Are Old Management Theories Still Useful for the Modern Manager?

“Contemporary management theory is not a single theory. It is a loosely knit combination of many approaches” that have been derived and adapted from the past (Miller & Vaughan, 2001, p. 11). Thus the past can act as a guidepost that offers “guidance and direction to contemporary managers who can apply this distillation of experience in the context of current times.” (Miller & Vaughan, 2001, p. 11). This topic seeks to discover if theories and approaches to management from the past 100 years are useful for today’s modern manager. In a globalised and ever fast changing world, with changing internal and external environment factors exacerbated by globalisation, this is an important subject matter. From the study of this issue it can help determine how management practice has advanced and changed, as well as find out if current practices are falling too far behind in terms of using contemporary approaches.

This essay will argue that various approaches to management from the past 100 years have proved on the whole to be useful for current managers. Although it will be shown some aspects are outdated, these historical theories demonstrate that they form a key foundation for contemporary management. This essay will provide a discussion of three approaches, with the inclusion of multiple academic positions on the topic, as well as drawing evidence from the author’s own workplace at Coles. First it will focus on the classical concept of administrative principles, specifically the elements put forth by Mary Parker-Follett. Next, a discussion of the usefulness of Douglas McGregor’s Theory X and Theory Y will be provided. Lastly, this essay will examine the approach of a Bureaucratic organisation, put forth by Max Weber.

The historical approach of Administrative principles and Mary Parker-Follett’s contributions within it prove to contain usefulness and relevance for the modern manager. Administrative principles, which falls under the category of Classical approaches to management, can be defined as general theories that attempt to understand the experience of successful managers, and therefore determine what establishes effective management practices (Schermerhorn, Davidson, Poole, Woods, Simon & McBarron, 2014).

This theory displays the importance of groups in the workplace, viewing organisations as a “complex of dynamic social relations” (Miller & Vaughen, 2001, p. 8). It also covers important aspects such as employee empowerment, and ‘integration of interests’ as a solution to conflict, as well as a way of leadership (Miller & Vaughen, 2001; Schermerhorn et al., 2014). The literature establishes this approach as largely useful to modern managers. Sethi (1962) concludes that these “deep-seated theories of managerial organisation…are as much true today as they were novel when they first appeared” (p. 8).

Likewise, several other scholars agree that by addressing the social nature of people in work settings, Follett created themes that today’s management theories have their roots in. These key themes are found as ‘empowerment’, ‘involvement’, ‘profit sharing’, ‘flexibility’, and ‘self-management’ (Miller & Vaughen, 2001; Pindur, Rogers & Kim, 1995; Schermerhorn et al., 2014). For example, the usefulness of administrative principles is witnessed in Australian company Sinclair Knight Merz. They maximised employee empowerment through participation in ownership, the result of which in 2009 led to 15% of profits being distributed to employees (Schermerhorn et al., 2014). The result of this, in line with Follett’s ideals, would be to make employees feel more committed to the operation of the business as they have a stake and integration of interests in the business. This concept of collective responsibility can clearly be traced back to Follett’s contributions to administrative principles, displaying its usefulness to the modern manager. 

However, it must be noted that Follett’s work on administrative principles cannot be taken as fully relevant in management today. Sethi (1962) also contends that Follett’s work due to its age does lack the ‘particularistic’ notions required for it to be more useful in the present. Likewise, not all managers can take heed of all of Follett’s work because it sometimes depends on the type of organisation in which they work. For example, some mechanistic organisations such as Coles do not engage in processes such as ‘profit sharing’ with lower level employees as it is impractical. Such a program does not exist due to the fact that there is a high turnover rate, and the workforce employed is so large with over 90,000 members. Overall, administrative principles whilst providing a clearly useful connection for modern managers, contains certain aspects of it that must be applied where the context fits.

