Modern Management Theory: Quantitative, System and Contingency

Approaches to Management!

THE CONTEMPORARY AGE (1960 TO PRESENT). FOLLOWING 1960, MANAGEMENT THINKING SHIFTED AWAY FROM EXTREME HUMAN RELATIONS IDEAS,

ESPECIALLY IN REGARDS TO THE DIRECT RELATIONSHIP BETWEEN MORALE AND PRODUCTIVITY. IN TODAY'S MANAGEMENT THINKING, MAN AND

MACHINE SHOULD BE GIVEN EQUAL WEIGHT.

THE SOCIAL ROLES OF BUSINESS PRACTICES HAVE BEEN RECOGNIZED BY MODERN BUSINESS IDEOLOGISTS, WHO THINK ALONG SIMILAR LINES. DURING

THIS PERIOD, MANAGEMENT CONCEPTS WERE REFINED AND PERFECTED TO A HIGH LEVEL. THE DIVISION OF OWNERSHIP AND MANAGEMENT OCCURRED

AS A RESULT OF THE CREATION OF LARGE CORPORATIONS.

THIS SHIFT IN OWNERSHIP EVENTUALLY RESULTED IN THE INTRODUCTION OF ‘SALARIED AND SKILLED MANAGERS' IN PLACE OF ‘OWNER MANAGERS.' THE

DELEGATING OF AUTHORITY TO HIRED MANAGEMENT CULMINATED IN A GREATER USE OF EMPIRICAL MANAGEMENT METHODS. HOWEVER, COMPETENT

MANAGEMENT HAS BECOME SOCIALLY ACCOUNTABLE TO A VARIETY OF STAKEHOLDERS, INCLUDING CONSUMERS, SHAREHOLDERS, VENDORS, AND

EMPLOYEES.

Under modern management thought three streams of thinking have beers

noticed since 1960:

(I) Quantitative or Mathematical Approach or Management Science

Approach:
Mathematics has made inroads into every field of study. It is widely acknowledged as a valuable
analytical method and a language for expressing precise concepts and relationships.

Management is viewed as a set of mathematical models and processes by the Mathematical School,
which provides a quantitative framework for decision-making. It's also known as "Management
Science School" or "Operations Study." The use of mixed teams of scientists from various disciplines
is a key feature of this school. It employs scientific methods to provide a quantitative foundation for
management decisions.The exponents of this school view management as a system of logical
process.

It can be represented mathematically by symbols, relationships, and models. Different mathematical

and quantitative methods or instruments, such as linear programming, simulation, and queuing, are
increasingly being used to research a broad variety of problems in almost all areas of management.

Moreover, mathematics quantitative techniques provide tools for analysis but they cannot be
treated an independent system of management thought.

Mathematicians have made important contributions to the field of management. This

has made a significant contribution to the development of orderly thought among
managers. The management discipline has become more precise as a result of it. Its
contributions and utility are difficult to overstate. It can, however, only be used
as a tool in managerial practice.

Limitations::
critics of this approach regard it as too narrow since it is concerned merely with the
development of mathematical models and solutions for certain managerial problems.

This approach suffers from the following drawbacks:

(i) This approach does not give any weight age to human element which plays a dominant role
in all organisations.

(ii) In actual life executives have to take decisions quickly without waiting for full information
to develop models.

(iii) The various mathematical tools help in decision making. But decision making is one part
of managerial activities. Management has many other functions than decision-making.

(iv) This approach supposes that all variables to decision-making are measurable and inter-
dependent. This assumption is not realistic.

(v) Sometimes, the information available in the business for developing mathematical models
are not upto date and may lead to wrong decision-making.

(ii) Systems Approach:

Ludwing Von Bertalanffy, Lawrence J. Henderson, W.G. Scott, Deniel Katz, Robert L. Kahn,
W. Buckley, and J.D. Thompson were among those who contributed early on.
They saw organization as an interactive, organic system made up of interacting and interdependent
parts known as subsystems. The system approach views management as a system or "an organised
whole" made up of subsystems that work together to form a unified or ordered whole.

The system approach is based on the premise that all is connected and interdependent. A system is
made up of interconnected and dependent elements that, when combined, form a unified whole. A
system is simply a collection of things or sections that come together to form a complex whole.

One of the most distinguishing features is that it is made up of a hierarchy of sub-systems. That is, the
components that make up the main structures, and so on. The planet, for example, can be thought of as
a structure in which different national economies are sub-systems.

