DBA102: PRINCIPLES OF MANAGEMENT

INTORODUCTION TO MANAGEMENT
Definition:
Management is the process of achieving organization goals through co-coordinated performance
of five specific functions: planning, organization, staffing, directing and controlling.
The fundamental features of management are: -
(i) Management is universal – principals of management can be applied universally.
(ii) Management applies to all levels of organization
(iii) Management is purposeful – it aims to achieve a specific objective
(iv) Management is concerned with productivity – this implies effectiveness and efficiency
(v) Management is an integrative process; the essence of management lies in the co-
ordination of individual effort into a team.
(vi) As managers, people carry out the managerial process of planning, organizing, staffing,
directing and controlling
(vii) Management involves the allocation and control of resources, human, money and other
physical resources.
(viii) Management is a social process – management is done by people, through people and
for people
(ix) Management is multi-disciplinary – it depends upon wide knowledge derived from
several disciplines
(x) Management is a continuous process – it is dynamic and an ongoing process.
Management is an art as well as a science.

Objectives of management
• Organizational objectives include:
1. Reasonable profits so as to give a fair return on the capital invested in the business.
2. Survival and solvency of the business; continuity
3. Growth and expansion of the enterprise.
4. Improving the goodwill or reputation of the business.
• Personal objectives: an organization consists of several persons who have their own
objectives. These objectives are as follows:
1. Fair remuneration for work performed.
2. Reasonable working conditions
3. Opportunities for training and development
4. Participation in management and prosperity of the enterprise
5. Reasonable security of service.
• Social objectives: management is also expected to be responsible to various groups outside
the organization. It is expected to fulfil the objectives of society which include:
1. Quality of goods and services at fair prices to consumers
2. Honest and prompt payment of taxes to the government
3. Conservation of the environment and natural resources
4. Fair dealings with suppliers, dealers and competitors.
5. Preservation of ethical values of the society.
Importance of management
• Achievement of group goals.
• Optimum utilization of resources.
• Minimization of costs.
• Survival and growth.
• Generation of employment.
• Development of the nation.

Management a science or an art

As an art
Management is essentially an art because: -
• The process of management involves the use of know how – knowledge and skill
• Management seeks to achieve concrete practical results – profit and growth
• Management involves creativity. It involves moulding and welding the attitudes and
behaviour of people at work
• Management as any other art is a personalized process – each manager has his own style
• Good management is efficient and the success of a manager is measured by the effective
realization of organizational goals.

As a science
Management is a science because:
• There is a systematized body of knowledge in management. Principles are available which
help guide management
• The principles of management have been developed through continuous observation and
empirical verification
• The principles of management are capable of universal application.
• Management theory helps to examine and evaluate alternative courses of action to resolve
a given problem.

Principles of management
• Divisions of Labour:
• Authority and responsibility: The holder of an office should have enough authority to
carry out his mandate.
• Discipline: People in companies must respect the rules and regulations that govern the
company.
• Unity of command: Each subordinate should report to one superior
• Subordination of individuals to a common goals Interest of individuals should not be placed
before the goals of the overall company.
• Remuneration (Compensation). Compensation should be fair to the employees
• Centralization: Power and authority should be concentrated at upper levels of the company
as much as possible
• Scalar Chain: A chain of authority should extend from top to the bottom of the company
and should be followed at all times
• Order: Resources should be well co-coordinated such that they are at the at the required
place at the required time
 • Equity: Managers should be kind and fair when dealing with subordinates. Equal treatment
for all.
• Stability of tenure of personnel high turnover of employees should be avoided or limited
• Initiative: subordinates should have the freedom to make their own decisions
• Unity of direction: similar activities in a company should be grouped under one manager
i.e. all activities should have the same objective
• Team work: Esprit de corps: Team spirit and sign of unity and togetherness should be
maintained at all times

