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DIFFERENT THEORIES OF MANAGEMENT

The theories of management are: the situational or contingency theory the systems theory the chaos theory the scientific management theory the bureaucratic management theory the human relations theory

These theories are grouped into either the historical theories or the contemporary theories.

a.) Situational or Contingency Theory

The contingency management theory is based on the premise that managers preferred actions or approaches depend on the variables of the situations they face. When managers make a decision, they must take into account all aspects of the current situation and act on those aspects that are key to the situation at hand. Basically, it is the approach that "it depends". For example, if one is leading troops in Iraq, an autocratic style is probably best. If one is leading a hospital or University, a more participative and facilitative leadership style is probably best. The basic premise of Contingency Theory is that there is no one best way to lead an organization. There are too many external and internal constraints that will alter what really is the best way to lead is in a given situation. In other words, it all depends upon the situation at hand as to what will be the best course of action. Fred Fiedler is a theorist whose Contingency Trait Theory was the precursor to his Contingency Management Theory. Fiedler believed there was a direct correlation to the traits of a leader and the effectiveness of a leader. According to Fiedler, certain leadership traits helped in a certain crisis and so the leadership would need to change given the new set of circumstances. Fiedler's Contingency Theory proposes the following concepts: 1. Fiedler's Contingency Theory says there is no one best way to manage an organization. 2. Fiedler's Contingency Theory of leadership says that a leader must be able to identify which management style will help. achieve the organization's goals in a particular situation 3. The main component of Fiedler's Contingency Theory is the least preferred coworker (LPC) scale which measures a manager's leadership orientation.

b.)Systems Theory

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The systems theory has had a significant effect on management science and understanding organizations. A system is a collection of part unified to accomplish an overall goal. If one part of the system is removed, the nature of the system is changed as well. A system can be looked at as having inputs (e.g., resources such as raw materials, money, technologies, people), processes (e.g., planning, organizing, motivating, and controlling), outputs (products or services) and outcomes (e.g., enhanced quality of life or productivity for customers/clients, productivity). Systems share feedback among each of these four aspects of the system. The Systems Theory may seem quite basic. Yet, decades of management training and practices in the workplace have not followed this theory. Only recently, with tremendous changes facing organizations and how they operate, have educators and managers come to face this new way of looking at things. The effect of systems theory in management is that it helps managers to look at the organization more broadly. It has also enabled managers to interpret patterns and events in the workplace - i.e., by enabling managers to recognize the various parts of the organization, and, in particular, the interrelations of the parts. The major features of the approach to the study of management may be summed up as under: 1. A system consists of inter-related and interdependent parts. (2) The approach emphasises the study of the various parts in their interrelationships rather than in isolation from each other. (3) The approach brings out the complexity of a real life management problem much more sharply than any of other approaches. (4) The approach may be utilised by any of the other approaches. (5) The approach has been utilised in studying the function of complex organisations and has beenutilised as the base for new kinds of organisation. The Systems Approach has an edge over the other approaches insofar as its closeness to reality is concerned. However the problem with the approach is its utter complexity particularly when it comes to a study of large and complex organisations. The conceptual framework of management provided by this approach is too abstract to be useful to practising managers. The approach recognises the input of environment but does not functionally relate it to management concepts and techniques.

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c.) Chaos Theory

The Chaos theory is advocated by Tom Peters (1942). As chaotic and random as global events seem today, they are equally chaotic in organizations. Yet for many decades, managers have acted on the basis that organizational events can always be controlled. Thus, a new theory, known as chaos theory, has emerged to recognize that events are rarely controlled. Chaos theorists suggest that systems naturally go to more complexity, and as they do so, they become more volatile and must, therefore, expend more energy to maintain that complexity. As they expend more energy, they seek more structure to maintain stability. This trend continues until the system splits, combines with another complex system or falls apart entirely. It will need an effective manager for the latter worst scenario not to happen. In a scientific context, the word chaos has a slightly different meaning than it does in its general usage as a state of confusion, lacking any order. Chaos, with reference to chaos theory, refers to an apparent lack of order in a system that nevertheless obeys particular laws or rules; this understanding of chaos is synonymous with dynamical instability, a condition discovered by the physicist Henri Poincare in the early 20th century that refers to an inherent lack of predictability in some physical systems. The two main components of chaos theory are the ideas that systems - no matter how complex they may be - rely upon an underlying order, and that very simple or small systems and events can cause very complex behaviors or events. This latter idea is known as sensitive dependence on initial conditions , a circumstance discovered by Edward Lorenz (who is generally credited as the first experimenter in the area of chaos) in the early 1960s.

