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The Management Process: Management Functions

The successful manager must actively perform basic managerial functions. One of the
earliest classifications of managerial functions was made by Fayol, who suggested that
planning, organizing, coordinating, commanding, and controlling were the primary
functions. Some others theorists identify additional management functions, such as
staffing, communicated, or decision making.

Planning
Planning is considered to be the central function of management because it sets the pattern for the
other activities to follow. "Planning means defining goals for future organizational performance and
deciding on the tasks and use of resources needed to attain them" (Richard Daft). Planning
encompasses four elements:
Evaluating environmental forces and organizational resources
Establishing a set of organizational goals

Developing strategies and plans to achieve the stated goals

Formulating a decision-making process

These elements are concerned with organizational success in the near future as well as success in the
more distant future. Planning to the future, the manager develops a strategy for getting there. This
process is referred to as strategic planning.

Organizing
Organizing is the managerial function of making sure there are available the resources to carry out a
plan. "Organizing involves the assignment of tasks, the grouping of tasks into departments, and the
allocation of resources to departments" (Richard Daft). Managers must bring together individuals and
tasks to make effective use of people and resources. Three elements are essential to organizing:
Developing the structure of the organization
Acquiring and training human resources
Establishing communication patterns and networks

Determining the method of grouping these activities and resources is the organizing process.

Leading
Leading is another of the basic function within the management process "Leading is the use of
influence to motivate employees to achieve organizational goals" (Richard Daft). Managers must be
able to make employees want to participate in achieving an organization's goals. Three components
make up the leading function:
Motivating employees
Influencing employees

Forming effective groups

The leading process helps the organization move toward goal attainment.

Controlling

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The final phase of the management process is controlling. "Controlling means monitoring employees'
activities, determining whether the organization is on target toward its goals, and making correction
as necessary (Richard Daft ). Controlling ensures that, through effective leading, what has been
planned and organized to take place has in fact taken place. Three basic components constitute the
control function:

Elements of a control system

Evaluating and rewarding employee performance

Controlling financial, informational, and physical resources.

Controlling is ongoing process. An affective control function determines whether the organization is
on target toward its goals and makes corrections as necessary.

These all managerial functions are necessary and are related and interrelated to each other.

The Scope of Management

Management is needed in all types of organized activities. Moreover, management principles are
applicable to all types of organizations, including profit-seeking organizations (industrial firms, banks,
insurance companies, small business, etc.) and not-for-profit organizations (governmental
organizations, health care organizations. educations organizations, churches, etc.). Any group of two or
more people working to achieve a goal and having resources at its disposal is engaged in management.
Obviously, a manager's job is somewhat different in different types of organizations, exists in unique
environments, and uses different technology. However, all organizations need the common basic
activities: planning, organizing, leading, and controlling.

Management is also universal in that it uses a systematic body of knowledge including economics,
sociology, and laws. This knowledge can be applied to all organizations, whether business, or
government, or religious, and it is applicable at all levels of management in same organizations.

Types of Managers: Levels of Management

The managerial functions must be performed by anyone who manages any type of organized activity.
With the basic understanding of management, defining the term manager becomes relative simple.
According to Ricky W. Griffin definition of manager is as follows:

" A manager is someone whose primary activities are a part of the management process. In
particular, a manager is someone who plans, organizes, leads, and controls human, financial,
physical, and information resources."

The success or failure of an organization depends heavily on the ability of its managers to perform
these tasks effectively. Managers can be classified in two ways: by their level within the organization
and by the scope of their responsibilities.

Most people think of three basic levels of management:top, middle, and first-line managers.

Top managers are responsible for the overall direction and operations of an organization. Particularly,
they are responsible for setting organizational goals, defining strategies for achieving them,
monitoring and implementing the external environment, decisions that affect entire organization. They
have such titles as chief executive officer (CEO), president, chairman, division president, and
executive vice-president. Managers in these positions are responsible for interacting with

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representatives of the external environment (e.g., important customers, financial institutions, and
governmental figures) and establishing objectives, policies, and strategies.

Middle managers are responsible for business units and major departments. Examples of middle
managers are department head, division head, and director of the research lab. The responsibilities of
middle managers include translating executive orders into operation, implementing plans, and directly
supervising lower-level managers. Middle managers typically have two or more management levels
beneath them. They receive overall strategies and policies from top managers and the translate them
into specific objective and programs for first-line managers.

