Modern Approaches to Management

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

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.

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

Types of Systems

Basically 2 types of System :-

Open System : which interacts with its Environment.

Closed : which do not interacts with its Environment.

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.

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

“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’

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.

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).

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

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

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

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.