Another approach that has emerged to help our understanding of management is Douglas McGregor’s Theory X and Theory Y behavioural assertions. To a large extent these principles are still relevant and useful for the modern manager. Theory X follows a more traditional style of management based on coercion and control as well as the assumption that employees dislike work, avoid responsibility and prefer to be led rather than to lead (Pindur, Rogers & Kim, 1995; Schermerhorn et al., 2014). McGregor considers this thinking unsuitable. Rather, he professes that Theory Y is how managers should view employees and their behaviour. This new information is ‘participatory’ and presumes employees want to be at work, desire responsibility, are able to direct themselves, and that when jobs are enjoyable people commit themselves to the company’s goals (Pindur, Rogers & Kim, 1995; Schermerhorn et al., 2014).

Many writers on management theory agree that McGregor’s analysis on Theory X and Theory Y is relevant in today’s workplace. Kopelman, Prottas and Davis (2008) demonstrate the relevance of McGregor’s work in their work. This was done by a study that concluded that executing a task under a Theory X climate would be likely to fail as compared to Theory Y.

The authors establish that employers are now expected to provide education and give employees further involvement opportunities (Boswell et al., 2001, as cited in Kopelman, Prottas and Davis, 2008). Thus it emphasises that McGregor’s Theory Y perspective is the way a modern approach should be. Likewise, Schermerhorn et al. (2014) provides evidence to show “Theory Y thinking is very consistent with developments in the new workplace and its emphasis on valuing workforce diversity. It is also central to the popular notions of employee participation, involvement, empowerment and self-management” (p. 45).

Here, it is clear the literature establishes the usefulness of this approach for the modern manager. For example, in accordance with this, it has been noticed that in Coles, department managers in today’s world try to further involve employees and also provide them with educational possibilities. This is done by actions such as sharing departmental weekly sales figures and asking advice from employees to determine ways in which to maximise sales. Such actions are in line with features put forth in Theory Y, indicating its relevance for modern managers in today’s workplace.

On the other hand, some academics note that “the environments which will bring forth the ‘higher levels’ of human motivation assumed in Theory Y are difficult to create” (Graham, 1980, p. 76). Wynn (1978) as cited in Graham (1980) contends that at best, Theory Y ‘islands’ could operate in Theory X organisations and for “any particular project Theory Y would be ‘killed and replaced’ by Theory X” (p. 76).

Part of the reason for this is that Theory Y does not provide usefulness to organisations and managers that want to enact their own view and need more control over the workplace. Hence, it is argued that this approach makes too much of a generalisation about the motivations and views of all employees. For example, managers in a difficult environment may resort to more Theory X tendencies and strategies if deemed suitable.

As seen in Coles, in some situations where a crisis emerges, employee engagement is restricted and managers get involved in a more authoritative and direct manner to fix the situation as they see fit. For example when a practice audit was performed, in the aftermath there were several changes to the store, and these were enacted in a more controlling and less participative way. Here, McGregor’s work still proves to be useful and relevant to modern managers as even if modern managers do not adapt a Theory Y position, they still fit along a spectrum between Theory Y and Theory X that has been detailed in McGregor’s theory. Overall, this approach provides contemporary managers with the knowledge of both Theories and allows them to pursue a more effective management practice. 

The approach of a ‘Bureaucratic organisation’, developed by Max Weber, is a historical theory that provides usefulness depending on the organisation examined. According to this theory, organisations should run by the principles of logic, order and authority (Schermerhorn et al., 2014). It includes notions such as division of labour, rules, careers based on merit, and a hierarchy where each position reports to a higher level one in order to pursue organisational goals (Pindur, Rogers & Kim, 1995; Schermerhorn et al., 2014). Advantages gained from a Bureaucracy that still apply today include efficiency, reliability and precision (Schermerhorn et al., 2014).

