The study of management theory is important for which of the following reasons

People who create management theories rely upon observation and mathematics in order to construct a model for business activities. Management practice relies upon case studies and the individual experiences of managers when dealing with workplace situations. Since both schools of management have flaws and benefits, a business owner should study both styles of management in order to improve profitability.

Benefits of Learning

Employees most commonly leave their jobs due to poor management practices, a situation that increases costs and lowers the talent present in a business. Business owners should understand good management practices through personal research or formal education in order to create a business model that can improve employee productivity, eliminate redundancy in processes and increase retention rates.

Limitations of Theory and Practice

Management theories face limitations, because models of human behavior in a business do not consider all of the variables that can impact profitability. Different businesses face different issues with employees, financial resources and the use of technology.

For example, a workplace of single mothers requires a company to focus more on family leave, a consideration that a theorist might not work into a general business model. Management practice can also result in flawed management behavior, because managers cannot see the business as a whole and instead rely solely upon their own experience.

Creating Uniformity of Management

Management theories work best from a macro perspective, such as when a business determines the appropriate model for management as a whole or starts a large project that it has never attempted before. The formal structure of this type of management works best for large corporations that have a top-down management structure which requires uniformity in order to accomplish goals, even if this model slightly decreases productivity.

Personalized Management Style

Since management practices rely upon the opinions of managers and employees or a case study in a particular area of business, they work best for informal organizations. Little doubt exists as to whether a management model will work, because the track record of the model speaks for itself. Management practices focus more on dynamics between groups, which allows managers more flexibility in making decisions and helps employees function together as a unit when they work together on a project.

Putting Theory Into Application

Business owners should mix management practices and theories together based upon their business model. A small business owner will usually study and implement management practices, because he requires flexibility to sustain his business mode. As his business grows, he may add some elements of management theory in order to formalize the decision making and leadership qualities of management.

So what is management theory? First, let’s break down the term. Theories help us understand our experiences by using research and observable facts. Management is the act of supervising and directing people, tasks, and things. So, simply put, management theory is a collection of understandings and findings that help managers best support their teams and goals.

The Importance of Management Theories

Management theories help organizations to focus, communicate, and evolve. Using management theory in the workplace allows leadership to focus on their main goals. When a management style or theory is implemented, it automatically streamlines the top priorities for the organization. Management theory also allows us to better communicate with people we work with which in turn allows us to work more efficiently. By understanding management theory, basic assumptions about management styles and goals can be assumed and can save time during daily interactions and meetings within an organization.

Theories can only reach so far, and management theories are no exception. There is no such thing as a one-size-fits-all management theory. What may work for one organization may not be relevant for another. Therefore, when one theory does not fit a particular situation, it is important to explore the option of developing a new theory that would lead in a new, more applicable direction. While some theories can stand the test of time, other theories may grow to be irrelevant and new theories will develop in their place.

The Evolution of Management Theory

While the next section will get into the nitty-gritty behind the history of different types of management theory, it is important to have a basic understanding as to why management theory was such an important and ground-breaking idea. The Industrial Revolution is at the center of management theory. From the late 1700s through the early 1900s, the Industrial Revolution brought extraordinary change to the workplace and forever transformed the way companies operate.

While productivity goals can be set easily, managing a team to meet productivity goals was not so simple. For the first time, managers had to find new and innovative ways to motivate a sizable number of employees to perform. Since this was a new concept, research, observations, experiments, and trial and error were all used to find new and better ways to manage employees. The Industrial Revolution gave birth to a variety of management theories and concepts, many of which are still relevant and essential in today’s workforce. In addition, many management theories have developed since the end of the Industrial Revolution as society continues to evolve. Each management theory plays a role in modern management theory and how it is implemented.

PRactice Question

Let’s take a look at some key management theories, explore their history and reasoning, and learn about the masterminds behind them.

What is the most important management theory?

What is the study of management theory?

What are the 3 main theories of management?

What are the 4 theories of management?