First-line managers are directly responsible for the production of goods and services. Particularly,
they are responsible for directing nonsupervisory employees. First-line managers are variously called
office manager, section chief, line manager, supervisor.

Responsibilities

In large organizations, managers are also distinguished by the scope of activities the manage.
Functional managers are responsible for departments that perform a single functional tasks. They
supervise employees with specialized skills in a single area of operation, such as accounting,
personnel, payroll, finance, marketing, advertising, and manufacturing. General managers are
responsible for the overall operation of a more complex unit, such as a company or a division. Project
managers also have general management responsibility, because they coordinate employees across
several departments to accomplish a specific project.

Managerial Roles

Mintzberg's observations and research indicate that diverse manager activities can be organized into
ten roles. For an important starting point, all ten rules are vested with formal authority over an
organizational unit. From formal authority comes status, which leads to various interpersonal relations,
and from these comes access to information, which, in turn, enables the manager to make decisions
and strategies.

The ten roles are divided into three categories: interpersonal, informational, and decisional.

Interpersonal Roles

Three of the managers's roles involve basic interpersonal relationships:

The figurehead role. Every manager must perform some duties of a ceremonial nature (e.g., the
president greets the touring dignitaries, the sales manager takes an important customer to lunch).
These activities are important to the smooth functioning of an organization.

The leader role. This role involves leadership directly (e.g., the manager is responsible for hiring an
training his own staff). The leader role encompasses relationships with subordinates, including
motivation, communication, and influence.

The liaison role, in which the manager makes contacts inside and outside the organization with a
wide range of people: subordinates, clients, business associates, government, trade organization
officials, and so on.

Information Roles

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The processing of information is a key part of the manager's job. Three roles describe the
informational aspects of managerial work:

The monitor role. This role involves seeking current information from many sources. For example,
the manager perpetually scans his environment for information, interrogates liaison contacts and
subordinates and receives unsolicited information.

The disseminator role In their disseminator role, managers pass information to other, both inside and
outside the organization.

The spokesperson role. In their spokesman role, managers send some of their information to people
outside the organization about company policies, needs, actions, or plans.

Decisional Roles

The manager plays the major role in his unit's decision-making system. Four roles describe the
decisional aspects of managerial work:

The entrepreneur role. In his entrepreneur role, managers search for improvement his unit to adopt it
to changing conditions in the environment.

The disturbance handler role. This role involves responding to high-pressure disturbances. For
example, manager must resolve conflicts among subordinates or between manager's department and
other departments.

The resource allocator role. In their resource allocator role, managers make decisions about how to
allocate people, budget, equipment, time and other resources to attain desired outcomes.

The negotiator role. The negotiations are duties of the manager's job. These activities involve formal
negotiations and bargaining to attain outcomes for the manager's unit responsibility.

These ten roles are not easily separate: "No role can be pulled out of the framework and the job be left
intact". However, this description of managerial work should be important to managers: "...the
managers' effectiveness is significantly influenced by their insight into their own work" (L. Gulick).

Management Skills

Regardless of the sort of goals they must meet or their level of authority, managers need to possess
conceptual, human, technical, diagnostic, and political skills. The first three skills have long been
accepted as important for management, the last two have received more recent attention.

According to a classic article by Robert L. Katz, managerial success depends primarily on performance
rather than personality traits. He indicates that three types of skills are important for successful
management performance:

Conceptual skills. Conceptual skill is the cognitive ability to see the organization as a whole and the
relationship among its parts. Managers need the mental capacity to understand how various functions
of the organization complement one another, how the organization relates to its environment, and how
changes in one part of the organization affect the rest of the organization.

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Human skills. The manager needs human skills: the ability to communicate with, understand, and
motivate both individuals and groups.

Technical skills. Technical skills are skills necessary to accomplish specialized activities (e.g.,
engineering, computer programming, and accounting).

The diagnostic skill is from Ricky Griffin, and the political skill is from Pavett and Lau :

Diagnostic skills. Diagnostic skills include the ability to determine, by analysis and examination, the
nature of a particular condition. A manager can diagnose a problem in the organization by studying its
symptoms. These skills are also useful in favourable situations.

