MODERN MANAGEMENT THEORIES

Introduction
1. Lkdjfal;kdsjflaksdf
2. A;klsdfjlkajd
3. aklsdf
Aim
4. To present and discuss Modern Management Theories and draw comparison with the
Classical Management Theory.
Sequence
5. The presentation will follow the sequence as under: -
a. The Three Eras of Management.
b. Important Theories of Management.
c. Modern Management Theories.
d. Principles of Modern Management.
e. Is Classical Theory of Management Extinct?
f. Comparison between Classical and Modern Management Theories.
The Three Eras of Management
6. Aksldjfl;kasjdf
7. Asdkl;fjalksd
8. aksldfj
Important Theories of Management
9. akldfjlaksd
10. asdlfk
11. a;sdlkfj
Modern Management Theories
12. akjdsf;lkasjd
13. ;alksdjf;laksdjf
14. A;lkdsjf;laksdjf
Principles of Modern Management
15. A;lsdkfj;alskdjf
16. Alksjdf;lkasjdf
17. A;lsdkfja;lskdjf
Is Classical Theory of Management Extinct?
18. Asdkjf;lkasjdfl;k
19. A;klsdjf;laksdjf
20. A;slkdfa;lkdjf
Comparison between Classical and Modern Management Theories
21. A;klsdjflkasdjfkajs
22. La;kdsjfaksjdf;lkjas
23. Als;kdfj;laksjdflaksjdf
Conclusion
24.
 THREE ERAS OF MANAGEMENT
Organization as machine – this imagery from our industrial past continues to cast a long shadow
over the way we think about management today. It isn’t the only deeply-held and rarely
examined notion that affects how organizations are run. Managers still assume that stability is
the normal state of affairs and change is the unusual state (a point I particularly challenge in  The
End of Competitive Advantage). Organizations still emphasize exploitation of existing
advantages, driving a short-term orientation that many bemoan. (Short-term thinking has been
charged with no less than a chronic decline in innovation capability by Clayton Christensen who
termed it “the Capitalist’s Dilemma.”) Corporations continue to focus too narrowly on
shareholders, with terrible consequences – even at great companies like IBM.
But even as these old ideas remain in use (and indeed, are still taught), management as it is
practiced by the most thoughtful executives evolves. Building on ideas from my colleague Ian
MacMillan, I’d propose that we’ve seen three “ages” of management since the industrial
revolution, with each putting the emphasis on a different theme: execution, expertise, and
empathy.
Prior to the industrial revolution, of course, there wasn’t much “management” at all – meaning,
anyone other than the owner of an enterprise handling tasks such as coordination, planning,
controlling, rewarding, and resource allocation. Beyond a few kinds of organization – the church,
the military, a smattering of large trading, construction, and agricultural endeavors (many
unfortunately based on slave labor) – little existed that we would recognize as managerial
practice. Only glimmers of what was to come showed up in the work of thinkers such as Adam
Smith, with his insight that the division of labor would increase productivity.
With the rise of the industrial revolution, that changed. Along with the new means of production,
organizations gained scale. To coordinate these larger organizations, owners needed to depend
on others, which economists call “agents” and the rest of us call “managers”. The focus was
wholly on execution of mass production, and managerial solutions such as specialization of
labor, standardized processes, quality control, workflow planning, and rudimentary accounting
were brought to bear. By the early 1900’s, the term “management” was in wide use, and Adam
Smith’s ideas came into their own. Others – such as Frederick Winslow Taylor, Frank and
Lillian Galbreth, Herbert R. Townes, and Henry L. Gantt – developed theories that emphasized
efficiency, lack of variation, consistency of production, and predictability. The goal was to
optimize the outputs that could be generated from a specific set of inputs.
It is worth noting that, once they gained that scale, domestically-focused firms enjoyed relatively
little competition. In America, there were few challengers to the titans in the production of steel,
petroleum products, and food. Optimization therefore made a lot of sense. It is also worth noting
that in this era, ownership of capital, which permitted acquisition and expansion of means of
production (factories and other systems), was the basis for economic well-being.
Knowledge began accumulating about what worked in organizational management. While
schools dedicated specifically to business had been offering classes throughout the 1800s in
Europe, the economic juggernaut US gained its first institution of higher education in
management with the 1881 founding of the Wharton School. A wealthy industrialist, Joseph
Wharton aspired to produce “pillars of the state” whose leadership would extend across business
and public life. Other universities followed. The establishment of HBR in 1922 was another
milestone, marking progress toward the belief that management was a discipline of growing
evidence and evolving theory.
Thus the seeds were planted for what would become the next major era of management,
emphasizing expertise. The mid-twentieth century was a period of remarkable growth in theories
of management, and in the guru-industrial complex. Writers such as Elton Mayo, Mary Parker
Follett, Chester Barnard, Max Weber, and Chris Argyris imported theories from other fields
(sociology and psychology) to apply to management. Statistical and mathematical insights were
imported (often from military uses) forming the basis of the field that would subsequently be
known as operations management. Later attempts to bring science into management included the
development of the theory of constraints, management by objectives, reengineering, Six Sigma,
the “waterfall” method of software development, and the like. Peter Drucker, one of the first
management specialists to achieve guru status, was representative of this era. His book Concept
of the Corporation, published in 1946, was a direct response to Alfred P. Sloan’s challenge as
chairman of General Motors: attempting to get a handle on what managing a far-flung, complex
organization was all about.
But something new was starting to creep into the world of organization-as-machine. This was the
rise of what Drucker famously dubbed “knowledge work.” He saw that value created wasn’t
created simply by having workers produce goods or execute tasks; value was also created by
workers’ use of information. As knowledge work grew as a proportion of the US economy, the
new reality of managing knowledge and knowledge workers challenged all that organizations
knew about the proper relationship between manager and subordinate. When all the value in an
organization walks out the door each evening, a different managerial contract than the command-
and-control mindset prevalent in execution type work is required. Thus, new theories of
management arose that put far more emphasis on motivation and engagement of workers.
Douglas McGregor’s “Theory Y” is representative of the genre. The idea of what executives do
changed from a concept of control and authority to a more participative coaching role. As
organizational theorists began to explore these ideas (most recently with efforts to understand the
“emotional intelligence” factor in management, led by writers such as Daniel Goleman), the
emphasis of management was shifting once more.
Today, we are in the midst of another fundamental rethinking of what organizations are and for
what purpose they exist. If organizations existed in the execution era to create scale and in the
expertise era to provide advanced services, today many are looking to organizations to create
complete and meaningful experiences. I would argue that management has entered a new era
of empathy.
This quest for empathy extends to customers, certainly, but also changes the nature of the
employment contract, and the value proposition for new employees. We are also grappling with
widespread dissatisfaction with the institutions that have been built to date, many of which were
designed for the business-as-machine era. They are seen as promoting inequality, pursuing profit
at the expense of employees and customers, and being run for the benefit of owners of capital,
rather than for a broader set of stakeholders. At this level, too, the challenge to management is to
act with greater empathy.
Others have sensed that we are ready for a new era of business thinking and practice. From my
perspective, this would mean figuring out what management looks like when work is done
through networks rather than through lines of command, when “work” itself is tinged with
emotions, and when individual managers are responsible for creating communities for those who
work with them. If what is demanded of managers today is empathy (more than execution, more
than expertise), then we must ask: what new roles and organizational structures make sense, and
how should performance management be approached? What does it take for a leader to function
as a “pillar” and how should the next generation of managers be taught?  All the questions about
management are back on the table – and we can’t find the answers soon enough.
 
