BSc Chemistry - e-PG Pathshala

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COMMERCE PAPER NO. 1.Management Concepts and Organisational Behaviour

MODULE NO. 3. Contemporary Theories of Management

Subject COMMERCE

Paper No and Title 1.Management Concepts and Organisational Behaviour

Module No and Title 3. Contemporary Theories of Management

Module Tag COM_P1_M3

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TABLE OF CONTENTS

1. Learning Outcomes

2. Introduction

3.Behavioural Science Approach

3.1 Concept of Behavioral Science Approach

3.2 Assumptions of Behavioural Science Approach

3.3 Contributions of Behavioural Scientists

4.Quantitative or management science approach

4.1 World War Births a New Management Method

4.2 Applicability of Quantitative Management Theory

5. Systems approach

5.1 System and Types of Systems

5.2 Organization and the System

5.3 Levels of Systems

6. Contingency approach

6.1 Key Aspects of Contingency Management

6.2 Contingency Characteristics

7. Quality School of Management

7.1 Concept of Quality School of Management

7.2 Quality Management Techniques

7.2.1 Kaizen Approach

7.2.2 Reengineering Approach

8. Summary.

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1. Learning Outcomes

After studying this module, you shall be able to

Know about the popular modern management theories

Understand the applicability of these theories in modern management decision making

Identify the pros and cons of different management theories

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2. INTRODUCTION

Classical and neo-classical approaches constitute the ‘traditional school of management thought’

and the other approaches are often termed as ‘modern or contemporary approaches’ to

management.

1. Behavioral science approach

2. Quantitative or management science approach

3. Systems approach

4. Contingency approach


3. BEHAVIORAL SCIENCE APPROACH

3.1 Concept of Behavioral Science Approach As management research sustained in the 20th century, questions created to come up regarding

the communications and motivations of the individual within organizations. Management

principles established during the classical period were not useful in allocating with many

management conditions and could not elucidate the behavior of individual employees. Classical

theory ignored employee motivation and behavior. As a result, the behavioral school was a

natural development of this new management experiment.

Behavioral science uses research and the scientific method to understand behavior at the

workplace. Behavioral sciences include relational sciences which contract with relationships,

interaction, communication systems, and interpersonal strategies between organisms or cognitive

articles in a social system.

Behavioral science draw from a quantity of different fields and theories including industrial

psychology, organizational psychology, industrial sociology, cultural anthropology,

administrative theory, and political science.

One application of the behavioral science approach can be seen in a field called organizational

development. Organization development is a long-term, systematic process of executing effective

organizational transformation.

The emphasis on using quantitative data and qualitative research method to determine how people

process information and understand social relationships is important to helping managers better

understand the proven methods for increasing employee motivation and employee productivity.

The behavioral science approach is the most communal study of management science today.

The behavioral science approach is also named as "Human Resource Approach". It gave

importance to attitudes, behavior and performance of individuals and groups in the organizations.

Behavioral scientists brought two new aspects to the study of management.

They gave a more complex view of human beings and their needs. For e.g. Abraham

Maslow, gave importance to Self-actualization need of human beings.

They used scientific methods to study the group behavior in organizations.

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3.2 Assumptions of Behavioral Science Approach Basic assumptions and propositions of Behavioral Science Approach are:-

Organizations are socio-technical systems. The management must incorporate both the

systems.

Work and interpersonal behavior of people in the organization is influenced by many

factors.

Employees are encouraged not only by the physiological needs but also by the social and

psychological needs.

Different people have different perceptions, attitudes, needs and values. These

differences must be found out and recognized by management.

In an organization conflicts are unavoidable.

Personal goals and Organizational goals must be joined together.

3.3 Contributions of Behavioral Scientists Elton Mayo's contributions derived as part of the Hawthorne studies, a sequence of experiments

that thoroughly applied as a classical management theory only to disclose its shortcomings. The

conclusion from the Hawthorne studies was that human relationships and the social needs of

workers are critical aspects of business management. This principle of human motivation helped

in changing the theories and practices of management.

