# Management Approaches

24/12/2020

The modern approach to management was developed around the year 1950. This approach is an improvement upon both the classical and neo-classical approach to management.

This approach has three basic pillars:

1. Quantitative Approach
2. System Approach
3. Contingency Approach

Quantitative Approach:

The quantitative approach was propounded by C. W Churchman and his colleagues around the year 1950. This approach is also known by the name of Operational Research or Operational Analysis.

The classical approach lays stress upon the physical resources while the neo-classical approach gives importance to human resources. Both these approaches are silent about some of the most serious problems usually faced by the managers.

The quantitative approach to management makes some suggestions to solve different problems facing the managers. It tells the managers to solve their problems with the help of the mathematical and statistical formulas. Some special formulas have been prepared to solve managerial problems.

For Example:

(i) Theory of Probability,

(ii) Sampling Analysis,

(iii) Correlation / Regression Analysis,

(iv) Time Series Analysis,

(v) Ratio Analysis,

(vi) Variance Analysis,

(vii) Statistical Quality Control,

(viii) Linear Programming,

(ix) Game Theory,

(x) Network Analysis,

(xi) Break-Even Analysis,

(xii) Waiting Line or Queuing Theory,

(xiii) Cash-Benefit Analysis, etc.

The main objective of the quantitative approach is to find out a solution for the complex problems facing the big companies. The help of a computer is usually taken in order to make use of the above mentioned techniques.

The chief advantage of the approach is to solve complex problems quickly. But the chief disadvantage is that this approach offers an alternative to decision and cannot take decision.

System Approach:

This is a newly developed approach which came existence in 1960. This approach was developed by Chester I. Bernard, Herbert A. Simon and their colleagues.

The system approach means a group of small inter-related units. A group of different units which means a complete unit is called a system, while the small units are themselves independent, but somehow or the other is connected with the sub-systems of the related system. All the sub-systems influence one another. For example- a scooter is a system which has many sub-systems in the form of engine, shaft, gear, wheels body, etc.

All these sub-systems are inter-related with one another and if one of them fails the whole system stops working. Therefore, the success of the system depends on the cooperation and efficiency of the sub-systems.

It can, therefore, be said that a system means different inter-related parts which work n cohesion simultaneously to achieve a particular purpose.

According to the system approach, the whole organization is a system and its various departments are its sub-systems. All the sub-systems work in unison. Then and only then the objective of the organization can be achieved. Therefore, when manager taken some decision regarding a particular sub-system, he should also take into consideration the defect of his decision on the other sub-systems.

Key Concepts of System Approach:

The following are the chief characteristics of the System Approach:

(1) Sub-Systems:

Every system happens to be a combination of many sub-systems. All the sub-systems are inter-related. It means that whenever we take some decision regarding a particular sub-system, we should always keep in mind the possible effect of the decision might have on the other sub-systems. In the context of a company, all its departments (e.g. purchase, sale, finance, production, personnel, research and development) happen to be its sub-systems.

All these are created by the major system which happens to be the company itself. Company itself is a sub-system of industry. Industry is a sub-system of a national economy. Similarly, the national economy itself happens to be a sub-system of the world system. Therefore, it is clear that various sub-systems constitute a major system.

(2) Holism:

A major characteristic of the System Approach is that it is looked upon as a whole. It clearly means that a decision taken with regard to a particular sub-system does influence or affect the other sub-systems. Therefore, every decision is taken keeping in view the entire organisation, meaning thereby, that all the sub-systems are kept in mind while taking a decision. If that is not done, the major system is certainly damaged and it cannot work properly.

For example- if the sales department is aiming at doubling its sales, it shall have to take care of the fact whether the purchase department would be in a position to purchase the requisite amount of raw material.

Again, whether the personnel department will be able to provide the required man-power. Yet again whether the finance department will be able to provide the required financial support. It can, therefore, be said that no decision is possible in respect of any particular sub-system alone. That is why the system approach is called holistic.

(3) Synergy:

It means that the whole is greater than the sum of its parts. This can be better understood with the help of an example. Suppose there are five persons in a group. Everybody has a capacity to carry a load of five quintal each. When they are told to lift a load of one quintal, everybody will be able to lift only one quintal of load. But if that are told to lift the weight collectively, they would certainly be able to lift a load in excess of five quintal.

It is thus, clear that if job is performed collectively rather than individual, it is certainly well-performed with better results. Here, the pointer happens to be towards coordination. When all the parts of a system work keeping in mind the interests of others, the performance turns out to be decidedly better results.

