What do we mean by Management Theories?
Management theories are the set of general rules that guide the managers to manage an organization. Theories are an explanation to assist employees to effectively relate to the business goals and implement effective means to achieve the same.
General Management Theories:
There are four general management theories.
1. Frederick Taylor – Theory of Scientific Management.
2. Henri Fayol – Administrative Management Theory.
3. Max Weber - Bureaucratic Theory of Management.
4. Elton Mayo – Behavioral Theory of Management (Hawthorne Effect).
1. Frederick Taylor’s Theory of Scientific Management:
Taylor’s theory of scientific management aimed at, improving economic efficiency, especially labor productivity. Taylor had a simple view about, what motivated people at work, - money. He felt that, workers should get a, fair day's pay for a fair day's work, and that pay, should be linked to the amount produced. Therefore he introduced the, DIFFERENTIAL PIECE RATE SYSTEM, of paying wages to the workers.
Taylor's Differential Piece Rate Plan:
If Efficiency is greater than the defined Standard then workers should be paid 120 % of Normal Piece Rate.
If Efficiency is less than standard then workers should be paid 80% of Normal Piece Rate.
Principles of Scientific Management.
Four Principles of Scientific Management are:
1.Time and motion study: - Study the way jobs are performed and find new ways to do them.
2.Teach, train and develop the workman with improved methods of doing work. Codify the new methods into rules.
3.Interest of employer & employees should be fully harmonized so as to secure mutually understanding relations between them.
4.Establish fair levels of performance and pay a premium for higher performance.
2. Henri Fayol’s Administrative Management Theory:
Henri Fayol known as the Father Of Management laid down the 14 principles of Management.-
1.Division of Work.
5.Authority and Responsibility.
6.Esprit De Corps.
7.Subordination of Individual Interest to General Interest.
8.Stability of Tenure.
10.Unity of Direction.
14.Unity of Command.
3. Max Weber’s Bureaucratic Theory Of Management:
Weber made a distinction between authority and power. Weber believed that power educes obedience through force or the threat of force which induces individuals to adhere to regulations. According to Max Weber, there are three types of power in an organization:-
3.Bureaucratic Power or Legal Power.
Features of Bureaucracy:
1.Division of Labor.
2.Formal Hierarchical Structure.
3.Selection based on Technical Expertise.
4.Management by Rules.
6.Only Legal Power is Important.
7.Formal and Impersonal relations.
4. Elton Mayo’s Behavioral Theory of Management:
Elton Mayo's experiments showed an increase in worker productivity was produced by the psychological stimulus of being singled out, involved, and made to feel important. Hawthorne Effect, can be summarized as “Employees will respond positively to any novel change in work environment like better illumination, clean work stations, relocating workstations etc. Employees are more productive because they know they are being studied.