The theorists who contributed to this school view employees as individuals, capital, and assets to

be developed and worked with — not as machines, as in the past. Several individuals and

experiments contributed to this theory.

Abraham Maslow, James March and Herbert Simon, Douglas McGregor, Victor Vroom, Fredrick

Herzberg, Chestar Barnard,etc., finished with their important contributions to the behavioral

science approach.

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The main contributions made by above Behavioural Scientists are:-

As a group, these theorists discovered that people worked for inner satisfaction and not

materialistic rewards, shifting the focus to the role of individuals in an organization's

performance.

4. Quantitative or Management Science Approach

4.1 World War Births a New Management Method The quantitative approach was initiated during the 1940’s, during World War II. No one would

ever think that from a war, a new method of management could be born. When we think of wars,

there are a lot of images that come to mind - but certainly, new management methods are not one

of those images. However, during World War II, scientists, mathematicians and physicists all got

together to resolve some military problems (most especially, the atomic bomb). This cooperation

and collaboration was the foundation that help in developing the quantitative school of

management. Now, management was looked at as a group of systems to improve decision

Abraham Maslow's Hierarchy of Needs Theory: Human beings have many

needs. Some are lower-level needs like physiological needs, safety and security needs, and social needs, These needs

must be satisfied first. The higher level needs are ego needs, and self-

actualisation needs. These needs are satisfied after satisfying lower-level

needs.

James March and Herbert Simon: There are many types of communication in an

organisation. This is essential for the performance of the organisation.

Douglas McGregor's Theory X and Y:Different managers have different

assumptions about people. This depends on the situation. Managers may have negative assumptions about people. That is, human

beings dislike work and therefore, they must be forced, controlled, directed, and

threatened with punishment to make them work. (Theory X). Managers may have positive assumptions about people, i.e. people love to work, and that people have self-control and

self-direction. (Theory Y).

Victor Vroom's Expectancy Theory of Motivation: People will be motivated to

reach a goal, if they believe (i) in the worth of the goal, and (ii) in the steps

taken to reach that goal.

Fredrick Herzberg's Two Factor Theory: There are many factors that influence behaviour and work of people in an organisation. One group of factors is called "hygiene factors". They are salary, working conditions. Supervision, etc. If

these factors exist in the organisation then there will be no dissatisfaction. However,

these factors will not motivate the workers. The second group of factors is called "motivators". They are recognition,

achievement, challenging work, etc. These factors bring satisfaction and motivation.

Chester Barnard: The managers must maintain a system of co-operation in the

organisation.

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making. And when the problem is how to split an atom, the

decision making has to be very precise and incorporate

statistical analysis, information models and computer simulations. When the Americans enter in

the war in 1941, they used the British model procedure Operations Research (OR) teams to

determine how to set up troops, submarines, and other military personnel and equipment most

effectively. For example, Operation research techniques were used to establish the optimum

pattern that search planes should fly and try to locate enemy ships. After the war, businesses also

began using these techniques.

The quantitative school of management strives to combine classic management theory and

behavioral science through the uses of statistical models and simulations. Let’s revise the concept

of classical management and behavioral management approach.

Classic management theory focused on how to find the best possible way for workers to perform

their tasks. In practice, it was broken down further into two parts: first, how to increase

productivity (the classical science branch), and second, how management - or the company - can

be organized to achieve productivity (the classic administrative branch). These two areas of focus

worked together to develop theories and ideas that helped companies be more effective.

The behavioral aspect came into play when companies started looking at how to motivate, lead

and, indeed, manage their employees. Companies realized that people were a part of the equation

and needed to be incorporated into the entire process. This part of the process looked at how

people behaved and why they behaved the way they did, then blended those findings into

management theories to get more out of the workers.