Overview of the management process

Planning this the process by which the organization determines what is to be done. It involves the
following processes:
• Forecasting-analyzing known information within and external to the organization in order
to predict future conditions;
• Goal setting-determining, in light of forecasts and other imperatives, of what the
organization wishes to achieve in the relevant time span;
• Decision making-making choices between different goals and courses of action, including
the identification and resolution of problems, conflicts and priorities
One of the key to this process is an understanding of where the organization is coming from and
what the future may be like.
Organizing is the management process which arranges for work to be done.
• It is concerned with the allocation of resources-both staff and others-and their arrangements
into working units and relationships, such that the agreed plans may be carried out and
achieved.
• It involves both the division of work into logical tasks and its allocation to staff and the
structural arrangement of staff into groups and organizational relationships.
Staffing is concerned with the acquisition, development, and maintenance of an efficient and
satisfied workforce in the organization. It involves
• recruitment,
• training,
• development and appraisal of the workforce
Directing arises out of organizing, being about ensuring that employees are appropriately engaged
in working on activities to meet goals and plans. This involves motivating and supervising staff
towards the concerted efforts needed for effective performance.
Controlling is the process of monitoring and regulating performance to ensure that it conforms to
plans and goals of the organization. Controls starts from the time plans are put into actions. It
involves continues monitoring and review of the way in which goals are being met through
performance of the designated activities.
Control also involves the taking of appropriate corrective action to ensure that what is actually
happening is in accordance with the expectations of the planning process.
 THE HISTORY OF MANAGEMENT

Ancient origins of management

The art of management is as old as human civilization. Instances of the application of management
principles are found in ancient civilizations like Athenian commonwealth of Greece, the Roman
Empire, the states of Egypt and China e.t.c. the pyramids of Egypt, the architectures, the iron pillars
of ancient Greece, the great wall of China are all manifestations of the administrative skill of those
times. The bible contains references to effective public administration. In the holy bible, Moses of
Israel is advised by the father in-law to follow the principles of span of control. Socrates’ definition
of management as a skill separate from technical knowledge and experience is remarkably close
to current understanding of management.
In antiquity, management developed largely in the Roman Catholic Church, government and
military organizations. The hierarchy of authority7, functional specialization, staff specialists and
so on, were employed successfully in the Roman Catholic Church. Many management principles
including scalar principles, unity of command, effective communication had their origin in the
administration of armies. A group of Austrian and German public administrators known as
Cameralists advocated the principles of functional specialization, careful selection and training of
administrators, simplifications of administrative procedures etc. for effective administration of the
state.
The techniques of management, like the art of administration and the science of organization, has
ancient roots and medieval branches

Management theories
The systematic development of management thinking is viewed as dating from the end of the 19 th
century with the emergence of large industrial organizations, and the ensuing problems associated
with their structure and management. A central part of the study of management is the
development of the management thinking and what might be termed as management theory. The
application of theory brings about change in actual behaviour.
The following are the main approaches to organization, structure and management
• Early classical Approaches - emphasis is on the purpose, formal structure, hierarchy of
management, technical requirements and common principles of organization, represented
by scientific management, administrative management, and bureaucracy.
• Neo –classical approaches represented by human relations movement and behavioural
approach. Attention is given to social factors at work, groups, leadership, the informal
organization and the behaviour of people.
• Modern approaches, represented by quantitative approach, systems approach and
contingency approach.
The study of management theory is important for the following reasons:
• They form an important part of the accumulated body of management knowledge;
• Management insight requires that you combine a conceptual framework of ideas with an
understanding of behaviour in organisations and its application in practice;
• Early ideas form the foundations of current understanding, out of which current thinking
has evolved;
 • Management is the process of realising organisational goals through the efforts of people
and through planning, organising, directing and controlling such efforts. To be effective in
practice, this requires the manager to have an appreciation of early ideas and why they were
either displaced or evolved;
• It ensures that the manager does not have to re-invent the wheel;
• Practical management of people and their behaviour is founded on ideas of what will work
in practice;
• Management thought has evolved to cope with changes in the manager's environment.
In order to help identify main trends in the development of organizational behaviour and
management theory, it is used to categories the work of writers and various approaches, based on
their views of organizations, structure and management
Is management a science or an art
“Management is the oldest of arts and the youngest of sciences”
It’s a science because:
• It is systematized body of knowledge & its principles have evolved on the basis of
observation
It’s an art because:
1. Application of knowledge of certain underlying principles
2. Gets perfection by managing only through continuous practice

Implies capacity to apply accurately the knowledge to solve the problems

The following analysis will revolve around a framework based on three main approaches.

EARLY CLASSICAL APPROACHES

Scientific management
Fredrick w. Taylor (1856-1915) is considered the father of scientific management. He exerted a
great influence on the development of management thought through his experiments and
writings. Taylor made several important contributions which are classified under scientific
management

What to do to improve productivity?