Political skills. Political skill is the ability to acquire the power necessary to reach objectives and to
prevent others from taking power. Political skill can be used for the good of the organization and for
self-interest.

The extent to which managers need different kinds of skills moves from lower management to upper
management. Most low-level managers use technical skills extensively. At higher levels technical
skills become less important while the need for conceptual skills grows. However, human skills are
very important to all managers.

Management : Science or Art?

The best response to the question of whether management is an art or a science is that it is both.
Managing, like all other practices (e.g., music composition, medicine, or even tennis) is an art. To
manage effectively, peoples must have not only the necessary abilities to lead but also a set of critical
skills acquired through time, experience, and practice. If we define art as a personal aptitude or skill,
then management has certain artistic components.

On the other hand, the organized knowledge underlying the practice may be referred to as a science.
To perform at high levels in a variety of situations, managers must be able to draw on the sciences -
particularly economics, sociology, mathematics, political science, psychology, and political science -
for assistance and guidance.

The tasks of modern managers require the use of techniques, practices, and skills. In this context
science and art not mutually exclusive but complementary.

Emerging challenges for Management

1. Achieving a Stretch Goal

The organization youre managing is responsible for something whether its performing a business
process, supporting some other organization, developing a new product, or getting new customers.
There are goals associated with your objectives, and if your organization is aggressive then those goals
require more than the typical amount of effort. Its going to take some careful planning for you to
figure out how to apply your organizations people and resources to achieve an aggressive goal. Youre
going to have to motivate people, remove roadblocks from their path, and focus them on the things
that are most important. Its a stretch goal, but you can achieve it maybe even surpass it.

2. Bringing Out the Best in Your Employees

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All employees have good days and bad days. Some of the causes are out of your control. But its
important that you take steps to make as many days as possible good days. Here are some of the
things that you can do:

Treat every employee with respect. If you have praise for the employee, give the praise in front
of coworkers. If you have criticism for the employee, give it in private. For all but the worst
underperforming employees, make sure that the praise happens much more often than the
criticism.
Help employees align their personal goals with their work goals. Talk with each employee
about his or her personal goals: what they want to get out of life, where they want their career
to go. To the extent possible, use this information to help you allocate work assignments.
Provide a work environment that is appropriate for the work and conducive to employee well-
being. A comfortable work environment makes your employees more productive.
Encourage employee communication and cooperation. For example, in one of my management
jobs, I held a monthly lunch for my employees. During the lunch I updated them on any
company news Id heard, and I had some of the employees describe their recent work and
some of their challenges. We also had a series of awards.
But these were not your typical awards. Each award was given by the previous award recipient
to someone who exemplified the spirit of the particular award. There was a Gumby award (a
Gumby character) given to the most flexible employee, and other awards for things like putting
the team ahead of yourself, most creative outside-the-box idea, and unluckiest employee.
Employees sometimes even created their own one-time awards when something special or
unusual happened. Over time the number of awards grew, and the interchange of enthusiasm
and ideas made the organization a happy and fun place to work.

3. Dealing with Underperforming Employees

Not all of your employees will do their best. Some will have personal issues that interfere with their
work. Technically its not your problem, but in reality any issue that contributes to an underperforming
employee is your problem. Youll help employees cope with personal issues, youll provide motivation
and counsel, maybe steer them to appropriate resources inside or outside your company. Youll carry
your underperforming employees to a point, and then beyond that point youll have to ease them out
of your organization. Youll be humane, but you have to balance the needs of the organization with the
needs of the employees.

4. Dealing with Outstanding Employees

Some of your employees obviously outperform the others. Thats good news for your organization, but
it presents its own set of challenges. Outstanding employees need special treatment. You want them to
keep doing an exceptional job but that usually means that youll have to pay them special attention.
They need recognition for their talents and efforts. They need encouragement, training and guidance.
And above all they need to know that they have a career path in your company, even if that career path
takes them out of your organization.

Youll be tempted to hold on to your outstanding employees and keep them from being promoted out
of your organization. You shouldnt do that. When an employee star outgrows your organization, the
best thing for your company is to make sure that the employee finds a home in another part of your
company where he or she can continue to contribute. And ultimately, youll be rewarded for your good
deed of helping the employee achieve his or her potential. Your reputation as a team player and good
manager will grow, and your own career will be enhanced.

