Modern Approach to Management

Everything you need to know about the modern approach to

management. The modern approach to management was
developed around the year 1950.
This approach is an improvement upon both the classical and
neo-classical approach to management.
Modern approach to management has three basic pillars: I.
Quantitative Approach II. System Approach III. Contingency
Approach.

Modern Approach to Management: Quantitative

Approach, System Approach, Contingency Approach and
Other Approaches
Modern Approach to Management – Quantitative
Approach, System Approach, Contingency Approach and
Other Approaches
The modern approach to management was developed around
the year 1950. This approach is an improvement upon both the
classical and neo-classical approach to management.
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This approach has three basic pillars:

I. Quantitative Approach,
II. System Approach, and
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III. Contingency Approach

I. Quantitative Approach:
The quantitative approach was propounded by C. W
Churchman and his colleagues around the year 1950. This
approach is also known by the name of Operational Research
or Operational Analysis.
The classical approach lays stress upon the physical resources
while the neo-classical approach gives importance to human
resources. Both these approaches are silent about some of the
most serious problems usually faced by the managers.
The quantitative approach to management makes some
suggestions to solve different problems facing the managers. It
tells the managers to solve their problems with the help of the
mathematical and statistical formulas. Some special formulas
have been prepared to solve managerial problems.
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For Example:
(i) Theory of Probability,
(ii) Sampling Analysis,
(iii) Correlation / Regression Analysis,
(iv) Time Series Analysis,
(v) Ratio Analysis,
(vi) Variance Analysis,
(vii) Statistical Quality Control,
(viii) Linear Programming,
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(ix) Game Theory,

(x) Network Analysis,
(xi) Break-Even Analysis,
(xii) Waiting Line or Queuing Theory,
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(xiii) Cash-Benefit Analysis, etc.

The main objective of the quantitative approach is to find out a
solution for the complex problems facing the big companies.
The help of a computer is usually taken in order to make use of
the above mentioned techniques.
The chief advantage of the approach is to solve complex
problems quickly. But the chief disadvantage is that this
approach offers an alternative to decision and cannot take
decision.
II. System Approach:
This is a newly developed approach which came existence in
1960. This approach was developed by Chester I. Bernard,
Herbert A. Simon and their colleagues.
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The system approach means a group of small inter-related
units. A group of different units which means a complete unit is
called a system, while the small units are themselves
independent, but somehow or the other is connected with the
sub-systems of the related system. All the sub-systems
influence one another. For example- a scooter is a system
which has many sub-systems in the form of engine, shaft, gear,
wheels body, etc.
All these sub-systems are inter-related with one another and if
one of them fails the whole system stops working. Therefore,
the success of the system depends on the cooperation and
efficiency of the sub-systems.
It can, therefore, be said that a system means different inter-
related parts which work n cohesion simultaneously to achieve
a particular purpose.
According to the system approach, the whole organization is a
system and its various departments are its sub-systems. All the
sub-systems work in unison. Then and only then the objective
of the organization can be achieved. Therefore, when manager
taken some decision regarding a particular sub-system, he
should also take into consideration the defect of his decision on
the other sub-systems.
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Key Concepts of System Approach:

