Key Management Theories and Principles for Businesses
Taylor’s Theories
Taylor’s main interest was increasing productivity through greater efficiency in production and higher wages for workers by applying the scientific method. His principles emphasize the use of science, the generation of group harmony and cooperation, obtaining maximum production, and the development of workers.
Fayol’s Theories
Fayol divided industrial activities into six groups: technical, commercial, financial, security, accounting, and administrative. He noted the need for management education. He formulated 14 principles of management, such as those concerning authority and responsibility, unity of command, scalar chain (hierarchy), and esprit de corps.
- Authority and Responsibility: Fayol noted that authority and responsibility must be related, and that the second must derive from the first. Authority is conceived as a combination of factors derived from the position occupied by the administrator and personal factors.
- Unity of Command: This means employees must take orders from a single superior.
- Scalar Chain (Hierarchy): Fayol conceived this as a “chain of superiors” from the highest rank under which, if not unnecessarily ignored, should be eliminated if its scrupulous monitoring would be harmful.
- Team Spirit: This principle of “unity is strength” is an extension of the principle of unity of command, with particular emphasis on the need for teamwork and the importance of communication in this.
Functions of Managers
They are a very useful structure for organizing management knowledge.
- Integration of People: It consists of filling positions with people in the organization’s structure and maintaining those positions filled.
- Directing: It is influencing people to contribute to the organization and group goals.
- Controlling: The function of measuring and correcting individual and organizational performance to ensure that the facts will stick to plans.
- Planning: It is choosing missions and goals and actions to carry out those and reach them, and requires that decisions are made.
- Organizing: It involves establishing an intentional structure of roles that individuals should play in a company.
Administrative Approaches
- Interpersonal Behavior: Analysis focuses on interpersonal behavior, human relations, leadership, and motivation. It is mainly based on individual psychology.
- Empirical or Case Studies: Analysis of experience through case studies to identify successes and failures.
- Mathematical or “Science of Government”: Analysis that primarily takes into account the processes, concepts, symbols, and mathematical models. This approach views management as a purely logical process, which is expressed in symbols and mathematical relationships.
- Decision-Making Theory: Analysis focuses on making decisions, people or groups who make decisions, and the decision-making process. Some theorists use decisions as a starting point to explore all the activities of the company.