7 Organizational Management Styles and Their Importance

Updated March 10, 2023

Companies can structure and use their leadership and resources in a variety of ways to set and achieve goals. They use organizational management to give employees direction and encourage them to work toward a common objective. By understanding how this strategy works, you can help your company operate efficiently and achieve its vision. In this article, we explain what organizational management is, why it is important and common types of management styles.

What is organizational management?

Organizational management is a strategy companies use to structure their leadership, control their resources and achieve goals. The company, or organization, is comprised of managers, employees and resources working toward a common goal. Organizational management describes the planning and managing of those individuals and resources to achieve that goal.

Organizational management involves creating a plan, monitoring its progress and making changes based on results and feedback so the company can improve its performance. Methods company leaders use to execute organizational management effectively might include employee training, promotions and meetings. Every company uses organizational management differently depending on its needs. The goal, however, is typically the same: to make or increase profits.

Why is organizational management important?

Strong organizational management can help companies make money and achieve goals. The benefits of having an effective organizational management strategy include:

Setting clear goals for all employees to work toward
Defining each employee's role and responsibilities within the organization
Creating processes to achieve company goals
Monitoring results, encouraging feedback and making changes as needed
Finding the best ways to use resources
Being adaptable

When done correctly, organizational management allows companies to use their material and human resources effectively, reduce costs and increase profits.

Organizational management styles

Companies and their leaders can follow several types of management styles. Your company might have one type of organizational management style based on the owner's or CEO's vision or use several types depending on what works best for each department or manager. Here are seven common organizational management styles and their key traits:

Autocratic

With an autocratic organizational management style, one person leads the company and has all the authority. They are responsible for making all important decisions, typically without input from lower-level managers and employees. Autocratic leaders establish clear policies for employees to follow.

This management style is effective in companies where accuracy and control are more important than creativity. An organization where employees perform controlled tasks or manufacture precise products, for example, might need a disciplined and decisive leader to oversee their work and ensure they produce functioning products. Autocratic leaders might also benefit companies that employ large workforces with limited training. These employees might need constant management to do their jobs correctly.

Bureaucratic

Bureaucratic organizational management follows formal rules, structures and processes. These companies have a clear hierarchy and set of expectations for employees at every level. Employees report to their direct supervisors, who report to their superiors. Bureaucratic managers are highly focused and lead by enforcing rules and maintaining order.

This type of organizational management might benefit companies that process a huge amount of information or documentation, work with significant numbers of people every day or must follow strict codes or regulations. These companies need consistency, organization and strict procedures to work effectively and accurately.

Democratic

Companies with democratic or participative organizational management have a clear hierarchy but welcome feedback from employees of all levels. This work environment encourages group decision-making, collaboration and teamwork. Managers typically have open and effective communication with their employees. Company leaders delegate tasks and make important decisions, but they gather ideas and feedback from all employees before doing so.

Democratic management can benefit a company or department filled with experienced, talented and inventive employees. They thrive under a supportive and engaging leader who asks for their feedback and allows them to participate in decision-making processes. The manager's job is to determine how to best use each team member's strengths and ideas.

Laissez-faire

With a laissez-faire organizational management, company leaders are not highly involved in decision-making or operations. They serve as leaders in title and appearance and simply provide the guidelines and resources employees need to complete their tasks. In this work environment, employees can make decisions and manage themselves. They have the independence to oversee projects, think creatively and solve problems without communicating frequently with their managers.

Laissez-faire management can benefit organizations that employ experienced and knowledgeable staff who are experts in their field. They do not require constant management to perform their job well and often know more about the company's products or services than their supervisors. The company's leadership is trusting and open-minded.

Management by wandering around

Organizational management by wandering or walking around is a leadership method popular among project managers. With this strategy, management interacts with their employees frequently and acts like an equal part of the team. They ask for feedback, suggestions and concerns and are good listeners. The supervisor is more like a mentor to their employees than a manager. They offer encouragement and reinforce the company's vision or goals.

Paternalistic

In a paternalistic or parental organizational management, one individual serves as the company leader and treats their employees as a family or partners. As a result, their employees are often loyal, motivated and committed to the company's success. Management creates policies that benefit both the company and its staff and welcome feedback from employees of all levels. Under this management style, the company leader often provides skills training and career advancement opportunities for employees.

Companies that prioritize their employees' needs over profits or stakeholder needs might use a paternalistic management style.

Transformational

Company leaders who have a transformational management style challenge traditional ideas and methods of doing things. They encourage change and innovation to improve the organization. They find ways to maximize each employee's potential and performance.

Transformational management can benefit conventional companies that to need modernize their operations or products to stay competitive in a changing market. These organizations might hire a dynamic and motivational leader to improve their strategies and processes and ensure the company remains successful.