SYLLABUS

Unit – I: Introduction to Management: The Management Process, Management Functions,

Kinds of managers, Managerial roles and skills. Evolution of Management, Theories of
Management - Classical, Scientific, Administrative, Behavioral, Management Sciences Theories;
Systems and Contingency theory.

Unit – II: Planning and Decision Making: Planning and goal setting- Types of plans, steps in
planning process, Approaches to planning; Organizational planning - Vision, Mission,
Objectives and goals; Decision making process, types of decisions, decision making styles,
Vroom’s Participative decision making model.

Unit – III: Organizing and Controlling: Principles of Organizing, Organizational Structure,

Types of organizational structures, Authority, Power and Influence. Controlling: Control process,
controlling for organizational performance, types of control, financial controls, Balanced
Scorecard, Bench Marking, Contemporary issues in controlling.

Unit – IV: Organizational Behavior: Individual and Group Behavior, Importance of

Organizational Behavior, Culture and dynamics of diversity, personality theories, perception,
formation of group behavior, classification of groups, group properties, group cohesiveness,
build teams.

Unit – V: Leadership and Motivation: Leadership traits, Leadership styles, Leadership

theories, Power and Politics. Motivation: Approaches to Motivation, Maslow’s needs hierarchy
theory, two factor theory of motivation, McGregor’s theory, ERG theory, McClelland’s needs
theory, Valance Theory.

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 Unit – I

Introduction to Management: The Management Process, Management Functions, Kinds of

managers, Managerial roles and skills. Evolution of Management, Theories of Management -
Classical, Scientific, Administrative, Behavioral, Management Sciences Theories; Systems and
Contingency theory.

Management is a universal phenomenon. It is a very popular and widely used term. All
organizations - business, political, cultural or social are involved in management because it is the
management which helps and directs the various efforts towards a definite purpose.

A universal concept that is needed in every organisation whether it is a business organisation or a

non-business organisation such as hospital school, etc, is known as Management. An
organisation’s success depends on the successful functioning of its management and is always
required whenever human and non-human resources of an organisation work together for the
accomplishment of any objective. In present times, with an increase in the size and complexities
of modern organisations. the concept of management has gained immense importance.

Definitions of Management

Management consists of getting things done through others. A manager is one who accomplishes
objectives by directing efforts of others.

– C.S. George

Management is the art of getting things done through others.

-Mary Parker Follett

The process undertaken by one or more persons to coordinate the activities of other persons to
achieve results not attainable by any one person acting alone.

-Ivancerich, Donnelly and Gibson

Management is the process of optimizing human, material and financial contribution for the
achievement of organizational goals

-John A. Pearce and Richard B. Robinson

Management is a process through which an organisation designs and maintains an environment

in which individuals work together with the motive of achieving organisational goals effectively
and efficiently. The three essential elements that come under the modern concept of
Management are as follows:
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1. Management is a ‘Process’: Management involves a series of interrelated functions like
planning, organising, staffing, directing, and controlling, which makes it a process. Every
manager performs these functions to achieve goals.

2. Management requires effective Performance: Effectiveness in Management means

achieving goals on time. In simple terms, it aims at end result. For example, if an organisation
achieves its sales target within time, it is said to be effective.

3. Management needs Efficiency: Efficiency in Management means doing tasks correctly and
with minimum cost. It is not enough to just complete the task on time, it should be accurate also.
Besides, management also aims at using its resources efficiently as it reduces the cost of the firm
ultimately resulting in higher profits.

Characteristics of Management

1. Continuous Process: Management is a continuous process. It means that the process of

business management goes on until the company exists, as it helps in achieving the
organisational goals. Every manager of an organisation has to perform the different functions of
management in a series (planning, organising, staffing, directing, and controlling).

2. Goal-oriented: Every organisation has a set of predetermined goals or objectives that it aims
to accomplish during its existence. Every organisation has different goals. Hence, management
helps these organisations in fulfilling their goals by utilising the given limited resources in the
best optimum manner. For example, if the objective of Airtel is to add a billion Airtel Xtreme
customers in a year, then all of its managerial activities will be directed toward the achievement
of this objective.

3. All Pervasive: The process of business management is universal in nature. Every organisation,
whether small scale, large scale, economic, social, etc., uses the process of management at every
level or stage. Besides, the activities involved in the management of an organisation are common
for all whether it is a social, political, or economic enterprise.

4. Multidimensional: Management is a multidimensional process as it does not involve only one

activity. The three main activities involved in management are Management of Work,
Management of People, and Management of Operations.

a. Management of Work: Every organisation is set up to perform some work or goal, and
the management aims at achieving these goals or tasks. The work of an organisation
depends upon the nature of Business; for example, work to be fulfilled in a hospital is
treating patients, in a university is educating students, etc.

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 b. Management of People: People are the most essential assets of an organisation and refer
to human resources. It is the duty of the management to get the work completed through
human resources/people by making their strengths effective and weaknesses irrelevant.
Managing people have two dimensions; viz., Taking care of a group of people and
Taking care of employees’ individual needs.

c. Management of Operations: Operations are the activities of an organisation’s

production cycle, like purchasing inputs, converting them into semi-finished goods, and
finished goods.

5. Dynamic Function: There are different internal and external factors that affect the working of
an organisation. An organisation has to change and adapt itself on the basis of changing
environment to accomplish the organisational goals and objectives. Hence, management is a
dynamic function.

6. Management is a Group Activity: Management involves a group of people performing

managerial activities. The functions of management can be executed only when every individual
performs his/her role in their respective status and department.

7. Management is an Intangible Force: Management is a function that cannot be physically

seen but its presence can be felt by watching the orderliness and coordination in work
environment and happy faces of the employees when the task is completed.

8.Coordination is the essence of management. It helps in synchronizing the different activities

of all departments and functions of management. The managers at each level of the organisation
have to ensure proper coordination for better results and accomplishment of organisational
goals.

Objectives of Management

1. Social Objectives: These refer to the objectives which are desired to be achieved for the
benefit of society. Every organisation has a social responsibility to fulfill during its existence.
Some of the social obligations of an organisation include implementing environment friendly
practices in the production process, providing basic amenities to employees such as healthcare,
education, etc and providing the unprivileged sections of society with employment opportunities.

2. Organisational Objectives: With the help of management, every organisation sets and
achieves organisational goals. The three major organisational objectives are survival, profit, and
growth.

a. Survival: One of the basic objectives of every organisation is survival. It does so by

making positive decisions for the organisation with the help of the business management
process.
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 b. Profit: Survival is not enough for an organisation; it has to earn profits to grow and
expand in the future. Hence, every organisation has to ensure its profit so that it can cover
its costs and risks.

c. Growth: Besides earning a profit, an organisation has to grow in order to remain in the
industry. For this purpose, the management of an organisation has to exploit its resources
effectively and efficiently.

