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Management Theory of Stephen Covey

Improve your business using Stephen Covey's seven habits of highly effective people.

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Written by: Sean Peek, Senior AnalystUpdated Jan 02, 2025
Chad Brooks,Managing Editor
Business.com earns commissions from some listed providers. Editorial Guidelines.
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Whether you’re starting a new business or looking to make changes to your existing business, it can be hard to figure out your management style. It may seem difficult and other tasks may feel more urgent. But, identifying your management style and keeping it up to date is paramount to running a successful business.

You don’t have to discover it on your own, though. You can draw from a rich history of management theories, such as the one developed by Stephen Covey. Here is a breakdown of Covey’s ideas and how you can use them to improve your company overall.

Management theory of Stephen Covey

Through his uplifting and straightforward guidance, Covey exhibited a lifelong dedication to helping others control their destiny. His 1989 book “The 7 Habits of Highly Effective People” is one of the most influential business books of the 20th century.

“Covey’s very well-known [theory] rests on the idea that the path to success begins with individual behaviors, such as being proactive, and that these can be learned and practiced,” explained Rita McGrath, a strategy professor at Columbia Business School, a C-Suite strategist and author. “His advice — such as ‘begin with the end in mind’ — is very practical for small business people.”

The Covey model is an “inside-out” philosophy, which means that change starts inside each of us and works its way out. Covey claimed that, to be “effective,” people should follow these seven important habits:

  1. Be proactive: Instead of simply reacting to something that happens, proactively choose how to respond. Covey encouraged people to take the time to think through their feelings and figure out the best way to react. This forethought and proactivity can empower people and minimize conflict.
  2. Think of the future: Covey said to “begin with the end in mind.” Setbacks and unanticipated challenges will undoubtedly occur. But, you need an overall sense of what you are working toward and what to expect. Having a clear goal makes it easier to navigate the unexpected.
  3. Prioritize: Identify the most important tasks and do them first. This step may require you to cut out distractions that feel urgent but aren’t actually helping you achieve your goals.
  4. Consider everyone’s needs and desires: This allows you to develop “win-win” situations. It’s easy to get stuck in your own perspective, but that isn’t the best way to operate as a member of a community. When you set aside your own directives, you can find creative, new solutions that benefit you and the people around you.
  5. Listen and understand: Covey’s theory asks you to “seek first to understand and then to be understood.” This habit cuts down on reactivity and instead encourages thought and patience. By listening and understanding, you deprioritize your own needs and become more open to new solutions.
  6. “Synergize” for creative cooperation: Instead of trying to do everything yourself, work with others to get things done. Whether you’re working on projects together or just benefiting from shared knowledge, solving problems in a collaborative environment helps relieve pressure on the individual. It also leads to more success.
  7. Allow for self-care: Continue to develop and learn as you “sharpen the saw” with Covey’s theory. Along with monitoring your progress, this habit focuses on self-care and self-improvement. Care for your physical, emotional, spiritual and mental well-being to be your best self.
TipBottom line
Use real, meaningful rewards to motivate your employees. Merit-based bonuses, raises and time off are ways to inspire your employees to do their best work.

How to implement Covey’s management theory

Now that you know the basics of Covey’s management theory, it’s time to put it into action. Follow these steps to implement the seven habits of highly effective people.

Educate your employees on Covey’s habits.

Encourage your employees to read Covey’s “7 Habits,” then discuss the book over lunch or a workshop. See what they think about the book and answer any questions they may have. Talk together as a group about what those habits would look like in your workplace. How can your employees be proactive about completing tasks? How can you organize tasks and projects to start with the end in mind? What does each employee need to feel like they have “won” in a situation? What’s the best way for your team to communicate? [Read related: Get It Together: 7 Quick Ways to Make Your Business More Organized]

Grow from dependence to independence.

Covey believed that our actions are the result of past conditioning and that we must change our habits — and who we are — in order to succeed. Those steps are also necessary when your company incorporates a new people management style. We start our lives dependent on others; similarly, we begin jobs reliant on our colleagues to show us the ropes.

The initial three habits of Covey’s management training take you from dependence to independence. The first habit calls on managers to be proactive, rather than reactive, and to take control of their environment. Instead of dealing with problems as they arise, managers should figure out how to lead their teams in a way that minimizes opportunities for disruption.

The second habit requires managers to think of the future — always keeping in mind the desired outcome. With this sense of direction, they can cut out distractions and unnecessary tasks to lead their team to achieve the ultimate goal. The third habit means that managers must not forget to manage themselves — implementing activities that accomplish the second habit. By allowing for self-care and self-improvement, managers will understand the significance of each habit and establish credibility with their team.

Become interdependent.

Once you accomplish the first three habits, the next three habits allow you to become interdependent. In other words, managers become just as dependent on their staff as their staff is dependent on them. Everyone should understand that they work as a team; each team member is necessary for the business to succeed.