4.2 Applicability of Quantitative Management Theory From these beginnings, companies began to look more scientifically at decision making, and not

just with immediate thought process and instincts. Quantitative management theory (QMT) began

to shape and form specific areas of how decisions could be processed to ensure a more informed

result. Since this theory really started with scientists and mathematicians, it's easy to see how a

great deal of the theories and processes they developed centered on statistics, models and data to

get the best possible outcome. The quantitative school of management consists of several

branches and can be structured in the following areas:

Let's take a look at these in a slight detail you can see how they helped shape and develop the

quantitative school of management, as well as how decisions are made.

Management science originally started to treat the problems that could occur or arise with global

warfare. In today's world, it encourages and supports managers in using math and statistics to

Management science

Operations management

Management information

systems

Systems management

theory

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solve problems. When we take a second to think about it, most

of the time managers are using statistics and some sort of math

to better understand problems so they can come up with the right solution.

Today, this view inspires managers to use mathematics, statistics, and other measureable

techniques to make management decisions. Managers can use computer models to figure out the

finest ways to do something — saving both money and time. Managers use several science

applications.

Mathematical forecasting helps make estimations that are useful in the planning process.

For Example, Inventory modeling helps in controlling the inventories by mathematically

launching how and when to order a product. Queuing theory helps in allocating the service

personnel or workstations to reduce the customer waiting and service cost.

Operations management is a constricted branch of the quantitative method of management. It

focuses on handling the process of transforming materials, labor, and capital into valuable goods

and/or services. The product outputs can be moreover goods or services; effective operations

management is a worry for both manufacturing and service organizations. The resource inputs, or

factors of production, include the wide variety of raw materials, technologies, capital information,

and people needed to create finished products. The transformation process, in turn, is the definite

set of operations through which various capitals are utilized to produce finished goods or services

which worth to customers or clients. In many ways, it can be looked at like a traffic cop directing

all the parts of traffic. Materials can go that way and employees can go this way, while capital has

to wait for the light to change. In the end, these three areas derived together to help the final

product leave the factory or be presented to the customer.

Management information systems (MIS) is the latest subfield of the quantitative school. A

management information system organizes past, present, and projected data from both internal

and external sources and processes it into practical information, which it then makes available to

managers at all organizational levels. The information systems are also able to organize data into

usable and accessible formats. As a result, managers can recognize alternatives quickly, estimate

alternatives by using a spreadsheet program, pose a series of “what‐if” questions, and finally,

select the best alternatives based on the answers to these questions. This information helps

managers make decisions because it supplies information, such as tracking trends or showing

what might happen to a company in 90 days if sales stay the way they are. It literally manages all

this information and makes it available for managers to look at, review and analyze.

Systems management theory is a little more basic to understand. It takes inputs, places them

through a transformation process, produces outputs and finally gives feedback on the systems the

company is using. That system could be manufacture, or a system for recompensing their bills or

even accounting. If we look at a system like a machine, it is easy to recognize the process. Take

baking a cake, for example. The cake goes into the oven (input), then the oven heats up and bakes

the cake (transformation process), the cake is then taken out of the oven (output) and tasted

(feedback).If you did all this right, you have a good-tasting cake. System management theory has

been discussed in the next section in detail.

All four of these (management science, operations management, management information

systems and systems management theory) can be present in a company to help managers make

decisions. Just like our cake example, some people might use more sugar than others to bake a

cake, or some may use a different type of oven, but in the end, the cake does get baked. So, these

four areas can be present in a company in varying degrees and used by some or all of the

departments and managers to help them make decisions. Management science, operations

management, management information systems and systems management theory are separate

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applied areas and beyond the scope of this chapter. However,

following general sequence and some quantitative tools are

mentioned below for reference purpose only.