3. Personal or Individual Objectives: People are the main asset of an organisation having
different goals, backgrounds and personalities. It is the duty of the managers to ensure that the
personnel objectives are aligned with the organisational objectives. Individual or Personal
Objectives of an organisation consists of satisfying needs like Social Needs, Financial Needs,
Good and Healthy Working Conditions and Higher Level Needs.

Importance of Management

1. Increases Efficiency: The management process of an organisation increases its efficiency by

reducing cost and increasing productivity by utilisation of the available resources in the best
possible and optimum way.

2. Helps in Achieving Group Goals: Effective management process creates teamwork and
builds coordination among the members of an organisation. The managers provide a common
path or direction to their employees for the accomplishment of the overall objectives of the
organisation.

3. Creates a Dynamic Organisation: Every organisation works in a changing environment. The

managers of an organisation have to help their members adapt to the changing environment,
which ultimately helps them ensure the survival and growth of the organisation. Besides, the
management convinces the employees that the changes brought in the organisation will benefit
their future prospects.

4. Development of Society: Every organisation has various objectives toward different groups of
society. Along with the development of the organisation, its management has to develop the
society too. To do so, the management helps the organisation produce good quality products,
adopt new technologies, and provide employment opportunities to the weaker sections of
society.

5. Helps in Achieving Personal Objectives: Every individual or employee of an organisation

has different objectives or goals they wish to accomplish while doing their jobs. Management
helps these employees in fulfilling their personal objectives along with the organisational
objectives.

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Functions of Management

1. Planning:

Planning means deciding in advance what to do, how to do, when to do, and who is going to do.
In simple terms, planning means setting up goals, deciding the course of action, timeline of the
work, etc., in advance for the success and growth of an organisation. It is the first step in the
process of management, and every other function of business management depends upon the
planning function. For effective planning, an organisation has to analyze the external and internal
environment, formulate plans, forecast the future, and decision-making process.

For example,setting up the sales target for the organization, formulating rules and regulations
for the employees and the firm, etc.

2. Organising:

The second function of management is organising. It involves assigning duties, grouping

different tasks, and establishing authority and responsibility. Proper organizing in an
organisation ensures its success by providing the course of action. According to the nature of the
work of an organisation, different firms require different kinds of organisational structures. In
simple terms organising means dividing a whole task into small units of work, and then
distributing them along with authority and responsibility.

For example, the top managers of an organisation can allot different tasks to different
departments of the organisation. The department heads can then allot the sub-units of the task to
different employees based on their designation, qualification, expertise and skills.

3. Staffing:

Staffing means recruiting the right person for the right job and at the right time. The staffing
process of business management involves recruitment, selection, development, appointment and
training of employees in an organisation. The human resource department of an organisation
deals with staffing by ensuring that the employee selected for a specific job position has the right
qualifications, skills, experience, expertise and abilities.

For example, In an Ed-tech organisation, the human resource department can look for
educational qualifications, like graduation, post-graduation and skills like communication,
decision-making, problem-solving and experience for the development of commerce courses as
per the requirement of the job position.

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4. Directing:

The organisation has to guide, supervise, direct, inspire, motivate and instruct the recruited
employees. Hence, the process of directing includes taking the required steps to supervise, direct,
and motivate employees in achieving the organisational goals, along with their personal
objectives. A good leader must use criticism and compliments in such a way that it motivates the
employees to work up to their full potential.

For example, Middle-level management can use positive reinforcement or negative

reinforcement to motivate the employees in working towards the fulfillment of organisational
goals accordingly.

5. Controlling:

Controlling means deciding the standards of organisational performance in advance, measuring

the actual results, comparing the standard and actual performance, finding variations and taking
required corrective measures. Controlling is a continuous process as an organisation has to
perform the process until it reaches the desired goals.

For example, an organisation has set the standard sales as 50,000 units. However, the actual sales
of the organisation are 40,000 units. The variation in the actual and standard performance is
10,000 units. Now, the managers will look for the reasons behind the lack of 10,000 more units
and then take corrective actions to attain standard sales.

Fig 1.1 Functions of Management

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Kinds of Managers

There are different types of managers working in an organization. Similarly, those managers
have different roles and responsibilities towards their departments. To cope with market
competition, managers need to have different skills and roles. The common classification of
managers can be made based on levels and the nature of works.

Types of Managers – There are basically two types of managers.

1. On the basis of Levels of Management

2. On the basis of Nature or Area of Managerial Job

Types of Managers – On the Basis of Levels of Management

 Top-Level Managers
 Middle-Level Managers
 Lower-Level Manager

 Top-Level Managers

This is the highest level of the managerial hierarchy and also known as the brain of the
management. This level is the final source of authority. Generally, top-level management is
constituted with a management committee elected directly from shareholders as members of the
board of directors. Besides, this level also involves chief executives like the chairman, president,
managing director or general manager.

Top-level managers are responsible for the performance of the entire organization through
middle managers. They coordinate among different departments and units of an organization.
They perform complex and varied nature of jobs. They work long hours and spend much of their
time in meetings and decision making.

 Middle-Level Managers

The middle-level manager is the largest group of managers in most organizations. This level of
managers consists of departmental heads like personnel manager, production manager, marketing
manager, finance manager, procurement manager, and similar other positions.

In some big organizations; this level of management may have two layers i.e. senior and junior
middle-level managers. Heads of the department come under the senior level whereas branch
heads are under the junior level manager. The top-level manager delegates a major part of his/her
authority and responsibility to this level.

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This level manager plays the role of mediator between the top and first-line management. The
managers of this level have to report about the accomplishment of work to the top level and give
instructions to the lower level

 Lower-Level Managers

This level is known as the first-line or operating level of managers. It is directly involved in the
actual operation of production, marketing, financing, accounting, etc. This level consists of
supervisors, foremen, sales officers, accounts officers, superintendents, and other operational
heads. They are responsible for the implementation of plans and strategies developed by the
middle-level manager. They have a direct relation with the employees who are involved in an
operation.

Thus, this level is directly responsible for the completion of works and planned objectives.

Types of Managers – On the Basis of Nature or Area of Managerial Job

Managers may also be classified on the basis of the scope of activities they manage. Managers
work in various areas regardless of their level in an organization. On the basis of function,
managers may be classified into three groups:

 Generalist Manager
 Functional Manager
 Staff Manager

 Generalist Manager

Managers who perform different types of jobs in an organization as per the requirement are
called generalist managers. They don’t have specialization in any area. But they have to look
after the overall activities of the organization apart from any particular area of operation.