d.)Scientific Management Theory

Ideas of early management was developed by the impact of natural methodology and stress rational thinking. The scientific management theory was based on the scientific work to improve individual staff's capacity, the representatives of this theory are Taylor, Jill Perth couple and Gantt. Scientific management, also called Taylorism,[1] was a theory of management that analyzed and synthesized workflows. Its main objective was improving economic efficiency, especially labor productivity. It was one of the earliest attempts to apply science to the engineering of processes and to management. Its development began with Frederick Winslow Taylor in the 1880s and 1890s within the manufacturing industries. Its peak of influence came in the 1910s; by the 1920s, it was still influential but had begun an era of competition and syncretism with opposing or complementary ideas. Although scientific management as a distinct theory or school of thought was obsolete by the 1930s, most of its themes are still important parts of industrial engineering and management today. These include analysis; synthesis; logic; rationality; empiricism; work ethic; efficiency and elimination of waste; standardization of best practices; disdain for tradition preserved merely for its own sake or merely to protect the social status of particular workers with particular skill sets; the

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transformation of craft production into mass production; and knowledge transfer between workers and from workers into tools, processes, and documentation. Scientific management's application was contingent on a high level of managerial control over employee work practices. This necessitated a higher ratio of managerial workers to laborers than previous management methods. The great difficulty in accurately differentiating any such intelligent, detail-oriented management from mere misguided management also caused interpersonal friction between workers and managers. While the terms "scientific management" and "Taylorism" are often treated as synonymous, an alternative view considers Taylorism as the first form of scientific management, which was followed by new iterations; thus in today's management theory, Taylorism is sometimes called (or considered a subset of) the classical perspective (meaning a perspective that's still respected for its seminal influence although it is no longer state-of-the-art). Taylor's own early names for his approach included "shop management" and "process management". When Louis Brandeis popularized the term "scientific management" in 1910,[2] Taylor recognized it as another good name for the concept, and he used it himself in his 1911 monograph. The field comprised the work of Taylor; his disciples (such as Henry Gantt); other engineers and managers (such as Benjamin S. Graham); and other theorists, such as Max Weber. It is compared and contrasted with other efforts, including those of Henri Fayol and those of Frank Gilbreth, Sr. and Lillian Moller Gilbreth (whose views originally shared much with Taylor's but later evolved divergently in response to Taylorism's inadequate handling of human relations). Taylorism proper, in its strict sense, became obsolete by the 1930s, and by the 1960s the term "scientific management" had fallen out of favor for describing current management theories. However, many aspects of scientific management have never stopped being part of later management efforts called by other names. There is no simple dividing line demarcating the time when management as a modern profession (blending art, academic science, and applied science) diverged from Taylorism proper. It was a gradual process that began as soon as Taylor published (as evidenced by, for example, Hartness's motivation to publish his Human Factor, or the Gilbreths' work), and each subsequent decade brought further evolution. Scientific Management tries to increase productivity by increasing efficiency and wages of the workers. It finds out the best method for performing each job. It selects employees by using Scientific Selection Procedures. It provides Scientific Training and Development to the employees. It believes in having a close co-operation between management and employees. It uses Division of Labour. It tries to produce maximum output by fixing Performance Standards for each job and by having a Differential Piece-Rate System for payment of wages. Principles of Scientific Management

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1. Performance Standards F.W. Taylor found out that there were no scientific performance standards. No one knew exactly how much work a worker should do in one hour or in one day. The work was fixed assuming rule of thumb or the amount of work done by an average worker. Taylor introduced Time and Motion Studies to fix performance standards. He fixed performance standards for time, cost, and quality of work, which lead to uniformity of work. As a result, the efficiency of the workers could be compared with each other. 2. Differential Piece Rate System Taylor observed that workers did as little work as possible. He felt that under existing wage system, an efficient worker gained nothing extra. So, Taylor used the differential piece (unit) rate system. Under differential piece rate system, a standard output was first fixed. Then two wage rates were fixed as follows :Low wage rate was fixed for those workers who did not produce the standard output. Higher wage rate was fixed for those workers who produced the standard output or who produced more than the standard output. Differential piece-rate system can be explained with following example :The standard output for a day is 10 units. The wage rate for producing less than 10 units is $ 5 per unit, and for producing 10 or more units is $ 8 per unit. If Mr. X produces 7 units, and Mr. Y produces 12 units, then their wages will be as follows :Mr. X's wage is 7 x 5 = $ 35 Mr. Y's wage is 12 x 8 = $ 96 Because of this system, the inefficient workers will try to improve their efficiency, and the efficient workers will be motivated to maintain or improve their production capacity. 3. Functional Foremanship Taylor started "Functional Foremanship". Here, 8 foremen (lower level manager or supervisor) are required to supervise the workers. This is because one foremen cannot be an expert in all the functions. Taylor's functional foremanship consists of two groups of supervisors :At the Planning Level or Office Level. At the Doing Level or Factory Level. (a) At the Planning Level :Taylor separated planning from doing. At the planning level there were four supervisors. They are :- Time and Cost Clerk : This boss prepares the standard time for completing the work and cost of doing that work. - Route Clerk : This boss makes the exact route (way) through which each product has to travel from a raw-material to a finished product.