(4) Closed and Open System:

A system can be of two types:

(i) Closed system and

(ii) Open system

(i) Closed System:

This is a system that remains unaffected by the environmental factors. Traditional management experts consider an organisation as a closed system. They believed that an organisation worked without being influenced by the outside factors, e.g., a watch is not influenced by the outside factors and it works continuously without getting interrupted. This is a good example of the closed system.

(ii) Open System:

An open system means a system which remains constantly in touch with its environment and is influenced by it. Modern management experts consider an organisation as an open system. Environment is a combination of many factors.

The chief factors of the environment of an organisation happen to be raw material, power, finance, machine, man-power, technique, market, new products, government policies, etc. All these factors of environment enter an organisation as Input. Within the organisation, they are converted into products through the process of various activities.

Then they walk out of the organisation in the form of output and once again mingle with the environment. At this time, they happen to be in the form of goods, services and satisfaction. All the factors of input and output influence the organisation. That is why an organisation is called an open system.

(5) System Boundary:

This means a certain dividing line which separates a system from its environment. The dividing line in a closed system is rigid while in respect of open system, it is flexible. It is not easy to determine the dividing line in respect of physical and biological systems, e.g., a dividing line can easily be drawn between the two pieces of land.

It is, however, difficult to do so in respect of a social system and an organisation is a social system. System boundary makes it clear as to which factors are related to the system and which factors are related to the environment. Consequently, it makes control easier.

In conclusion, it can be said that there have been revolutionary changes in the process of decision-making because of concept of system approach. However, some critics feel that it is difficult to study the relations between sub-systems of a particular system. Therefore, this concept is not practical.

III. Contingency or Situational Approach:

Contingency approach to management is an important modem approach. This approach originated in around 1970. According to it, the managers should take decisions not according to principles but according to the situations. It means that there cannot be any single principle / formula / managerial activity which can be suitable in all the situations. Its chief reason is the constantly changing nature of environment. Here environment means the sum total of all the factors which influence the organization.

These factors are both internal and external. The internal factors include objectives, policies, organization structure, management information system, etc. The external factors include customers, suppliers, competitors, government policies, political set-up, legal system, etc. All these factors are subject to change that is why the environment of an organization is called dynamic.

The system approach has failed to establish a relationship between the organization and environment. The contingency approach has made an attempt to remove this weakness. It is, therefore, the basic duty of the managers to analyse the environment and they should take decision on the basis of their analysis. The managers should always keep in mind that no single method can be suitable for doing any work. Its suitability depends on the situations.

It is quite possible that a particular method of doing a thing may be futile and to hope that these principles would be suitable or successful in one situation, but the same may not be the case in some other situation. So far as the different principles of management are concerned, they simply guide the mangers, and in the present dynamic environment, it would be futile to hope that these principles would be suitable or helpful in all the situations.

For example- single style of leadership cannot be applied to all the situations. Similarly, there are many methods of motivation and control, but a single method cannot be applied to all the situations.

Features of Contingency Approach:

The following are the main features of the contingency approach:

1. The managerial action influences the environment.
2. The managerial action changes according to the situations.
3. There is essentially coordination between the organization and environment.

Limitations of Contingency Approach:

The following are the limitations of the contingency approach:

1. It is not sufficient to say that the managerial action depends on the situation. It is essential to say what action should be taken in a particular situation.
2. A situation can be influenced by many factors. It is difficult to analyse all these factors.

Conclusion:

In conclusion, it can be said that this approach advises the managers to be alert and suggests that the approach and system of work should be suitably changed in view of the situations confronting them.

1. Other Approaches:

(1) Decision Approach:

Apart from some expert economists who developed the Decision Theory Approach, C.I. Barnard and Herbert Simon happen to be the chief exponents of this approach.

This approach can be better understood with the help of the following mathematical equation:

Management Minus Decision-Making is Zero

This equation makes it clear that if we take away decision out of management, nothing remains except zero. It means that, management is nothing but decision making. A manager has to take decisions at every step. Decision becomes absolutely necessary when there are many alternatives available to solve a particular problem.

After analysing the various alternatives, a rational decision has to be taken. The process of decision-making is a continuous process. The chief reason for it is that the managers have to face problems one after the other and they have to take decision to solve those problems.

Features:

The following are the chief characteristics of the decision theory approach:

(1) Decision is the soul of management.

(2) The study of various factors influencing decision is management.

(3) This approach lays stress on taking rational decisions.