Generally, the generalist manager desire to manage a complex or difficult department or unit.
They lack specialization as they can be transferred to or from one organization to another
organization. They have over workload, as they have to perform the diverse nature of jobs.

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Chief executive officers, presidents, vice presidents, general managers or deputy general
managers fall under this category.

 Functional Manager

Managers who specialize in specific areas are functional managers. Their authorities, duties, and
responsibilities are already described in the job description. The managers performing functions
relating to production, finance, public relation, research and development, accounting, etc. are
managers of this category.

In practice, all department heads of a business firm are functional managers. In the normal
course of operation, they are accountable for the performance of their department or unit.

 Staff Manager

Staff Managers are professionals and experts in a specific area of business. They are given no
specific formal position at a management level. However, they play the role of advisors between
generalist and functional managers. They provide guidance and suggestions to both the above
managers on the basis of requirement.

Legal advisors, external auditors, management consultants are examples of such managers.

Managerial roles and skills

As a manager, you hold a position that requires you to perform and handle a variety of
responsibilities regularly. While all these tasks fall under management duties, they can fall into
specific categories based on their purposes. Dr. Henry Mintzberg a prominent management
researcher conducted a researcher to find out what are manager duties or responsibilities.

Fig 1.2 Roles of Managers

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Interpersonal Roles

These roles relate to the manager’s behavior that focuses on interpersonal contact. Interpersonal
roles are roles that involve people (subordinates and persons outside the organization) and other
duties that are ceremonial and symbolic.

The three interpersonal roles include being a;

 Figurehead.
 Leader.
 Liaison.

According to Dr. Henry Mintzberg, the three interpersonal roles derive from the authority and
status associated with managers’ post.

1. Figurehead

The figurehead performs symbolic legal or social duties. In this light, the manager is seen as a
symbol of status and authority.

2. Leader

The Leader builds relationships with employees and communicates with, motivates and coaches
them.

Duties are at the heart of the manager-subordinate relationship and include structuring and
motivating subordinates, overseeing their progress, promoting and encouraging their
development, and balancing effectiveness.

3. Liaison

The liaison maintains a network of contacts outside the work unit to obtain
information.Describes the information and communication obligations of a manager. One must
network and engage in information exchange to gain access to knowledge bases.

Informational Roles

Informational roles involve receiving, collecting, and disseminating information.

The 3 informational roles include;

 Monitor,
 Disseminator, and
 Spokesperson.

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These informational roles are all about receiving and transmitting information so that managers
can serve as the nerve centers of their organization. The informational roles are;

1. Monitor

The monitor seeks internal and external information about issues that can affect the organization.
Duties include assessing internal operations, a department’s success and the problems and
opportunities which may arise. All the information gained in this capacity must be stored and
maintained

2. Disseminator

The disseminator transmits information internally that is obtained from either internal or external
sources. Highlights factual or value-based external views into the organization and to
subordinates. This requires both filtering and delegation skills.

3. Spokesperson

The spokesperson transmits information about the organization to outsiders. Serves in a PR

capacity by informing and lobbying others to keep key stakeholders updated about the operations
of the organization.

Decisional Roles

Decisional roles revolve around making choices. Managers’ interpersonal role leads to decisional
roles. Information and resources that are collected and gathered by the interpersonal make a
manager able to play the decisional roles or responsibilities that he is obligated to.

The four decisional roles include being an entrepreneur disturbance handler, resource allocator,
and negotiator.

1. Entrepreneur

The entrepreneur acts as an initiator, designer, and encourage change and innovation.Roles
encourage managers to create improvement projects and work to delegate, empower and
supervise teams in the development process.

2. Disturbance handler

The disturbance handler takes corrective action when the organization faces important,
unexpected difficulties.A generalist role that takes charge when an organization is unexpectedly
upset or transformed and requires calming and support.

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3. Resource allocator

The resource allocator distributes resources of all types, including time, funding, equipment, and
human resources.Describes the responsibility of allocating and overseeing financial, material and
personnel resources.

4. Negotiator

The negotiator represents the organization in major negotiations affecting the manager’s areas of
responsibility is a specific task which is integral for the spokesman, figurehead, and resource
allocator roles.

If we analyze Mintzberg’s roles we can say that authority and status derive the interpersonal
roles, interpersonal makes it necessary for a manager to play informational roles. And that
enables a manager to make a decision. These ten roles of a manager stated by Mintzberg comes
with many responsibilities. Informing, Connecting, and orders require a manager to able to adapt
to the situation and controlling it in a balanced way.

Skills of Manager

Managers at every level in the management hierarchy must exercise three basic types of skills:
technical, human, and conceptual. All managers must acquire these skills in varying proportions,
although the importance of each category of skill changes at different management levels.

1. Technical skills

2. Technical skills refer to the ability and knowledge in using the equipment, techniques and
procedure involved in performing specific tasks.
3. These skills require specialized knowledge and proficiency in the mechanics of a
particular.
4. Technical skills lose relative importance at higher levels of the management hierarchy,
but most top executives started out as technical experts.

Human skills:

1. Human skills refer to the ability of a manager to work effectively with other people both
as individual and as members of a group.
2. Human skills are concerned with understanding of people.
3. These are required to win cooperation of others and to build effective work teams.
4. Conceptual skills:

5. Conceptual skills involve the ability to see the whole organization and the
interrelationships between its parts.

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 6. These skills refer to the ability to visualize the entire picture or to consider a situation in
its totality.
7. These skills help the managers to analyze the environment and to identify the
opportunities.
8. Conceptual skills are especially important for top-level managers, who must develop
long-range plans for the future direction of their organization.

Evolution of Management

The origin of evolution of management can be traced back to the days when man started living in
groups. History reveals that strong men organized the masses into groups according to their
intelligence, physical and mental capabilities. Evidence of the use of the well recognized
principles of management is to be found in the organization of public life in ancient Greece, the
organization of the Roman Catholic Church and the organization of military forces. Thus
management in some form or the other has been practiced in the various parts of the world since
the dawn of civilization. With the onset of Industrial Revolution, however, the position
underwent a radical change. The structure of industry became extremely complex. At this stage,
the development of a formal theory of management became absolutely necessary. It was against
this background that the pioneers of modern management thought laid the foundations of modern
management theory and practice.