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Discipline Clerk : This boss looks after the discipline and absenteeism problems in the organisation. Instruction Card Clerk : The boss gives instructions about how to do a particular work. (b) At the Doing Level :-

At the doing level there were also four supervisors. They are :- Gang Boss : He is responsible for setting up the machines and tools and for direct supervision of workers. - Speed Boss : He is responsible for maintaining a proper speed of work. - Repair Boss : He is responsible for the repairs and maintenance of machines. - Inspector Boss : He is responsible for maintaining the quality of production. 4. Mental Revolution Taylor introduced the concept of "Mental Revolution". He said that the management and workers should have a positive attitude towards each other. This will result in close cooperation between them. This will increase productivity and profits. 5. Time Study Time study means to record the time taken for doing each part of a job. The full job is first observed and analysed. Then it is divided into different elements (parts). Later the time taken for doing each part of the job is recorded. This is done by using a stop clock. Time study helps the management to know exactly how much time it will take to do a particular job. This helps the management to fix the amount of work to be done by each worker in one hour or in one day. That is, management can fix a standard output of work for a certain period of time. Taylor advised all managers to do time study. This will prevent the workers from passing time, working slowly and doing less work. Time study helps to increase the productivity of the organisation. 6. Fatigue and Motion Study Frank and Lillian Gilbreth (Husband and Wife) introduced fatigue and motion studies. Fatigue and motion studies find out and remove unnecessary and wasteful movements while doing the job. According to the Gilbreths, fatigue (tiredness) and motion (movements or actions) are interlinked. Every motion that is removed will reduce fatigue. Using cameras, they studied workers (masons) doing common jobs like bricklaying. They found that the workers do many wasted motions while doing their work. This resulted in fatigue. So, the Gilbreths asked the workers to stop all unnecessary motions and to do only the motions which were necessary for doing the job. They reduced the bricklayers' motions from 18 to 5. This also reduced the fatigue of the bricklayers. Therefore, productivity of workers increased. 7. Gantt Charts

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Henry Gantt invented the Gantt chart. This chart shows the planned work and the completed work at each stage of production. It also shows the time taken to do the work. Gantt chart is the basis for following two concepts :The Critical Path Method (CPM), and The Program Evaluation Review Technique (PERT).

e.) Bureaucratic Management Theory

Bureaucratic Theory was developed by a German Sociologist and political economist Max Weber (1864-1920). According to him, bureaucracy is the most efficient form of organization. The organization has a well-defined line of authority. It has clear rules and regulations which are strictly followed. According to Max Weber, there are three types of power in an organization:1. Traditional Power, 2. Charismatic Power, and 3. Bureaucratic Power Or Legal Power. The characteristics or features of Bureaucratic Organisation are as follows :1. There is a high degree of Division of Labour and Specialisation. 2. There is a well defined Hierarchy of Authority. 3. It follows the principle of Rationality, Objectively and Consistency. 4. There are Formal and Impersonal relations among the member of the organisation. 5. Interpersonal relations are based on positions and not on personalities. 6. There are well defined Rules and Regulations. There rules cover all the duties and rights of the employees. These rules must be strictly followed. 7. There are well defined Methods for all types of work. 8. Selection and Promotion is based on Technical qualifications. 9. Only Bureaucratic or legal power is given importance. The basics of bureaucratic management include specialization, hierarchy and formal processes. Specialization refers to groups of people working in specific functional areas, such as finance and manufacturing. Hierarchy refers to management layers and formal processes refer to how companies organize internally and interact externally with investors, suppliers and customers. Scientific management emphasizes process improvements and efficiencies, and it makes managers accountable for improving organizational productivity. Bureaucratic management structures share certain characteristics, such as a defined hierarchy, rules and regulations, and detailed recordkeeping and documentation. Each position in a bureaucracy supervises another, thus providing direction and control throughout the organization. A small business

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may have everybody in the organization reporting to the owner. A large business may have layers of department managers and vice presidents reporting ultimately to the chief executive, who reports to the board of directors, which is accountable to shareholders. Scientific management involves finding the best way to complete tasks, including providing financial incentives to employees to improve their productivity. Additionally, scientific management involves developing a management methodology, selecting and training employees, and supervising them closely. Companies all over the world have adopted bureaucratic management principles. Public sector organizations--commonly known as bureaucracies--rely on formal processes and hierarchies to achieve stable structures and consistent results. However, bureaucracies tend to be rigid and slow to adapt to change, while small businesses need to be flexible and adaptable. Scientific management has been responsible for steady improvements in business operations, such as better job definitions, automated inventory tracking, just-in-time manufacturing and compensation schemes that seek to link incentives to performance. The main problem with bureaucratic management is its reliance on topdown direction and control. Some have argued that this leads to additional management layers, higher cost structures and slower decision making. Scientific management's insistence on close managerial involvement may lead to a loss of productivity because employees tend to be more motivated when they are provided the tools and left alone to do their work. Criticism of Bureaucratic Organisation
1.)

