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The Eleven Key Management Concepts For Small Businesses

The Eleven Key Management Concepts For Small Businesses

In the corporate sector, there are several management theories in circulation. Some are new, while others are older. But almost all of them are founded on one of the 11 management ideas on this list, in one way or another.


Why is that crucial? Why not focus on managing your company rather than researching outmoded concepts? Yes, you should give your business your full attention. But a big part of that success depends on how you manage your team.


These management theories are crucial because they provide you with specific guidelines for motivating your team to achieve success.


We'll give you a quick rundown of the management ideas that every manager should be familiar with in this article. Look for one you like, then Invest a little more time in research before applying it to your company.

11 Fundamental Theories of Management

System theory, first

Systems Theory, often known as The Systems Approach, had little to do with business management when it was first developed and everything to do with biology. This is due to the fact that general systems theory (GST) was developed by biologist Ludwig von Bertalanffy (1901–1972) in an effort to combat reductionism and restore the unity of science.


According to general systems theory, a system is made up of interdependent components that are influenced by their surroundings. This interaction enables the system as a whole to evolve (acquire new properties) and self-regulate (make adjustments).

Experts abbreviate "general systems theory" to "Systems Theory" when used in business applications. In actuality, systems theory is less of a practise and more of a perspective. You are urged by systems theory to recognise that your company is a system that is subject to the same rules and tendencies that apply to any other biological organisation.


This introduces ideas like:


Entropy is the propensity for a system to deteriorate and fail, which is something to avoid in business.

Synergy: When parts work together, they can accomplish more than they could individually. Subsystem: Your company is based on subsystems, which are in turn built on even more subsystems.

Systems Theory can be used in conjunction with the other management theories on this list because it is a perspective on your company rather than a specific management procedure.

2) Administrative Management Principles

Henri Fayol (1841–1925), a miner and engineer, created his administrative management concepts as a top-down method of analysing a company. He envisaged the challenges his manager may face when interacting with their staff in the manager's position.


This led him to the conclusion that his managers, and management in general, had six duties to fulfil when it came to overseeing employees:


Organize Command Control

Coordinate Plan Forecast

Fayol created 14 administrative principles that guide how managers should lead their teams with these duties in mind. These values, which range from the value of initiative and teamwork to the necessity of maintaining a clean facility, serve as the cornerstone for many of today's most prosperous companies.

Organisational Management

When developing his bureaucratic management theory, Max Weber (1864–1920) adopted a more social perspective. Weber's theories centre on the significance of setting up your company in a hierarchical fashion with distinct jobs and procedures.


The ideal corporate structure (or bureaucratic system), in Weber's opinion, is built on:


An obvious separation of labour

dividing up the owner's personal and business assets

chain of command in an organisation

Keeping accurate records

promoting and hiring based on performance and skills rather than on personal connections

uniform regulations

Today, bureaucratic management is often perceived as an impersonal approach that can become bogged down in procedures and conventions. However, it can be incredibly helpful for new organisations that require structure, procedures, and standards.

4) Scientific Administration

Frederick Taylor (1856-1915) optimised worker productivity by conducting controlled tests in the latter part of the 19th century. He came to the conclusion that efficiency in the workplace is best determined by the scientific approach rather than by judgement or discretion as a result of the findings of these tests.


Standardisation, specialisation, aptitude-based assignment, thorough training, and close monitoring are all encouraged by scientific management. A company can only achieve efficiency and productivity through those procedures. This management theory looks for the best way to finish a task, frequently at the expense of the workers' humanity.


Parts of the theory, including workplace effectiveness, training, and cooperation, are the cornerstones of some of the most prosperous companies on the planet. The idea as a whole isn't employed much anymore.

Theory X and Theory Y.

The Human Side Of Enterprise was written by social psychologist Douglas McGregor (1906–1964) and published in 1960. He described two radically different management techniques (theories X and Y) in it. The manager's perceptions of their employees' motivations serve as the basis for each style.


According to Theory X, workers are unmotivated or disliking of their jobs. Theory X-supporting managers tend to be authoritarian and supervise everything because they don't trust their staff.


According to Theory Y, workers are self-driven, accountable, and eager to assume responsibility of their job. Theory Y-aligned managers involve their staff in decision-making and promote creativity at all levels.


In reality, small businesses frequently follow Theory Y while big businesses frequently follow Theory X.

Sixth: Human Relations Theory

Elton Mayo (1880-1949), a psychologist, was tasked in the first quarter of the 20th century with increasing productivity among disgruntled workers. By adjusting environmental factors like lighting, temperature, and break schedules, Mayo tried to increase employee satisfaction. All of those modifications were advantageous.


The length of the workday and quotas (which he increased) were two more factors that Mayo tried to alter since he believed they would have a detrimental impact on contentment. He noticed that worker satisfaction usually rose regardless of the change, good or negative.


This prompted Mayo to draw the conclusion that the workers' success was a direct outcome of the researchers' attention to them. In other words, the workers felt valued as a result of the attention.

These discoveries gave rise to Mayo's Human Relations Theory, which contends that social variables, such as receiving individual attention or feeling a part of a group, motivate workers more than environmental considerations, such as pay and working conditions.