This post is part of a series of perspectives by leading thinkers participating in the Sixth Annual
Global Drucker Forum, November 13-14 in Vienna. For more information, see the conference
homepage.
 IMPORTANT THEORIES OF MANAGEMENT
1

General Management Theories

There are four general management theories.

 Frederick Taylor – Theory of Scientific Management

 Henri Fayol – Administrative Management Theory
 Max Weber - Bureaucratic Theory of Management
 Elton Mayo – Behavioral Theory of Management (Hawthorne Effect)

1. Frederick Taylor’s Theory of Scientific Management:

Taylor’s theory of scientific management aimed at, improving economic efficiency, especially
labor productivity. Taylor had a simple view about, what motivated people at work, - money. He
felt that workers should get a fair day's pay for a fair day's work, and that pay should be linked to
the amount produced. Therefore he introduced the differential piece rate system, of paying wages
to the workers.

Taylor's Differential Piece Rate Plan:

 If Efficiency is greater than the defined Standard then workers should be paid 120 % of
the Normal Piece Rate.
 If Efficiency is less than standard then workers should be paid 80% of the Normal Piece
Rate.

Principles of Scientific Management

Four Principles of Scientific Management are:

 Time and motion study: - Study the way jobs are performed and find new ways to do
them.
 Teach, train, and develop the workman with improved methods of doing work. Codify
the new methods into rules.
 The interest of the employer & employees should be fully harmonized so as to secure
mutually understanding relations between them.
 Establish fair levels of performance and pay a premium for higher performance.

2. Henri Fayol’s Administrative Management Theory:

Henri Fayol known as the Father of Management laid down the 14 principles of Management.
These 14 principles of management are used to manage an organization and are beneficial for
prediction, planning, decision-making, organization and process management, control, and
coordination.

 Division of Work: Improves productivity, efficiency, accuracy, and speed

 Equity: Employees should be treated equally and respectfully
 Discipline: Makes the management job easy and make progress
 Initiative: support and encourage employees taking initiatives
 Authority and Responsibility: Efficient delivery of work with defined responsibility
 Esprit de Corps: Develop trust and mutual understanding
 Subordination of Individual Interest: Company over personal interest and respect the
chain of command
 Stability: offer job security to their employees
 Remuneration: motivating factor linked to the individual’s efforts
 Unity of Direction: Unified goals and motives for all personnel working in a company
 Centralization: Balance between the hierarchy and division of power
 Scalar Chain: Hierarchy steps should be from top to the lowest
 Unity of Command: More than one boss brings a conflict of interest and confusion
 Order: the positive atmosphere in the workplace boosts productivity

3. Max Weber’s Bureaucratic Theory of Management:

Weber made a distinction between authority and power. Weber believed that power educes
obedience through force or the threat of force which induces individuals to adhere to regulations.
According to Max Weber, there are three types of power in an organization:-

 Traditional Power
 Charismatic Power
 Bureaucratic Power or Legal Power.

Features of Bureaucracy:
 Division of Labor.
 Formal Hierarchical Structure.
 Selection based on Technical Expertise.
 Management by Rules.
 Written Documents.
 Only Legal Power is Important.
 Formal and Impersonal relations.

4. Elton Mayo’s  Behavioral Theory of Management:

Elton Mayo's experiments showed an increase in worker productivity was produced by the
psychological stimulus of being singled out, involved, and made to feel important. Hawthorne
Effect can be summarized as “Employees will respond positively to any novel change in a work
environment like better illumination, clean work stations, relocating workstations, etc.
Employees are more productive because they know they are being studied.

5 Relationship Theories or Transformational Theories of Management

Relationship theories (also known as "Transformational theories") focus upon the connections
formed between leaders and followers. These leaders motivate and inspire people by helping
group members see the importance and utility of the task. Transformational leaders are focused
on the performance of group members, but also want each person to fulfill his/her potential.
These leaders often have high ethical and moral standards.

There are different thoughts on management. According to one school of thought, history is of
no relevance to the real problems faced by modern world managers in today's dynamic
environment. However, both management theory and its history are indispensable tools for
managing complex digitally-enabled organizations in a modern context.

Forces Influencing Management Theories

The following three forces had a major influence on the concept and evolution of management
theories.
Social Forces:

Social forces are the norms and values that characterize a culture. Early social forces allowed
workers to be treated poorly. However, more recent social forces have provided for more
acceptable working conditions for the workforce.  Social forces have greatly influenced the
management thought in the areas of motivation and leadership.

Economic Forces

Economic factors have influenced the way businesses developed and designed their
organizational structures, workforce, etc. Examples of these economic forces are Ideas like a
market economy, public enterprise, and private ownership of property, economic freedom,
competitive markets, and globalization.

Political Forces

Political forces such as governmental regulations play a significant role in how organizations
choose to manage themselves. Government actions and political realities often influence the
success and failure of a business and most of the time political factors that affect a business are
often completely out of the company's control. Political forces have influenced management
theory in the areas of environmental analysis, planning, control, and organizational design and
employee rights.
 2
There are many management theories floating around in the business world. Some are old and
some are new. But pretty much all of them are based — in one form or another — on one of the
11 management theories on this list.
Why is that important? Shouldn’t you concentrate on running your business instead of reading up
on old ideas? Yes, you should focus on making your business a success. But that success
depends, in large part, on the way you lead your employees.
That’s why these management theories are so important: they give you concrete ways to inspire
greatness in your team.
In this article, we’ll give you a brief overview of the management theories every manager should
know. Find one you like, do a bit more research, and then incorporate it into your business.
11 Essential Management Theories
1) Systems Theory

