Modern Approaches to Management

Introduction
 Modern approaches are there besides classical, behavioral
and quantitative approaches to management.
 There are mainly 2 approaches, which have significantly
shaped modern management thoughts
1. Systems Theory.

2. Contingency Theory.

 The 2 Theories combined and thus arrives to

Contemporary Approach to Management
System Theory
 Churchman West is one of the Pioneer of System
Approach to Management.
 Provides Managers to look at an organization as a whole
and as a part of the larger, external environment.
 System approach consist of 4 major components:-
 Inputs.
 Transformation process.
 Output.
 Feedback.
System View of Organization
INPUTS TRANSFORMATION OUTPUTS
(Resource) PROCESS
Labor Plannin Goods
g Service
Materi Organiz s
als ing Profit
Capital Staffing
Leading
& loss
Machi
Controll Emplo
nery
ing yee
Inform Satisfa
Technol
ation ogy ction
FEEDBACK
Types of Systems

 Basically 2 types of System :-

 Open System : which interacts with its Environment.

 Closed : which do not interacts with its Environment.

Contingency Theory(Situational Theory)
 Developed by the managers, consultants and researchers
who tried to apply the concepts of the major schools of
management thought to real life situations.
 Paul Hersey and Ken Blanchard developed Contingency
approach to leadership.
 This Theory suggest that,” there is no one best way to
manage all situations”, or
 “There is no one best way to manage”.”It Depends”
 Here managers can take business decision or adopt a
particular management style only after considering all
situational factors.
The Contingency Managerial View

Universal view:
Same managerial principles apply to
all situations

Situation 1

Contingency View:
Managerial actions varies Situation 2
from situation to situation

Situation 3
 “The task of managers is to identify which technique will
in a particular situation, under particular circumstances,
and at a particular time, best contribute to the attainment
of management goals’
Theory Z
 Theory Z is a name applied to two distinctly different
psychological theories.
 One was developed by Abraham H. Maslow in his paper
Theory Z and the other is Dr. William Ouchi's so-called
"Japanese Management" style popularized during the
Asian economic boom of the 1980s.
 Theory X, which stated that workers inherently dislike
and avoid work and must be driven to it.
 Theory Y, which stated that work is natural and can be a
source of satisfaction when aimed at higher order human
psychological needs.
 Theory Z focused on increasing employee loyalty to the
company by providing a job for life with a strong focus on
the well-being of the employee, both on and off the job.
 Theory Z management tends to promote stable
employment, high productivity, and high employee morale
and satisfaction.
 The secret to Japanese success, according to Ouchi, is not
technology, but a special way of managing people. “This is
a managing style that focuses on a strong company
philosophy, a distinct corporate culture, long-range staff
development, and consensus decision-making”(Ouchi,
1981).
 PLANNING
JAPANESE MANAGEMENT AMERICAN MANAGEMENT
Long term orientation Primarily short-term orientation

Collective decision-making with Individual decision-making

consensus

Involvement of many people in preparing Involvement of few people in making

and making the decision and “selling” the decision to person with
divergent values
Decision flow from bottom to top and Decision initiated at the top; flowing
check down

Slow decision-making Fast decision-making; slow

Fast implementation of decision implementation requiring compromise,
often resulting on suboptimal decisions
ORGANIZING
JAPANESE
AMERICAN MANAGEMENT
MANAGEMENT
Collective responsibility and Individual responsibility and
accountability accountability

Ambiguity of decision responsibility Clear and specific decision responsibility

Informal organization structure Formal, bureaucratic organization

structure

Well-known common organization culture Lack of common organization culture

and philosophy; competitive spirit toward identification with profession rather than
other enterprises with company
 LEADING
JAPANESE AMERICAN MANAGEMENT
MANAGEMENT

Leader acting as a social facilitator and Leader acting as a decision maker and
group member head of the group

Paternalistic style Directive style

Often divergent values, individualism

Common values facilitating cooperation
sometimes hindering cooperation

Bottom-up communication Communication primarily top-down

Conclusion
 The results shows lower turn-over, increased job
commitment, and dramatically higher productivity.

 Theory Z involves providing job security to employees to

ensure their loyalty and long-term association with the
company. This also involves job rotation of employees to
develop their cross-functional skills.