The following are the chief characteristics of the System
Approach:
(1) Sub-Systems:
Every system happens to be a combination of many sub-
systems. All the sub-systems are inter-related. It means that
whenever we take some decision regarding a particular sub-
system, we should always keep in mind the possible effect of
the decision might have on the other sub-systems. In the
context of a company, all its departments (e.g. purchase, sale,
finance, production, personnel, research and development)
happen to be its sub-systems.
All these are created by the major system which happens to be
the company itself. Company itself is a sub-system of industry.
Industry is a sub-system of a national economy. Similarly, the
national economy itself happens to be a sub-system of the
world system. Therefore, it is clear that various sub-systems
constitute a major system.
(2) Holism:
A major characteristic of the System Approach is that it is
looked upon as a whole. It clearly means that a decision taken
with regard to a particular sub-system does influence or affect
the other sub-systems. Therefore, every decision is taken
keeping in view the entire organisation, meaning thereby, that
all the sub-systems are kept in mind while taking a decision. If
that is not done, the major system is certainly damaged and it
cannot work properly.
For example- if the sales department is aiming at doubling its
sales, it shall have to take care of the fact whether the
purchase department would be in a position to purchase the
requisite amount of raw material.
Again whether the personnel department will be able to provide
the required man-power. Yet again whether the finance
department will be able to provide the required financial
support. It can, therefore, be said that no decision is possible in
respect of any particular sub-system alone. That is why the
system approach is called holistic.
(3) Synergy:
It means that the whole is greater than the sum of its parts. This
can be better understood with the help of an example. Suppose
there are five persons in a group. Everybody has a capacity to
carry a load of five quintal each. When they are told to lift a load
of one quintal, everybody will be able to lift only one quintal of
load. But if that are told to lift the weight collectively, they would
certainly be able to lift a load in excess of five quintal.
It is thus, clear that if job is performed collectively rather than
individual, it is certainly well-performed with better results.
Here, the pointer happens to be towards coordination. When all
the parts of a system work keeping in mind the interests of
others, the performance turns out to be decidedly better results.
(4) Closed and Open System:
A system can be of two types:
(i) Closed system and
(ii) Open system
(i) Closed System:
This is a system that remains unaffected by the environmental
factors. Traditional management experts consider an
organisation as a closed system. They believed that an
organisation worked without being influenced by the outside
factors, e.g., a watch is not influenced by the outside factors
and it works continuously without getting interrupted. This is a
good example of the closed system.
(ii) Open System:
An open system means a system which remains constantly in
touch with its environment and is influenced by it. Modern
management experts consider an organisation as an open
system. Environment is a combination of many factors.
The chief factors of the environment of an organisation happen
to be raw material, power, finance, machine, man-power,
technique, market, new products, government policies, etc. All
these factors of environment enter an organisation as Input.
Within the organisation, they are converted into products
through the process of various activities.
Then they walk out of the organisation in the form of output and
once again mingle with the environment. At this time, they
happen to be in the form of goods, services and satisfaction. All
the factors of input and output influence the organisation. That
is why an organisation is called an open system.
(5) System Boundary:
This means a certain dividing line which separates a system
from its environment. The dividing line in a closed system is
rigid while in respect of open system, it is flexible. It is not easy
to determine the dividing line in respect of physical and
biological systems, e.g., a dividing line can easily be drawn
between the two pieces of land.
It is, however, difficult to do so in respect of a social system and
an organisation is a social system. System boundary makes it
clear as to which factors are related to the system and which
factors are related to the environment. Consequently, it makes
control easier.
In conclusion, it can be said that there have been revolutionary
changes in the process of decision-making because of concept
of system approach. However, some critics feel that it is difficult
to study the relations between sub-systems of a particular
system. Therefore, this concept is not practical.
III. Contingency or Situational Approach:
Contingency approach to management is an important modem
approach. This approach originated in around 1970. According
to it, the managers should take decisions not according to
principles but according to the situations. It means that there
cannot be any single principle / formula / managerial activity
which can be suitable in all the situations. Its chief reason is the
constantly changing nature of environment. Here environment
means the sum total of all the factors which influence the
organization.
These factors are both internal and external. The internal
factors include objectives, policies, organization structure,
management information system, etc. The external factors
include customers, suppliers, competitors, government policies,
political set-up, legal system, etc. All these factors are subject
to change that is why the environment of an organization is
called dynamic.
The system approach has failed to establish a relationship
between the organization and environment. The contingency
approach has made an attempt to remove this weakness. It is,
therefore, the basic duty of the managers to analyse the
environment and they should take decision on the basis of their
analysis. The managers should always keep in mind that no
single method can be suitable for doing any work. Its suitability
depends on the situations.
It is quite possible that a particular method of doing a thing may
be futile and to hope that these principles would be suitable or
successful in one situation, but the same may not be the case
in some other situation. So far as the different principles of
management are concerned, they simply guide the mangers,
and in the present dynamic environment, it would be futile to
hope that these principles would be suitable or helpful in all the
situations.
For example- single style of leadership cannot be applied to all
the situations. Similarly, there are many methods of motivation
and control, but a single method cannot be applied to all the
situations.
Features of Contingency Approach:
The following are the main features of the contingency
approach:
1. The managerial action influences the environment.
2. The managerial action changes according to the situations.
3. There is essentially coordination between the organization
and environment.
Limitations of Contingency Approach:
The following are the limitations of the contingency
approach:
1. It is not sufficient to say that the managerial action depends
on the situation. It is essential to say what action should be
taken in a particular situation.
2. A situation can be influenced by many factors. It is difficult to
analyse all these factors.