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5. Hiring the Right People

No matter how happy your employees are, youll get occasional turnover. And if your organization is
successful then youll often find that your budget and headcount will grow as you are assigned more
and more responsibility. Either way, youll need to hire. Hiring is easy, but hiring the right person is
extremely difficult.

The trick in hiring is to get an understanding of how an employee will actually perform the work
not just how the employee does in interviews. Interviews are seldom a good predictor of work and
work habits, so going beyond the interview is crucial.

6. Responding to a Crisis

No matter how much planning you do, things will go wrong. An employee will get sick at a critical
time. A weather disaster will hit your facility and disrupt your plans. A crime will be committed
maybe a theft or even something that harms an employee.

Planning is a part of managing, but perhaps more important is a managers ability to change plans on
the fly in response to changing conditions. When a crisis hits, you have to be able to deal with it
calmly, quietly and without being overwhelmed by stress.

7. Continuous Improvement

No matter how good your organization gets, it can do better. Theres always some type of
improvement that can be made: a change in a process, a better working environment, better employee
motivation, more focus on the essentials. If you ever get to the point where you honestly have no idea
how to improve things further, then you should either (a) seek outside advice, or (b) look for another
job. Theres always a better way, and you have to keep looking for it.

Conclusion

Management is complicated. It requires skill and motivation. But most of all it requires commitment
the commitment needed to rise to these seven challenges.

DIFFERENT MANAGERIAL THEORIES

School of Management Thought

Awareness and understanding of important historical developments are also important to contemporary
managers. The history of management theories, helps managers by organizing information and
providing a systematic framework for action.

The concept of management is not new; its has been practiced for thousands of years, although terms
such as management principles or management theory may not have been used. The Sumerians, the
Babylonians, or the Romans have provided numerous illustrations of effective management. In terms
of longevity, "the most effective formal organization in the history of Western civilization has been the
Roman Catholic Church" (Harold Koontz and Cyril O'Donnell). However, management gained in
importance, as mankind progressed and moved into the Industrial Revolution era.

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Today's concept of management is the product of a long and complicated evolutionary process.
Essentially, four major forces affect management are economic, social, political-legal, and
technological.

Over the years, disagreement on exactly how many different approaches to management exist and
what each approach entails has been common. Some count as few as three approaches, others as many
as seven.In order to present the essence of the management movements, I have chosen to discuss three
schools; based on the approach of Donnelly, Gibson, and Ivancevich. They offered these three well-
established approaches to management the thought: the classical approach, the behavioral approach,
and the management approach. Each complements and supports the others.

Although not recognized as a separate school, the contingency and the systems approach are also
discussed in this section, which attempt to integrate the three schools.

The Classical School

The classical approach on management emerged during the nineteenth and early twentieth centuries
and to some extent is accepted and practiced by many managers even today. The classical school
actually includes two different areas: lower-level management analysis (scientific management); and
comprehensive analysis of management (administrative theory).

The Scientific Management

The management science school provides managers with a scientific basis for solving problems and
making decisions. This approach arose out of a need to improve manufacturing productivity through
more efficient use of physical and human resources. It grew from the pioneering work of five people:
Frederick W. Taylor, Frank and Lillian Gilbreth, Henry Gantt, and Harrington Emerson.

Frederick W. Taylor (1856-1915)

Frederick Winslow Taylor, become known as "the father of scientific management." He insisted that
management itself would have to change and, further, Taylor suggested that decisions based on rules
of thumb be replaced with precise procedures developed after careful study of individual
situations.The essence of Taylor's scientific management can be summarized in the following
principles:

Develop a science for each element of a worker's job to replace rules of thumb.
Job specialization should be a part of each job.

Ensure the proper selection, training, and development of workers.

Planning and scheduling of the work are essential.

Standards with respect to methods and time for each task should be established.

Wage incentives should be an integral part of each job.

These four principles became the basic guidelines for managing the work of individuals. Taylor's
approach had a significant impact on American society; it led to increases in productivity. His ideas
also stimulated others to continue the formulation of management thought.

Frank Gilbreth (1868- 1924), Lillian Gilbreth (1878-1972)

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Frank and Lillian Gilbreth were a husband-wife team if industrial engineers. They produced
significant contributions in motion study and work simplification. With the use of motion picture
cameras, the Gilbreth's found the most efficient and economical motions for each task, thus reducing
and upgrading production. Working individually and together, Frank and Lillian Gilbreth developed
numerous techniques and strategies for eliminating inefficiency.