The Logical Sequence of Management Science/Quantitative School of Management is

1. Problem Formulation

2. Gathering Information and

3. Data Constructing

4. Mathematical Models

5. Exploring Tentative Solutions

6. Executing the Best Solution

7. Testing the Suggested Solutions

The Different Quantitative Tools used in Management Science are

1) The Queuing Theory

2) Linear Programming

3) PERT Chart

4) The Critical Path Method

5) Monte Carlo Method

6) Decision Theory

7) Business Simulation

8) Probability Theory

5. Systems Approach

The Systems Approach to management sought to find an equal balance between the extremely

impersonal Scientific Approach and the individually-focused Human Relations Approach. In this

approach, we look at all of the mechanisms of an organization as part of one greater system. The

systems management model has had an important effect on management science. A system is an

interconnected set of fundamentals functioning as a whole. An organization as a system is

composed of four elements:

Inputs — material or human capitals

Transformation processes — technical and managerial processes

Outputs — products or services

Feedback — responses from the environment

In a relationship to an organization, inputs contain a resources such as raw materials, money,

technologies, and people. These inputs go through a alteration process where they're planned,

organized, inspired, and controlled to eventually meet the organization's goals. The outputs are

the products or services designed to improve the value of life or productivity for

customers/clients. Feedback includes comments from customers or clients using the products.

This overall systems framework relates to any department or program in the overall organization.

5.1 System and Types of Systems System is a collection of part combined to accomplish a complete goal. If one part of the system

is detached, the nature of the system is changed as well. For example, a mountain of sand is not a

system. If one removes a sand particle, you have still got a mountain of sand. However, a running

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car is a system. Remove the carburetor and you have no longer

got a working car. A system can be looked at as taking inputs,

processes, outputs and outcomes.

In systems management theory, we have three basic system types:

Open System: A system that continually interacts with the environment around it. For

example, a producer might use several diverse suppliers of flour to make the product they

produce, or an organization might have to change as the demands of consumers change.

Closed System: Is the reverse of an open system. It is a system (or company) independent

on the environment around it. Usually when we look at closed systems, we are looking at

very extraordinary types of products that have inadequate sources of input and produce a

consistent product or output (like space satellites). In fact, satellites are produced in a

protected environment, like a lab, to ensure there is no contamination.

One of the simplest images that can help you grasp these first two types is a jar. When it's open,

it's an open system. It can interact with air, water and anything else around it. When it has a lid on

it, it's a closed system. It can only interact with what's inside the jar - there are no outside

influences on it.

The third basic type is a Subsystem: This is much easier to understand. This is a system

that is part of a larger system - much like how the train system around an airport can get

you from terminal to terminal (the larger part of the system).

Another way to get a mental image of subsystems is to think about the human body. One large

system makes us what we are. However, we have the subsystems of the digestive system, nervous

system, and circulatory system contained within us.

In order to understand the entire system, we must first be able to recognize the role each division

and department plays within the whole system. These divisions or departments are known as sub-

systems. Each sub-system can be observed as its own entity fits into the entire organization and

to control the role it plays in the larger system.

Each element must be looked at independently. Additionally, the result of the interactions

between these components must be explored, as well as the whole that is created as a result of

those interactions. The systems theory inspires managers to look at the organization from a wider

perspective. Managers are beginning to identify the various parts of the organization, and, in

precise, the interrelations of the parts.

The following terminology is important for understanding of the systems approach:

•Entropy is the tendency of systems to deteriorate or break down over time.

•Synergy is the ability of the whole system to equal more than the sum of its parts.

5.2 Organization and the System

Looking at an organization. Inputs would contain resources such as raw materials,

money, skills and people. These inputs go through a process where they are planned,

organized, encouraged and controlled, eventually to meet the organization’s goals.

Outputs would be products or services to a market. Consequences would be, e.g.,

improved the quality of life or productivity for customers. Feedback would be informed

from human resources carrying out the process, customers using the products, etc.

Feedback also comes from the bigger environment of the organization, e.g., influences

from government, the public, economics, and technologies. This overall system agenda

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applies to any system, including subsystems (departments,

programs, etc.) in the overall organization.4. Systems A Take McDonald's, for example. While the food in other countries might be dissimilar (there are

no hamburgers at McDonald's in India), the system to get the food is the similar: walk up, look at

the menu on the panel, order combo meal number 4, and you are on your way. Thus, the system is

repeated around the world, and it works. Again, we do have to make some adjustments, but don't

reflect that one system works the same everywhere. But even with adjustments, the system makes

it much easier for an organization to produce a similar customer experience around the world.