Evolution of management thought may be divided into four stages

1. Pre-scientific Management Period.

2.ClassicalTheory
Scientific Management of Taylor

 Administrative Management of Fayol

 Bureaucratic Model of Max Weber

3. Neo-classical Theory or Behaviour Approach

4. Modern Theory

 Systems Approach
 Contingency Approach

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 Fig 1.3 Evolution of Management Thought

1. Pre-scientific Management Period

The advent of industrial revolution in the middle of the 18th century had its impact on
management. Industrial revolution brought about a complete change in the methods of
production, tools and equipments, organization of labour and methods of raising capital.

Employees went to their work instead of receiving it and so the factory system, as it is known
today, became a dominant feature of the economy. Under this system, land and buildings, hired
labour, and capital are made available to the entrepreneur, who strives to combine these factors
in the efficient achievement of a particular goal. All these changes in turn, brought about changes
in the field of management. Traditional, conventional or customary ideas of management were
slowly given up and management came to be based on scientific principles. In the words of L. F.
Urwick- "Modern management has thrown open a new branch of human knowledge, a fresh
universe of discourse". During the period following the industrial revolution, certain pioneers
tried to challenge the traditional character of management by introducing new ideas and
approaches. The notable contributors of this period are:

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Professor Charles Babbage (UK 1729 -1871)

He was a Professor of Mathematics at Cambridge University. Prof Babbage found that

manufacturers made little use of science and mathematics, and that they (manufacturers) relied
upon opinions instead of investigations and accurate knowledge. He felt that the methods of
science and mathematics could be applied in the place of guess work for the solution of business
problems. He advocated the use of accurate observations, measurement and precise knowledge
for taking business decisions. He urged the management of an enterprise, on the basis of accurate
data obtained through rigid investigation, the desirability of finding out the number of times each
operation is repeated each hour, the dividing of work into mental and physical efforts, the
determining of the precise cost for every process and the paying of a bonus to the workers in
proportion to his own efficiency and the success of enterprise.

James Watt Junior (UK 1796 - 1848) and Mathew Robinson Boulton (1770 - 1842)

James Watt Junior and Mathew Robinson Boulton contributed to the development of
management thought by following certain management techniques in their engineering factory at
Soho in Birmingham.

Robert Owens (UK 1771 - 1858)

Robert Owens, the promoter of co-operative and trade union movement in England, emphasized
the recognition of human element in industry. He firmly believed that workers' performance in
industry was influenced by the working conditions and treatment of workers. He introduced new
ideas of human relations - shorter working hours, housing facilities, training of workers in
hygiene, education of their children, provision of canteen etc. Robert Owen, managed a group of
textile mills in Lanark, Scotland where he used his ideas of human relations. Though his
approach was paternalistic, he came to be regarded as the father of Personnel Management.

Henry Robinson Towne (USA 1844 -1924)

H.R Towne was the president of the famous lock manufacturing company "Yale and Town". He
urged the combination of engineers and economists as industrial managers. This combination of
qualities, together with at least some skill as an accountant, is essential to the successful
management of industrial workers. He favoured organized exchange of experience among
managers and pleaded for an organized effort to pool the great fund of accumulated knowledge
in the art of workshop management.

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Seebohm Rowntree (UK 1871- 1954)

Rowntree created a public opinion on the need of labour welfare schemes and improvement in
industrial relations. The Industrial Welfare Society, The Management Research Groups and the
Oxford Lecture Conferences in the U.K owed their origin and progress to the interest and zeal of
Rowntree.

2. Classical Theory

Prof. Charles Babbage, James Watt Junior and Mathew Robinson Boulton, Robert Owen, Henry
Robinson Towne and Rowntree were no doubt, pioneers of management thought but, the impact
of their contributions on the industry as a whole was meagre. The real beginning of the science
of management did not occur until the last decade of the 19thcentury. During this period,
stalwarts like F.W. Taylor, H.L. Gantt, Emerson, Frank and Lillian Gilberth etc., laid the
foundation of management, which in due course, came to be known as scientific management.
This epoch in the history of management will be remembered as an era in which traditional ways
of managing were challenged, past management experience was scientifically systematized and
principles of management were distilled and propagated. The contributions of the pioneers of this
age have had a profound impact in furthering the management know-how and enriching the store
of management principles.

F.W. Taylor regarded as the founder of scientific management and Henry Fayol as the
founder of administrative management and both provided the bases for science and art of
management.

Features of Management in the Classical Period

It was closely associated with the industrial revolution and the rise of large-scale enterprise.

Classical organization and management theory is based on contributions from a number of

sources. They are scientific management, Administrative management theory, bureaucratic
model, micro-economics and public administration.

Management thought focused on job content division of labour, standardization, simplification

and specialization and scientific approach towards organization.

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Taylor's Scientific Management:

F.W.Taylor started as an apprentice machinist in Philadelphia, USA. He rose to be the chief

engineer at the Midvale Engineering Works and later on served with the Bethlehem Works
where he experimented with his ideas and made the contribution to the management theory for
which he is so well known. Frederick Winslow Taylor well-known as the founder of
scientific management was the first to recognize and emphasise the need for adopting a
scientific approach to the task of managing an enterprise. He tried to diagnose the causes of
low efficiency in industry and came to the conclusion that much of waste and inefficiency is due
to the lack of order and system in the methods of management. He found that the management
was usually ignorant of the amount of work that could be done by a worker in a day as also the
best method of doing the job. As a result, it remained largely at the mercy of the workers who
deliberately neglected work.

He therefore, suggested that those responsible for management should adopt a scientific
approach in their work, and make use of "scientific method" for achieving higher efficiency. The
scientific method consists essentially of

1. Observation
2. Measurement
3. Experimentation and
4. Inference.

He advocated a thorough planning of the job by the management and emphasized the necessity
of perfect understanding and co-operation between the management and the workers both for the
enlargement of profits and the use of scientific investigation and knowledge in industrial work.
He summed up his approach in these words:

 Science, not rule of thumb

 Harmony, not discord
 Co-operation, not individualism
 Maximum output, in place of restricted output

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Elements of Scientific Management:

The techniques which Taylor regarded as its essential elements or features may be classified as
under:

 Scientific Task and Rate-setting, work improvement, etc.

 Planning the Task.
 Vocational Selection and Training
 Standardization (of working conditions, material equipment etc.)
 Specialization
 Mental Revolution.

