Management Theory
We live in a profit-driven society. Weather your business provides a service, creates a product, or exists solely to suck some equity out of the global economy, its ultimate goal is clear: make money. Money is like food and water to a business. Without money, it will die. So naturally, the business world is brutal and competitive. It takes strong management to keep any company alive and thriving, especially when the economy is in the tanks. Thankfully the US economy is starting to look up. But, solid management is still as important today as it’s ever been. Over the years, management theory has been written, erased, rewritten, and erased again. It’s the 21st century, and the practice is still evolving. To better understand what it takes to be an effective manager and run a successful business it is important to understand modern management theory and how we got to this point.
For most of history, “managers” were feudal kings, war generals, and slave drivers. Things started to change in the 1800s during the Industrial Revolution, but employers were still largely out of touch with their workers. The classical school of management arose as managers struggled to find ways to train their employees. In the late 19th century, Frederick Taylor helped establish the scientific branch of classical management. Scientific management focused on finding the most efficient way to get work done. This theory can be summarized by: redesigning a coal worker’s shovel. Around this time, Max Weber helped contribute to the administrative branch of classical management. Weber described an objective form authority organization called a bureaucracy. According to Weber, a bureaucracy must have the following characteristics: a well-defined hierarchy, division of labor and speculation, rules and regulations, an impersonal relationship between managers and employees, competence, and detailed record keeping.
In the early 20th century, people began to notice some of the problems with the classical school of management. Specifically, it ignored employee motivation and behavior. The behavioral school of management evolved from these issues. Proponents of the behavioral management theory argued that a better understanding of workers’ motivation, conflict, expectations, and group dynamics improved productivity. This theory can be summarized by: addressing the needs of the coal worker. Abraham Maslow was an early advocate of this theory. He is most known for his hierarchy of human needs, which include: physiological needs, safety needs, esteem needs, and self-actualization needs.
During World War II mathematicians and scientists formed the quantitative approach to management. They used statistics, models, and computer simulations to improve wartime decision-making. Today managers use all sorts of statistical tools (forecasting, inventory modeling, econometrics, queuing theory, etc.) to improve their company’s profitability. This theory can be summarized by: simulating the coal worker’s activities and calculating the most efficient way he can shovel coal. One of the main contributors to this school of thought is William Edwards Deming. After WWII Deming brought his theories of process control (notably his “plan-do-chek-act” cycle) to Japan. In a few decades Japan became known for its innovative, high-quality products.
Recently, management theory has evolved to include the quality school of management. Proponents of this theory believe that focusing on clients, while addressing the needs of shareholders, is the best way to produce the highest quality of goods and services. This theory can be summarized by: forgetting the coal, people want renewable energy. The Kaizen approach of quality management focuses on continuous improvement of people, products, and processes. The reengineering approach of quality management calls for continuous change and recognizing when change needs to occur.
Successful managers take information from all of these approaches to management. They also recognize that management theory is constantly evolving. Most of these management theories were only detailed and put into practice within the past 100 years. Managers today must excel in their leadership responsibilities and reinvest in their most important asset- their employees.
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