(4) This approach considers decision-making as the centre of the study of management.

(5) Decision-making is a continuous process.

(6) The success of the organisation depends on the quality of the decisions.

(7) This approach recommends the use of quantitative methods in the process of decision-making.

(8) According to this approach, the system of communication has a vital role to play for the success of the process of decision-making.

(9) According to this approach, a manager is recognised as a person known for his problem solving capability.

(10) This approach lays stress on the study of the economic, political, social and practical aspects in case of decision making.

Criticisms:

The following are the major points of criticism of this approach:

(1) Narrow Concept:

This is a narrow approach of management. Decision-making can be an important function of management but not the whole of it.

(2) Rational Decision not Possible:

This approach takes about taking rational decisions, but it is not possible. Various types of information are needed to make rational decisions possible but this is not available or even if it becomes available, its purity is not ensured or granted.

(3) Use of Quantitative Methods not Possible:

There are many occasions when the use of Quantitative Methods is not possible. In such situations a manager makes use of his knowledge and experience rather than some formulae.

On the basis of the above details, it can be said that undoubtedly decision-making is the essence of management, but not the entire management.

(2) McKinsey’s 7-s Approach:

In 1970, Tom Peters and Robert Waterman advocated the theory of 7-S. They made this achievement while they were working as consultants with McKinsey & Co. They conveyed their 7-S approach to the managers through their published article “Structure is Not Organisation.”

The advocates of this approach decided to study the secret of the success of the well-reputed organisations and managers. On the basis of this study, they found out seven important factors on which the effectiveness of an organisation depended.

These factors are the following:

(1) Strategy

(2) Structure

(3) System

(4) Style

(5) Staff

(6) Skill

(7) Shared value

According to this approach the, effectiveness of an organisation is influenced by these seven factors. The chief characteristic of these factors is that they are inter-related. Each factor influences the other factors and is influenced by others. Therefore, nothing can be decided about any particular factor separately. When managers take any decision regarding any one particular factor, they have to take into consideration the effect it will have on the other factors.

Scientific Management Approach:

The industrial revolution in England gave an immense impetus for the scientific management approach. It brought about such an extra ordinary mechanisation of industry that it necessitated the development of new management principles and practices. Bringing groups of people together for the purpose of working in the factory posed problems for the factory owners.

The establishment of formal organisation structure, formal lines of authority, factory systems and procedures had to be undertaken for coordinated effort. In order to deal with these problems, a management movement known as ‘Scientific Management’ was born.

Frederick Winslow Taylor (1865-1915) was the first to recognise and emphasise the need for adopting a scientific approach to the task of management. The introduction of the concept of standard time, standard output, standard cost, standardisation of production process, change in the attitude of management and workers to bring about the mutuality of interests are the important landmarks of scientific management. This approach was supported and developed by Henry L. Gantt, Frank Gilbreth, Lillian Gilbreth, Harrington Emerson, etc.

#### 2. Management Process or Administrative Management Approach:

The advocates of this school perceive management as a process consisting of planning, organising, commanding and controlling. In the words of W.G. Scott, “It aims to analyse the process, to establish a conceptual framework for it, to identify principles underlying it, and to build a theory of management from them”.

It regards management as a universal process, regardless of the type of the enterprise, or the level in a given enterprise. It looks upon management theory as a way of organising experience so that practice can be improved through research, empirical testing of principles and teaching of fundamentals involved in the management process.

The process school is also called the ‘traditional’ or ‘universalist’ school as it believes that management principles are applicable to all the group activities, Henry Fayol is regarded as the father of this school. Oliver Shelden, J.D. Mooney and Chester I. Barnard are among the other important contributors to this approach.

#### 3. Human Relations Approach:

The human relations approach is concerned with the recognition of the importance of human element in organisations. Elton Mayo and his associates conducted the world famous Hawthorne Experiments and investigated the myriad of informal relationships, social cliques, patterns of communication and patterns of informal leadership. As a result of these experiments, a trend began which can be phrased as ‘being nice to people’. This trend was eventually termed as ‘the human relations movement’.

The human relations approach revealed the importance of social and psychological factors in determining workers’ productivity and satisfaction. It was instrumental in creating a new image of man and the workplace. It put stress on interpersonal relations and the informal groups. “It’s starting point was in individual psychology rather than the analysis of worker and work. As a result, there was a tendency for human rationalists to degenerate into mere slogans which became an alibi for having no management policy in respect of the human organisation.” Nevertheless, this school has done a unique job in recognising the importance of human element in organisations.

