MODERN MANAGEMENT: THEORY, PRINCIPLES, TOOLS, IMPORTANCE - DUDAS - 2024

The modern management is the managerial era that began in the 1890s with Frederick Taylor, who advocated abandoning old practices for better management practices that were supported empirically.

This management theory holds that companies can fully improve the performance of unskilled workers by first looking at work processes and then developing best practices.

Source: pixabay.com

Modern management is based on Adam Smith's theory of the division of labor, which ensures that each worker becomes more and more skilled at a particular task, allowing him to be as productive as possible.

This administration is more focused on the psychological and sociological aspects of the human relationship, using Maslow's motivation theories and ideas about how organizational structure interferes with satisfaction.

The formation of large companies caused management to separate from ownership, with salaried managers instead of proprietary managers. Handing over control to a hired management led to the management methods being used more widely.

Modern management theory

They are the considerations that lead to favorable administrative strategies. They can include tools such as standards and procedures that can be put in place in today's businesses.

Scientific management theory

Frederick W. Taylor was the main precursor to the scientific theory of management. Source: wikipedia.org

This theory created by Taylor highlights that having to force people to work hard is not the best way to optimize results. Instead, he recommends simplifying tasks to increase productivity.

The strategy to follow is different from how business was previously conducted. Initially, a manager had only minimal contact with his workers. There was no way to standardize workplace rules and the only motivation of employees was their job security.

Money was the key incentive to work, so Taylor developed the concept of "just pay for a fair day's work." The resulting collaboration between employees and employers became the teamwork that is enjoyed now.

Systems management theory

It has another methodology for the administration of companies. It states that a company is made up of a great variety of elements that operate in a balanced way so that the system as a whole can function in an excellent way.

According to this theory, the success of a company depends on these fundamental components: the synergy, relationships and dependency between the different systems. One of the most significant pieces of the company are the workers, in addition to the departments and work groups.

Contingency management theory

This theory is mainly based on the fact that no one management approach is suitable for all organizations. There are several external and internal factors that will affect the chosen management approach.

It states that the traits of a leader are directly related to the effectiveness with which he leads. For each type of situation there is a set of useful leadership traits.

Therefore, a leader must be flexible enough to adapt to a changing environment. This theory could be summarized as follows:

- There is no specific technique for managing an organization.

- A leader must quickly identify the particular management style suitable for a particular situation.

Principles and tools

The principles were explained in the early 1900s by a group of pioneering management thinkers, such as Henri Fayol, Lyndall Urwick, Luther Gullick, and Max Weber.

Henry Fajol - Source: Unknown author / Public domain

Although each of these theorists had a slightly different opinion on the philosophical foundations of modern management, they all agreed on the principles.

This agreement is not surprising, as they were all focused on the same problem: how to maximize operational efficiency and reliability in large organizations. Currently, this remains the only problem that modern administration is competent to address.

Standardization

Minimize variations in standards around inputs, outputs and working methods. The purpose is to build economies of scale, with efficiency, reliability and quality in manufacturing.

Specialization of tasks and functions

Group similar activities into modular organizational units to reduce complexity and accelerate learning.

Goal alignment

Set clear goals through a cascade of secondary goals and supporting metrics. Make sure individual top-down efforts are congruent with objectives.

Hierarchy

Create a pyramid of authority based on a limited range of control. This should keep control over a wide scope of operations.

Planification and control

Forecasting demand and budget resources, in addition to scheduling tasks, then following up to correct deviations from the plan. Regularity and predictability must be established in operations, in accordance with plans.

Rewards

Financial rewards should be provided to individuals and teams for achieving specific results to motivate effort and ensure adherence to policies and regulations.

Importance

Maximize employee productivity

It helps companies maximize production by using human resources to their full potential. Thus, companies do everything possible to develop workers towards their maximum efficiency.

Simplify decision making

Max Weber theorized that hierarchical systems encourage informed decision making. In the 1990s, the hierarchical lag theory emerged.

The Institute for Employment Studies claims that smoothing the hierarchy would shorten communication channels, stimulate innovation, speed up decision-making, and also create an environment where managers are more involved in production. This eliminates overhead and reduces bureaucracy

Increase staff participation

Modern management theories have been interested in interpersonal relationships in the workplace. Therefore, companies gave staff more influence over decisions.

Thinking objectively through scientific processes

Scientific management theories leave executives to be responsible for scientific processes, rather than simply relying on their judgment. When management strategies are implemented, others in the company will be able to test the effectiveness of these strategies and determine if they are effective.

This prevents management from making capricious decisions. Therefore, it encourages scientifically proven changes that increase worker productivity.

Adapt to global changes

Globalization theories take into account the changes that occur around the world, as well as how these changes influence business.

They argue that the business world is becoming increasingly interconnected and many companies are doing business with other international companies, investing, hiring workers and also managing distribution chains abroad.

References

1. Chuck Robert (2019). The Importance of Modern Management Theories in Managing People. Taken from: bizfluent.com.
2. JD Meier (2019). The Principles of Modern Management. Taken from: jdmeier.com.
3. CFI (2020). What are Management Theories? Taken from: corporatefinanceinstitute.com.
4. Citeman (2009). Modern Management approaches. Taken from: citeman.com.
5. Smriti Chand (2020). Modern Management Theory: Quantitative, System and Contingency Approaches to Management. Your Article Library. Taken from: yourarticlelibrary.com.