Scientific Task and Rate-Setting (work study):

Work study may be defined as the systematic, objective and critical examination of all the
factors governing the operational efficiency of any specified activity in order to effect
improvement. Work study includes.

a) Methods Study: The management should try to ensure that the plant is laid out in the
best manner and is equipped with the best tools and machinery. The possibilities of
eliminating or combining certain operations may be studied.
b) Motion Study: It is a study of the movement, of an operator (or even of a machine) in
performing an operation with the purpose of eliminating useless motions.
c) Time Study (work measurement): The basic purpose of time study is to determine the
proper time for performing the operation. Such study may be conducted after the motion
study. Both time study and motion study help in determining the best method of doing a
job and the standard time allowed for it.
d) Fatigue Study: If, a standard task is set without providing for measures to eliminate
fatigue, it may either be beyond the workers or the workers may over strain themselves to
attain it. It is necessary, therefore, to regulate the working hours and provide for rest
pauses at scientifically determined intervals.

Rate-setting: Taylor recommended the differential piece wage system, under which workers
performing the standard task within prescribed time are paid a much higher rate per unit than
inefficient workers who are not able to come up to the standard set.

Planning the Task: Having set the task which an average worker must strive to perform to get
wages at the higher piece-rate, necessary steps have to be taken to plan the production
thoroughly so that there is no bottlenecks and the work goes on systematically.

Selection and Training: Scientific Management requires a radical change in the methods and
procedures of selecting workers. It is therefore necessary to entrust the task of selection to a

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central personnel department. The procedure of selection will also have to be systematized.
Proper attention has also to be devoted to the training of the workers in the correct methods of
work.

Standardization: Standardization may be introduced in respect of the following.

a) Tools and equipment: By standardization is meant the process of bringing about

uniformity. The management must select and store standard tools and implements which
will be nearly the best or the best of their kind.
b) Speed: There is usually an optimum speed for every machine. If it is exceeded, it is likely
to result in damage to machinery.
c) Conditions of Work: To attain standard performance, the maintenance of standard
conditions of ventilation, heating, cooling, humidity, floor space, safety etc., is very
essential.
d) Materials: The efficiency of a worker depends on the quality of materials and the method
of handling materials.

Specialization: Scientific management will not be complete without the introduction of

specialization. Under this plan, the two functions of 'planning' and 'doing' are separated in the
organization of the plant. The `functional foremen' are specialists who join their heads to give
thought to the planning of the performance of operations in the workshop. Taylor suggested eight
functional foremen under his scheme of functional foremanship.

a) The Route Clerk: To lay down the sequence of operations and instruct the workers
concerned about it.
b) The Instruction Card Clerk: To prepare detailed instructions regarding different aspects
of work.
c) The Time and Cost Clerk: To send all information relating to their pay to the workers
and to secure proper returns of work from them.
d) The Shop Disciplinarian: To deal with cases of breach of discipline and absenteeism.
e) The Gang Boss: To assemble and set up tools and machines and to teach the workers to
make all their personal motions in the quickest and best way.
f) The Speed Boss: To ensure that machines are run at their best speeds and proper tools
are used by the workers.
g) The Repair Boss: To ensure that each worker keeps his machine in good order and
maintains cleanliness around him and his machines.
h) The Inspector: To show to the worker how to do the work.

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Mental Revolution: At present, industry is divided into two groups – management and labour.
The major problem between these two groups is the division of surplus. The management wants
the maximum possible share of the surplus as profit; the workers want, as large share in the form
of wages. Taylor has in mind the enormous gain that arises from higher productivity. Such gains
can be shared both by the management and workers in the form of increased profits and
increased wages.

Benefits of Scientific Management: Taylor's ideas, research and recommendations brought into
focus technological, human and organizational issues in industrial management. Benefits of
Taylor's scientific management included wider scope for specialization, accurate planning,
timely delivery, standardized methods, better quality, lesser costs, minimum wastage of
materials, time and energy and cordial relations between management and workers. According to
Gilbreths, the main benefits of scientific management are "conservation and savings, making an
adequate use of every one's energy of any type that is expended".

The benefits of scientific management are:-

1. Replacement of traditional rule of thumb method by scientific techniques.

2. Proper selection and training of workers.
3. Incentive wages to the workers for higher production.
4. Elimination of wastes and rationalization of system of control.
5. Standardization of tools, equipment, materials and work methods.
6. Detailed instructions and constant guidance of the workers.
7. Establishment of harmonious relationship between the workers.
8. Better utilization of various resources.
9. Satisfaction of the needs of the customers by providing higher quality products at lower
prices.

Criticism

Worker's Criticism:

Speeding up of workers:

Scientific Management is only a device to speed up the workers without much regard for their
health and well-being.

Loss of individual worker's initiative:

Scientific Management reduces workers to automatic machine by taking away from them the
function of thinking.

21
Problem of monotony:

By separating the function of planning and thinking from that of doing, Scientific Management
reduces work to mere routine.

Reduction of Employment:

Scientific Management creates unemployment and hits the workers hard.

Weakening of Trade Unions:

Under Scientific Management, the important issues of wages and working conditions are decided
by the management through scientific investigation and the trade unions may have little say in
the matter.

Exploitation of workers:

Scientific Management improves productivity through the agency of workers and yet they are
given a very small share of the benefit of such improvement.

Employer's Criticism:

Heavy Investment: It requires too heavy an investment. The employer has to meet the extra cost
of the planning department though the foreman in this department do not work in the workshop
and directly contribute towards higher production.

Loss due to re-organization: The introduction of Scientific Management requires a virtual

reorganization of the whole set-up of the industrial unit. Work may have to be suspended to
complete such re-organization.

Unsuitable for small scale firms: various measures like the establishment of a separate
personnel department and the conducting of time and motion studies are too expensive for a
small or modest size industrial unit.

Contributions of Scientific Management:

 Emphasis on rational thinking on the part of management.

 Focus on the need for better methods of industrial work through systematic study and
research.
 Emphasis on planning and control of production.
 Development of Cost Accounting.
 Development of incentive plans of wage payment based on systematic study of work.
 Focus on need for a separate Personnel Department.
 Focus on the problem of fatigue and rest in industrial work.
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Taylor was the pioneer in introducing scientific reasoning to the discipline of management.

Many of the objections raised were later remedied by the other contributors to scientific
management like Henry L Gantt, Frank and Lillian Gilbreth and Harrington Emerson.

Frank (USA, 1867 - 1924) and Lillian (U.S.A, 1878 - 1912):

The ideas of Taylor were also strongly supported and developed by the famous husband and wife
team of Frank and Lillian Gilbreth. They became interested in wasted motions in work. After
meeting Taylor, they combined their ideas with Taylor's to put scientific management into effect.
They made pioneering effort in the field of motion study and laid the entire foundation of our
modern applications of job simplification, meaningful work standards and incentive wage plans.
Mrs. Gilbreth had a unique background in psychology and management and the couple could
embark on a quest for better work methods. Frank Gilbreth is regarded as the father of motion
study. He is responsible for inculcating in the minds of managers the questioning frame of mind
and the search for a better way of doing things.