At its creation, Systems Theory (or The Systems Approach) had nothing to with business
management and everything to do with biology. That’s because Ludwig von Bertalanffy (1901-
1972) — a biologist at the time — founded general systems theory (GST) in an attempt to refute
reductionism and revive the unity of science.
The premise of general systems theory is that a system is composed of interacting elements that
are affected by their environment. Because of this interaction, the system as a whole can evolve
(develop new properties) and self-regulate (correct itself).
When applied to business, experts shorten “general systems theory” to just Systems Theory. In
actual fact, Systems Theory is more a perspective than a fully formed practice. Systems Theory
encourages you to realize that your business is a system and is governed by the same laws and
behaviors that affect every other biological organization.
This introduces such concepts as:
 Entropy — The tendency for a system to run down and die (a thing to be avoided in
business)
 Synergy — Working together, the parts can produce something greater than those same
parts could produce on their own
 Subsystem — The whole (your business) is built on subsystems, which themselves are
built on yet more subsystems
Because it is a way of looking at your business rather than a concrete management process, you
can use Systems Theory in concert with the other management theories on this list.
2) Principles Of Administrative Management
Miner and engineer Henri Fayol (1841-1925) developed his principles of
administrative management as a top-down approach to examining a business. He put himself in
his manager’s shoes and imagined what situations they might encounter when dealing with their
team.
From this, he concluded that his managers — and indeed management in general — had six
responsibilities when it came to managing employees:
1. Organize
2. Command
3. Control
4. Coordinate
5. Plan
6. Forecast
With those responsibilities in mind, Fayol developed 14 principles of administration that
influence how managers should lead their teams. These principles, which range from the
importance of maintaining a clean facility to the value of initiative and teamwork, are the
foundation for many of today’s most successful businesses.
3) Bureaucratic Management

Max Weber (1864-1920) took a more sociological approach when creating his bureaucratic
management theory. Weber’s ideas revolve around the importance of structuring your business
in a hierarchical manner with clear rules and roles.
 According to Weber, the ideal business structure (or bureaucratic system) is based on:
 Clear division of labor
 Separation of the owner’s personal and organizational assets
 Hierarchical chain of command
 Accurate record keeping
 Hiring and promotion based on qualifications and performance, not personal relationships
 Consistent regulations
Many today see Bureaucratic Management as an impersonal style that can become overwhelmed
by rules and formalities. That said, it can be very useful for new businesses that are in need of
standards, procedures, and structure.
4) Scientific Management
Toward the end of the 19th century, Frederick Taylor (1856-1915) conducted controlled
experiments to optimize his workers’ productivity. The results of these experiments helped him
form the belief that the scientific method — not judgment or discretion — is the best determiner
of efficiency in the workplace.
Scientific Management promotes standardization, specialization, assignment based on ability,
and extensive training and supervision. Only through those practices can a business achieve
efficiency and productivity. This management theory attempts to find the optimal way to
complete a given task, often at the expense of the employees’ humanity.
The theory as a whole isn’t used much anymore, but parts of it — workplace efficiency, training,
and cooperation — are the foundation of some of the most successful businesses on the planet.
5) Theories X And Y

In 1960, social psychologist Douglas McGregor (1906-1964) published his book The Human
Side Of Enterprise. In it, he outlined two drastically different styles of management (theories X
and Y). Each style is guided by a manager’s perceptions of their employees’ motivations.
Theory X posits that employees are apathetic or dislike their work. Managers who adhere to
Theory X are often authoritarian and will micromanage everything because they don’t trust their
employees.
Theory Y posits that employees are self-motivated, responsible, and want to take ownership of
their work. Managers who adhere to Theory Y include their employees in the decision-making
process and encourage creativity at all levels.
In practice, small businesses tend to operate on Theory Y while large businesses tend to operate
on Theory X.
6) Human Relations Theory

In the first quarter of the 20th century, psychologist Elton Mayo (1880-1949) was tasked with
improving productivity among dissatisfied employees. Mayo attempted to improve worker
satisfaction by changing environmental conditions like lighting, temperature, and break time. All
of those changes had a positive effect.
Mayo then tried changing variables that he perceived would have a negative effect on
satisfaction, like the length of the workday and quotas (he increased both). What he observed
was that regardless of the change — good or bad — worker satisfaction always increased.
This led Mayo to conclude that performance was a result of the attention the researchers paid to
the workers. In other words, the attention made the workers feel valuable.
These findings gave rise to Mayo’s Human Relations Theory, in which he states that employees
are more motivated by social factors — like personal attention or being part of a group — than
environmental factors, such as money and working conditions.
7) Classical Management
Classical Management Theory is predicated on the idea that employees only have physical needs.
Because employees can satisfy these physical needs with money, Classical Management Theory
focuses solely on the economics of organizing workers.
 Due to this narrow view of the workforce, Classical Management Theory ignores the personal
and social needs that influence employees’ job satisfaction. As a result, Classical Management
Theory advocates seven key principles:
1. Profit maximization
2. Labor specialization
3. Centralized leadership
4. Streamlined operations
5. Emphasis on productivity
6. Single-person or select-few decision making
7. Priority to the bottom line
When these seven principles are put into practice, they create an “ideal” workplace based on a
hierarchical structure, employee specialization, and financial rewards.
Control of the business is held by a select few who exercise exclusive control over the decisions
and direction the company takes. Underneath those select few, middle managers govern the day-
to-day activities of the employees who are at the bottom of the pecking order.
And all of this revolves around the idea that employees will work harder and be more productive
if they are rewarded in larger and larger increments (via wages or benefits).
While this may not sound like an “ideal” management theory by today’s standards, it worked
well for many years prior to the early 20th century. And even though the system isn’t applied
lock-stock-and-barrel as it once was, there are several strong points that managers can use in the
21st century. They include:
 Clear managerial structure
 Division of labor
 Clear definition of employee roles
These three principles, combined with other management theories on this list, can improve the
way your employees — and your business — works in this modern age.
8) Contingency Management
 Fred Fiedler and others conceived of Contingency Management Theory in the 1950s and 60s.
Fiedler based his theories on the idea that effective leadership was directly related to the traits the
leader displayed in any given situation.
From that idea sprang the belief that there exist a set of traits that are effective for every situation
and that different situations demand different leadership traits. As such, leaders must be flexible
and adapt to change as the market, the business, and the team demands.
Fiedler then extended that concept from an individual, management focus to a much broader
organization-focused theory. Fiedler’s theory suggests that there is no one management approach
that suits every situation and every organization.
Instead, three general variables determine business management and structure. They are:
 The size of the organization
 The technology employed
 The leadership at all levels of the business
What that means for the individual manager who subscribes to Contingency Management Theory
is that they must be able to identify the particular management style suitable for every given
situation. They must also be willing and able to apply that management style quickly and
effectively whenever necessary.
In a larger sense, businesses and managers who adhere to Contingency Management Theory —
whether intentionally or unintentionally — will be concerned, above all else, with maintaining
the alignment of their team and achieving a good fit in all projects and situations.
Ultimately, according to Contingency Management Theory, there is no one best way to do
things. The way a business chooses to organize will depend on the environment in which they
operate.
9) Modern Management
Modern Management Theory developed as a direct response to Classical Management Theory.
Modern-day businesses are faced with navigating rapid change and complexities that seem to
grow exponentially overnight. Technology is both the cause of and the solution for this dilemma.
As such, businesses that incorporate the Modern Management Theory into their operations seek
to meld technology and, to some extent, mathematical analysis with the human and traditional
elements of their organization.
This combination of scientific and social variables creates a dual-pronged approach to
management, organization, and decision-making. Modern Management Theory emphasizes:
 Using mathematical techniques to analyze and understand the relationship between
managers and employees.
 That employees don’t work for money alone (in contrast to Classical Management
Theory). Instead, they work for happiness, satisfaction, and a desired lifestyle.
Modern Management Theory embraces the idea that people are complex. Their needs vary over
time, and they possess a range of talents and skills that the business can develop through on-the-
job training and other programs.
At the same time, management can use mathematical techniques such as statistical, cost,
revenue, and return-on-investment (ROI) analysis to make rational decisions unaffected by
emotion.
Though Modern Management Theory isn’t perfect by itself, it does, like Classical Management
Theory, offer some useful points that you can combine with other theories to create a structure
that is just right for your business.
10) Quantitative Management