1. Scientifically study each part of a task and develop the best method for performing the task.
2. Select competent people to perform the defined task.
3. Train them to perform the task by using the scientifically developed method
4. Stimulate good behaviour with motivation-related strategies (mostly financial)
5. Cooperate fully with workers to ensure task execution
6. Divide work and responsibility so that management will be responsible for planning work
methods and workers are responsible for executing the work accordingly.

Contributions of Scientific Management

• Work units with clear purpose and direction
• Work organization and scheduling
• Higher competency
 • Financial reward system to motivate workers
• Work coordination

Limitations of scientific management

• It offered a one-dimensional approach to motivation which ignored job satisfaction;
• It tended to generate fears of mass redundancies, strikes and long-lasting resentment;
• It promoted resistance to change;
• Worker suspicions of work measurement and time and motion studies arose due to one-
sided applications – working harder for the same money!
• Power was concentrated in the hands of the production controllers and decision power was
removed from workers, thereby losing their potential contribution;
• Rationalisation, division of labour and specialisation led to de-skilling;
• Specialisation led to boredom and monotony and ignored individuality and the desire for
variety.

Bureaucracy
Max Weber, a Germany sociologist, made a study a study of different types of business and
government organizations and distinguished 3 basic types of administration in them:
• Leader oriented administration is one which there is no delegation of management
functions. All employees serve as loyal subjects of a leader.
• In tradition-oriented administration managerial positions are handed down from
generation to generation. Who you are rather than what you can do, becomes the primary
criterion for work assignment
• In bureaucratic administration delegation of management responsibility is based on a
person’s demonstrated ability to hold the position. People earn positions because they are
presumed to be the best capable of filling them. Weber considered this to be the most ideal
type of administration.

Establish a bureaucratic management: why?

Need for the organization to operate in a rational manner rather than relying on the arbitrary whims
and sectional interests of the owners and managers

Features of Bureaucracy
• Specialisation of labour: jobs are broken down into routine, well defined tasks so that
members know what is expected of them and can become extremely competent at what
they do.
• Formal rules and procedures: written rules and procedures specify the behaviours desired
from members, facilitate coordination and ensure uniformity.
• Impersonality: rules, procedures, and sanctions are applied uniformly regardless of
individual personalities and personal considerations.
• Well defined hierarchy: multiple levels of positions with carefully determined reporting
relationships among levels provide supervision of lower offices by higher ones, a means of
handling exceptions and the ability to establish accountability of actions.
 • Career advancement based on merit: selection and promotion are based on the qualification
and performance of members.
Contributions of Bureaucracy
• The definition of responsibilities and duties of each position within the hierarchy derives
from the overall objectives of the organisation and there is no room for subversion of those
objectives.
• Work is highly regulated in that every eventuality is covered by the laid-down rules and
procedures
• All tasks are covered by the hierarchy of supervision which ensures the desired level of
performance.
• The existence of tight job descriptions and person specifications means that staff has
specific skills and abilities related directly to the tasks to bke performed.
• The bureaucratic form strongly supports the application of rules and regulations which
create a feeling of certainty that provides a stress free workplace.
• Security of employment and the impersonality of the work practices and procedures
encourage faithful performance of duties, confidence in the system and opportunities
within a regularized promotion system which removes office competition.

Limitation of Bureaucracy
a) Impersonality can ensure a common level of treatment and lack of responsiveness to
individual incidents.
b) Relationships are inhibited, meaning that social and ego needs are unsatisfied.
c) Individual circumstances vary infinitely and trying to apply rigid rules can mean
inefficiency, even injustice, in the non-standard case.
d) Initiative may be stifled as rules become ends in themselves.
e) Bureaucratic rules/procedures can cause a lack of flexibility or adaptation to changing
circumstances.
f) There can be a lack of attention to the informal organisation and the development of groups
and their goals.
g) Handling problems in a standard fashion instead of using their own initiative does not
satisfy most workers' needs.
h) Environments are becoming more dynamic and prone to change there is therefore need for
a dynamic organisation and relationships in a changing environment.

