A Report on the Relevance of Management Theories in the Modern Economy

This report provides a detailed analysis of the relevance of management theories in the modern economy. It begins with a historical overview of management, tracing its evolution from the Industrial Revolution to the present day. The report examines key management theories, including Taylorism and the Bureaucratic theory of management, exploring their core principles such as increasing productivity, role specialization, elimination of wastes, division of labor, impersonal relationships, and formal selection. It demonstrates how these principles continue to be applied in the modern workplace, highlighting their enduring relevance. The report also discusses the concept of empowerment, its reasons, and ways of empowering employees. Each component is explored in terms of its core tenets and its continued relevance in the emerging economy.

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Executive Summary
This report focuses on analyzing the relevance of management Theories in the modern economy.
In particular, the report gives a historical overview of the rise of management from the onset of
Industrial Revolution to the present times. The report demonstrates how management theories
are still relevant in the modern economy by analyzing how the various principles of these
theories such as increasing productivity, role specialization, elimination of wastes, division of
labor, impersonal relationships and formal selection are still used in the modern workplace ,The
continued application of these theories clearly demonstrates their relevance. The components
addressed in the report include Taylorism, the Bureaucratic theory of management and
empowerment. Each individual component is then explored in broad terms in terms of what it
advocates for and how these principles are still relevant in the emerging economy today

Contents
Executive Summary.....................................................................................................................................................2
Introduction................................................................................................................................................................. 4
TAYLORISM..............................................................................................................................................................5
Productivity..............................................................................................................................................................6
Elimination of wastes...............................................................................................................................................6
Work ethics..............................................................................................................................................................7
Division of labor......................................................................................................................................................7
BUREAUCRACY....................................................................................................................................................... 7
Impersonal relationships..........................................................................................................................................9
Formal Selection......................................................................................................................................................9
Role specialization...................................................................................................................................................9
Rules and requirements............................................................................................................................................9
Career Orientation..................................................................................................................................................10
Hierarchy of Authority...........................................................................................................................................10
EMPOWERMENT....................................................................................................................................................10
Reasons for Empowerment....................................................................................................................................11
Increasing productivity and Morale...................................................................................................................11
Increased commitment through involvement....................................................................................................12
Solving problems speedily..................................................................................................................................12
Better Customer experience..............................................................................................................................12
WAYS OF EMPOWERING EMPLOYEES..........................................................................................................13
Delegation..........................................................................................................................................................13
Granting Autonomy to employees.....................................................................................................................13
CONCLUSION..........................................................................................................................................................14
REFERENCES.......................................................................................................................................................... 15

Introduction
The Concept of Management is used in several areas in the modern world; it can be used in the
family context to refer to the management of family resources, in the school context to refer to
the management of time by students and teachers among other broad areas of use. However,
management in the business context is basically concerned with the creation of wealth through
the use of specific ideas and concepts. Management dates back to the era of Industrial revolution
era whose start was the year 1860.The industrial revolution is used to the period in which there
was a general shift by the society from farming to industrialization (Taylor,2014). It is the shift
from agrarian and handicraft economy to an industrialized economy dominated by industries and
machines. The industrial revolution started in Britain before spreading to other parts of the
world. With the Industrial Revolution, came many changes in the society which were classified
into technological, cultural and socioeconomic changes. Among the resultant technological
changes was the introduction of a new system of work which was known as factory system and
which was characterized by specialization and high division of labor. Social changes resulting
from this era included the entrance of women and children into the workforce, many people who
were previously farmers moved to cities to secure formal jobs among others. Replacement of
people by machines as the primary means of production was among the economic changes that
resulted from this period. Others included replaced of homed by factories as the primary center
of production among other changes (Adetule,2011). Management has been in existence from
way back since human beings started controlling each other. It has however been a concept under
evolution over time. Changes in Management came about as a result of these changes especially
the introduction of labor economies which necessitated the rise of a discipline aimed at

understanding workers in a broader perspective and making them more resourceful. This was
followed by scholarly interests in the field of management which led to the rise of management
theories. Among the scholars who had a special interest in management was Taylor who was
known for the scientific theory of management, Fayol is known for the Administrative theory of
management. The two believed that management could be taught (Taylor,2014). Others
included Mary Parker, Max Weber. There are different points of view in management such as
management being on a relative scale and management being on an absolute scale. This report
will analyze different points of view regarding management.
TAYLORISM
Taylorism is a management theory also known as scientific management and which is basically
concerned with the analyzing and synthesizing of workflows. Its main focus is on breaking down
of tasks or jobs into small and simple segments which can be taught and analyzed with ease. The
theory was established by Fredrick Taylor in the 1880’s and 1890’s in the United States and
continues to be used even in the present management contexts. By Coming up with this theory
Taylor was focused on improving economic efficiency particularly productivity. Although the
theory in its entirety doesn’t exist today, its themes are still widely used in the modern day
management. Some of these themes include the elimination of wastes and standardization of
best practices, increasing efficiency, rationality and work ethics. The relevance of these aspects
in the in the modern economy is indisputable. As per say, Taylorism theory was intended at
achieving a number of objectives at the time of its establishment (Snow,2014). Some of these
included separations of work planning from work execution, separation of direct labor from
indirect labor, facilitating payments based on results, achieving maximum job fragmentation in
order to reduce job learning time and skill requirement among others.

