Running Head: MANAGEMENT THEORIES 1

Management Theories

Marlen Sierra

South Texas College

Dr. Rebecca L. Lynch

December 2, 2018
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Management Theories

The study of organizational management through theories is very important for optimal

operation and management, and to obtain greater advantages from the individuals in the

organization. The decision-making process by management involves seeing the company as a

whole. Regardless of the type of organization, being this, producer of goods or services, public

or private, with or without profit, it must face the development of processes under parameters of

coordination and optimization of resources. These processes are carried out by individuals

working in groups at different levels of the organization with functions according to their

administrative abilities. According to different theories, the expected outcome depends on the

way the individuals are managed by the organization’s management teams. There must be a

development of continuous improvement strategies within the organization. Over time, the study

of organizations and mainly of managers has been based on different theories that have helped to

explain a part of the organizational reality. Looking back to those theories we come across three

of the management theories of all times leading to modern day organizational leadership.

Organizational management is based on the ideas of different theorists and how they

influence management in an organization. The ability of the organization’s management to

achieve objectives is seen when the manager has an overview of all the organization and is able

to direct the company in a way where the employees are satisfied with their jobs. In order to

obtain a greater understanding of the organization’s proper operations, it is important to focus on

maximizing the manager’s control over the organization itself and for the managers to develop

good strategies to fulfil the employee’s satisfaction on the job.

In this paper we will look into three main theorists that revolutionized the organizations

with their beliefs, assumptions and prepositions on how to adequately manage individuals in the
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organization; and how to maximize the individuals work for the betterment of the company. We

will delve into the Administrative theory by Henri Fayol (Wren, Bedeian, & Breeze, 2002),

“Theory X” and “Theory Y” by Douglas McGregor (Yaeger & Head, 2011), and the Human

Relations Theory by Elton Mayo (Sarachek, 1968).

Literature Review

Administrative theory by Henri Fayol

The administrative theory was developed by Henry Fayol (Wren, Bedeian, & Breeze) in

1916, a French scholar of management thought. It was until 1949 that his book was translated

and printed in English. He lived around the time of the Industrial revolution working as a mine

manager himself. It was during these years that he felt the need to come up with a way to train

managers that were in charge of big industrial companies. He saw it necessary for managers to be

well trained in management in order to be able to have control over the employees and the

organization as a whole. They needed to be well aware of everything the organization needed

plus what the employees needed to work well (Wren, Bedeian, & Breeze, 2002).

Although it is said that Fayol laid the foundation for others to develop management

theories more than 100 years ago, his approach in organizational management is still being used

and has been cited many times. He developed the five functions of management which are still

being used in modern time in organizations. As Jacqueline McLean writes, “Managers clearly

face a challenge to effectively and efficiently manage both the organization and the people

working with it” (McLean, 2011, para. 1). This challenge that McLean refers to, is easier to deal

with in modern times, because of the many different theorists that came up with brilliant ideas on
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how to manage an organization. In modern times, there are many organizations that concentrate

on giving managers trainings where they can learn to become effective leaders (McLean, 2011).

X & Y Theories by Douglas McGregor

McGregor’s (2011) approach to management gave way to two different sides of the

management theory (Yaeger & Head, 2011). One side was his assumption that “…a manager

who believed his/her subordinates were generally lazy, uninspired, unimaginative, and only react

to reward and punishments would be classified as “Theory X” (Yaeger & Head, 2011, para. 3).

This meant that during McGregor’s observation of managers he perceived there were managers

who thought the employees were naturally lazy and they must be rewarded or punished in order

to obtain a positive outcome. On the other hand, McGregor also observed that “…a manager

who believed her/his subordinates wanted to excel, desirous and capable of independent thought

and action and responded well to “higher order” tasks was labeled “Theory Y” (Yaeger & Head,

2011, para. 3). Meaning that that manager had a much better belief in his/her employees’

conviction of work. These assumptions made by McGregor led to the “Pygmalion effect”

(Yaeger & Head, 2011, para. 3) or the self-fulfilling prophesy which means that whatever the

managers thought of their employees, would eventually be true. When managers thought

employees were lazy, they in turn would try to control the employees resulting in employee

resistance reinforcing the Theory X beliefs. On the other hand, when managers thought highly of

their employees and had confidence in them, the employees would work better and get better

results, also reinforcing the Theory Y beliefs (Yaeger & Head, 2011).