To be successful at interdependence, you must communicate well with others to develop positive relationships; the fifth habit means you try to understand others before you get them to understand you. Conversations are not battles to be won or lost. Implement healthy communication habits that reduce blame and encourage generous listening. The sixth habit says everyone should work together to achieve mutual goals.

Continuously strive to improve yourself.

Habit seven, “sharpen the saw,” means that you continually learn from your experiences in order to make yourself a better person. Do not consider the job done once you have “completed” all seven steps with your company; plan ahead for methods of reflection and renewal. How often will you use the habits to reevaluate your practices? How will you incorporate new employees into the seven-habits system? This roadmap is crucial to prevent backslides and stagnation.

Once you decide to implement Covey’s seven habits of highly effective people, growth and innovation are sure to follow.

FYIDid you know
In 2004, Covey added an eighth habit; it allows you to go “from effectiveness to greatness” on personal, leadership and organizational levels. Doing so requires leaders to act with integrity and inspire others to do the same.

Alternatives to Covey’s management theory

While Covey’s management theory is among the most widely used management innovation strategies in recent years, several other theories remain relevant today. According to Dr. Laurie Cure, CEO of Innovative Connections, understanding these approaches — and how they resonate with your leadership style — is an important element of emotional intelligence and self-awareness.

“Gaining an increased understanding of a leader’s personality, values, perspectives and motivational approach all contribute to more effective leadership. Leadership theory and styles are an external manifestation of those qualities,” explained Cure, who also practices as an executive coach and HR expert. “While most leaders adopt characteristics of several different styles, the goal in studying leadership theories is to best define your current and desired approach and to learn which approaches tend to be more or less effective.”

Did You Know?Did you know
Your leadership style and the needs of your business may lend themselves to elements of multiple different management theories. Understanding different theories and their principles can help you determine where you are and where you want to be.

To help you better understand your leadership style, here are some alternatives to Covey’s management theory to explore.

Contingency management theory explained

As the name suggests, Fred Fielder’s contingency management theory posits that there is no singular correct way to run a business. Rather, leaders must adapt their management style to different situations. To identify the “right” approach, a leader must determine their natural leadership approach as well as situational favorableness.

Drucker management theory explained

According to Peter Drucker’s management theory, organizations must be results-oriented and adaptable — putting the customer experience at the forefront. For small businesses, applying Drucker’s management theory may involve a flatter organizational structure, allowing employees to have greater input and encouraging innovative problem-solving.

Follett management theory explained

The management theory of Mary Parker Follett emphasizes the importance of “powering with” employees; namely, collaborating with them and encouraging their leadership development — rather than “powering over” employees. According to Follett, a true leader doesn’t create power just for themselves, but for the entire team.

Juran management theory explained

With a focus on quality control, the management theory of Joseph Juran has been incorporated into several other quality management theories, including lean manufacturing and Six Sigma. There are three key steps in Juran’s theory: quality planning (or instituting quality by design), quality control (to measure performance and progress) and quality improvement (through repair, refinement, renovation and reinvention).

Kanter management theory explained

Rosabeth Moss Kanter’s management theory espouses six keys to fostering positive change within an organization: show up, speak up, look up, team up, never give up and lift others up. Kanter’s theory aims to strengthen the organization as a whole, thereby improving team morale and productivity.

Mayo management theory explained

George Elton Mayo’s research set out to disprove that employees were primarily motivated by pay, the prevailing theory at the time. This research brought about the Mayo management theory, which emphasizes that employees are significantly more driven by relational factors — such as attention and camaraderie — than monetary ones.

Mintzberg management theory explained

The management theory of Henry Mintzberg categorizes different types of organizations and managerial roles — helping business leaders define their organizations and the roles and responsibilities within them. Under Mintzberg’s definition, most small businesses can function as entrepreneurial organizations, though they may adjust in structure as they grow.

Schein management theory explained

Edgar Schein’s management theory emphasized the importance of building a strong organizational culture. According to this theory, there are three levels of culture: artifacts (tactile elements of culture), espoused values (the values employees hold and demonstrate), and basic assumptions (the often-unspoken, foundational beliefs employees and managers hold).

Danielle Fallon-O’Leary contributed to this article.

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Written by: Sean Peek, Senior Analyst
Sean Peek co-founded and self-funded a small business that's grown to include more than a dozen dedicated team members. Over the years, he's become adept at navigating the intricacies of bootstrapping a new business, overseeing day-to-day operations, utilizing process automation to increase efficiencies and cut costs, and leading a small workforce. This journey has afforded him a profound understanding of the B2B landscape and the critical challenges business owners face as they start and grow their enterprises today. At business.com, Peek covers technology solutions like document management, POS systems and email marketing services, along with topics like management theories and company culture. In addition to running his own business, Peek shares his firsthand experiences and vast knowledge to support fellow entrepreneurs, offering guidance on everything from business software to marketing strategies to HR management. In fact, his expertise has been featured in Entrepreneur, Inc. and Forbes and with the U.S. Chamber of Commerce.
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