Henry L. Gantt (1861-1919)

Contributions toward work scheduling and control were made by Harry L. Gannt. He tried to improve
systems or organizations through task scheduling and reward innovation. Essentially, Gantt's most
famous contribution was the Gannt chart, a system of control and scheduling we still use today.

Harrington Emerson (1853-1931)

The principles of efficiency were further developed by Harrington Emerson. He was also a strong
advocate of making a strict distinction between line and staff roles in organizations. Moreover,
Emerson urged on the use of statements of goals and objectives for the total organization.

Administrative Theory

Whereas scientific management focused on the productivity of the individual worker, the
administrative theory focused on the total organization. Among the well-know contributors to this
theory were Lyndall Urwick, Chester Barnard, Alvin Brown, Henry Dennison, Oliver Sheldon and
Max Weber. However, the most notable of all contributors was Henry Fayol. His book, General and
Industrial Management, had a major impact on the emerging field of management.

He discussed 14 general principles of management. These principles follow in the order developed by
Fayol:

1. Division of labor. Specialization of labour results in increased productivity. Both managerial and
technical work are amenable to specialization.

2. Authority. Authority was defined by Fayol as the "right to give orders and the power to exact
obedience". It is needed to carry out managerial responsibilities.

3. Discipline. Employees must respect the rules that govern the organization.

4. Unity of command. Employees should receive orders from only one superior.

5. Unity of direction. Each group of activities in an organization should be grouped together under
one head and one plan.

6. Subordination of individual interests to the general interest The interests of one person should
not be placed before the interests of the organization as a whole.

7. Remuneration. Compensation should be based on systematic attempt to reward good performance.

8. Centralization. The degree to which centralization or decentralization should be adopted depends

on the specific organization, but managers should retain final responsibility to do the tasks
successfully.

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9. Scalar chain. A chain of authority should extend from the top to the bottom of the organization.
This chain implements the unity-of-command principle and allows the orderly flow of information.

10. Order. Human and material resources must be in the right place at the right time.

11. Equity. Employees should be treated as equally as possible.

12. Stability of personnel. Successful firms usually had a stable group of employees.

13. Initiative. Employees should have the freedom to take initiative.

14. Esprit de corps. Managers should encourage a sense of unity of effort through harmony of
interests.

Chester I. Barnard (1886-1961)

Chester Barnard made significant contributions to management in his book, The Functions of the
Executive. One of his contributions was the concept of the informal organization. Another
significant contribution was the acceptance theory of authority, which states that people have free
will and can choose whether to follow management orders. An order is accepted if the subordinate
understands it, is able to comply with it, and views it as appropriate given the goals of the
organization.

Max Weber (1864-1920)

Max Weber, a German theorist, believed that an organization based on rational authority would be
more efficient and adaptable to change because continuity is related to formal structure. He envisioned
organizations that would be managed on an impersonal, rational basis. This form of organization was
called a bureaucracy. Some of elements of bureaucracy are:

Labor is divided with clear definitions of authority and responsibility.

Positions are organized in a hierarchy of authority.

All employees are selected and promoted based on technical qualifications.

Administrative acts and decisions are recorded in writing.

Management is separate from the ownership of the organization.

Managers are subject to rules and procedures that will insure reliable, predictable behavior.

Weber's work on bureaucracy laid the foundation for contemporary organization theory.

Behavioral School

The behavioral school has had a profound influence on management. Typical behavioral
school topics include motivation, communication, leadership, organizational politics, and
employee behavior. This approach was stimulated by a number of writers and theoretical
movements. Particularly, two branches contributed to the behavioral school: the human
relation movement and the behavioral science approach..

The Human Relations Movement

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The human relations movement grew from the Hawthorne studies. A group of Harvard researchers,
headed by Elton Mayo, conducted a series of experiments on worker productivity in 1924 at the
Hawthorne plant of Western Electric Company in Illinois. These experiments have come to be know as
the Hawthorne studies.

