THEORIES OF

MANAGEMENT

Dr. Ahmad Azhar, Assistant Professor, VBU, Hazaribag

CLASSICAL THEORY THEORIES OF MANAGEMENT
Classical management theory is based on the belief that workers only have physical and
economic needs. It does not take into account social needs or job satisfaction, but instead
advocates a specialization of labor, centralized leadership and decision-making, and profit
maximization.
The classical theory has the following characteristics:
 It is built on an accounting model.
 It lays emphasis on detecting errors and correcting them once they have been committed.
 It is more concerned with the amount of output than the human beings.
 The human beings are considered to be relatively homogeneous and unmodifiable. Thus,
labor is not divided on the basis of different kinds of jobs to be performed in an
organization.
 It is assumed that employees are relatively stable in terms of the change, in an
organization.
 It is assumed that the authority and control should be vested with the central authority
only, in order to have a centralized and integrated system.
 
 BEHAVIORAL SCHOOL

 Behaviorism, also known as behavioral psychology, is a theory of learning based on the idea

that all behaviors are acquired through conditioning. Conditioning occurs through interaction
with the environment. Behaviorists believe that our responses to environmental stimuli shape
our actions.
 The behavioral management theory is often called the human relations movement because it
addresses the human dimension of work. Behavioral theorists believed that a better
understanding of human behavior at work, such as motivation, conflict, expectations, and group
dynamics, improved productivity.
 QUANTITATIVE APPROACH
 Quantitative methods emphasize objective measurements and the statistical, mathematical, or
numerical analysis of data collected through polls, questionnaires, and surveys, or by manipulating
pre-existing statistical data using computational technique. A quantitative approach allows the
researcher to examine the relationship between the two variables of income and health insurance.
The data can be used to look for cause and effect relationships and therefore, can be used to make
predictions.
 Quantitative research answers the question of how many real consumers would actually buy your
product or service. It doesn't just look at the numbers, but considers the buying patterns of the
targeted consumers. Is the market already saturated with similar products, or is there a change in
the market that creates an opportunity for your company? This approach uses statistics and number-
based models to determine whether your products or services are viable in the area.
 The qualitative approach steps away from numbers and looks at customer sentiment. It uses surveys
and testimonial feedback to understand how your customer base and target market feel about your
company, your products and similar products in the industry. For example, a qualitative analysis of
a diet pill might show that consumers no longer have confidence in this method of weight loss.
 This type of research is as important as the quantitative market size, because your marketing team
needs to know how to craft a public message that puts your product or service in the best possible
light based on what the public already thinks or feels.
SYSTEMS APPROACH
 In the 1960, an approach to management appeared which try
to unify the prior schools of thought. This approach is
commonly known as ‘Systems Approach’. Its early contributors
include Ludwing Von Bertalanfty, Lawrence J. Henderson,
W.G. Scott, Deniel Katz, Robert L. Kahn, W. Buckley and J.D.
Thompson.
 They viewed organisation as an organic and open system,
which is composed of interacting and interdependent parts,
called subsystems. The system approach is top took upon
management as a system or as “an organised whole” made up
of sub- systems integrated into a unity or orderly totality.
 Systems approach is based on the generalization that everything is
inter-related and inter­dependent. 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 its most important characteristic is that it is composed of hierarchy
of sub-systems. That is the parts forming the major system 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 as production, marketing,
finance, accounting and so on.
Features of Systems Approach:

(i) A system consists of interacting elements. It is set of inter-related and inter-dependent 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 vacuum. It receives information, material and energy from other
systems as inputs. These inputs undergo a transformation process within a 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 organisational level. In Appling

system concepts, organisations are taken into account and not only the
objectives and performances of different departments (sub-systems).

The systems approach is considered both general and specialised systems.