7) Conventional Management

The foundation of traditional management theory is the notion that employees primarily have physical demands. Employees can buy the means to satisfy their physical requirements, hence the economics of organising workers is the only topic covered by classical management theory.


Classical Management Theory ignores the social and personal demands that affect employees' job happiness as a result of its limited perspective on the workforce. As a result, the seven guiding principles of classical management theory are:

Maximising profits

Specialisation of work

Streamlining activities under centralised management

stressing productivity

Individual or small group decision-making

putting the bottom line first

When these seven guidelines are followed, a "ideal" workplace with a hierarchical structure, staff specialisation, and monetary incentives is produced.


The corporation is run by a small group of people who have complete influence over the choices and course the business will take. Middle managers oversee the daily operations of the workers at the bottom of the hierarchy, below the chosen few.


All of this is based on the notion that if rewards are given to workers in increasingly larger amounts (via salaries or perks), they will work harder and be more productive.

Although by today's standards this may not sound like the "ideal" management philosophy, it was effective for many years prior to the early 20th century. Although the system isn't used lock, stock, and barrel like it once was, there are still a number of advantages that managers can take use of in the modern period. They consist of:


a definite management structure

dividing up the work

Clearly defining the duties of employees

These three guidelines, along with the other management ideas on this list, can enhance the way your staff members and your company operate in the contemporary workplace.

8) Disaster Management

In the 1950s and 1960s, Fred Fiedler and others developed the Contingency Management Theory. Fiedler based his views on the notion that the characteristics a leader demonstrated in each given situation were closely tied to good leadership.


From that concept sprang the idea that there is a set of attributes that are useful in any circumstance and that various circumstances call for various leadership traits. Therefore, to adapt to change as the market, the business, and the team require, leaders must be adaptable.


Then, Fiedler expanded that idea from a management-focused, individualist perspective to a far more expansive organization-focused view. According to Fiedler's idea, no organisation or environment is suitable for a single management strategy.

Business management and structure are instead determined by three general factors. As follows:


The organization's size

The used technology

The direction of the company at all levels

This means that a manager who follows the contingency management theory needs to be able to recognise the specific management approach that is best in each situation. Additionally, they must be prepared and able to use that management approach immediately and effectively when necessary.


In a broader sense, organisations and managers who follow the CMT — whether purposefully or accidentally — will be preoccupied above all with preserving team alignment and attaining a good fit in all projects and circumstances.


Contingency Management Theory asserts that there is no single best strategy.

9) Modern Administration

As a direct reaction to Classical Management Theory, Modern Management Theory emerged. Businesses nowadays must deal with rapid change and difficulties that appear to multiply dramatically over night. Technology is both the problem and the answer to this conundrum.


As a result, organisations that use the Modern Management Theory in their operations try to combine human and conventional components of their organisation with technology and, to some extent, mathematical analysis.


This fusion of social and scientific factors results in a two-pronged strategy for management, organisation, and decision-making. The focus of contemporary management theory is:

analysing and comprehending the relationship between managers and employees using quantitative methods.

that—contrary to traditional management theory—employees don't just labour for pay. Instead, they strive to achieve happiness, fulfilment, and the lifestyle they desire.

The complexity of individuals is embraced by modern management theory. They have a range of talents and skills that the company can develop through on-the-job training and other programmes, and their demands change over time.


Management can also employ quantitative methods to make emotion-free judgements, such as statistical, cost, revenue, and return-on-investment (ROI) analyses.


Despite the fact that Modern Management Theory isn't ideal on its own, it does, like Classical Management Theory, give some valuable aspects that you may combine with other theories to create a framework that is ideal for your company.

Quantitative Management, 

An extension of Modern Management Theory, established in reaction to management effectiveness during World War II, is Quantitative Management Theory.


For the U.S. military, Quantitative Management Theory brought together specialists from a variety of scientific fields to handle challenges with personnel, supplies, logistics, and systems. The logical, quantitative approach to management (which also applies to business) assisted decision-makers in weighing the risks, advantages, and disadvantages of various courses of action.


The assumption that these quantitative findings should be utilised to assist, not replace, knowledgeable managerial judgement tempers this shift towards purely logical, scientific, and mathematical reasoning.

Organisational Learning Systems (No. 11)

In comparison to many of the other ideas on this list, the Organisations As Learning Systems Management Theory is relatively young. Many of the more traditional management theories that are still in use today gave rise to the Organisations As Learning Systems Management Theory, often known as Integral or Holistic Management Theory.


It begins with the notion that the company is a system made up of a series of interconnected subsystems. Each subsystem must operate smoothly and efficiently both within itself and with the other subsystems around it in order for the business to run effectively.


According to this view, managers are in charge of organising the collaboration required to make sure the bigger "organism" keeps running well.

This philosophy places a strong emphasis on learning and change, and it encourages and makes learning available to everyone, not just middle and senior management. The focus of this philosophy is on empowerment of the person as well as teamwork, participation, and knowledge exchange.

The Change Justifies the Work





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