Quantitative Management Theory is an offshoot of Modern Management Theory developed

during World War II in response to managerial efficiency.
Quantitative Management Theory brought together experts from scientific disciplines to address
staffing, materials, logistics, and systems issues for the U.S. military. The clear-cut, numbers-
oriented approach to management (which applies to business as well) helped decision makers
calculate the risks, benefits, and drawbacks of specific actions.
This shift toward pure logic, science, and math is tempered by the belief that these mathematical
results should be used to support, not replace, experienced managerial judgment.
11) Organizations As Learning Systems
Organizations As Learning Systems Management Theory is fairly new when compared to many
of the other theories on this list. Organizations As Learning Systems Management Theory —
sometimes called Integral or Holistic Management Theory — developed as a postmodern
response to many of the older management theories that are still in use today.
It starts with the idea that the business is a system that is built on a succession of subsystems. In
order for the business to run smoothly and efficiently, each subsystem must also work smoothly
and efficiently within itself, but also with the other subsystems around it.
In this theory, managers are responsible for coordinating the cooperation necessary to ensure the
larger “organism” continues to function successfully.
Learning and change are major components of this theory, and learning is encouraged and made
available to everyone — not just middle and upper-management. The emphasis in this theory is
on teamwork, participation, information sharing, and individual empowerment.
The Change Is Worth The Effort
Implementing changes to your management theory and style is difficult. But when you commit
to accommodating the attitudes and natural habits of your employees, your business will reap the
rewards both now and in the future.
Managing your team in a way they understand (and that appeals to them) results in improved
morale, decreased turnover, and better employee engagement. Those results are well worth the
effort.
For more free resources to help you manage your business better, organize and schedule your
team, and track and calculate labor costs, visit GetSling.com today.

3
What are Management Theories?

Management theories are concepts surrounding recommended management strategies, which

may include tools such as frameworks and guidelines that can be implemented in
modern organizations. Generally, professionals will not rely solely on one management theory
alone, but instead, introduce several concepts from different management theories that best suit
their workforce and company culture.

At a Glance

Until the day that machines are able to think, talk, and experience emotions, humans will remain
the most complicated beings to manage. Humans can never achieve the kind of error-free
performance that machines provide. On the upside, there are tons of things that machines aren’t
capable of doing, making humans indispensable assets. For such reason, proper management is
one of the most crucial things for an organization.

For a long time, theorists have been researching the most suitable forms of management for
different work settings. This is where management theories come into play. Although some of
these theories were developed centuries ago, they still provide stable frameworks for running
businesses.

Popular Management Theories

1. Scientific Management Theory

American mechanical engineer Frederick Taylor, who was one of the earliest management
theorists, pioneered the scientific management theory. He and his associates were among the first
individuals to study work performance scientifically. Taylor’s philosophy emphasized the fact
that forcing people to work hard wasn’t the best way to optimize results. Instead, Taylor
recommended simplifying tasks so as to increase productivity.

The strategy was a bit different from how businesses were conducted beforehand. Initially, a
factory executive enjoyed minimal, if any, contact with his employees. There was absolutely no
way of standardizing workplace rules and the only motivation of the employees was job security.

According to Taylor, money was the key incentive for working, which is why he developed the
“fair day’s wages for a fair day’s work” concept. Since then, the scientific management theory
has been practiced worldwide. The resulting collaboration between employees and employers
evolved into the teamwork that people now enjoy.

2. Systems Management Theory

Systems management offers an alternative approach to the planning and management of

organizations. The systems management theory proposes that businesses, like the human body,
consists of multiple components that work harmoniously so that the larger system can function
optimally. According to the theory, the success of an organization depends on several key
elements: synergy, interdependence, and interrelations between various subsystems.
Employees are one of the most important components of a company. Other elements crucial to
the success of a business are departments, workgroups, and business units. In practice, managers
are required to evaluate patterns and events in their companies so as to determine the best
management approach. This way, they are able to collaborate on different programs so that they
can work as a collective whole rather than as isolated units.

3. Contingency Management Theory

The main concept behind the contingency management theory is that no one management
approach suits every organization. There are several external and internal factors that will
ultimately affect the chosen management approach. The contingency theory identifies three
variables that are likely to influence an organization’s structure: the size of an organization,
technology being employed, and style of leadership.

Fred Fiedler is the theorist behind the contingency management theory. Fiedler proposed that the
traits of a leader were directly related to how effectively he led. According to Fiedler’s theory,
there’s a set of leadership traits handy for every kind of situation. It means that a leader must be
flexible enough to adapt to the changing environment. The contingency management theory can
be summed up as follows:

 There is no one specific technique for managing an organization.

 A leader should be quick to identify the particular management style suitable for a
particular situation.
 The primary component of Fiedler’s contingency theory is LPC – the least preferred co-
worker scale. LPC is used to assess how well oriented a manager is.

4. Theory X and Theory Y

Do you believe that every individual gets maximum satisfaction from the work they do? Or are
you of the opinion that some view work as a burden and only do it for the money? Such
assumptions influence how an organization is run. The assumptions also form the basis of
Theory X and Theory Y.

