Management Theories and their relevance in 2024

Introduction to theories

Management has only existed as a named discipline for around 100 years, but clearly, the elements of the subject have been around since the beginning of human history. Much of management has arisen through conquest and the use of military terminology of strategy/ tactical is used. There is no single way of explaining management and organisational theories as they are a group of related theories.

Management theory can be described as a theoretical means of understanding the organisation and its people and how the organisation's structure works to increase effectiveness. The early theorists divide into main groups, the practising managers or classical and the social scientists who emphasise human behaviour, motivation, communication and leadership styles.

The initiator of classical/ scientific theory in 1900 was pioneer F.W Taylor, typically defined as Taylorism. Classical theory was concentrated on using people well and concentrating on efficiency in the workplace to increase productivity which later laid the work for Gantt charts to be developed.

On the other hand, Fayol, a pioneer of organisational theory focused on managers rather than workers, where he derived 14 principles such as the unity of command and direction.

In around 1925 Human relations theory was introduced which was centred around treating people well and when people are happy they work better which was pioneered by Elton Mayo. Moreover, system theory pioneered by Ludwig von Bertalanffy, have in mind that organisations have to become part of the greater environment such as civil engineering firms are all part of the built environment.

And finally, around 1975 the contingency theory was introduced which looked at organisational effectiveness and looked at the best way to manage the organisation based on the task and manager fit. Pioneers of contingency were Lawrence and Lorch and Burn and Stalker.

Classical theory

Classical theory was all about the efficiency of workers and the argument that managers must manage, and workers must do the work (i.e. inhuman approach) which is derived as one way of formal communication in a formal hierarchical organisation structure. Taylorism is about the division of work and getting people to do what they were good at by methods and procedures used for coordination and control of work. It emphasises on careful selection of workers and inducing and training the worker by the scientific method. Taylorism believed in the rational-economic needs concept of motivation.

Classical theory is based on determining the efficiency of production through work observation and time measurements where efficiency can be measured and improved. As developed by Weber a bureaucracy that exercises authority and power included the division of labour based on routines and defined tasks, authority hierarchy with a clear chain of command, formal selection of people, formal rules and regulations for operating procedures and impersonality which means everyone must obey the rules and controls.

from Expert Program Management

Human relations approach

Human relations theory is based on treating people well and attention is given to social factors at work to make people happy, so they work better in this theory, the focus is shifted from task to workers and worker's cognitive and emotional aspects of work.

This theory involves the understanding of how people behave in the workplace and this type of organisation have people's needs as the decisive factor in making organisations more effective and gives less emphasis on the task.

Workers’ opinions, complaints, suggestions and feelings to increase satisfaction and production are communicated.

The Hawthorne experiments which were conducted by Mayo found that productivity increased because attention was paid to the workers. It also found that individual or group performance is influenced by human behaviour factors.

Moreover, the neo-human relations which identify the need to give workers more responsibilities and job enrichment as well as the need for managers to learn to trust their subordinates will improve organisation efficiency. This had to do with a major motivational and leadership style change in terms of McGregor's Theory X and Y.

Human relations tended more toward Theory Y. Also Maslow’s hierarchy of needs could be applied to this theory as the levels of human needs such as physiological, safety, love, esteem and self-actualisation could be used to identify the needs of people at work which by satisfying them will make them motivated to do good work.

Systems theory

Quick definition: The integration of classical and human relations approaches. The importance of the socio-technical system. The organisation within its eternal environment

System theory views organisations as complex systems of people, tasks and technology which basically integrates classical and human relation approaches together. It encourages managers to interrelate the organisation with its people and to view the organisation both as a whole and a part of a large environment. The system approach consists of four main elements, input, process, outputs and feedback.

A supra-system is a macro-level system composed of a number of subsystems. The individual units forming a system are typically called subsystems, elements or components. Systems tend to seek a steady state between forces that are strongly opposed to one another. Engineers tend to work better in an open system hence non-authoritarian leadership from engineering firms with a matrix organisational structure is preferred which encourages collaboration.

Contingency theory

Form of structure, management, and success of the organisation dependent upon a range of situational variables

Contingency theory suggests that there is no one best design of an organisation as it depends on the best fit between task and manager and the circumstances in which it operates. Depending on the tasks the situational leadership theory can be applied which states that as the level of maturity of the follower continues to increase in terms of accomplishing a specific task, the leader should begin to reduce task behaviour and increase relationship behaviour.

Management theories relevance to the 2022 Construction industry

Even though these theories are derived years ago they still are relevant

For example, classical theory gave us work-study, planning studies such as Gantt charts, and method study which is still applied to projects. The classical approach prompted the start of a more systematic view of management and attempted to provide some common principles applicable to all organisations such as attempting to analyse the effectiveness of the design of organisation structure.

Also, from Fayol the main principles of bonus schemes, are industrial relations. It is applied to the continuum of leadership, fit for the best job, some jobs you need to give a lot of direction or there is a two-way communication

Example of a Gantt Chart from EdrawSoft

Systems theory largely describes how civil engineering projects operate and are administered (we work in an open system) with the majority of construction projects being structured in a matrix-type organisation structure which promotes collaboration.

Decision theory also is much used in relation to classifying risk in projects. Contingency theory identifies variables likely to affect projects and seeks to match resources to the task at hand as every project in civil engineering is unique and will require a different approach.

The human relations theories recognised the importance of the informal organisation, which will always be present within the formal structure and influence the motivation of employees who will view the organisation for which they work through the values and attitudes of their colleagues.

Recognition of the socio-technical approach is of particular importance today which argues that people must be considered as at least an equal priority along with investment in technology. It has been highlighted that major technological change has brought about dramatic changes in worker behaviour and requirements and it is essential to remember that it is people who unlock the benefits and opportunities of information and communications technology.

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Recommended further reading:

Leadership style (McGregor's Theory X and Y)

Differences between Functional vs Matrix organization structure in Engineering firms

The Effective Performance of a Team

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