#### 4. Behavioural Science Approach:

The ‘behavioural science’ approach utilises methods and techniques of social sciences such as psychology, sociology, social psychology and anthropology for the study of human behaviour. Data is objectively collected and analysed by the social scientists to study various aspects of human behaviour.

The pioneers of this school such as Gantt and Munsterberg reasoned that in as much as managing involves getting things done with and through people, the study of management must be centred around the people and their interpersonal relations.

The advocates of this school concentrated on motivation, individual drives, group relations, leadership, group dynamics and so forth. The noted contributors to this school include Abraham Maslow, Fredrick Herzberg, Victor Vroom, McGregor, Lawler, Sayles, and Tannenbaum.

#### 5. Quantitative or Mathematical Approach:

This approach stands for using all pertinent scientific tools for providing a quantitative basis for managerial decisions. The abiding belief of this approach is that management problems can be expressed in terms of mathematical symbols and relationships. The basic approach is the construction of a model because it is through this device that the problem is expressed in its basic relationships and in terms of selected objectives. The users of such models are known as operations researchers or management scientists.

Linear programming, Critical Path Method, Programme Evaluation Review Technique, Break­even analysis, Games Theory and Queueing Theory have gained popularity for solving managerial problems these days. These techniques help the managers in improving their decisions by analysing the various alternatives in a scientific manner.

The application of mathematical techniques is particularly useful in solving the physical problems of management such as inventory and production control. They can never be substitute for knowledge, experience and training necessary for understanding the human behaviour.

#### 6. Systems Approach:

A system is composed of elements or subsystems that are related and dependent on each other. The system approach is based on the generalisation that an organisation is a system and its components are inter-related and inter-dependent. This approach lays emphasis on the strategic parts of the system, the nature of their interdependency, goals set by the system and communication network in the system.

Another basic feature of the systems approach is that attention is paid towards the overall effectiveness of the system rather than the effectiveness of subsystems. Under system approach, the overall objectives and performance of the organisation are taken into account and not only the objectives and performance of its different departments or subsystems.

The spiritual father of this school of management was Chester I. Barnard. The systems theory lays emphasis on the interdependency and interrelationships between the various parts of a system.

It stresses communication and decision processes throughout the organisation. It follows an open system approach. The organisation as an open system has an interaction with the environment. It can adjust to the changes in the environment.

#### 7. Contingency Approach:

The latest approach to management is known as ‘contingency’ or ‘situational’ approach. Underlying idea of this approach is that the internal functioning of organisations must be consistent with the demands of technology and external environment and the needs of its members if the organisation is to be effective.

This approach suggests that there is no one best way to handle any management problem. The application of management principles and practices should be contingent upon the existing circumstances. Functional, behavioural, quantitative and systems tools of management should be applied situationally.

There are three major parts of the overall conceptual framework for contingency management – (a) environment; (b) management concepts, principles and techniques; and (c) contingent relationship between the two. The environment variables are independent and management variables (process, quantitative, behavioural and systems tools) are dependent. Every manager has to apply the various approaches of management according to the demands of the situation.

#### 8. Operational Approach:

Koontz and O’Donnell have advocated operational approach to management. This approach recognises that there is a central core of knowledge about managing which exists in management such as line and staff, patterns of departmentation, span of management, managerial appraisal and various managerial control techniques. It draws from other fields of knowledge and adapts within it those parts of these fields which are specially useful for managers.

“The operational approach regards management as a universally applicable body of knowledge that can be brought to bear at all levels of managing and in all types of enterprises. At the same time, this approach recognises that the actual problems managers face and the environments in which they operate may vary between enterprises and levels”. The application of science by a perceptive practitioner must take this into account in finding solutions to management problems.

#### 9. Empirical Approach:

According to this approach, management is the study of the experiences of managers. The knowledge based on experiences of successful managers can be applied by other managers in solving problems in future and in making decisions. Thus, the empirical school is based on analysis of past experience and uses the case method of study and research.

Managers can get an idea of what to do and how by studying management situations of the past. They can develop analytical and problem-solving skills. They can understand and learn to apply effective techniques in comparable situations.

No one can deny the value of analysing past experience to obtain a lesson for the future. But management, unlike law, is not a science based on precedent, and future situations exactly resembling those of the past are unlikely to occur. Indeed, there is a positive danger in relying too much on past experience…….. for the simple reason that a technique found “right” in the past may be far from an exact fit for a somewhat similar situation of the future.