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Modern Approaches to Management
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Introduction Modern approaches are there besides
classical, behavioral and quantitative approaches to management. There are mainly 2 approaches, which have
significantly shaped modern management thoughts
1. Systems Theory.
2. Contingency Theory.
The 2 Theories combined and thus arrives to Contemporary Approach to Management
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System Theory Churchman West is one of the Pioneer of
System Approach to Management. Provides Managers to look at an organization
as a whole and as a part of the larger, external environment.
System approach consist of 4 major components:-
Inputs. Transformation process. Output. Feedback.
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System View of Organization
LaborMateri
alsCapit
alMachineryInformatio
n
Planning
Organizing
Staffing
Leading
Controlling
Technology
GoodsServic
esProfit & lossEmplo
yee Satisfaction
FEEDBACK
INPUTS (Resource)
TRANSFORMATION PROCESS
OUTPUTS
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Types of Systems
Basically 2 types of System :-
Open System : which interacts with its Environment.
Closed : which do not interacts with its Environment.
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Contingency Theory(Situational Theory) Developed by the managers, consultants and
researchers who tried to apply the concepts of the major schools of management thought to real life situations.
Paul Hersey and Ken Blanchard developed Contingency approach to leadership.
This Theory suggest that,” there is no one best way to manage all situations”, or
“There is no one best way to manage”.”It Depends”
Here managers can take business decision or adopt a particular management style only after considering all situational factors.
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The Contingency Managerial View
Situation 1
Situation 2
Situation 3
Universal view:Same managerial principles
apply to all situations
Contingency View:Managerial actions
varies from situation to situation
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“The task of managers is to identify which technique will in a particular situation, under particular circumstances, and at a particular time, best contribute to the attainment of management goals’
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Theory Z Theory Z is a name applied to two distinctly
different psychological theories. One was developed by Abraham H. Maslow in
his paper Theory Z and the other is Dr. William Ouchi's so-called "Japanese Management" style popularized during the Asian economic boom of the 1980s.
Theory X, which stated that workers inherently dislike and avoid work and must be driven to it.
Theory Y, which stated that work is natural and can be a source of satisfaction when aimed at higher order human psychological needs.
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Theory Z focused on increasing employee loyalty to the company by providing a job for life with a strong focus on the well-being of the employee, both on and off the job.
Theory Z management tends to promote stable employment, high productivity, and high employee morale and satisfaction.
The secret to Japanese success, according to Ouchi, is not technology, but a special way of managing people. “This is a managing style that focuses on a strong company philosophy, a distinct corporate culture, long-range staff development, and consensus decision-making”(Ouchi, 1981).
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PLANNINGJAPANESE MANAGEMENT AMERICAN
MANAGEMENTLong term orientation Primarily short-term orientation
Collective decision-making with consensus
Individual decision-making
Involvement of many people in preparing and making the decision
Involvement of few people in making and “selling” the decision to person with divergent values
Decision flow from bottom to top and check
Decision initiated at the top; flowing down
Slow decision-makingFast implementation of decision
Fast decision-making; slow implementation requiring compromise, often resulting on suboptimal decisions
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ORGANIZINGJAPANESE MANAGEMENT AMERICAN MANAGEMENT
Collective responsibility and accountability
Individual responsibility and accountability
Ambiguity of decision responsibility
Clear and specific decision responsibility
Informal organization structure Formal, bureaucratic organization structure
Well-known common organization culture and philosophy; competitive spirit toward other enterprises
Lack of common organization culture identification with profession rather than with company
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JAPANESE MANAGEMENT
AMERICAN MANAGEMENT
Leader acting as a social facilitator and group member
Leader acting as a decision maker and head of the group
Paternalistic style Directive style
Common values facilitating cooperation
Often divergent values, individualism sometimes hindering cooperation
Bottom-up communication Communication primarily top-down
LEADING
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Conclusion The results shows lower turn-over, increased
job commitment, and dramatically higher productivity.
Theory Z involves providing job security to employees to ensure their loyalty and long-term association with the company. This also involves job rotation of employees to develop their cross-functional skills.