While McDonald's is only one example, there are many more, such as Starbucks, and boarding an

airplane. The list goes on and on.

5.3 Levels of Systems Envisioning the world as a group of systems was only the first step for general systems theorists.

One of the more important recent steps has been the identification of hierarchies of systems,

ranging from very specific systems to general ones. Identifying systems at many levels has helped

to convert the abstract general systems theory into more concrete terms. A hierarchy of systems

significant to management is the seven-level scheme of living systems shown in Figure A. Notice

that each system is a subsystem of the one above it.

Figure A Levels of Living Systems

http://college.cengage.com/business/kreitner/foundations/1e/students/appendices/appendix_a.html

6. Contingency Approach

Founded in the 1960’s, the Contingency Perspective forms upon the Systems Approach

distinguishes that there are various factors that may influence an organization’s

performance. This approach also looks at other principles that claim to be the describing

management approach with disbelief. The claim is that there is no one best way to

accomplish.

The Contingency Approach identifies that all business situations are changed. Each event

comes with its own set of problems, challenges, and internal and external environmental

factors. Managers who contribute to the contingency school of management trust that systems


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and theories in place to track the business, the right things to do

depend on a complex variety of critical environmental and

internal contingencies. There can be different structures and management philosophies in place

unique to each department or business unit. They may need to change based on internal and

external pressures or circumstances. Thus, there might be plans and systems in place, and they

can be the same or different for each department, but when problems arise, those systems and

plans very likely will be, changed.

6.1 Key Aspects of Contingency Management There are numerous key elements of contingency management that we need to recognize so we

can fully grasp its concept. The first element is business continuity planning. Business

continuity planning is planning and endorsing activities that either prevent problems from arising

or allow for a plan should an anticipated risk actually occur. The preventing of problems from

happening portion is a lot like the emergency brake in a car. Thus, it was planned for and is in

place should a critical part of your company (in this case, your brakes) fail. We can all agree that

would be a very serious issue, and car manufacturers have planned for that by including an

emergency brake in the car.

The second portion or aspect is having a disaster recovery plan. A disaster recovery plan is the

planned processes or procedures a company will take to recover from a disaster. When we say

disaster, we mean approximately very serious such as your data center burning down. In this case,

should something of this enormousness happen, there would be a plan in place to endure working

while the issue was addressed as well as a plan to address the issue should it actually happen. It is

something like an assurance policy and plan if something catastrophic occurs to your business

and you cannot carry on to work until it's resolved.

Companies do not just come up with issues or areas that might cause them to lose time or money

and essential some sort of contingency plan. Rather, they conduct what is called an

Environmental scan, or environmental scanning, to understand, for lack of a better word, what

is out there. Environmental scanning is the suspicious monitoring of an organization's internal

environments (features within the company's four walls) and external environments (aspects

external to the company) to look for initial signs of opportunities or threats.

Some of these macro-environmental factors, or contingencies, to be considered include:

Changes in technology

Demographic shifts

Economic conditions

Cultural factors

Government and legislation.

If management is flexible, then management can respond to each of these factors and act

accordingly. Interestingly, studies of companies that operate in uncertain environments are more

successful with a flexible approach to management, while companies in a more stable

environment do better with a more rigid and structured management style of operations.

In order to determine the most effective management approach, each situation should be

evaluated separately to determine how best to apply any individual management theory.

6.2Contingency Characteristics Some management scholars are attracted to contingency thinking because it is a workable

compromise between the systems approach and what can be called a purely situational

perspective. Figure B illustrates this relationship. The systems approach is often disapproved for

being too common and abstract, although the purely situational view, which accepts that every

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real-life situation requires a definitely different approach, has

been called miserably specific. Contingency advocates have

tried to take advantage of common denominators without getting trapped into simplistic

generalization. Three characteristics of the contingency approach are (1) an open-system

perspective, (2) a practical study orientation, and (3) a multivariate approach.