Douglas McGregor is the theorist credited with developing these two contrasting concepts. More
specifically, these theories refer to two management styles: the authoritarian (Theory X) and
participative (Theory Y).
In an organization where team members show little passion for their work, leaders are likely to
employ the authoritarian style of management. But if employees demonstrate a willingness to
learn and are enthusiastic about what they do, their leader is likely to use participative
management. The management style that a manager adopts will influence just how well he can
keep his team members motivated.

Theory X holds a pessimistic view of employees in the sense that they cannot work in the
absence of incentives. Theory Y, on the other hand, holds an optimistic opinion of employees.
The latter theory proposes that employees and managers can achieve a collaborative and trust-
based relationship.

Still, there are a couple of instances where Theory X can be applied. For instance, large
corporations that hire thousands of employees for routine work may find adopting this form of
management ideal.

Why Study Management Theories?

 
1. Increasing Productivity

One of the reasons why managers should be interested in learning management theories is
because it helps in maximizing their productivity. Ideally, the theories teach leaders how to make
the most of the human assets at their disposal. So, rather than purchase new equipment or invest
in a new marketing strategy, business owners need to invest in their employees through training.

It can be seen in Taylor’s scientific management theory. As mentioned earlier, Taylor proposed
that the best way to boost workers’ productivity was by first observing their work processes and
then creating the best policies.

2. Simplifying Decision Making

Another area where management theories have proven to be useful is in the decision-making
process. Max Weber proposed that hierarchical systems encourage informed decision-making. A
report written by the Institute for Employment Studies suggests that flattening the hierarchy
paves the way for local innovation while speeding up the decision-making process. Flattening
out entails getting rid of job titles and senior positions so as to inspire a cohesive work
environment.

3. Encouraging Staff Participation

Management theories developed in the 1900s, aimed at encouraging interpersonal relationships

in the workplace. One such theory that encouraged a collaborative environment is the human
relations approach. According to this theory, business owners needed to give their employees
more power in making decisions.

Key Takeaway

Throughout history, companies have been putting different management theories into practice.
Not only have they helped to increase productivity but they have also improved the quality of
services. Although these management theories were developed ages ago, they help in creating
interconnected work environments where employees and employers work hand-in-hand. Some of
the most popular management theories that are applied nowadays are systems theory,
contingency theory, Theory X and Theory Y, and the scientific management theory.
 

Additional Resources

Thank you for reading CFI’s guide to management theories. CFI is a global provider
of Corporate Development Courses and career advancement for finance professionals. To learn
more and expand your career, explore the additional relevant resources below:

 Employee Morale
 Impostor Syndrome
 Leadership Theories
 Management Skills
3

What do some of the original management theorists believe?

Want to learn more? View our Infographic

DOWNLOAD INFOGRAPHIC

 Different managers have different schools of thought.

 Frederick W. Taylor's theory is scientific.
 Henri Fayol's theory is administrative.
 Max Weber's theory is bureaucratic.
 Elton Mayo's theory is based in human relations.
 Ludwig von Bertalanffy's theory is systemic.
 Douglas McGregor's theory is based on different types of workers.

There's a lot more to managing a team than meets the eye. To properly lead a business, you need
to appeal to employees through numerous methods, including emotional and financial incentives.
Employees in 2019 tend to enjoy authentic managers who value them as people and
professionals, whereas some of the original management theories didn't value kindness or work-
life balance.

Management is a constantly changing field, and it's both an art and a science. Most modern-day
workplaces employ multiple management theories to ensure optimal employee output. While
many of these systems are hybrids of multiple theories and strategies, there are a few famous
strategies that have been studied by managers for decades.

Different managers have different schools of thought

Until the day computers can think, learn and feel emotions, humans will probably be the most
complicated assets to manage. We've come to expect error-free performance from a printer or fax
machine, but you can't expect the same thing from a human. On the other hand, there are many
things that machines just aren't capable of, which makes human assets irreplaceable. For this
reason, proper management is vital to an organization's success.

"Proper management" is a tricky term, though. Not every employee, and certainly not every
group of employees within a company, responds the same way to certain managerial tactics. The
best managers are able to use different styles when dealing with different people, while still
using one or two major guiding philosophies for leading a team. This can make modern
management challenging.

Theorists have long speculated on what type on management is best for humans in the
professional setting. Their management theories, or collections of ideas that provide the
framework for effective management strategy, are implemented in modern workplaces to
motivate and bring out the best in employees.

It's common for managers to use more than one theory to achieve productivity or organizational
goals. It is important for managers to understand these different theories and know how to
implement them, while also realizing past management theories don't always tell the whole
picture when it comes to effective leadership.
Here's more on the six most popular management theories discussed above in the infographic.

Scientific theory by Frederick W. Taylor

This one is a classic. Taylor's scientific theory poses some fascinating questions by diving deeper
into the efficiency of work processes. Taylor was an engineer, and he experimented in various
ways to determine the most efficient and effective ways to get tasks done.

On the surface, this theory held great value. The scientific theory aimed to make work more
efficient. Unfortunately, the theory had some major flaws as well.

Taylor created four principles of his scientific management theory. First, each task should be
studied to determine the most efficient way to do the task. This disrupts traditional work
processes. Second, workers should be matched to jobs that align with both their abilities and
motivation. Third, workers should be monitored closely to ensure they only follow best working
practices. Fourth, managers should spend time training employees and planning for future needs.

There are a few positives of this theory. Maximizing efficiency is a great idea. Assigning
workers to jobs based on their abilities and motivation levels is also an interesting idea that could
have beneficial effects in some areas.

Major flaws in the theory include the de-emphasis on teamwork. An incredible focus on specific
and individualized tasks eliminates creative problem-solving and makes teamwork obsolete. The
scientific management theory also encourages micromanagement that could drive today's
employees crazy.

Administrative theory by Henri Fayol

Fayol developed six functions of management that work in conjunction with 14 management
principles. This theory has a few core ideas that live on today, but you'll rarely find a workplace
swearing by Fayol's 14 principles.

The six functions are as follows:

 Forecasting
 Planning
 Organizing
 Commanding
 Coordinating
 Controlling

Some people combine forecasting and planning into one function, simplifying the theory down to
five functions. The functions are straightforward, with Fayol saying managers need to plan for
the future, organize necessary resources, direct employees, work collaboratively and control
employees to make sure everyone follows necessary commands.