Gilbreth's contributions to management thought are quite considerable. His main contributions
are:

The one best way of doing a job is the way which involves the fewest motions performed in an
accessible area and in the most comfortable position.The best way can be found out by the
elimination of inefficient and wasteful motions involved in the work.He emphasized that training
should be given to workers from the very beginning so that they may achieve competence as
early as possible.He suggested that each worker should be considered to occupy three positions -
(i) the job he held before promotion to his present position,

(ii) his present position, and

iii)the next higher position.

The part of a worker's time should be spent in teaching the man below him and learning from the
man above him. This would help him qualify for promotion and help to provide a successor to
his current job.

Frank and Lillian Gilberth also gave a thought to the welfare of the individuals who work for the
organization.

Gilbreth also devised methods for avoiding wasteful and unproductive movements. He laid down
how workers should stand, how his hands should move and so on.

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Henry Lawrence Gantt (USA, 1861 - 1819):

H.L Gantt was born in 1861. He graduated from John Hopkins College. For some time, he
worked as a draftsman in an iron foundry.

In 1884, he qualified as a mechanical engineer at Stevens Institute. In 1887, he joined the

Midvale Steel Company. Soon, he became an assistant to F.W Taylor. He worked with Taylor
from 1887 - 1919 at Midvale Steel Company. He did much consulting work on scientific
selection of workers and the development of incentive bonus systems. He emphasized the need
for developing a mutuality of interest between management and labour. Gantt made four
important contributions to the concepts of management:

Gantt chart to compare actual to planned performance.

Gantt chart was a daily chart which graphically presented the process of work by showing
machine operations, man hour performance, deliveries, effected and the work in arrears. This
chart was intended to facilitate day-to-day production planning.

Task-and-bonus plan for remunerating workers indicating a more humanitarian approach.

This plan was aimed at providing extra wages for extra work besides guarantee of minimum
wages. Under this system of wage payment, if a worker completes the work laid out for him, he
is paid a definite bonus in addition to his daily minimum wages. On the other hand, if a worker
does not complete his work, he is paid only his daily minimum wages. There was a provision for
giving bonus to supervisors, if workers under him were able to earn such bonus by extra work.

Psychology of employee relations indicating management responsibility to teach and train

workers.

In his paper "Training Workmen in Habits of Industry and Cooperation", Gantt pleaded for a
policy of preaching and teaching workmen to do their work in the process evolved through pre-
thinking of management.

Gantt laid great emphasis on leadership. He considered management as leadership function. He

laid stress on the importance of acceptable leadership as the primary element in the success of
any business. Gantt's contributions were more in the nature of refinements rather than
fundamental concepts. They made scientific management more humanized and meaningful to
devotees of Taylor.

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Harrington Emerson (USA, 1853 - 1931):

Emerson was an American Engineer. He devoted his attention to efficiency in industry. He was
the first to use the term 'efficiency engineering' to describe his brand of consulting. He called his
philosophy "The Gospel of Efficiency". According to him, "efficiency means that the right thing
is done in the right manner, by the right man, at the right place, in the right time".

Emerson laid down the following principles of efficiency to be observed by management

1. Ideals
2. Common Sense
3. Competent Counsel
4. Discipline
5. Fair Deal
6. Proper Records
7. Dispatching
8. Standards and Schedules
9. Standard Conditions
10. Standardized Operations
11. Standard practice instructions and
12. Efficiency Reward.

Administrative Management Theory:

Henry Fayol was the most important exponent of this theory. The pyramidal form, scalar
principle, unity of command, exception principle, span of control and departmentalization are
some of the important concepts set forth by Fayol and his followers like Mooney and Reiley,
Simon, Urwick, Gullick etc.

Henry Fayol (France, 1841 - 1925):

Henry Fayol was born in 1941 at Constantinople in France. He graduated as a mining engineer
in 1860 from the National School of Mining. After his graduation, he joined a French Coal
Mining Company as an Engineer. After a couple of years, he was promoted as manager. He was
appointed as General Manager of his company in 1888. At that time, the company suffered
heavy losses and was nearly bankrupt. Henry Fayol succeeded in converting his company from
near bankruptcy to a strong financial position and a record of profits and dividends over a long
period.

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Concept of Management: Henry Fayol is considered the father of modern theory of general
and industrial management. He divided general and industrial management into six groups:

 Technical activities - Production, manufacture, adaptation.

 Commercial activities - buying, selling and exchange.
 Financial activities - search for and optimum use of capital.
 Security activities - protection of property and persons.
 Accounting activities - stock-taking, balance sheet, cost, and statistics.
 Managerial activities - planning, organization, command, co- ordination and control.

These six functions had to be performed to operate successfully any kind of business. He,
however, pointed out that the last function i.e., ability to manage, was the most important for
upper levels of managers. The process of management as an ongoing managerial cycle involving
planning, organizing, directing, co-ordination, and controlling, is actually based on the analysis
of general management by Fayol. Hence, it is said that Fayol established the pattern of
management thought and practice. Even today, management process has general recognition.

Fayol's Principles of Management:

1. Division of work:

Division of work or specialization alone can give maximum productivity and efficiency. Both
technical and managerial activities can be performedin the best manner only through division of
labour and specialization.

2. Authority and Responsibility:

The right to give order is called authority. The obligation to accomplish is called responsibility.
Authority and Responsibility are the two sides of the management coin. They exist together.
They are complementary and mutually interdependent.

3. Discipline:

The objectives, rules and regulations, the policies and procedures must be honoured by each
member of an organization. There must be clear and fair agreement on the rules and objectives,
on the policies and procedures. There must be penalties (punishment) for non-obedience or
indiscipline. No organization can work smoothly without discipline - preferably voluntary
discipline.

4. Unity of Command: In order to avoid any possible confusion and conflict, each member
of an organization must receive orders and instructions only from one superior (boss).

26
5. Unity of Direction: All members of an organization must work together to accomplish
common objectives.

6. Emphasis on Subordination of Personal Interest to General or Common

Interest: This is also called principle of co-operation. Each shall work for all and all for
each. General or common interest must be supreme in any joint enterprise.

7. Remuneration: Fair pay with non-financial rewards can act as the best incentive or
motivator for good performance. Exploitation of employees in any manner must be
eliminated. Sound scheme of remuneration includes adequate financial and nonfinancial
incentives.

8. Centralization: There must be a good balance between centralization and

decentralization of authority and power. Extreme centralization and decentralization
must be avoided.