Administrative School (Management)

Henry Fayol was an early 20th century mining engineer who developed an interest in management
principles. He realised the importance of structure and argued that every organization needs to be
planned, organized and controlled. Fayols notion of the ideal structure for all organizations rested
on the following principle:
1. Divisions of Labour:
2. Authority and responsibility: The holder of an office should have enough authority to carry
out his mandate.
3. Discipline: People in companies must respect the rules and regulations that govern the
company.
4. Unity of command: Each subordinate should report to one superior
 5. Subordination of individuals to a common goals Interest of individuals should not be placed
before the goals of the overall company.
6. Remuneration (Compensation). Compensation should be fair to the employees
7. Centralization: Power and authority should be concentrated at upper levels of the company
as much as possible
8. Scalar Chain: A chain of authority should extend from top to the bottom of the company
and should be followed at all times
9. Order: Resources should be well co-coordinated such that they are at the at the required
place at the required time
10. Equity: Managers should be kind and fair when dealing with subordinates. Equal treatment
for all.
11. Stability of tenure of personnel high turnover of employees should be avoided or limited
12. Initiative: subordinates should have the freedom to make their own decisions
13. Unity of direction: similar activities in a company should be grouped under one manager
i.e. all activities should have the same objective
14. Team work: Esprit de corps: Team spirit and sign of unity and togetherness should be
maintained at all times
Fayol also developed a functional view of the management process. He singled out five (5) basic
functions that a manager needs to perform.
• Planning
• Organizing
• Commanding Employers
• Coordinating and controlling responses

Contributions of Administrative Management

• There is a strong element of common sense in the ideas put forward, and many are
recognized by practising managers.
• There is emphasis on the importance of objectives in the overall performance of the
organization.
• Focus was put on how the structure of the organization and how it affects its performance.
• Management education was recognized as being important in the running of an
organization.
• There was recognition that organizations were open systems and therefore were affected
by the environment around them.

Limitations of the Administration Management

• The approaches are now seen as being too mechanistic and rigid, as there is demand for a
more flexible approach to management and organisation.
• This approach ignores the existence of the informal organization.
• All important decisions rest with management, with very little consultation with the staff.
• His principle of specialisation produces the following dysfunctional consequences;
a) It leads to the formation of small work groups with norms and goals at odds with
those of management.
b) It results in the dissatisfaction of workers because it does not provide them the
opportunity to use all their abilities.
 c) It results in an increase in the overhead costs because the more the specialisation
develops at one level, the greater becomes the need for coordination at a high level.

Neo-classical approaches
These approaches are called neo-classic because they do not reject the classical concepts but only
try to refine and improve them.

Human Relations Theory of Management

A series of experiments in the 1920s and early 1930s pointed the way to new approaches to the
problems of productivity. These studies were conducted at the Hawthorne plant of western
electrical company in Chicago by Elton Mayo who was an associate professor at the Harvard
graduate school of business management.
• The background was that the researchers were trying to find the optimum level of lighting
in the plant to maximize productivity.
• The surprising finding was that the productivity increased among the group of workers
being studied both when levels of illumination was increased and when it was decreased.
• Subsequent studies by Mayo led to the conclusion that what was affecting performance
was the special attention being paid to the group of workers rather than any external
physical factors. Their working lives had suddenly become more interesting because of the
experiments which were taking place, they felt important and valued, and the result was
increased enthusiasm for their jobs and a higher output. This phenomenon has become to
known as the “Hawthorne effect”
Having established from this that performance was related to psychological and sociological
factors as well as purely physical ones and the organizational structure, Mayo went on to
investigate what other forces were at play in the work place.
In summary, his findings were as follows:
• Workers are strongly motivated by social needs (for social interaction, self esteem and
recognition, a sense of belonging and security) and seek satisfaction of those needs over
and above any others, including the need for money once a certain level of remuneration
has been achieved.
• Individual workers belong to groups at the workplace which lay down their own codes of
behaviour, leaders and means of enforcement of the group norms constituting a whole
“informal” organization within the formal one.

Contributions of Human Relations Movement

• It recognized the importance of human factors like feelings and needs
• It brought out the importance of group dynamics in communication, motivation,
participation and leadership.
• The importance of organizational members as active resources rather than passive tools
was recognized.
• A business organization is not merely a techno-economic system but is also a social system.
• There is no correlation between improved working conditions and high production.
• A worker’s production norm is set and enforced by his group and not by the time and
motion study done by any industrial engineer.
 • A worker does not work for money only. Non-financial rewards such as affection and
respect of his co-workers also significantly affect his behaviour.
• Employee-centred, democratic and participative style of supervisory leadership is more
effective than the task-centred leadership.
• The informal group and not the individual is the dominant unit of analysis in organizations.