2.) 3.) 4.) 5.) 6.) 7.)

8.)

Bureaucratic organisation is a very rigid type of organisation. It does not give importance to human relations. It is suitable for government organisations. It is also suitable for organisations where change is very slow. It is appropriate for static organisations. Bureaucratic organisation is criticised because of the following reasons :Too much emphasis on rules and regulations. The rules and regulations are rigid and inflexible. No importance is given to informal groups. Nowadays, informal groups play an important role in all business organisations. Bureaucracy involves a lot of paper work. This results in lot of wastage of time, effort and money. There will be unnecessary delay in decision-making due to formalities and rules. Bureaucratic model may be suitable for government organisations. But it is not suitable for business organisations because business organisations believe in quick decision making and flexibility in procedures. Too much importance is given to the technical qualifications of the employees for promotion and transfers. Dedication and commitment of the employee is not considered.

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f.) Human Relations Theory

Hawthorne experimental results that the productivity of employees affected by the interaction and the caring of management to staff which can provide staff satisfaction, leading to better performance. This is the basic foundation for the behavioral view of human relations, with Maslow and McGregor, for the representatives in interpersonal perspective. It is a concept regarding the principles and goals of management in organizations, especially in industry, that developed in bourgeois social science. The theory arose in the 1920s in the USA as the attitudinal and methodological basis of the industrial sociology of labor. Its leading advocates were F. J. Roethlisberger, W. E. Moore, and E. Mayo in the USA and G. Friedmann in France. Human relations theory developed as a response to Taylorism. Rejecting the biological and mechanistic approaches of F. W. Taylors scientific management, the human relations theory proposed the implementation of methods of dealing with workers as sociopsychological beings. As the basis of its new methods of intensifying and increasing labor productivity, the human relations theory proposed that human psychological and moral qualitiessuch as goals, motivation, and valuesbe taken into account. The use of empirical data on worker satisfaction with labor and the influence of collective demands and of the psychological climate in work groups on labor productivity spurred attempts to develop a program to harmonize the relations of different groups and individuals in order to bring about maximum efficiency in the operation of the organization as a whole. The program took into account requirements arising from modern technological progress. New technology and the automation and mechanization of production processes placed in the forefront the task of training workers capable of continual improvement of work habits. Moreover, it was determined that sweatshop methods of increasing worker productivity were ineffective. The practical needs of capitalist production encouraged the study of important problems within the framework of the human relations theory; such problems included factors fostering a positive or negative attitude toward labor and the influence of the work group on the individual; the effectiveness of forms and methods of supervision; and the improvement of conditions for work, relaxation, and leisure. The term human relations theory reflects an attempt by bourgeois ideologists to pass off a program of measures as the humanization of labor that are of practical value for increasing profits. In fact, the human relations theory attempts to conceal or rationalize the profound social conflicts of capitalist society.

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The human relations experts tried to integrate (combine) Psychology and Sociology with Management. According to them, organisation is a social system of interpersonal and inter group relationships. They gave importance to the management of people. They felt that management can get the work done from the workers by satisfying their social and psychological needs. Principles of Human Relations Approach The basic principles of human relations approach are :1. Human beings are not interested only in financial gains. They also need recognition and appreciation. 2. Workers are human beings. So they must be treated like human beings and not like machines. Managers should try to understand the feelings and emotions of the workers. 3. An organisation works not only through formal relations, but also through informal relations. Therefore, managers should encourage informal relations in the organisation along with formal relations. 4. Workers need a high degree of job security and job satisfaction. Therefore, management should give job security and job satisfaction to the workers. 5. Workers want good communication from the managers. Therefore, managers should communicate effectively without feelings of ego and superiority complex. 6. In any organisation, members do not like conflicts and misunderstandings. Therefore, managers should try to stop conflicts and misunderstandings among the members of the organisation. 7. Workers want freedom. They do not want strict supervision. Therefore, managers should avoid strict supervision and control over the workers. 8. Employees would like to participate in decision making, especially, in those matters affecting their interests. Therefore, management must encourage workers' participation in management. This will increase productivity and job satisfaction.