9. Scalar Chain: The formal lines of authority from highest to lowest ranks are known as
scalar chain. Organisations should have a chain of authority and communication that
runs from top to the bottom and should be followed by managers and subordinates.

10. Order: Order or system alone can create a sound organization and efficient management.

11. Equity: An organization consists of a group of people involved in joint effort. Hence,
equity (i.e., justice) must be there. Without equity, we cannot have sustained and
adequate joint collaboration.

12. Stability of Tenure: A person needs time to adjust himself with the new work and
demonstrate efficiency in due course. Hence, employees and managers must have job
security. Security of income and employment is a pre-requisite of sound organization
and management.

13. Initiative: Creative thinking and capacity to take initiative can give us sound managerial
planning and execution of predetermined plans.

14. Esprit de Corps: It is the responsibility of the management to motivate their employees
and be supportive of each other regularly Developing trust and mutual understanding
will lead to a positive outcome and work environment.

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Bureaucratic Model: Max Weber, a German Sociologist developed the bureaucratic model. His
model of bureaucracy include

 Hierarchy of authority.

 Division of labour based upon functional specialization.

 A system of rules.

 Impersonality of interpersonal relationships.

 A system of work procedures.

 Placement of employees based upon technical competence.

 Legal authority and power.

Bureaucracy provides a rigid model of an organization. It does not account for important human
elements. The features of Bureaucracy are:-

 Rigidity, impersonality and higher cost of controls.

 Anxiety due to pressure of conformity to rules and procedure.

 Dependence on superior.

 Tendency to forget ultimate goals of the organization.

Bureaucratic Model is preferred where change is not anticipated or where rate of change can be
predicated. It is followed in government departments and in large business organizations.

Neoclassical Theory:

Neo-classical Theory is built on the base of classical theory. It modified, improved and extended
the classical theory. Classical theory concentrated on job content and management of physical
resources whereas, neoclassical theory gave greater emphasis to individual and group
relationship in the workplace. The neo- classical theory pointed out the role of psychology and
sociology in the understanding of individual and group behaviour in an organization.

George Elton Mayo (Australia, 1880 - 1949): Elton Mayo was born in Australia. He was
educated in Logic and Philosophy at St. Peter's College, Adelaide. He led a team of researchers
from Harvard University, which carried out investigation in human problems at the Hawthorne
Plant of Western Electrical Company at Chicago. They conducted some experiments (known as
Hawthorne Experiments) and investigated informal groupings, informal relationships, patterns of
communication, patterns of informal leadership etc. Elton Mayo is generally recognized as the
28
father of Human Relations School. Other prominent contributors to this school include
Roethlisberger, Dickson, Dewey, Lewin etc.

Hawthorne Experiments: In 1927, a group of researchers led by Elton Mayo and Fritz
Roethlisberger of the Harvard Business School were invited to join in the studies at the
Hawthorne Works of Western Electric Company, Chicago. The experiment lasted up to 1932.
The Hawthorne Experiments brought out that the productivity of the employees is not the
function of only physical conditions of work and money wages paid to them. Productivity of
employees depends heavily upon the satisfaction of the employees in their work situation.
Mayo's idea was that logical factors were far less important than emotional factors in
determining productivity efficiency. Furthermore, of all the human factors influencing employee
behaviour, the most powerful were those emanating from the worker's participation in social
groups. Thus, Mayo concluded that work arrangements in addition to meeting the objective
requirements of production must at the same time satisfy the employee's subjective requirement
of social satisfaction at his work place.

The Hawthorne experiment consists of four parts. These parts are briefly described below:-

1. Illumination Experiment.

2. Relay Assembly Test Room Experiment.

3. Interviewing Programme.

4. Bank Wiring Test Room Experiment.

1. Illumination Experiment: This experiment was conducted to establish relationship

between output and illumination. When the intensity of light was increased, the output
also increased. The output showed an upward trend even when the illumination was
gradually brought down to the normal level. Therefore, it was concluded that there is no
consistent relationship between output of workers and illumination in the factory. There
must be some other factor which affected productivity.

2. Relay Assembly Test Room Experiment: This phase aimed at knowing not only the
impact of illumination on production but also other factors like length of the working
day, rest hours, and other physical conditions. In this experiment, a small homogeneous
work-group of six girls was constituted. These girls were friendly to each other and were
asked to work in a very informal atmosphere under the supervision of a researcher.
Productivity and morale increased considerably during the period of the experiment.
Productivity went on increasing and stabilized at a high level even when all the
improvements were taken away and the pre-test conditions were reintroduced. The
researchers concluded that socio-psychological factors such as feeling of being important,

29
 recognition, attention, participation, cohesive work-group, and non-directive supervision
held the key for higher productivity.

3. Mass Interview Programme: The objective of this programme was to make a systematic
study of the employees' attitudes. The researchers interviewed a large number of workers
with regard to their opinions on work, working conditions and supervision. Initially, a
direct approach was used whereby interviewers asked questions considered important by
managers and researchers. The researchers observed that the replies of the workmen were
guarded. Therefore, this approach was replaced by an indirect technique, where the
interviewer simply listened to what the workmen had to say. The findings confirmed the
importance of social factors at work in the total work environment.

4. Bank Wiring Test Room Experiment: This experiment was conducted by

Roethlisberger and Dickson with a view to develop a new method of observation and
obtaining more exact information about social groups within a company and also finding
out the causes which restrict output. The experiment was conducted to study a group of
workers under conditions which were as close as possible to normal. This group
comprised of 14 workers. After the experiment, the production records of this group were
compared with their earlier production records. It was observed that the group evolved its
own production norms for each individual worker, which was made lower than those set
by the management. Because of this, workers would produce only that much, thereby
defeating the incentive system. Those workers who tried to produce more than the group
norms were isolated, harassed or punished by the group. The findings of the study are:-

 Each individual was restricting output.

 The group had its own "unofficial" standards of performance.

 Individual output remained fairly constant over a period of time.

 Informal groups play an important role in the working of an organization.

Contributions of the Hawthorne Experiment: Elton Mayo and his associates conducted their
studies in the Hawthorne plant of the western electrical company, U.S.A., between 1927 and
1930. According to them, behavioural science methods have many areas of application in
management. The important features of the Hawthorne Experiment are:-

1. A business organization is basically a social system. It is not just a techno-economic

system.

2. The employer can be motivated by psychological and social wants because his behaviour
is also influenced by feelings, emotions and attitudes. Thus economic incentives are not
the only method to motivate people.
30
 3. Management must learn to develop co-operative attitudes and not rely merely on
command.

