Evolution of management

thought (contd)
Refer
Principles and Practice of
Management - L M Prasad
Social systems approach
• Extension of the implications of human relations approach.
• Introduced by Vilfredo Pareto and Chester Barnard
• An organisation is essentially a cultural system composed of
people who work in cooperation.
Major features:
1.Organisation is a social system, a system of cultural
relationships.
2.Relationships exist among the external and internal
environment of the organisation.
3.Cooperation among group members is necessary for the
achievement of organisational objectives.
4.For effective management, efforts should be made for
establishing harmony between the goals of the organisation
and the various groups therein.
 Contribution of Chester Barnard
1. Concept of organisation:
Formal organisation;
3 conditions for an organisation: ability to communicate, willing
to contribute, attempt to accomplish

2. Formal and informal organisations

Organisation needs both formal and informal organisation
Informal organisation can overcome the problems of formal
organisation.
Informal organisation – means of communication, bring
cohesion, protect an individual from dominance
Both formal and informal organisations are dependent on each
other
• Elements of a formal organisation:
functionalisation; effective and efficient incentives, power, logical decision
making.

• Authority: Acceptance theory of authority (Bottom up authority)

• Functions of the Executive:

3 types of functions: maintenance of organisational communication,
securing of essential services from employees, formulation and definition
of organisational purpose.

• Motivation: non-financial incentives

• Executive effectiveness: requires a high order of responsible leadership

for securing cooperation from people.

• Organisational equilibrium: matching of individual efforts and

organisational efforts to satisfy individuals
 Decision Theory Approach
• This approach looks at the basic problem of management around
decision making – the selection of a suitable course of action out of
the given alternatives.

• Herbert Simon, March, Cyert, Forrester, etc,.

Features:
1.Management is essentially decision making

2. The members of the organisation are decision makers and problem

solvers.
3. Organisation can be treated as a combination of various
decision centres. The importance of members are determined
on the basis of importance of decisions which they make.

4. Quality of decision affects the organisational effectiveness.

5. All factors affecting decision making are the subject matter

of study of management. Besides processes and techniques,
the other factors affecting the decisions are information
systems, and social and psychological aspects of decision
makers.
 Contributions of Herbert Simon
• Concept of organisation
An organisation is a complex network of decisional processes, all pointed
towards their influence upon the behaviour of the operatives.

• Decision making: 3 sequential steps:

Intelligent activity, design activity, choice activity

• Bounded rationality
Managers do not go for maximum satisfaction out of a decision but are
satisfied with good enough satisfaction from a decision.

• Administrative man:
satisfying approach to decision making; world- a simplified model; choice
of alternatives; decisions- rule of thumb.

• Organisational communication: 3 stages: initiation, transmittal, receipt

of information
• Contributions of Peter Drucker

1. Nature of management
Management with creative and innovative characteristics
Basic objective: to lead towards innovation
Management is a discipline and profession

2 Management functions
3 functions of a manager: make contributions for a purpose;
making work productive and worker achieving; making social
impacts and social responsibilities
A manager has to act as an administrator (improve what is
existing) and an entrepreneur ( redirect resources)
Manager’s activities: objective setting, decision making,
organising, motivating
3. Organisation structure
3 basic characteristics of an effective organisation structure: organised
for performance, contain least possible managerial levels, training and
testing of tomorrow's managers
3 basic aspects in organising: activity analysis, decision analysis,
relation analysis

4. Federalism
centralized control in decentralised structure

5. Management by Objectives
includes planning, setting standards, performance appraisal and
motivation.

6. Organisational changes: Accept changes as challenges

 Management Science approach
• Also known as mathematical or quantitative measurement
approach, visualises management as a logical entity, the action of
which can be expressed in terms of mathematical symbols,
relationships, and measurement data.

• The primary focus of this approach is the mathematical model.

Major features:
1.Management is regarded as the problem-solving mechanism with
the help of mathematical tools and techniques.

2.Management problems can be described in terms of mathematical

symbols and data. Thus, every managerial activity can be
quantified.
3. This approach covers decision-making, systems analysis, and
some aspects of human behaviour.

4. Operations research, mathematical tools, simulation, models, etc.,

are the basic methodologies to solve managerial problems

5. Management science approach is a fast developing one in

analyzing and understanding management. Various mathematical
tools like sampling, linear programming, game theory, time
series analysis, simulation, waiting line theory, etc., have
provided more exactness in solving managerial problems.