The Harvard researches suggested that the way people were treated had an important impact on
performance; individual and social processes played a major role in shaping worker attitudes and
behavior. Therefore, management must recognize the importance worker's needs for recognition and
social satisfaction. Mayo termed this concept of the social man: individuals are motivated by social
needs and good on-the-job relationships and respond better to work-group pressure that to
management control activities.

Two of the best-known contributors who helped advance the human relations movement were
Abraham Maslow and Douglas McGregor.

Abraham Maslow (1908-1970) , a practicing psychologist, observed that his patients are motivated
by a sequence of needs, including monetary incentives, social acceptance, and others. He generalized
his work and suggested a hierarchy of needs. Maslow's theory of "hierarchical needs" was a primary
factor in the increased attention that managers began to give to the work of academic theorists.

Douglas McGregor (1906-1970) advanced two beliefs for managers about human behavior- Theory X
and Theory Y. Theory X takes a relative pessimistic and negative view of workers. Theory Y represents
the assumptions that human relations advocates make. The point of Theory Y is that organizations can
take advantage of the imagination and intellect of all its employees.

Behavioral Sciences Approach

Organizational behavior acknowledges that behavior is much more complex than human relations
realized. Systematic research is the basis for this approach. This research draws from psychology,
sociology, anthropology, economies, and medicine. All of the remaining chapters of this thesis contain
research findings and applications that can be attributed to the behavioral sciences approach to the
study of management.

The Management Science School

The management science school provides managers with a scientific basis for solving problems and
making decisions. This school grew directly out of the World War II groups (called operational
research teams in Great Britain and operations research teams in the United States).Churchman,
Ackoff, and Arnoff define the management science approach as an application of the scientific method
to problems arising in the operation of a system, and the solving of these problems by solving
mathematical equations representing the system.

The term management science sounds very much like scientific management (the approach developed
by Taylor), but the two not be confused. The distinguishing characteristics include:

* Managerial decisionsmaking Scientific management is concerned with production tasks and the
efficiency of workers and machines. Management science stresses that efficiency comes from proper
planning and making the right decisions.

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* Mathematical models In management science, a mathematical model attempts to reduce a

managerial decision to a mathematical form so that the decision-making process can be simulated and
evaluated before the actual decision is made.

* Computer applications The use of the computer has been the driving force behind the emergence
of the management science approach.

* Evaluation criteria In management science, model have been evaluated against a set of
effectiveness criteria (e.g., revenue, return on investment, and cost savings).

Operations management refers to the various models and techniques in use. Some of the commonly
used methods are forecasting, inventory modeling, linear and nonlinear programming, scheduling,
simulation, networks models, probability analysis, and break-even analysis. Operations management
specialists use these techniques to solve manufacturing problems.

Management information system (MIS) is the most recent subfield of the management science
perspective. MIS is a system designed to provide information to managers in a timely and cost-
efficient manner. It entails and integrated data base (usually in a computer), a hierarchical information
structure, and an orientation toward decision support.

Because management science thought is still evolving, more specific technic can be expected.

Attempt to integrate the three approaches

During the lats 30 years, there have been attempts to achieve integration of the three approaches to
management. On of these attempts, the systems approach, stresses that the organizations must be
viewed as total systems. Another, the contingency approach, stresses that the correctness of a
managerial practice is contingent upon how it fits the practical situation in which it is applied.

The Contingency Approach

One pioneer who was instrumental in moving organization theory to the contingency approach was
Joan Woodward, who studies the effect of technology on the organization. Woodward found that many
variations in organization structure were associated with differences in manufacturing techniques. As
Woodward pointed out:

"Different technologies imposed different kinds of demands, and these demands had to met through an
appropriate structure. Commercially successful firms seemed to be those in which function and form
were complementary.

Several authors have further developed some ides of contingency thinking. One of these important
contributors is James D. Thompson, whose work in the area of technology's effect on organization is
already a classic.

Thompson argued that organizations that experience similar technological problems will engage in
similar behavior.

The contingency view approaches management from a totally different perspective than do the formal
schools of management. The classical, behavioral, and management science schools assumed a
universal approach. They proposed the discovery of "one-best-way" management principles that
applied the same techniques to every organization. However, experienced managers know that not all

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people and situations should be handled identically. Therefore, the contingency approach holds that
universal solutions and principles cannot be applied to organizations. In simple terms, the contingency
theory suggests that what managers do in practice depends on, or is contingent upon, a given set of
circumstances - a situation.