Despite the fact that this theory was established several years ago, most of what it advocated for
is still emphasized in the modern economy.
Productivity
Productivity in economic terms refers to the measure of output per every unit of input. Input,
therefore, includes the labor provided by the employee and capital provided by the employer
while the output is calculated in terms of revenue. Taylor was so much focused on workforce
productivity. He argued that focus on productivity does not only help the employer but also the
workforce. Taylor influenced the setting of wages in accordance with the complexity of the task
at hand, deviating from the previous method where workers were paid fixed rates for all pieces
of work. As a result, workers became more productive hence earning more pay
(Sheldrake,2013). There were incentives for greater output. Productivity is also emphasized in
the modern times whereby employers put in place measures to increase the productivity of their
workforce with minimal resources. There are also incentives offered for greater output for
example overtime pay for employees working normal hours. However, just like in the onset of
this theory, the emphasis is on increasing productivity through efficiency enhancement which
means that employees are made to become smarter in their jobs.
Elimination of wastes
Elimination of wastes was another area of focus for Taylorism theory. Taylor argued that for
maximum efficiency at the workplace to be achieved, wastes had to be reduced as much as
possible. Waste in this context can be viewed in terms of material resources and time. Without
having in place control measures so much time was wasted in organizations. Taylorism was one
of the solutions to this problem. Elimination of wastes in business processes is not a concept that
only applies to the times of Fredrick Taylor but it is also widely emphasized in the modern

business settings. There is so much focus on achieving maximum output with minimum input.
Numerous technological innovations and ongoing employee training and development are some
of the strategies that are used to eliminate waste in business processes (Sapru,2013).
Work ethics
Under work ethics, there was a focus on employees, with the belief that employees should work
hard and maintain rationalism in their undertakings (Schermerhorn, 2011). Work ethics is also
strongly encouraged in the present business world. Among the elements that employees are
supposed to abide by are respect, professionalism, accountability, dedication, sense of teamwork,
emphasis on quality, integrity among others.
Division of labor
Before Taylorism, the foreman was responsible for all tasks regarding employees. He acted as
the manager, human resource manager, accountant, etc. There was also no specialization on the
part of employees. Taylorism’s division of labor was, therefore, was aimed at having specific
people undertake specific roles at the workplace. The concept has continued to be used even in
the modern work setting which is highly specialized. Managers, accountants, personnel officers,
communication assistants all perform specific duties.
BUREAUCRACY
Bureaucratic theory of management or what is commonly referred to as the Max Weber theory
was established, used and described at the end of 19th Century by Max Weber who was a
German sociologist. The bureaucratic theory was believed to be the most effective way of setting
up organizations compared to the traditional structures. Under bureaucracy, each employee had
their roles clearly described. There was also equal treatment of all employees (Newton,2011).

It is defined as an organization structure whose characteristics include procedures and
requirements, many rules, standardized processes, the division of labor and responsibility, a
number of desks, professional interactions among employees and clear hierarchies of authority.
Weber argued that such an organizational structure was vital in large organizations and in
facilitating numerous tasks to be performed by many employees (Miles, 2012). Under this theory
also, employees were selected and promoted purely on the basis of technical qualifications.
What was emphasized by Max Weber at the end of the 19th Century is to a large extent similar
to what is currently happening in the modern times. This demonstrates the usability of the
Bureaucratic theory of management in emerging economy today. As emphasized by the theory
the process of recruitment and selection is currently carried out purely on merit basis. Under this,
after potential employees have been shortlisted, the selection is carried out on the basis of the
most qualified applicants from the pool of applicants. This is also the basis upon which
employees are promoted for various positions within their organization whereby, those with
exemplary performance and outstanding personalities are given first preference for promotion.
There is also a great deal of emphasis on professional interactions at the workplace in order to
keep productivity at its optimum as it was the case when this theory was founded. Division of
labor and high level of specialization is also a characteristic of the modern workplace.
Employees within the same organization perform different roles which collectively lead to the
overall success of organizations. Clear organizations structures with a clearly defined structure
of authority are quite relevant even in the modern economy (Mcgrath,2017).
Principles of bureaucratic theory of management relevant to modern economy