The 14 principles are as follows:

 Division of work – Employees should have complementary skill sets that allow them to
specialize in certain areas.
 Authority – Management needs authority to give employees orders. This authority must
be agreed upon.
 Discipline – This gets to the idea of employees listening to commands and being
disciplined in getting work done. If a manager sets a deadline, an employee should have
the discipline to meet it.
 Unity of command – Employees answer to their managers, and there aren't a bunch of
unnecessary people involved with the process. Going over your manager's head would be
an example of breaking this principle.
 Unity of direction – Teams should be striving for common goals.
 Subordination of individual interests – The team comes before the individual.
 Remuneration – There are monetary and non-monetary versions of remuneration. Both
are needed to motivate employees.
 Centralization – There should be a balance between decision-making power. For
example, a company's board of directors should have a say, but the midlevel managers
shouldn't be overpowered.
 Scalar chain – Each company should have clear hierarchical structures.
 Order – This refers mostly to cleanliness and organization within a workplace. An office
shouldn't be disgustingly messy.
 Equity – Employees should be treated well.
 Stability of tenure of personnel – This principle suggests that businesses should try to
limit turnover and keep employees around as they accumulate knowledge and improve.
 Initiative – Employees should share ideas and be rewarded for innovative thinking and
taking on new tasks.
 Esprit de corps – Employee morale matters. This principle suggests that managers
should work to keep employees engaged and interested.

There are quality aspects of this theory. Remembering all 14 principles can be challenging and
makes more sense for a test on management than an entrepreneur running their business, but the
principles apply in today's workforce. Things like equity and remuneration are important aspects
of management. Other principles, like scalar chain, aren't always necessary. Some businesses
find success without clear hierarchies, and the organizational setup depends largely on the
business and the size of the company.
Bureaucratic theory by Max Weber

Weber created the bureaucratic theory, which says an organization will be most efficient if it
uses a bureaucratic structure. Weber's ideal business uses standard rules and procedures to
organize itself. He believed this strategy was especially effective for large operations.

The theory includes the following five principles:

 Task specialization – Weber stressed the importance of each employee fulfilling a

specific role within a company.
 Hierarchy – Weber wanted each company to have a clear hierarchy within the
organization.
 Formal selection – When selecting leaders, businesses view a person's qualifications.
They should be appointed to certain roles based on qualifications, which means they
won't be elected by vote.
 Rules and requirements – These ensure everyone knows what's expected of them.
Weber wanted business to have uniform standards, and rules are essential to achieve this
goal.
 Impersonal – The rules and regulations make a business structure impersonal.
Promotions aren't about emotions or personal ties, but rather performance.

Elements of this theory make sense. Some rules and standards are certainly necessary within
every organization. On the other hand, it's not easy to implement many of these ideas. The theory
and practice don't line up. It's almost impossible to keep emotions out of business decisions, and
sometimes emotions are needed.

If your company offers three months of paternity leave, but a new mother has complications with
her baby near the end of those three months, some managers may offer another few weeks at
home to care for the child. With Weber's mindset, a manager would coldly ask her to return to
work after three months like everyone else. Emotions shouldn't always dictate decisions, but the
best managers can relate to their employees on a personal level.

Human relations theory by Elton Mayo

In stark contrast to Weber's bureaucratic theory of management, the human relations theory
emphasizes relationships. Mayo believed that productivity increases when people feel like they
are part of a team and valued by their co-workers.

The human relations theory emphasizes praise and teamwork as motivational factors. This is
basically the opposite of the bureaucratic theory. While emphasizing personal factors is a good
idea, there can be too much of a good thing. Valuing relationships above all else can lead to
tricky situations like office romances and promotions based on personality rather than job
accomplishments.

A happy medium between the bureaucratic theory and human relations theory might be a better
goal for managers. Some rules are necessary, but you shouldn't dehumanize employees either.

Systems theory by Ludwig von Bertalanffy

The systems theory of management believes that each business is a system, much like a living
organism, with numerous things going on to keep the operation rolling along. A business isn't
just its CEO, and a person isn't just a brain. A person needs its other organs and other key
features to live. A business needs more than just a CEO to survive.

While the organism idea is a little extreme – most business operations aren't life-or-death
endeavors – the analogy applies. The systems theory says everything needs to work together for
a business to succeed.

There is some truth to this theory, as businesses can benefit from getting different departments
on the same page. If a business's sales team is struggling, it can hurt the whole operation. On the
other hand, a sales team struggling doesn't necessarily hurt the accounting department. Many
businesses have separate entities within their organization, so this theory isn't completely
accurate.  

X&Y theory by Douglas McGregor

The X&Y theory of management assumes there are two different types of workers. Theory X
workers lack ambition and drive and need to be ordered around by bosses to do anything. Theory
Y workers, on the other hand, enjoy work and strive for self-fulfillment.

Both views of employees are a bit extreme, as most workers fall somewhere between X and Y.
Employees don't need to be ordered to do every task, but there is some need for discipline and
rules for most employees. Many employees do enjoy work, but it doesn't always come naturally
and requires some encouragement at times. There should be a middle ground for implementing
this theory.

"This theory is largely considered to be obsolete today, as few managers begin from a starting
position of being highly polar or binary in terms of their management style being just one of two
options at opposing ends of a spectrum," said Polly Kay, marketing manager at English Blinds.
The bottom line on management theories

Management theories popularized in the early to mid-1900s weren't perfect. That's unsurprising,
as different theories of management have gained steam in recent decades. Popular management
theories from the past often touch on important aspects of management but ignore other crucial
points. When studying or implementing these theories, it's important to know the pros and cons
of each and how those might apply to your business, even if you aren't directly using a certain
style.

"In the real working world, few managers and business leaders consciously use management
theories as rigid frameworks to adhere to or as long-term guiding principles," said Kay. "That
said, many do attempt to consciously incorporate individual elements of their preferred
management theories into their broader management style."

When it comes to implementing management theories, it's important to understand that no two
employees or businesses are the same. A certain style may offend one employee, while another
employee may respond beautifully. Management is both art and science, and being an effective
manager requires more than an understanding of certain theories. How they put them into
practice is what separates good and bad managers.

MODERN MANAGEMENT THEORIES

These early scientific and humanistic approaches to managing people gave way to more studies
on how to achieve more productivity, efficiency and profit. Those theories and findings became
the basis for further learning.

Systems View

The systems view of management suggests that organizations are a complex collection of
interrelated parts, working toward a common purpose.
In the systems view, a system is defined in two ways: externally, by its purpose and internally,
by its subsystems and internal functions.

Externally, the concept dictates that each system has a role to play in the system at the next level
up. For instance, a company that makes boxed macaroni and cheese creates its product for the
system at the next level, the boxed macaroni and cheese market. The boxed macaroni and cheese
market impacts the next level systems, like the food industry.