4. Participation becomes an important instrument in human relations movement. In order to

achieve participation, effective two-way communication network is essential.

5. Productivity is linked with employee satisfaction in any business organization. Therefore

management must take greater interest in employee satisfaction.

6. Group psychology plays an important role in any business organization. We must

therefore rely more on informal group effort.

The neo-classical theory emphasizes that man is a living machine and he is far more important
than the inanimate machine. Hence, the key to higher productivity lies in employee morale. High
morale results in higher output.

Behavioural Theory: There are three elements of behavioural theory.

The Individual: The neoclassical theory emphasized that individual differences must be
recognised. An individual has feelings, emotions, perception and attitude. Each person is unique.
He brings to the job situation certain attitudes, beliefs and ways of life, as well as skills. He has
certain meaning of his job, his supervision, working conditions etc. The inner world of the
worker is more important than the external reality in the determination of productivity. Thus
human relations at work determine the rise or fall in productivity. Therefore human relationists
advocate the adoption of multidimensional model of motivation which is based upon economic,
individual and social factors.

Work Groups: Workers are not isolated; they are social beings and should be treated as such by
management. The existence of informal organization is natural. The neo-classical theory
describes the vital effects of group psychology and behaviour on motivation and productivity.

Participative Management: The emergence of participative management is inevitable when

emphasis is laid on individual and work groups. Allowing labour to participate in decision
making primarily to increase productivity was a new form of supervision. Management now
welcomes worker participation in planning job contents and job operations. Neoclassical theory
focuses its attention on workers. Plant layout, machinery, tool etc., must offer employee
convenience and facilities. Therefore, neoclassical approach is trying to satisfy personal security
and social needs of workers.

Human relationists made very significant contribution to management thought by bringing into
limelight human and social factors in organizations. But their concepts were carried beyond an
appropriate limit. There are many other factors which influence productivity directly. Modern

31
management thought wants equal emphasis on man and machine and we can evolve appropriate
man- machine system to secure both goals – productivity and satisfaction.

Limitations of Human Relations Approach

The human relationists drew conclusions from Hawthorne studies. These conclusions are based
on clinical insight rather than on scientific evidence.

The study tends to overemphasize the psychological aspects at the cost of the structural and
technical aspects.

It is assumed that all organizational problems are amenable to solutions through human relations.
This assumption does not hold good in practice.

The human relationists saw only the human variables as critical and ignored other variables.

The human relationists overemphasize the group and group decision-making. But in practice,
groups may create problems and collective decision-making may not be possible.

Modern Theory (System Approach): The systems approach to management indicates the
fourth major theory of management thought called modern theory. Modern theory considers an
organization as an adaptive system which has to adjust to changes in its environment. An
organization is now defined as a structured process in which individuals interact for attaining
objectives.

Systems Approach Applied to an Organization: When systems approach is applied to

organization, we have the following features of an organization as an open adaptive system:-

It is a sub-system of its broader environment.

It is a goal-oriented – people with a purpose.

It is a technical subsystem – using knowledge, techniques, equipment and facilities.

It is a structural subsystem – people working together on interrelated activities.

It is a psychosocial system – people in social relationships.

There are 2 types of systems:

 Open System

 Close System.

Open System interacts with its environment dynamically and also gets influenced by the external
environment. All the organizations are open systems.
32
A Closed System is the opposite of an open system and doesn’t get influenced by external
environments and doesn’t interact with them. These types of systems rarely do exist.

The Systems Approach: An organization as a system has five basic parts

1. Input

2. Process

3. Output

4. Feedback and

5. Environment.

Fig 1.4 Systems Approach to Management

It draws upon the environment for inputs to produce certain desirable outputs. The success of
these outputs can be judged by means of feedback. If necessary, we have to modify out mix of
inputs to produce as per changing demands.

Dynamic: We have a dynamic process of interaction occurring within the structure of an

organization. The equilibrium of an organization and its structure is itself dynamic or changing.

Multilevel and Multidimensional: Systems approach points out complex multilevel and multi
dimensional character. We have both a micro and macro approach. A company is micro within a
business system. It is macro with respect to its own internal units. Within a company as a system
we have:-

33
Production subsystem

Finance subsystem

Marketing subsystem

Personnel subsystem.

All parts or components are interrelated. Both parts as well as the whole are equally important.
At all levels, organizations interact in many ways.

Merits of System Approach Theory of Management

1. System approach helps in studying the organization as a whole and not in bits of its
parts.

2. System approach provides a framework for effective interaction with subsystems in the
organization in a specific way to attain its goals. It does not focus on a particular
subsystem.

3. This approach provides a whole nature or description of the organization and emphasizes
on whether it’s adaptive or not. It assists in organization’s adaptability with
environmental changes and needs.

4. System approach helps in making decisions and policies in organizational context

5. In order to solve managerial problems within the whole organization or in any part of it,
the system approach uses various theories like the behavioral, cultural and classical
theories on a broader perspective.

6. This approach interacts between the external and the internal environment of the
organization.

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Demerits of System Approach Theory of Management

1. System Approach does not add anything new to the study of management. Without this
approach, managerial decisions were taking care of the changes in the environment. This
theory does not provide any specific decisions in any situations.

2. The relationship between its subsystems and the extent of relationship between the
internal and external environment is not defined by this theory.

3. This theory provides only a theoretical approach to management.

4. This theory assumed most of the organizations as open systems, big, and complex in
nature. Hence fails to provide a unified and universal theory.

Contingency Theory

Systems approach emphasizes that all sub- systems of an organization along with the super
system of environment are interconnected and interrelated. Contingency approach analyses and
understands these inter relationship so that managerial actions can be adjusted to demands of
specific situations or circumstances.

Thus the contingency approach enables us to evolve practical answers to problems demanding
solutions. Organization design and managerial actions most appropriate to specific situations will
have to be adopted to achieve the best possible result under the given situation. There is no one
best way (as advocated by Taylor) to organize and manage. Thus, Contingency Approach to
management emphasizes the fact that management is a highly practice-oriented discipline. It is
the basic function of managers to analyse and understand the environments in which they
function before adopting their techniques, processes and practices. The application of
management principles and practices should therefore be dependent upon the existing
circumstances.

Contingency approach guides the manager to be adaptive to environment. It tells the manager to
be pragmatic and open minded. The contingency approach is an improvement over the systems
approach. It not only examines the relationships between sub-systems of the organization, but
also the relationship between the organization and its environment.

However, the contingency approach suffers from two limitations

 It does not recognize the influence of management concepts and techniques on

environment.
 Literature on contingency management is yet not adequate.

35