Limitations
• The human relations writers saw only the human variables as critical and ignored other
variables.
• The implicit belief of this approach that an organization can be turned into one big happy
family where it is always possible to find a solution which satisfies everybody is not
correct.
• This approach over-emphasises the importance of symbolic rewards and underplays the
role of material rewards.
• This approach provides an unrealistic picture about informal groups by describing them as
a major source of satisfaction for industrial workers.
• This approach is in fact production-oriented and not employee-oriented as it claims to be.
• The leisurely approach of decision-making of this approach cannot work during an
emergency.
• The approach makes an unrealistic assumption that the superior does not want power.
• This approach is based on a wrong assumption that satisfied workers are more productive
workers.

Behavioural approach
The major contributors to this approach to management include:
Abraham Maslow
Under this approach productivity is a function of competency and motivation. Action is triggered
by the level of satisfaction to human to human needs. In his theory of motivation, he argues that
human beings have needs that are never completely satisfied. Human action is aimed at fulfilling
some needs that are unsatisfied at a give point in time. Needs fit into somewhat predictable
hierachy from lower level basic needs to higher level needs.

Not everybody has the same needs. One should survey the workforce and determine the needs for
each catergory of personnel. Senior level personnel tend to display highest level needs(belonging,
esteem, and self actualization) more than lower level personnel (physiological and safety needs
generally satisfied through monetary means). Once a need is sastified it stops being a motivator.

Frederick Herzberg developed his two-factor theory of motivation by looking at various job
factors and how they relate to needs. From this research, Herzberg divided the factors at the
workplace into two categories:
(a) Motivators
These are factors which, when present to a marked degree, increase satisfaction from work and
provide motivation towards superior effort and performance. These are:
• recognition (for work done)
• responsibility
• achievement
• advancement
• the work itself
These factors reflect the higher level needs identified by Maslow, and their satisfaction leads
directly to contentment. However, when absent, these factors do not lead to dissatisfaction. Note
that they are all directly related to the job.
(b) Hygiene factors
These are factors which, to the degree that they are absent, increase worker dissatisfaction with
jobs. When present, they serve to prevent job dissatisfaction, but do not result in positive
satisfaction and motivation. These factors are:
• type of supervision
• interpersonal relations
• salary/wages
• working conditions
• Company policies, rules, etc.
From the list you can see that these factors relate to more basic needs. If not satisfied, they can
lead to unhappiness. However, their satisfaction does not, in itself, result in contentment. Note that
all the factors are related to the context of the job (for example, its environment) rather than the
job itself.

Contributions
• Herzberg's most important contribution his assertion that work itself is a potential
motivator. He showed that the elements which give most job satisfaction have little to do
with money or status, and far more to do with achievement and responsibility within the
job.
• The importance of this in a work environment is that managers should ensure that both
hygiene factors (pay, working conditions, etc) and motivating factors (need for personal
fulfilment) are satisfied if employees are to be both contented and motivated.

Limitations
• In criticism it must be pointed out that the theory does not apply as well to unskilled or
semiskilled workers with boring and repetitive jobs. For many of these, even though the
work is often very well paid, it is instrumental and a means to an end – to satisfy outside
 interests. Where there is minimal satisfaction in the work and little scope for advancement
or personal growth, it makes sense to focus on the pay.

McGregor argued that the style of management adopted is a function of the manager’s activities
towards human nature and behaviour at work. He put forward two suppositions called theory X
and Theory Y.
Theory X represents the carrot and stick assumptions on which traditional organization are based.
It assumptions are that.
1. The average person is lazy and has an inherent dislike of work
2. Most people must be forced, controlled, directed and threatened with punishment if the
organization is to achieve its objectives.
3. The average person avoids responsibility, prefers to be directed, lacks ambition and values
security most of all.
4. Motivation occurs only at the physiological and security levels. The central principal of
theory X is direction and control through a centralized system of organization and exercise
of authority.
Theory Y represents the assumptions that:
1. For most people work is as natural as play or rest.
2. People will exercise self direction and self control in the service of objectives to which they
are committed.
3. Commitment to objectives is a foundation of rewards associated with their achievement.
4. Given the right conditions the average worker can learn to accept and to seek responsibility.
5. The capacity for creativity in solving organizational problems is distributed widely in the
population.
6. The intellectual potential of the average person is only partially utilized.
7. Motivation occurs at the affiliation, esteem and self actualization levels as well as the
psychological and security levels.
The central principal of Theory Y is the integration of individual and organizational goals.
The Neo-human relations approach has generated a lot of writing and research which has led
to continuing attention being given to such matters as organization structuring, group
dynamics, job satisfaction, communication and participation, leadership styles and motivation.

