An Overview of Management Theories: Classical, Behavioral, and Modern Approaches 

In both theory and practice, business management is at a crisis point. The world is changing — and changing quickly. There is no single management philosophy that answers every need. The best managers are flexible and blend methods. They adapt several management theories as needed to handle new situations. 

Some people may believe in the Great Man Theory of Leadership. Others know that management is like anything else: Practice and education improve performance. Understanding different management theories help managers prioritize the processes, relationships and information that impact an organization’s success.  

How should a leader set goals and guide their teams to realize them? Many heads are better than one, and this article covers three types of management approaches and many of the individual theories categorized within them. 

Three Types of Management Theories 

While ideas overlap between the categories, these three classifications differentiate management according to their focus and the era they came from: 

• Classical management theory: emerged from the Industrial Revolution and revolves around maximizing efficiency and production. 
• Behavioral management theory: started in the early 20^th century and addresses the organization’s human and social elements.  
• Modern management theory: followed on the heels of World War II and combines mathematical principles with sociology to develop holistic approaches to management. 

The origin of one movement doesn’t indicate the conclusion of the previous one. All three of these approaches still exist in contemporary practice.  

Newer is not always better either. Each philosophy was born out of changing ideals and emerging possibilities, but today’s business world is complex. Different theories better suit different needs. 

Classical Management Theory 

Classical management theory prioritizes profit and assumes that personal gain motivates employees. It aims to streamline operations and increase productivity. 

Major concepts include specialization, incentivization, and hierarchical structure. The first two contribute to employee efficiency and drive. Centralized leadership simplifies decision-making, and a meritocratic chain of commands provides order and oversight. At every level, standardization reduces waste and error. 

There are many strengths to classical management theory. It provides clarity for both the organization and its personnel, and specialization and sound hiring practices place employees in positions they can handle and even master. 

Shortcomings of classical management theory can include: 

• The treatment of workers as machines without accounting for the role job satisfaction and workplace culture play in an organization’s success 
• The difficulty of applying some of its principles outside a limited manufacturing context 
• A top-down approach to communication that neglects employee input and prevents collaboration 
• Failure to provide for creativity and innovation, which rigid structures and hyper specialization can stifle 

The following management approaches belong to the overarching category of classical management theory: 

Scientific Management Theory 

Scientific management theory is sometimes called Taylorism after its founder Frederick Winslow Taylor, a mechanical engineer. Taylor employed scientific methods to develop organizational principles that suited mass production needs. After creating and proving his theory as a manager and consultant, he wrote ” The Principles of Scientific Management” in 1911. 

Taylor wanted to replace outdated, “rule-of-thumb” methods with more efficient processes. To this end, he identified four core principles of good management. The manager: 

• Develops a science consisting of best practices for all elements of their employees’ work 
• Selects and trains employees accordingly 
• Works with employees to ensure that the science is followed 
• Assumes half the responsibility for all work through process development, guidance, and maintenance 

Today, many companies have adopted a version of the scientific management theory. By standardizing tools and procedures, they hope to increase productivity and reduce the reliance on individual talent and workers. 

Bureaucratic Management Theory 

Max Weber was one of the foremost scholars of the late 19^th and early 20^th century. He strongly influenced — and continues to influence — economic, religious, and political sociology. He explains bureaucratic management theory in “Economy and Society,” published posthumously in 1922. 

Weber believed that standard rules and well-defined roles maximize the efficiency of an organization. Everyone should understand the responsibilities and expectations of their position, their place within a clear hierarchy and general corporate policies. Hiring decisions and the application of rules should be impersonal, guided only by reason and established codes. 

Weber’s theory provides for orderly and scalable institutions. At least some element of bureaucracy informs most large organizations, whether they’re public, private, or profit driven. 

Administrative Management Theory 

Just as scientific management theory is sometimes called Taylorism, administrative management theory is sometimes called Fayolism.  

Henri Fayol was a mining engineer who sought to codify the responsibilities of management and the principles of effective administration. He outlined these in “General and Industrial Management” in 1916. 

His guide identifies 14 principles of management: 

1. Division of work: Divide work into tasks and between employees. 
2. Authority: Balance responsibility with commensurate authority.  
3. Unity of command: Give each employee one direct manager. 
4. Unity of direction: Align goals between employees. 
5. Equity: Treat all employees equally. 
6. Order: Maintain order through an organized workforce. 
7. Discipline: Establish and follow rules and regulations. 
8. Initiative: Encourage employees to show initiative. 
9. Remuneration: Pay employees fairly for the work they do. 
10. Stability: Ensure that employees feel secure in their positions. 
11. Scalar chain: Establish a clear hierarchy of command. 
12. Subordination of individual interest: Prioritize group needs. 
13. Esprit de corps: Inspire group unity and pride. 
14. A balance between centralization and delegation: Concentrate ultimate authority but delegate individual decisions. 

According to Fayol, managers need to develop practices that foster each of the 14 principles. 

Behavioral Management Theory 

Behavioral management theory places the person rather than the process at the heart of business operations. It examines the business as a social system as well as a formal organization. Therefore, productivity depends on proper motivation, group dynamics, personal psychology, and efficient processes. 

Behavioral management theory humanizes business. Feelings have a practical impact on operations. Team spirit, public recognition, and personal pride encourage employees to perform better. Individual relationships also play a role. Employees are more likely to go the extra mile for a boss they respect and who respects them. 