Internally, the system view looks at subsystems and internal functions. Each of these systems
interrelates and contributes to the overall purpose of the parent system. So, the accounts
receivable and accounts payable departments contribute to the overall purpose of the finance
department, which contributes to the overall purpose of the organization and so on.

Managerially speaking, an organization looks to the system above it in the hierarchy to define its
purpose, and then organizes its subsystems to serve that purpose. A manager’s duty is to operate
the systems in his charge to support the larger systems.

Contingency View

The contingency view of management suggests that the effective management of an organization
depends on various factors that cannot always be predicted with certainty. If a manager is going
to be successful he or she must understand the different aspects of an organization and the factors
which can affect performance.

What kinds of variables affect the performance of an organization and its workers?

For one, an organization’s size is a contingency factor. Small organizations can behave
informally and are often more flexible than larger organizations. They can make decisions faster,
and managers have direct control over processes. Large organizations require indirect control
mechanisms, and they can’t change direction quickly the way a smaller organization can. But
they can have divisional structures with workers that are highly specialized, and this may not be
appropriate for a smaller organization. The size of the organization, however, may not always be
a predicator of performance.
For example, another contingency factor may be environmental change and uncertainty may also
impact the way an organization is managed. A organization with centralized processes works
best with a stable environment. Certainty and predictability allow an organization to create
policies, rules and procedures to fit the way they do business. An organization with decentralized
processes is an advantage when there’s a unstable environment. Organizations in an unstable
environment need to be able to respond quickly to changes, thus they require specialization for
non-routine tasks and problems.

Work technologies have an impact on organizations as well. The technology to do the work
impacts the type of worker that needs to be hired, the span of management to manage those
workers, and so on.

What about customer diversity? Globalization? A business must adjust for all of these
contingencies as well. The contingency view is based on the idea that there’s no one best way to
manage an organization, and that managers should be ready to adjust to different situations as
they present themselves. Conversely, researchers suggests that managers themselves perform
differently in different situations, and their success is as much situational as it is based on their
talents and behaviors. We’ll talk more about that in a future module.

Chaos View

Chaos theory is a scientific principle that describes the unpredictability of systems, such as
weather patterns, water flows and, if you’re a Steven Spielberg fan (the movie director), the
actions of human-engineered dinosaurs. Although they appear to be chaotic behaviors, they can
be defined by mathematical formulas and are not as random as one might think.

Chaos management views pick up where contingency views leave off. In the early 1980s, Tom
Peters, management guru, wrote a handbook explaining the Chaos Theory, specifically intended
for managers. In it, he emphasizes that managers must be prepared for a constantly changing
environment.

According to Peters, changing global environments and technology are evidence of chaos, and
businesses should not just observe them without response. Peters suggests that the permanently
installed hierarchal structure is a cause of inflexibility in organizations that’s damaging. Not only
should organizations be flexible with their structures, but they should be prepared to achieve
their organizational results in a variety of ways.

The secret to capitalizing on the chaos view is a customer-responsive approach. Peters suggests
that organizations review their vision and mission, and be open to and willing to embrace
change.
 2
Modern Management Theory: Quantitative, System and Contingency Approaches to
Management
Modern Management Theory: Quantitative, System and Contingency Approaches to
Management!
The Modern Period (1960 to present). After, 1960 management thought has been turning
somewhat away from the extreme human relations ideas particularly regarding the direct relation
between morale and productivity. Present management thinking wishes equal emphasis on man
and machine.

The modern business ideologists have recognized the social responsibilities of business activities
and thinking on similar lines. During the period, the principles of management reached a stage of
refinement and perfection. The formation of big companies resulted in the separation of
ownership and management.

This change in ownership pattern inevitably brought in ‘salaried and professional managers’ in
place of ‘owner managers’. The giving of control to the hired management resulted in the wider
use of scientific methods of management. But at the same time the professional management has
become socially responsible to various sections of society such as customers, shareholders,
suppliers, employees, trade unions and other Government agencies.

Under modern management thought three streams of thinking have beers noticed since
1960:
(i) Quantitative or Mathematical Approach

(ii) Systems Approach.

(iii) Contingency Approach.

(I) Quantitative or Mathematical Approach or Management Science Approach:

Mathematics has made inroads into all disciplines. It has been universally recognised as an
important tool of analysis and a language for precise expression of concept and relationship.

Evolving from the Decision Theory School, the Mathematical School gives a quantitative basis
for decision-making and considers management as a system of mathematical models and
processes. This school is also sometimes called, ‘ Operations Research” or “Management
Science School’. The main feature of this school is the use of mixed teams of scientists from
several disciplines. It uses scientific techniques for providing quantitative base for managerial
decisions. The exponents of this school view management as a system of logical process.
It can be expressed in terms of mathematical symbols and relationships or models. Different
mathematical and quantitative techniques or tools, such as linear programming, simulation and
queuing, are being increasingly used in almost all the areas of management for studying a wide
range of problems.

The exponents of this school believe that all the phases of management can be expressed in
quantitative terms for analysis. However, it is to be noted that mathematical models do help in
the systematic analysis of problems, but models are no substitute for sound judgement.

Moreover, mathematics quantitative techniques provide tools for analysis but they cannot be
treated an independent system of management thought. A lot of mathematics is used in the field
of physical sciences and engineering but mathematics has never been considered as separate
school even in these fields.

The contributions of mathematicians in the field of management are significant. This has
contributed impressively in developing orderly thinking amongst managers. It has given
exactness to the management discipline. Its contributions and usefulness could hardly be over-
emphasized. However, it can only be treated as a tool in managerial practice.

Limitations:
There is no doubt that this approach helps in defining and solving complex problems resulting in
orderly thinking. But the 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.
Harold Knootz. Also observes that “it is too hard to see mathematics as a separate approach to
management theory. Mathematics is a tool rather than a school.”

(ii) Systems Approach:

In the 1960, an approach to management appeared which tried to unify the prior schools of
thought. This approach is commonly known as ‘Systems Approach’. Its early contributors
include Ludwing Von Bertalanffy, Lawrence J. Henderson, W.G. Scott, Deniel Katz, Robert L.
Kahn, W. Buckley and J.D. Thompson.

They viewed organization as an organic and open system, which is composed of interacting and
interdependent parts, called subsystems. The system approach is to look upon management as a
system or as “an organised whole” made up of subsystems integrated into a unity or orderly
totality.

System approach is based on the generalization that everything is inter-related and inter-
dependent. A system is composed of related and dependent element which, when in interaction,
forms a unitary whole. A system is simply an assemblage or combination of things or parts
forming a complex whole.