Modern approaches to management

Quantitative approach to management
This approach is sometimes referred to as management science approach. It is based on the
approach of scientific management. The characteristic of this approach are:
• Management is essentially decision-making and an organization is a decision making unit.
• Organizational efficiency depends upon the quality of managerial decisions
• A problem is expressed in the form of a quantitative or mathematical model containing
mathematical symbols and relationships
• The different variables in management can be quantified and expressed in the form of an
equation.
Contributions
• This approach has provided sharp tools for rational decision making.
 • The mathematical formulation enables practising managers to discover significant
relationships that could aid control.
• It provides a rational basis for making decisions with precision and perfection. It is widely
used in planning and control.
• It has contributed to computer based information systems

Limitation
• It cannot deal with human problems and therefore it is not used in organizing, staffing,
leadership.
• It does not take total view of management.

The Systems Approach

A system is a set of interrelated parts that operate as whole in pursuit of common goals. The ability
to achieve goals is a function of the ability of each component of the various systems to effectively
operate. Inefficiencies and ineffectiveness in one part of the system will affect its overall
performance. This approach calls for more interaction, interdependence and coordination in
organizational life.
The system, at its most simple level, takes inputs from its environment and transforms them
through various processes into outputs. The object of this transformation must at the very least be
the survival of the system, but it may be possible to attain further goals.
The organisation is essentially the transformation process. It takes inputs of varying kinds and
transforms them through a series of processes into outputs. This basic concept can be illustrated
diagrammatically as follows.
Figure 1.1: Basic Elements of a System

Plans Inputs Process Output

Objectives Information, Conversion Information,
Policies Energy of inputs Energy,
Methods Materials into Materials
outputs

The feedback loop is included to show that outputs commonly have an effect upon the system,
often by returning as an input.
Nature of systems
A system is composed of several components. These include:
(a) Sub-systems
Within each system, there are likely to be a number of "sub-systems", each a separate entity but
forming an integral part of the whole. The outputs from one subsystem are likely to form, at least
in part, the inputs for another sub-system. The whole can, then, be seen as a system of
interdependent parts, constantly in action and reaction, both internally in relation to each other and
externally in relation to the environment of the system.
Management must, therefore, understand and consider the inter-relationships and interdependence
of the various parts which make up the organisation.
(b) Boundaries and the environment
Each system or sub-system has a boundary existing around it and separating it from all the others.
• There are certain types of system which function entirely within their boundaries and are
totally unaffected by anything outside. These are known as "closed" systems.
• However, far more common are "open" systems where flows occur across the boundary
and factors outside the system affect it significantly.
• Anything outside the boundary of a system with the potential to affect its operation
constitutes the "environment".
These are important concepts since managerial problems often arise at the boundaries of a system
or sub-system, and events in the environment are often outside of the control of those responsible
for the system itself. Environmental monitoring is a key activity for management as it enables
managers to be aware of change which may affect the functioning of the organisation.
(c) Objectives and goals
All systems must have a purpose; at the very least, this should be to survive, but, in terms of the
types of organisation we are concerned with, it should be some form of mission expressed as aims,
objectives or goals.
This applies to sub-systems as well as the whole system. The outputs of the transformation process
are designed to meet these objectives.