Shortcomings of behavioral management theory include: 

• The difficulty of balancing personal relationships with professional conduct 
• An inclination toward socially motivated hiring practices that can be unjust  
• The danger of assuming that all individuals respond the same way to the same situations and for the same reasons 

Common behavioral management theories include the following: 

Human Relations Theory 

The fundamental texts on human relations theory evolved from an experiment following classical theory. Elton Mayo worked as part of a team evaluating the impact on the productivity of various workplace conditions at the Hawthorne Works, a large factory complex. Early results were self-contradicting; changes in opposite directions both improved productivity. 

Mayo realized that the researchers’ attention to the workers was the common factor. It instilled pride and fulfilled particular social needs of the workers. This led to the development of the “Hawthorne effect,” a principle of research that suggests researcher attention affects the subjects in a study and impacts the results. 

In business management, the Hawthorne studies led to articulating the role that human relations play in business operations. Mayo and later theorists developed several related conclusions, including: 

• Group dynamics affect job performance. 
• Communication between employees and employers must go in both directions. 
• Production standards depend more on workplace culture than on official objectives. 
• In addition to compensation, perceived value affects performance. 
• Workers prefer to participate in the decision-making process. 
• Integration between departments or groups positively impacts an organization. 

In the modern workplace, sanctioned social activities and open, defined communication channels owe a debt to human relations theory. 

Theory X and Theory Y 

Douglas McGregor primarily investigated the way managers motivate their employees. The same tactics don’t work across the board, and individuals require different types of oversight or encouragement. In 1960, McGregor developed Theory X and Theory Y in response, laid out in  
“The Human Side of Enterprise.” 

This management theory divides workers into two camps that require two leadership styles. Theory X workers lack drive. Managers need to provide large amounts of structure and direction to get them to accomplish the necessary work. These workers demand an authoritarian style of management.  

Theory Y workers are self-motivated individuals who enjoy their work and find it fulfilling. They benefit from a more participative environment that fosters growth and development. 

McGregor’s theory of differentiated management practices remains relevant, but neither workers nor managers tend to exist at the extreme ends of what should be a more nuanced spectrum. The approach also neglects the reciprocal effect managers and workers can have on one another. A natural self-starter can have their ambition micromanaged out of them. 

Modern Management Theory 

Modern management theory adopts an approach to management that balances scientific methodology with humanistic psychology. It uses emerging technologies and statistical analysis to make decisions, streamline operations and quantify performance. At the same time, it values individual job satisfaction and a healthy corporate culture. 

This category of theories is more holistic and flexible than its predecessors. Data-driven decisions can remove human bias while still accommodating employee health and happiness indicators. Modern management theory also allows organizations to adapt to complex, fluid situations with local solutions instead of positing a single, overriding principle to drive management. 

Shortcomings of the modern management approach include: 

• The prioritization of information that can be difficult, expensive, and time-consuming to collect 
• The gap between theoretical flexibility and practical agility 
• The tendency of some strains to be descriptive rather than prescriptive 

Two popular strains of modern management theory are systems theory and contingency theory: 

Systems Management Theory 

It’s no surprise that Ludwig Von Bertalanffy, who developed systems management theory, was a biologist. This theory borrows heavily from that discourse. Systems theory proposes that each business is like a single living organism. Distinct elements play different roles but ultimately work together to support the business’s health. The role of management is to facilitate cooperation and holistic process flows. 

Systems management theory sometimes leans more toward metaphorical description than prescriptive application. However, you can see evidence of the approach in technological architectures and tools that standardize services and open access to information. For example, innovations such as data fabric help break down departmental silos. 

Contingency Management Theory 

Contingency management theory addresses the complexity and variability of the modern work environment. Fred Fiedler realized that no one set of characteristics – no single approach – provided the best leadership in all situations. Success instead depended on the leader’s suitability to the situation in which they found themselves. 

Fiedler focused on three factors that determine that situation: 

1. Task structure: How well defined is the job? 

2. Leader-member relations: How well does the leader work with team members? 

3. Leader position power: How much authority does the leader have? To what extent can they distribute punishments and rewards? 

Managers can be classified as having a task-oriented or a people-oriented style. Task-oriented managers organize teams to accomplish projects quickly and effectively. People-oriented managers are good at handling team conflict, building relationships, and facilitating synergy. Task-oriented leaders thrive in both highly favorable and unfavorable conditions, but people-oriented leaders do better in more moderate configurations. 

The least-preferred coworker (LPC) scale is a common management tool developed by Fiedler to help leaders pinpoint their style. The scale asks you to identify the coworker you have the hardest time working with and rate them. Relationship-oriented managers tend to score higher on the LPC scale than task-oriented managers. 

What’s Next for Management Theory? 

It’s time for a new category of management theory. The business world requires more than a single new idea, and it’s ripe for a constellation of new theories.  

Ecology and technology continue to reshape our concerns, resources, and possibilities. Remote work physically distances coworkers, and worldwide health and climate concerns create fragile relationships with globalization. Equity is no longer “a nice idea” but an urgent imperative. Volatile conditions lead people to search for meaning at work and everywhere else. 

No one truly knows what’s next. But it will likely build on and cherry-pick from the above management approaches, reorienting them around a new philosophical core. Familiarize yourself with predominant principles today and prepare yourself for a new movement tomorrow.