In today’s business world, McGregor’s assumptions on organizational management are

tied in more to work enhancement programs and employee satisfaction. The use of Theory Y is
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more consistent with today’s approach to organizational design. McGregor’s theories have been

very influential and are used widely. The management style used today is a participative and it

provides the employees the means to achieve their own objectives. Managers are more confident

and give guidance, information and training facilitating the participation of employees in

decision-making, as well as in the negotiation of the objectives to be achieved. The

responsibilities are delegated and the Theory Y is easier to apply in today’s management.

Basically what McGregor did was observe the leader's behavior towards his/her subordinates and

depending on what the leader thinks of the employees, he would characterize the manager’s

leadership as either Theory X or Theory Y (Sorensen & Minahan, 2011).

Human Relations Theory by Elton Mayo

Yet another famous theorist who is recognized by his Human Relations Theory is Elton

Mayo. The humanistic approach he promoted was a true theoretical revolution that was done on

individuals who work or participate in organizations. The study of the oppression of man by the

abusive development of industrial civilization was the priority of the theory of human relations.

Its birth was possible thanks to the development of two basic aspects that occupied many other

stages of its development. Mayo had two assumptions; the physiological aspect of the work and

the psychological aspect of the worker (Ionescu & Negrusa, 2013). He analyzed the work and

adaptation of the worker to work and the adaptation of work to the worker. How well the

organization adapted to the employee and how well the employee adapted to the organization

were important. Mayo believed that the employees had to be studied as part of a group, rather

than as individuals. The Hawthorne studies was a project led by Elton Mayo (Zoller &

Muldoon, 2018) and it is considered the most famous studied and also the most misunderstood in

management. It is also noted that this study raised more questions than it gave answers. It raised
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many questions and criticism from many other theorists, but nonetheless, what it did do was “…

opened new and unexpected vistas for research” (Zoller & Muldoon, 2018, para. 5). Mayo took

part in the Hawthorne studies (Ionescu & Negrusa, 2013). As Ionescu and Negrusa noted “…

Mayo felt that “a remarkable change of mental attitudes in the group”, was the key factor in

explaining the Hawthorne mystery” (as cited in Ionescu & Negrusa, 2013, p. 676).

Hawthorne's experiments profoundly influenced some managers who recommended his

work and how it was done after the administration's investigation although it showed many

deficiencies in design, analysis and interpretation. The effort made was to increase production,

by improving working conditions and staff satisfaction, yet it did not bring about the impressive

improvement in productivity that had been expected. But what was noted was that giving

attention to employees did make a difference in productivity. Nonetheless, the issue of

productivity and worker satisfaction has turned out to be a more complex problem than initially

thought it would be (Zoller & Muldoon, 2018).

Exploiting new horizons

Looking into an established business and how they go about in the management of their

business and that of their employees, I came across a company who I had worked with for many

years. They were a company that sold material to construction companies and self-employed

individuals. Their company sold foam products; which are used in the construction of homes.

The main product they sold was foam boards. Some years back, in 2010, customers started

asking for foam frames in my store, which we sell party supplies. In my quest to expand and

exploit other business ventures within the party business, I set out to find those frames customers

were looking for. I was not familiar with the product the customer wanted but I went looking for
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someone who would sell this type of foam frames. I found no one here in the valley so I

ventured into Mexico and I was told that those foam boards that I was looking for came from

wholesale construction companies. I again looked and looked until I came across this company

who sold the material I was looking for. I explained what I needed and asked if they could make

a special order. The manager at that time was an older Caucasian male, who actually laughed at

my request and gave me an outrageous price for doing the fames. I felt humiliated but was

determined to come up with something on my own. I saw a construction worker buying a blade

from them and I asked the cashier what the blades were for. She showed me an electrical foam

cutter, that when connected, would get the blade hot and when pressed against the foam boards,

it would melt it like magic. I immediately bought the cutter, the blades, and the foam boards.

From then on, I started making the frames on my own.

Sometime later the foam company announced their closure. After a couple of months, I

was contacted by old employees that were re-hired under new management. The new business

had re-opened under new ownership and merged the business with another company who sells

steel products. The new company, StuccoMart, made quite a difference, like day and night. The

new management asked what they could do to serve us better; I took a chance and told them

about my idea of selling foam products for party stores in the valley. The new manager was a

Hispanic male in his late 20’s, who knew how to work with Photoshop, the program I use in my

business. We immediately started working together and he developed several frame designs.