Many managerial activities are not really capable of being quantified

because of involvement of human beings who are governed by
many irrational factors also.
 Human behaviour approach
• This approach is the outcome of the thoughts developed by
behavioural scientists who have looked at the organisation as
collectivity of people for certain specified objectives.

• Also known as ‘leadership’, ‘behavioural science’ or ‘human

resource’ approach.

• Since management involves getting things done by people, the study

of management must revolve around human behaviour.

• This approach is divided into 2 groups: interpersonal behaviour

approach (rely on human psychology) and group behaviour approach
(rely on social psychology and emphasize organisational behaviour).

• Maslow, Herzberg, McGregor, Likert, Argyris, Blake and Mouton,

Sayles, Bennis, Fiedler, Tannenbaum.
Major conclusions of the contributions by behaviorists:
1.People do not dislike work. In fact, job itself is a source of
motivation and satisfaction to employees.
2.Most people can exercise a great deal of self-direction, self-
control, and creativity than are required in their current job.
3.The manager’s basic job is to use the untapped human potential in
the service of the organisation.
4.The manager should create a healthy environment wherein all
subordinates can contribute to the best of their capacity.
5.The manager should provide for self-direction by subordinates and
they must be encouraged to participate fully in all important
matters.
6.Operating efficiency can be improved by expanding subordinate
influence, self-direction, and self-control.
7.Work satisfaction may improve as a ‘by-product’ of subordinates
making full use of their potential.
Systems Approach
• An integrating approach which considers management in its
totality based on empirical data.
• System:
An organised or complex whole; an assemblage or combination of
things or parts forming a complex unitary whole.
• Features:
1.A system is basically a combination of parts, subsystems.
2.Parts and sub-parts of a system are mutually related to each other,
some more, some less; some directly, some indirectly.
3.A system is not merely the totality of parts and subparts but their
arrangement is more important.
4.A system can be identified because it has a boundary.
5.The boundary of a system classifies it into two parts: closed
system and open system.
6.System transforms inputs into outputs.
 Differences between Closed and open systems
Closed system Open system

No interaction with environment Interact with their environment

Self-contained and self- Import energy and export output

maintaining
Generally mechanical Need to be adjusted according to
environment
A closed loop which does not Grow over a period of time
grow
No feedback Have a feedback mechanism that
helps them to maintain
homeostatis (a kind of
equilibrium)
Features of Management as System

1. Management as a social system

2. Management as Open system
3. Adaptive
4. Dynamic
5. Probabilistic
6. Multilevel and Multidimensional
7. Multivariable
8. An integrated approach
Implications
• Management of an organisation must be consistent with the
demands of organisational environment and the needs of its
members.
• It provides a framework through which organisation-
environment interaction can be analysed and facilitates
decision-making.

Limitations:
1.Abstract approach
2.Lack of universality
Contingency or situational approach
• There cannot be particular management action which
will be suitable for all situations. Rather, an appropriate
action is one which is designed on the basis of external
environment and internal states and needs.

• Features:
1. Management action is contingent on certain action
outside the system or subsystem as the case may be.
2.Organisational action should be based on the behaviour
of the action outside the system.
3.Because of the specific organisation-environment
relationship, no action can be universal. It varies from
situation to situation.
Implications of Contingency approach

1. Management is entirely situational and there is nothing like

universal principles of management or one best way of doing
a particular thing. What managers do depends on the
circumstances and environment.
2. The approach suggests suitable alternatives for those
managerial actions which are generally contingent upon
external and internal environment.
3. Contingency approach suggests that the internal state is to be
aligned with the external state.
Limitations

1. Inadequate literature
2. Complex
3. Difficult empirical testing
4. Reactive not Proactive
Schools of Management thought
1. Management Process School
2. Empirical School
3. Human behaviour School
4. Social Science School
5. Decision Theory School
6. Mathematical or Quantitative School
7. Systems School
8. Contingency School
Comparing Theories

Attempts to develop the best way to manage in all

Classical organizations by focusing on the jobs and structure of the
firm.
Attempts to develop a single best way to manage in all
Behavioral organizations by focusing on people and making them
productive.

Management Recommends using math (computers) to aid in problem

Science solving and decision making.

Manages by focusing on the organization as a whole and

Systems Theory the interrelationship of its departments, rather than on
individual parts.

Sociotechnical Recommends focusing on the integration of people and

Theory technology.

Contingency Recommends using the theory or the combination of

Theory theories that best meets the given situation.