In any field of management, the role of theory is to providea means of classifying significant and pertinent management knowledge. Forexample, in the area of designing an effective organization structure, thereare several principles that are interrelated and that have a predictive valuefor managers.
The theory of management is grouped into the five functions ofmanagement. In sum, there are basically three main reasons why we have to studymanagement theory. First, theories provide a stable focus for understandingwhat we experience. A theory provides criteria for what is relevant.
Second,theories enable us to communicate efficiently and thus move into more and morecomplex relationships with other people. Third, theories make it possible – indeed,challenge us – to keep learning about our world. By definition, theories haveboundaries. Current events in management focus upon improving theemployee productivity, attracting & retaining the best talents andimproving the employee engagement in the organization. It helps the humanresource to be the competitive advantage of the organization. These aspects oftoday’s management have become strategic in nature and deeply rooted to themanagement theories of the organization. The most relevant theories ofmanagement in the modern business environment are the1.
Humanistic theory of managementby Elton MayoThe theory focused more on human psychology and made efforts to improve it.Initiatives such as the reward system, positive reinforcement, job enrichment,training & development programs and employee motivation are the result ofthe humanistic approach of the management. This category was created by EltonMayo. The origin of behaviorism begin with the human relations movement thatwas a result of the Hawthorne Works Experiment carried out at the WesternElectric Company, in the United States of America that started in the early1920s (1927-32). Elton Mayo and his associates’ creation of experimentsdisproved Fredrick Taylor’s beliefs that science dictated that the highestproductivity was found in ‘the one best way’ and that way could be obtainedonly by controlled experiment. The Hawthorne studies attempted to determine theeffects of lighting on worker productivity. When these experiments showed noclear correlation when it comes to productivity, then they started to look forother factors (Forbes, 2012). These factors that were considered when Mayo wasworking with a group of women included rest breaks, no rest breaks, no freemeals, more hours in the work-day/work-week or fewer hours in the workday/work-week(Forbes, 2012).
With each of these changes, productivity increase. When thewomen were put back to their original hours and conditions, they set aproductivity record. These experiments proved five factors that can increase productivitywhich is: first, work satisfaction and hence performance is basically noteconomic but depends more on working conditions and attitudes – communications,positive management response and encouragement, working environment.
Second, itvetoed Taylorism and its emphasis on employee self-interest and the claimedover-riding incentive of monetary rewards. Third, large-scale experimentsinvolving over thousands employees showed highly positive responses to, forexample, improvements in working environments (e.g., improved lighting, newwelfare/rest facilities), and expressions of thanks and encouragement asopposed to persuasion from managers and supervisors. Fourth, the influence ofthe peer group is very high thus, the importance of intimate groups within theworkplace. Finally, it denounced ‘rabble hypotheses’ that society is a horde ofunorganized individuals (acting) in a manner to secure his or herself-preservation or self-interest.
These results showed that the groupdynamics and social makeup of an organization were an extremely important forceeither for or against higher productivity. This outcome caused the call forgreater participation for the workers, greater trust and openness in theworking environment, and a greater attention to teams and groups in the work-place.Finally, while Taylor’s impacts were the establishment of the industrialengineering, quality control and personnel departments, the human relationsmovement’s greatest impact came in what the organization’s leadership and personneldepartment were doing. These seemingly new concepts of “group dynamics”, “teamwork”,and organizational “social systems”, all stem from Mayo’s work in the mid-1920s