Figure B The Contingency View: A Compromise



7.1 Concept of Quality School of Management The quality school of management is a comprehensive concept for leading and operating an

organization, aimed at constantly improving presentation by focusing on consumers while

addressing the necessities of all stakeholders. In other words, this concept focuses on managing

the total organization to deliver high quality to customers.

The quality school of management considers the following in its theory:

Organization makeup: Organizations are made up of complex systems of customers and

suppliers. Every individual, executive, manager, and worker functions as both a supplier and a

customer.

Quality of goods and services: Meeting the customers' requirements is a priority goal and

presumed to be a key to organizational survival and growth.

Continuous improvement in goods and services: Recognizing the need to locate internal and

external requirements and constantly strive to improve. It is an idea that says, “the company is

good, but it can always become better.”

Employees working in teams: These groups are primary vehicles for planning and problem

solving.

Developing openness and trust: Confidence among members of the organization at all levels is

an important condition for success.

7.2 Quality Management Techniques Quality management involves employees in decision making as a way to prevent quality

problems.


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The very notion of continuous improvement suggests that

managers, teams, and individuals learn from both their

accomplishments and their mistakes. Quality managers help their workers gain insights from

personal work experiences, and they encourage everyone to share with others what they have

learned. In this way, everyone reveals upon his or her own work experiences, including failures,

and passes their recent knowledge to others. Sharing experiences in this manner helps to create an

organization that is continuously discovering new ways to improve. Two popular quality

management techniques are mentioned below:

7.2.1 Kaizen Approach

The Kaizen (pronounced ky‐zen) approach uses incremental, constant improvement for people,

products, and procedures. Kaizen is the commitment to work toward stable, continual

improvement. The best support for continuous improvement is an organization of people who

give a high priority to learning. In this process, everyone in the organization participates by

identifying opportunities for improvement, testing new approaches, recording the results, and

recommending changes.

7.2.2 Reengineering Approach

The reengineering approach concentrations on sensing the need to change, sighted change

coming, and reacting efficiently to it when it comes. The reengineering approach to management

emphases on creating change — big change — and fast. It centers on detecting the need to

change, seeing change coming, and reacting effectively to change when it comes.

Reengineering — the radical redesign of business processes to achieve affected improvements in

cost, quality, service, and speed — requires that every employee and manager look at all aspects

of the company's operation and find ways to rebuild the organizational systems to improve

efficiency, identify redundancies, and eliminate waste in every possible way. Reengineering is

neither easy nor cheap, but companies that adopt this plan have reaped remarkable results.

Reengineering efforts look at how jobs are planned, and raise serious questions about how much

work and work processes can be optimally arranged. Although many people believe that

reengineering is a substitute for outsourcing, this is not true. Yes, outsourcing may be a byproduct

of reengineering. However, the objective of reengineering is to bring about a constricted fit

between market opportunities and corporate abilities. After organizations are able to find this fit,

new jobs should be created.

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8. Summary

Modern management approaches respect the traditional, human resource, and quantitative

approaches to management. However, positive managers identify that although each theoretical

school has margins in its applications, each method also offers valuable visions that can broaden a

manager's choices in solving problems and achieving organizational goals. Successful managers

work to outspread these approaches to meet the demands of a dynamic environment.

Modern management approaches identify that people are complex and variable. Employee

requirements change over time; people have a range of talents and capabilities that can be

developed. Organizations and managers, therefore, should respond to individuals with a wide

variety of managerial strategies and job opportunities.

Key themes to be considered, as the twenty‐first century progresses, include the following:

Organizations must invest in their most significant asset, their people realize that their

most important and complex resource is people.

Managers must excel in their leadership responsibilities to perform numerous different

roles.

They should be able to utilize quantitative decision‐making tools to look for the one best

way to do something.

The Systems Approach looks at all constituents of an organization to see how they relate

and to create one larger system.

The Contingency Perspective identifies that all business conditions are different and can

have many internal and external factors that may impact outcomes.

The commitment to meet customer needs guides organizations toward quality

management and continuous improvement of operations.

BSc Chemistry - e-PG Pathshala

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