One of its most important characteristic is that it is composed of hierarchy of sub-systems. That
is the parts forming the major systems and so on. For example, the world can be considered to be
a system in which various 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.

In the systems approach, attention is paid towards the overall effectiveness of the system rather
than the effectiveness of the sub-systems. The interdependence of the sub-systems is taken into
account. The idea of systems can be applied at an organizational level. In applying system
concepts, organizations are taken into account and not only the objectives and performances of
different departments (subsystems).

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.

As discussed earlier, system approach has immense possibilities, “A system view point may
provide the impetus to unify management theory. By definitions, it could treat the various
approaches such as the process of quantitative and behavioural ones as sub-systems in an overall
theory of management. 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 that the executive must steer through by keeping a balance between conflicting forces
and events. 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.

This approach is called abstract and vague. 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.

One best way of doing may be useful for repetitive things but not for managerial problems. The
contingency theory aims at integrating theory with practice in systems framework. The
behaviour of an organisation is said to be contingent on forces of environment. “Hence, 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.

Evaluation:
This approach takes a realistic view in management and organisation. It discards the universal
validity of principles. Executives are advised to be situation oriented and not stereo-typed. So
executives become innovative and creative.

On the other hands, this approach does not have theoretical base. An executive is expected to
know all the alternative courses of action before taking action in a situation which is not always
feasible.
 PRINCIPLES OF MODERN MANAGEMENT

The Principles of Modern

Management
By

 JD Meier

 -

January 7, 2019

1827
Are your management practices long in the tooth?

I think I was lucky that early on, I worked in environments that shook things up
and rattled the cage in pursuit of more customer impact, employee
engagement, and better organizational performance.

In one of the environments, a manufacturing plant, the management team

flipped the typical pyramid of the management hierarchy upside down to reflect
that the management team is there to empower and support the production
line.

And when I was on the Microsoft patterns & practices team, we had an
interesting mix of venture capitalist type management coupled with some early
grandmasters of the Agile movement.  

An Agile Management Culture

More than just Agile teams, we had an Agile management culture that
encouraged a customer-connected approach to product development,
complete with self-organizing, multi-disciplinary teams, empowered
people, a focus on execution excellence, and a fierce focus on being a rapid
learning machine. 

We thrived on change.

We also had a relentless focus on innovation.  Not just in our product, but in our
process.  If we didn’t innovate in our process, then we got pushed out of market
by becoming too slow, too expensive, or by lacking the quality experience that
customers have come to expect.
Many Businesses Still Operate Under an Old World
Model
But not everybody knows what a great environment for helping people thrive
and do great things for the world, looks like.

While a lot of people in software or in manufacturing have gotten a taste of

Agile and Lean practices, there are many more businesses that don’t know what
a modern learning machine of people and processes that operate at a higher-
level looks like. 

Many, many businesses and people are still operating and looking at the world
through the lens of old world management principles.

In the book The Future of Management, Gary Hamel walks through the

principles upon which modern management is based.

The Principles of Modern Management

Hamel gives us a nice way to frame looking at what he calls the modern
management principles, by looking at their application, and their intended goal.

Via The Future of Management:

Principle Application Goal

Standardization Minimize variances from standards around inputs, Cultivate economies of scale,
outputs, and work methods. manufacturing efficiency, reliability,
and quality.

Specialization (of Group like activities together in modular Reduce complexity and accelerate
tasks and functions) organizational units. learning.
 Goal Alignment Establish clear objectives through a cascade of Ensure that individual efforts are
subsidiary goals and supporting metrics. congruent with top-down goals.
Ensure that individual efforts are congruent with
top-down goals.

Hierarchy Create a pyramid of authority based on a limited Maintain control over a broad scope
span of control. of operations.

Planning and Forecast demand, budget resources, and schedule Establish regularity and
control tasks, then track and correct deviations from plan. predictability in operations;
conformance to plans.

Extrinsic rewards Provide financial rewards to individuals and teams Motivate effort and ensure
for achieving specified outcomes. compliance with policies and
standards.

An Alternative View
When I first read these principles, my first reaction was that yes, they do reflect
the way a lot of organizations manage people.

But I didn’t think it reflects the future wave of more Agile or more Lean
organizations that lead a different way.

These principles look very different from leaner, flatter, more Agile
organizations that empower self-organizing teams that use more Agile planning
methods and focus on creating conditions for intrinsic satisfaction, while
wrapping themselves around their customers.

What are the Principles Upon Which Your

Management Beliefs are Based?
Most people aren’t aware of the principles behind the management beliefs that
they practice or preach.  But before coming up with new ones, it helps to know
what current management thinking is rooted in.

Via The Future of Management:

“Have you ever asked yourself, what are the deepest principles upon which your
management beliefs are based? Probably not.  Few executives, in my
experience, have given much thought to the foundational principles that
underlie their views on how to organize and manage.  In that sense,  they are
as unaware of their management DNA as they are of their biological
DNA.  So before we set off in search of new management principles, we need
to take a moment to understand the principles that comprise our current
management genome, and how those tenets may limit organizational
performance.”

A Small Nucleus of Core Principles

It really comes down to a handful of core principles.  These principles serve as
the backbone for much of today’s management philosophy.

Via The Future of Management:

“These practices and processes of modern management have been built around
a small nucleus of core principles: standardization, specialization, hierarchy,
alignment, planning, and control, and the use of extrinsic rewards to shape
human behavior.”

How To Maximize Operational Efficiency and

Reliability in Large-Scale Organizations
It’s not by chance that the early management thinkers came to the same
conclusions.  They were working on the same problems in a similar context.  Of
course, the challenge now is that the context has changed, and the early
management principles are often like fish out of water.

Via The Future of Management:

“These principles were elucidated early in the 20th century by a small band of
pioneering management thinkers — individuals like Henri Fayol, Lyndall Urwick,
Luther Gullick, and Max Weber. While each of these theorists had a slightly
different take on the philosophical foundations of modern management, they all
agreed on the principles just enumerated. This concordance is hardly surprising,
since they were all focusing on the same problem: how to maximize operational
efficiency and reliability in large-scale organizations. Nearly 100 years on, this
is still the only problem that modern management is fully competent to
address.”

Awareness is the first step to better management.

If your management philosophy and guiding principles are nothing more than a
set of hand me downs from previous generations, it might be time for a re-
think.

You Might Also Like

10 Things Great Managers Do
Chief Digital Officer Explained
How Leaders are Building Digital Skills
IS CLASSICAL THEORY OF MANAGEMENT EXTINCT?
COMPARISON BETWEEN CLASSICAL AND MODERN MANAGEMENT THEORIES