In turn, each national economy is composed of its various industries, each industry is
composed of firms; and of course, a firm can be considered a system composed of sub-systems
such as production, marketing, finance, accounting and so on.

The basic features of systems approach are as under:

(i) A system consists of interacting elements. It is set of inter related and interdependent parts
arranged in a manner that produces a unified whole.

(ii) The various sub-systems should be studied in their inter- relationships rather, than in
isolation from each other.

(iii) An organisational system has a boundary that determines which parts are internal and
which are external.

(iv) A system does not exist in a vaccum. It receives information, material and energy from
other systems as inputs. These inputs undergo a transformation process within the system
and leave the system as output to other systems.

(v) An organisation is a dynamic system as it is responsive to its environment. It is vulnerable

to change in its environment.

The systems approach is considered both general and specialized systems. The general
systems approach to management is mainly concerned with formal organizations and the
concepts are relating to technique of sociology, psychology and philosophy. The specific
management system includes the analysis of organisational structure, information, planning
and control mechanism and job design, etc.

Thus, the systems approach may succeed where the process approach has failed to lead
management out of the theory of jungle. ”

Systems theory is useful to management because it aims at achieving the objectives and it
views organization as an open system. Chester Barnard was the first person to utilise the
systems approach in the field of management.

He feels a high order of responsible leadership makes the executives effective. H. Simon
viewed organization as a complex system of decision making process.

Evaluation of System Approach:

The systems approach assists in studying the functions of complex organisations and has been
utilised as the base for the new kinds of organisations like project management organisation.
It is possible to bring out the inter-relations in various functions like planning, organising,
directing and controlling. This approach has an edge over the other approaches because it is
very close to reality.but It cannot be easily applied to large and complex organisations.
Moreover, it does not provide any tool and technique for managers.

(iii) Contingency or Situational Approach:

The contingency approach is the latest approach to the existing management approaches.
During the 1970’s, contingency theory was developed by J.W. Lorsch and P.R. Lawrence, who
were critical of other approaches presupposing one best way to manage. Management
problems are different under different situations and require to be tackled as per the demand
of the situation.

A contingency approach is an approach, where behaviour of one sub-unit is dependent on its

environment and relationship to other units or sub-units that have some control over the
sequences desired by that sub- unit.”

Thus behaviour within an organisation is contingent on environment, and if a manager wants

to change the behaviour of any part of the organization, he must try to change the situation
influencing it. Tosi and Hammer tell that organization system is not a matter of managerial
choice, but contingent upon its external environment.

Contingency approach is an improvement over the systems approach. The interactions

between the sub-systems of an organisation have long been recognised by the systems
approach. Contingency approach also recognises that organisational system is the product of
the interaction of the sub systems and the environment. Besides, it seeks to identify exact
nature of inter-actions and inter-relationships.

This approach calls for an identification of the internal and external variables that critically
influence managerial revolution and organisational performance. According to this, internal
and external environment of the organisation is made up of the organisational sub-systems.
Thus, the contingency approach provides a pragmatic method of analysing organisational
sub-systems and tries to integrate these with the environment.

Contingency views are ultimately directed towards suggesting organisational designs

situations. Therefore, this approach is also called situational approach. This approach helps us
to evolve practical answers to the problems remanding solutions.

Kast and Rosenzweig give a broader view of the contingency approach. They say, “The
contingency view seeks to understand the inter-relationships within and among sub-systems
as well as between the organization and its environment and to define patterns of
relationships or configurations of variables contingency views are ultimately directed toward
suggesting organization designs and managerial actions most appropriate for specific
situations.

Features of Contingency Approach:

Firstly, the contingency approach does not accept the universality of management theory. It
stresses that there is no one best way of doing things. Management is situation, and managers
should explain objectives, design organisations and prepare strategies, policies and plans
according to prevailing circumstances.

Secondly, managerial policies and practices to be effective, must adjust to changes in

environment.

Thirdly, it should improve diagnostic skills so as to anticipate and ready for environmental
changes. Fourthly, managers should have sufficient human relations skill to accommodate
and stabilise change.

Finally, it should apply the contingency model in designing the organization, developing its
information and communication system, following proper leadership styles and preparing
suitable objectives, policies, strategies, programmes and practices. Thus, contingency
approach looks to hold a great deal of promise for the future development of management
theory and practice.