MODERN THEORIES

BY MS MODISAEMANG
INTRODUCTION TO MODERN THEORIES
 Modern management theory adopts an approach to management that balances scientific
methodology with humanistic psychology.
 It uses emerging technologies and statistical analysis to make decisions, streamline operations
and quantify performance.
 The modern theory of organization uses mathematical analysis combined with an objective
understanding of the range of human emotions and motivation. A manager then can use
mathematics and statistics to gauge an employee’s motivation and measure their performance.
 Modern management theory gives more attention on the satisfaction of
employees. According to this theory, employee work not only to earn money, it doesn’t mean
that they work free but their main focus is different instead of earning money.
SYSTEM APPROACH
 Chester Bernard introduced the concept of Cooperative Systems in his book, Functions of an
Executive (1938).
 Economist, Herbert Simon, introduced in his book, Administrative Behavior (1947), the concept
of systems process in decision-making within organizations. Notably, he introduced concepts of
bounded rationality and satisfying.
 Biologist, Ludwig von Bertalanffy, introduced principles of General Systems theory in 1950.
 Other contributors include: Lawrence J. Henderson, W.G. Scott, Deniel Katz, Robert L. Kahn, W.
Buckley and J.D. Thompson.
 the system approach to management emphasizes the importance of understanding organizations
as systems that are made up of interrelated and interdependent parts.
 By focusing on interdependence, subsystems, inputs and outputs, and feedback, managers can
develop a holistic understanding of the organization and make effective decisions.
 Thus the organization comprises a unified singular system made up of these subsystems. For
example, a firm is a system that may be composed of sub-systems such as production,
marketing, finance, accounting and so on. As such, the various sub-systems should be studied in
their inter- relationships rather, than in isolation from each other.
 A system is a set of inter-connected elements or component parts to achieve certain goals. An
organisation is viewed by the modern authors as an open system. An organisation as a system has
five basic parts:
 Input,
 Process,
 Output,
 Feedback and
 Environment.
 Systems are of two types:
 Closed system: if closed system has no interaction with the outside world.
 Open system: continually interacts with its environment. All living systems are open system.
FEATURES OF SYSTEM THEORY TO MANAGEMENT
 An organisation consists of many sub-systems.
 All the sub-systems are mutually related to each other.
 The sub-parts should be studied in their enter-relationships rather than in isolation from each other.
 The organisation provides a boundary, which separates it from other systems. It determines which
parts are internal and which parts are external.
 The organisation is responsive to environmental effect. It is vulnerable is the changes in environment.
 An organisation is a system consisting of many interrelated and interdependent parts or sub-systems.
These elements are arranged orderly according to some scheme such that the is more than the sum of
the parts.
 As a system an organisation draws inputs (energy. Information, materials, etc.). From its environment.
It transforms these inputs and returns the output back into the environment in the form of goods and
services.
 Every system is a part of a super system.
 Organisation is an open system and it interacts with its environment. It is also a dynamic system ass
the equilibrium in it is always changing.
 Management is expected to regulate and adjust the system to secure better performance.
 Management is multidisciplinary as it draws and integrates knowledge from various disciplines.
CONTINGENCY THEORY
 Fred Fiedler was the first to popularize the contingency theory concept in 1964. Contingency
theory advocates for a certain flexibility in the management method to achieve the best results
for the organization.
 All decisions by managers will be affected (if not controlled) by the contingencies of a given
situation.
 The contingency approach is a management theory that emphasizes the importance of
understanding the unique characteristics of an organization and its environment in order to
determine the best management approach.
 This approach recognizes that there is no one-size-fits-all solution to management and that
managers must be flexible and adaptable in their approach.
 Contingency theory builds upon accepted elements of System Theory. It recognized that an
organization is an open system made up of interrelated sub-units. It adds, however, that the
behaviour of individual sub-units is contingent upon internal and external environmental
contingencies
TYPES OF LEADERS
 The two things that are important are the leader’s personality and the situational context. Thus,
a leader will lead and manage his unit during a crisis by analysing and evaluating the situation at
hand and acting out accordingly.
 According to him, there are two types of leadership:
1. Task-oriented leadership – it deals with accomplishment and handling the unit by handing out
tasks
2. Relationship-oriented leadership – it deals with the interpersonal skills and relationship of the
leader with his subordinates
 These orientations of the leader is measured on a scaled called the Least Preferred Co-worker
Scale. The leader is asked to name a co-worker with whom he preferred to work the least. He is
then asked to give a description of the character of the co-worker. A positive image of the co-
worker means that the leader is relationship oriented and scored high on the LPC scale. A
negative image by the leader means that he is task-oriented and scored low on the scale.
HOW DO CONTINGENCIES AFFECT ORGANISATIONAL
STRUCTURE
The commonly-identified contingencies influencing organizational structure include:
 Organization Size: The number of employers working in an organisation indicates its size. It is
observed that large organisations differ structurally from small ones in terms of division of
labour, rules and regulations, performance appraisal and budgeting procedures
 Nature of Business and Technology (the need for customization):Some kind of technology is
used to convert the resources into outputs in every organisation. Technology includes the
knowledge, machinery, work procedures, and materials that convert the inputs into outputs. The
technology used to manufacture the products decides the kind of the organisation for the
production system.
 Environmental Uncertainty:Environment has an impact on decision making – specifically the
difficulty of making decisions in an uncertain or unpredictable environment. Similarly, the
stability and predictability of the environment have a direct bearing on the ability of the
organisation to function effectively
 Individual Differences or Organizational Preferences
NB: The contingency approach defines not only patterns of internal interaction but also suggests
organization designs and management approaches most appropriate for specific situations.
CHARACTERISTIC OF A CONTINGENCY THEORY
 The primary characteristics of contingency theory include:
 Non-universality of management theory - There is no one best way of doing things.
 Contingency - Management decision making is contingent upon the situation.
 Environment - Managerial policies and practices to be effective, must adjust to changes in the
environment.
 Diagnostics - Managers must possess and continue to improve diagnostic skills so as to anticipate
and ready for environmental changes.
 Human Relations - Managers should have sufficient human relations skills to accommodate and
stabilize change.
 Information and Communication - Managers must develop a communication system adequate to
deal with environmental changes