The contingency perspective tells us that the effectiveness of various managerial practices, styles,
techniques, and functions will vary according to the particular circumstances of the situation.
Management's task is to search for important contingencies. The main determinants of the contingency
view relate to the external and internal environments of the organization. However, the contingency
approach is not without its critics. Its major problem is that it often is used as an excuse for not
acquiring formal knowledge about management. This formal study of management helps managers
decide which factors are relevant in what situations and its certain elements should serve as a
foundation for continued growth and developments.

The Systems Approach

The systems approach to management is more a perspective for viewing problems than a school of
management thought.

Ludwig von Bertalanffy is recognized as the founder of general system theory. The system approach
is based on the concept that an organization is a system. A system is defined as a number of
interdependent parts functioning as a whole for some purpose. Here there are five components: inputs,
a transformation process, outputs, feedback, and the environment.

The systems approach is very important in general management analysis. Four especially ideas that
have had substantial impact on management thinking are the concepts of open versus closed systems,
subsystems, subsystems and interdependencies, synergy and entropy.

Open versus closed systems. According to Ludwig von Bertlanffy, there are two basic types of
systems: closed systems and open systems. Closed system are not influenced by and do not interact
with their environments. Open systems interact with their environment. All organizations are open
systems, although the degree of interaction may vary.

Entropy. Entropy is a universal property of systems and refers to their tendency to run down and die.
A primary objective of management, form systems perspective, is to avoid entropy.

Synergy. Synergy means that the whole is greater the sum of its parts. Synergy is an important concept
for managers in that it reinforces the need to work together in a cooperative fashion.

Subsystems. A subsystem is a system within a system. From another perspective, subsystems are parts
of a system that depend on one another.

The concept wholeness is very important in general system analysis. L. Thomas Hopkins suggested
the following six guidelines regarding system wholeness that should be remembered during systems
analysis:

The whole should be the main focus of analysis, with the parts receiving secondary attention.
Integration is the key variable in wholeness analysis. Possible modifications in each part should be
weighted in relation to possible effects on every other part.
Each part has some role to perform so that the whole can accomplish its purpose.
The nature of the parts and its function is determined by its position in the whole.

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All analysis starts with the existence of the whole.

Systems theory offers the manager a useful perspective. For example, the management system is based
upon general system theory.

Recent Trends

In recent years, two management trends that seem significant in response to international competition
are the adoption of Japanese management practice and the renewed efforts to achieve excellence in
product and service quality.

Theory Z management. Given the recent success of Japanese companies, management writers have
been carefully analyzing Japanese organizations. The most notable publication in this area is Ouchis
Theory Z. Ouchi showed that American and Japanese firms are essentially different along seven
important dimensions:

1. length of employment
2. mode of decision making,
3. locations of responsibility,
4. speed of evaluation and promotion,
5. mechanism of control,
6. specialization of career path
7. and nature of concern of the employee.

Ouchis theory Z proposes a hybrid form of management that incorporates techniques from both
Japanese and North American management practices. In a very short time, his ideas have been well
received by practicing managers.

Achieving excellence. In their best seller on Americas best-run companies, In Search of Excellence,
Peter and Waterman found eight basic principles that reflected these companies, management value
and corporate culture. The eight principles of excellent companies are:

Bias toward action. Successful companies value action, doing, and implementation.
Closeness to the customer. Successful companies are customer driven; a dominant value is
customer need satisfaction.
Autonomy and entrepreneurship. Organization structure in excellent corporations is
designed to encourage innovation and change.
Productivity through people. People are encouraged to participate in production, marketing,
and new-product decisions.
Hands on, value driven. Excellent companies are clear about their value system.

Sticking to the knitting. Successful firms are highly focused. They do what they know best.

Simple form, lean staff. The structural form and systems of excellent companies are elegantly
simple, and few personnel are employed in staff positions.

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Simultaneous loose-tight properties. Excellent companies use tight controls in some areas
and loose controls in others. A tight, centralized control is used for the firms core values. In
other areas employees are free to experiment, to innovate, and to take risk in ways they will
help the organization achieve its goals.

Application of these principles in the best-managed companies tends to produce an environment that
fosters entrepreneurial pursuit of new opportunities and adaptation to change.

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