The literature highlights that a Bureaucracy is useful for modern managers as these advantages are highly sought after and it is a model that fits many current industries. In sectors such as retail (Woolworths), fast food (McDonalds), or the military a Bureacracy is often viewed as most suitable. Hopfl (2006) observes its usefulness in today’s world by noting that the end of Bureacracy would require “…the complete disappearance of hierarchies, which is inconceivable” (p. 19). For example, the organisational structure of Coles can be considered a Bureaucracy. Team members report to Department managers who report to Store managers, who report to Regional managers, to eventually reporting to the board and CEO. Clear rules are to be abided by each employee and an obvious division of labour is present in departmentalisation. Thus it is proven that the use of the Bureaucratic approach is useful for modern managers when constructing the structure of the workplace in these industries.

However, in other respects this approach is losing its relevance, especially with regards to emerging technology and innovation driven sectors. Schermerhorn et al. (2014) portray the disadvantages of a Bureaucracy as being slow, rigid and resistant to change. This is impracticable for modern organisations whose managers face a rapidly changing dynamic environment that require quick adaptations to changing circumstances in order to retain a competitive advantage.

As an example of the move away from a Bureaucracy and towards a more horizontal and organic structure, one can examine the company Valve. Kelion (2013) in a BBC article interviewed the marketing manager for this software and innovation driven organisation who said “We’re a flat organisation, so I don’t report to anybody and people don’t report to me”. This gives evidence to support the fact that organisations that seem opposite to Bureaucracies are increasingly useful for modern managers. Thus, overall Weber’s Bureaucratic approach remains highly useful for many managers, however in other industries this theory if falling behind, with limited usefulness.

  From this examination, it can be seen that although in some instances various approaches to management have become outdated, on the whole each contain elements that are useful for the modern manager. Findings suggest that administrative principles provide useful ideals that managers can incorporate to their modern workplace, if applicable. Douglas McGregor’s Theory X and Theory Y provides an important understanding of ways to approach employees. This offers scope managers so they can optimise their organisational goals.

Lastly, a Bureaucratic approach to management can be effectively utilised by some organisations, however to others who need to adapt to a dynamic 21st century environment this approach is becoming too outdated. Overall these theories at the very least provide vital information and act as a guide to modern managers so they can learn from the past. At most, some of these approaches can still be completely applicable to a modern workplace and therefore are imperative foundational findings. Thus, by a discussion of the chosen approaches, it is shown that modern managers on the whole, can learn from the past.

Reference List

Graham, R. J. (1980). On the Death of Theory Y. Interfaces, 10(3), 76-79. Retrieved from http://interfaces.journal.informs.org.ezproxy.lib.monash.edu.au/ 

Hopfl, H. M. (2006). Post-bureaucracy and Weber’s “modern” bureaucrat”. Journal of Organizational Change Management, 19(1), 8-21. http://dx.doi.org/10.1108/09534810610643659 D

Kelion, L. (2013, September 23). Valve: How going boss-free empowered the games-maker. BBC. Retrieved from http://www.bbc.com/news/technology-24205497

Kopelman, R. E., Prottas, D. J., & Davis A. L. (2008). Douglas McGregor’s Theory X and Y: Toward a Construct-valid Measure. Journal of Managerial Issues, 20(2), 255-271. Retrieved from http://www.pittstate.edu/econ/jmi.html

Miller, T. R., & Vaughan, B. J. (2001). Messages from the management past: Classic writers and contemporary problems. S.A.M Advanced Management Journal, 66(1), 4-11. Retrieved from http://search.proquest.com.ezproxy.lib.monash. edu.au/docview/231254196/abstract/DF10F6DC12CC45C7PQ/1?accountid=12528

Pindur, W., Rogers, S. E., & Kim, P. S. (1995). The history of management: A global perspective. Journal of Management History, 1(1), 59-77. Retrieved from http://search.proquest.com/docview/210941506?accountid=12528

Schermerhorn, J. R., Davidson, P., Poole, D., Woods P., Simon, A. & McBarron, E. (2014). Management (5th Asia-Pacific Edition). Milton, Queensland, Australia: John Wiley & Sons Australia. 

Sethi, N. K. (1962). Mary Parker Follett: Pioneer in Management Theory. Journal of the Academy of Management, 5(3), 214-222. doi: 10.2307/254473.