (human and machine interaction) system. Organisations are considered to be open systems interacting with the environment in which it operates. The system is made up of various sub-systems, e.g. task, technology, structure and people and a change in any one of those sub-systems results in overall change in the organisation. The organisation takes inputs from the environment (outputs from other systems) and through a series of activities or processes these inputs are transformed into outputs (inputs to other systems) to achieve an objective.

There were many thinkers involved in this approach including Blake & Mouton. Von Bertalanffy was regarded as the founder of this theory and Ackoff was a MIT professor who invented “OR” (operations research) which was the creation of multi-disciplinary teams of experts used in simulations of war games. Other names linked to this approach are Boulding, Starr, Forrester and Parsons.