The Organisation as a System

The systems approach concentrates attention on the dynamics of the organisation. It allows us to
consider not just how the organisation functions in formal or informal terms, but what it reacts to
and how change may affect it.
• If there is no change in the environment and inputs can remain constant, the organisation
will remain static and we can concentrate on the formal structures of the transformation
system.
• However, the people who work in the organisation are themselves dynamic and there are
very likely to be variations in the attitudes, motivations, etc. of staff as an input. The
environment within which most organisations operate is constantly changing, both in the
nature of the outputs required and the inputs available.
• To view the organisation as a system, or as a complex of inter-related sub-systems, is to
study the extent to which it is able to achieve a balance in its internal and external
relationships, and how far it can develop and progress in relation to the changes in those
relationships.
• As inputs and outputs change, the organisation must be capable of changing to
accommodate the new requirements and maintaining equilibrium – that essential balance
in a constantly shifting environment.
Elements of the Organisational System
The main sub-systems can be identified:
The technical sub-system Any organisation employs technology in its broadest sense to assist it
in carrying out its tasks. The technology used is an important determinant of the organisation.
Thus, examining the technical sub-system, and the way in which it changes, can explain a great
deal about organisation and management.
The psycho-social sub-system The goals, values, aspirations and modes of behaviour of the
members of the organisation will also be important determinants of the way work is done and the
relationships between people in the organisation. This gives recognition to the nature of the
informal organisation and culture, and its impact on organisational form and management.
The structural sub-system The structural subsystem is concerned with the division of tasks, their
grouping into operation units, their co-ordination and control.
The goals and values sub-system The goals and values sub-system emphasises the formal goals
and values of the organisation itself – the purpose of the undertaking and the supporting sub-goals
and value systems required to give expression to that purpose throughout the organisation.
The managerial sub-system This includes the form of management within the organisation and
the techniques employed to ensure that the work is carried out effectively and efficiently, such as
budgeting, management by objectives, work study and quality control.
The Organisation as a system

The systems approach highlights the multidimensional and multi disciplinary nature of
management.
This concept is useful in several ways:
a) It helps a system in determining where it ends and the other system begins.
b) It divides those elements that are a part of a system from those that are a part its
environment
c) It enables a system to protect its transformation process from the vagaries of its
environment.

Implications of system theory of management on modern management

• Organization is an open system. The internal functioning of the organization must be
consistent with the demands of the environment.
• Organization is a dynamic system in which equilibrium is always changing. Management
has to function in a probabilistic environment wherein absolute predictability of variables
is not possible.
• According to the system approach, no part of the system can be accurately analyzed and
understood apart from other parts and form the whole system. A manager should look at
the organization as a whole instead of dealing with its parts separately.
• Organization is multi-dimensional, multi-level and multivariate in character. There is no
simple cause and effect relationship due t which management must continuously adapt to
the changing environment. Effective management of systems requires a multivariational
and multi-disciplinary approach
 • Attention should be paid towards the overall effectiveness of the system rather than to the
effectiveness of the subsystem. The overall objectives and performance of the
organization should be given prominence over the objectives and performance of its
parts.
• The output of a system is always more than the combined output of its parts. This is
called synergy. The parts of a system become more productive when they interact than
when they act in isolation

Contributions of the systems approach

• In the system approach a problem is studied both at the level of the subsystem and the total
the total system. This results in the requirement that executives, in addition to having skills
in their own functional areas, should have enough knowledge of other areas also.
• It recognizes the importance of environment and feedback to organizational success

Limitations
• Systems are said to be abstract and vague.
• Too many subsystems and interdependence among them make the task of a manager very
difficult.
• The subsystem approach neither offers any tool and technique for analysis and fusion nor
recognizes the differences which exist between them.

Contingency approach Management

It is a systematic attempt to determine a package of management techniques, approaches and
practices which are appropriate in specific situation. It put more emphasis on the situational
variables and application of managerial tools and techniques contingent upon a specific situation.
The main features and principles of this approach are:
• Contingency approach is situation oriented urging upon the managers to study, analyse
and diagnose the situation. It is done in terms of component variables of the situation and
the external factors affecting the situation.
• Managers are expected to prepare inventories of management theory, principles,
techniques and concepts to apply to the situation. Different situations require different
managerial response.
• The environment of an organization is ever changing and the organization continuously
interacts with the dynamic environment. Management style and practice should match
the requirements of the situation.
• Success in management depends upon the ability to cope with environmental demands.
Therefore managers should sharpen their diagnostic skills to anticipate and comprehend
the environmental changes.
Contributions
• No one best way to manage an organization
• Identify the circumstances and contingencies that influence which particular approach or
principle will be effective in a given situation.
Limitations
• It lacks sound theoretical base.
• It all depends upon the situation.
• A manager has to think through all possible alternatives as he has no cut-out or tried
principles to act upon.