Impersonal relationships
In the modern economy there exist clear requirements and regulations at the workplace that
create impersonal associations among the workforce. Professional interactions at the workplace
help in minimizing the instances of nepotism or the possibility of the workforce being influenced
from the outside (Mahadevan,2010). This prominent feature of bureaucracy is founded on a set
of rules and requirements that ensures that employee’s or management’s views are not
influenced by feelings, emotions or personal involvement making rational factors as the sole
basis for decision-making.
Formal Selection
Bureaucratic theory emphasized on the selection of employees purely on the basis of competence
and technical skills acquired through workplace experience, relevant education or training. As
per this theory employee’s salary differ according to their positions. The principle of formal
selection is widely used in the modern economy.
Role specialization
Specialization involves division of tasks as per competencies and specializations of employees.
In the modern workplace, employees are responsible for what they do and undertake simple,
routine tasks (Magretta,2012). Each position has a role description on which job evaluations are
based. This means that employees are only allowed to operate within their responsibilities.
Rules and requirements
Rules and requirements were not only emphasized during the times of Weber but are also
characteristics of the modern workplace. Rules are meant to inform the employees of what is
expected of them and hence lead to some sort of uniformity among the employees and better

coordination of employee’s efforts. (Johnson,2009). All employees are required to conform to
these rules and requirements and it is the work of the senior management to come up with new or
modify existing rules.
Career Orientation
Just like Weber emphasized on employment based on expertise, in the modern economy,
employees are also employees are selected based on their expertise. There is a great emphasis on
having the right people in the right positions. Bureaucracy emphasizes on the building of one’s
career on expertise and experience as it is the case with many positions today (Flamholtz,2007).
With the division of labor, employees are able to improve their performances and become
experts in their areas of specialization.
Hierarchy of Authority
Bureaucracy also involves organization of authority into different hierarchical layers. In each of
these layers, the management is responsible for the staff and its overall performance. This is
synonymous with the modern economy where management is categorized into senior level
management and mid-level management. Thre are indeed many hierarchical positions in
organizations in which the highest position has the highest power. The hierarchy demonstrates
the existing lines of communication, power and responsibilities and the degree of delegation
(Evans & Alire, 2013).
EMPOWERMENT
Empowerment is a management concept that that is founded on the belief that employees
become more productive if they are given sufficient resources, information, opportunities, and

authority. It also asserts that such employees have a higher job satisfaction. It is the role of the
management to create the right environment so that empowerment can take place.
With the coming of the industrial revolution and the subsequent movement of many people in
towns to work in factories, there was an absolute loss of control over own destinies by such
people. Working in industries, people could work without rest for fourteen days a week, seven
days a week and still never made enough money for their own upkeep. The working conditions
in factories were quite dehumanizing with endless instructions to this or that. In management,
empowerment is viewed as a form of industrial democracy. After industrial revolution focus
shifted to the behavior displayed by Managers in front of their employees (Ein-Dor,2007). In the
1960’s.There was also focus on manager’s sensitivity regarding the incentives and needs of their
employees and overall employee involvement. Over the years, employee empowerment has been
viewed as a strategy for improving employee’s productivity and job satisfaction. The
management concept gained momentum in the 1980’s and 1990’s and has become an area of
focus for many organizations.
Reasons for Empowerment
Increasing productivity and Morale.
As it was the case during the period of industrial revolution, productivity has remained to be an
area of central focus in organization settings. However, while the focus was so much on
productivity then and little focus on morale, the focus has shifted towards balancing the two in
the modem economy (Dzimbiri,2009). There has been growing realization by managers that high
morale among the workforce was relative to productivity. Empowering employees is therefore
focused on improving their job satisfaction and hence their overall output.

Increased commitment through involvement
Employee involvement comes as a result of responsibility allocation. Managers, who wish
engage their employees, do so by assigning them more responsibilities. Employee involvement
has the possibility of making employees perceive their organization, customers as well as their
colleagues in a different way. It makes them feel appreciated and valued for their input which in
return inculcates in them a sense of belonging. Involvement of employees in various
organizational decisional making processes improves their commitment to their employer which
in return reduces the rate of employee turnover and the subsequent recruitment costs (Daft,
Kendrick & Vershinina,2010).
Solving problems speedily
Employees are often confronted with many issues and problems in the course of discharging
their duties. Empowerment is used in the modern workplace to improve problem-solving skills of
the workforce among other advantages. An empowered employee is responsive to problems than
an employee who is not empowered (Cole,2014).
Better Customer experience
In the modern competitive business world, organizations are faced with the risk of losing
customers if they don’t offer them quality goods and services. Among the reasons why
empowerment is greatly emphasized in the modern workplace is because empowerment of
employees makes them offer exceptional services to customers. It enables them to make major
decisions without having to consult their managers because they possess the necessary skills
(Cole & Kelly,2015). They have the ability go against the established rules and do what they feel