The issues

The issues with the past ownership and management were that they only wanted to keep a

line of merchandise and they were not willing to venture and explore other markets. Their lack of

awareness of market conditions and the culture differences prevented them from seeing the
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innovation on the rise and the timing to grasp the innovation. They had a centralized structure in

their organization which did not permit employees to be autonomous and that made the

employees just do their jobs, but not go out of their way for the customers. They did not trust

employees at the registers, but they trusted employees in the warehouse without knowing the

warehouse employees were the ones causing shrinkage in inventory. The poor communication

between employees and the way they allowed each department to do their own work without

connectivity, allowed external employees steal merchandise and sell to the contractors, right

outside their door. They had a very poor inventory and accountability system in place. The

outrageous prices on their products and services made customers look to other companies for

lower prices. Consequently, when companies focus only on the profits, they ignore the human

interaction that is needed to succeed in an organization (Sarachek, 1968).

The Solution

The different approach to management and customer service was obvious in the new

business, from the beginning. Their approach to customer service was evident, and how the

employees engaged with customers made a huge difference. Their working conditions had

improved for the employees and now they felt as part of the company, not only as employees.

Employees were given the opportunity to bring back their best customers and to reach out to

potential new customers while receiving a monetary compensation for every new customer.

They were also allowed to extend a credit to those customers whom they knew had a good

paying history. The autonomous approach to leadership allowed the company to excel and

visualize the road ahead. The new decentralized structure in the new organization allows the

employees to take up their concerns with management, every day, during their daily morning
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meetings. As Mayo’s Theory proposes, the worker’s output and satisfaction are linked to better

performance on the job when the employee feels that they are treated better (Sarachek, 1968).

I selected Elton Mayo’s theory of Human Relations, because I can identify with it. I too

believe that when employees are treated well, it can be seen in their performance. I liked to have

them work in teams, so they would do the job faster and not get bored. My husband, on the other

hand, preferred to work alone, since he would say he was easily distracted with the company of

others. I liked to involve my employees on the decision making or at least take them into

consideration when we would come up with a new strategy for the store. The decentralized

organizational structure that we had in place, allowed us to have a participative role with

employees. Being on top of market conditions and being aware of new innovations in the party

industry has allowed us to stay in business for 25 years. For all these years, I managed my own

business dealing with many employees and allowing them to put in their two cents in whatever

we would do. Up to now, when I see past employees, they greet me respect and it feels good to

know that many of them considered me a great manager (Sarachek, 1968).

Conclusion

The theoretical development has brought with it new approaches in organizations,

forming part of the change in the organizational vision. Without a managerial vision, a company

cannot exceed in their innovation and practice. Every organization is a decision-making system

in which individuals work with each other for the advancement of the organization and when the

organization gives the employees a sense of security and respect, the employees in turn will

value their work and perform to their highest standards (Sarachek, 1968). The diversity within

the organizations and their approach to success or failure of the company is developed within an

appropriate communication schemes, information management, and a joint decision making

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based on the fulfillment of objectives placed by management. Although many of the theorists we

come across in the journals and books, we can be assured that they knew that innovation was

coming, even if it was during the Industrial Revolution era, we can still see the changes in the

innovation and that their theories can still be applied in different aspects of different

organizations and within the industrial sociology (Zoller & Muldoon, 2018).
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References

Ionescu, G. G., & Negrusa, A. L. (2013). Elton Mayo, an Enthusiastical Managerial Philosopher.

Review of International Comparative Management / Revista de Management Comparat

International, 14(5).

McLean, J. (2011). Fayol - standing the test of time. Manager: British Journal of Administrative

Management, (74), 32–33.

Sarachek, B. (1968). Elton Mayo’s Social Psychology and Human Relations. Academy of

Management Journal, 11(2), 189–197.

Sorensen, P. F., Minahan, M. (2011). McGregor's legacy: the evolution and current application

of Theory Y management, Journal of Management History, Vol. 17 Issue: 2, pp.178-192.

Wren, D. A., Bedeian, A. G., & Breeze, J. D. (2002). The foundations of Henri Fayol’s

administrative theory. Management Decision, 40(9), 906.

Yaeger, T. & Head, T. C., (2011). Douglas McGregor’s legacy: lessons learned, lessons lost.

Journal of Management History, (2), 202.

Zoller, Y. J., Muldoon, J., (2018). Illuminating the principles of social exchange theory with

Hawthorne studies. Journal of Management History.