The general systems approach to management is mainly concerned with
formal organisations 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 organisation as an open
system. Chester Barnard was the first person to utilize the
systems approach in the field of management.
Evaluation of System Approach:
The systems approach assists in studying the functions of
complex organisations and has been utilized 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.
 What is a Contingency Approach to the Study of Management

Management, like life itself, is not based on simplistic principles. The

contingency approach( sometime called the situational approach) has
been used to replace simplistic principles of management and to
integrate much of management theory. A contingency approach to
the study of management is logical. Because organizations are
diverse- in size, objectives, tasks being done, and the like- it would
be surprising to find universally applicable principles that would work
in all situations. In other words, managing Oracle’s software design
engineers would be different from managing sales force in LIC. But of
course, it is one thing to say, “ It all depends”, and another to say
what it depends on. Advocates of the contingency approach- a group
that includes most management researchers and practitioners- have
been trying to identify the “what” variables. Table below describes
four popular contingency variables. The contingency variables can
have a significant effect on what managers do, that is, on the way
work activities are coordinated and integrated.
FOUR POPULAR CONTINGENCY VARIABLES
Organization Size
Routineness of Task Technology
Environmental uncertainty
Individual Differences
The no of people in an organization
is a major influence on what
managers do. As the size increases
so the problem of co-ordination.
In order for an organization to
achieve its purpose, it uses
technology, that is, it engages in the
process of transforming input into
output
General Principles of Management Henry Foyal’s

Henry Fayol’s 14 principles derive from the circumstance

that Fayol’s felt that management was not well defined. In
his striving to change this circumstance he suggested “some
generalized teaching of management” to be a main part of
every curriculum at places of higher education and even
beginning in “primary schools”. Fayol’s dedication to this
idea is demonstrated by the fact that after retirement he
went on to not just write books about management ideas,
but more importantly, he found the Centre for
Administrative Studies (CAS) in 1917 in Paris. The CAS mainly
functioned as a centre of discussion between professionals
from a large variety of professions, in order to further the
knowledge and understanding of management principles.
 Fayol's 14 Principles of Management

The Principles of Management are the essential, underlying factors that form
the foundations of successful management. According to Henri Fayol in his
book General and Industrial Management (1917), there are 14 'Principles of
Management'.
Division of Work - According to this principle the whole work is divided into
small tasks. The specialization of the workforce according to the skills of a
person, creating specific personal and professional development within the
labour force and therefore increasing productivity; leads to specialization
which increases the efficiency of labour.

Authority and Responsibility - This is the issue of commands followed by

responsibility for their consequences. Authority means the right of a superior
to give enhance order to his subordinates; responsibility means obligation
for performance.
Discipline - It is obedience, proper conduct
in relation to others, respect of authority,
etc. It is essential for the smooth functioning
of all organizations.

Unity of Command - This principle states

that each subordinate should receive orders
and be accountable to one and only one
superior. If an employee receives orders from
more than one superior, it is likely to create
confusion and conflict.
Unity of Direction - All related activities should
be put under one group, there should be one plan
of action for them, and they should be under the
control of one manager.

Subordination of Individual Interest to Mutual

Interest - The management must put aside
personal considerations and put company
objectives firstly. Therefore the interests of goals
of the organization must prevail over the personal
interests of individuals.
Remuneration - Workers must be paid sufficiently as this
is a chief motivation of employees and therefore greatly
influences productivity. The quantum and methods of
remuneration payable should be fair, reasonable and
rewarding of effort.

The Degree of Centralization - The amount of power

wielded with the central management depends on
company size. Centralization implies the concentration of
decision making authority at the top management.

Line of Authority/Scalar Chain - This refers to the chain

of superiors ranging from top management to the lowest
rank. The principle suggests that there should be a clear
line of authority from top to bottom linking all managers
at all levels.
Order - Social order ensures the fluid operation of a
company through authoritative procedure. Material order
ensures safety and efficiency in the workplace. Order should
be acceptable and under the rules of the company.

Equity - Employees must be treated kindly, and justice must

be enacted to ensure a just workplace. Managers should be
fair and impartial when dealing with employees, giving equal
attention towards all employees.

Stability of Tenure of Personnel - Stability of tenure of

personnel is a principle stating that in order for an
organization to run smoothly, personnel (especially
managerial personnel) must not frequently enter and exit
the organization.
Initiative - Using the initiative of employees can add strength and new ideas to an organization. Initiative on the part of employees is a
source of strength for organization because it provides new and better ideas. Employees are likely to take greater interest in the
functioning of the organization.

Esprit de Corps/Team Spirit - This refers to the need of managers to ensure and develop morale in the workplace; individually and
communally. Team spirit helps develop an atmosphere of mutual trust and understanding. Team spirit helps to finish the task on time
THANK YOU