Lecture 6

(10.11.12)

Open System and Contingency Management Theories, Discussion on Planning & Organizing

Chandrasen Kumar
M.Sc. (DU), MPA (LKYSPP, Singapore)

Todays overview
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Minor Exams: Discussion on nature of paper

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More about Open System Theory of Management

More about Contingency Theory of Management Planning and Organising: Basic discussion today and details shall continue

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4)

Open System Theory

This theory is different from the rest we have discussed earlier It says there is no one best way to run the organization or limited number of immutable principles uniformly applicable in all situations Emphasizes situational analysis:
Identification and Analysis of multiple variables affecting and determining organizational behaviour and effectiveness

Open System Theory

A system is a set of interrelated units The whole is greater than the sum of all units example? Traditional theories viewed organizations as closed systems:
It regarded the enterprise as sufficiently independent to allow most of its problems to be analyzed with reference to its internal structure and without reference to its external environment

Whereas OST views organisations as:

Entities existing in dynamic and interdependent relationship with environment receiving resources and transforming into outputs and transmitting them to environment, reactions are then fed-back to the system as input, and cycle is maintained

Open System Theory

Survival is the primary goal and in order to do that

Organizations must acquire and develop Ve entropy because closed systems experience chaos, eg. Wearing out of parts, breakdown etc.

Open systems have differentiation and elaboration of roles through specialization and equifianlity Open systems amy achieve purposes/goals through diverse sets of inputs and different configuration of system componenets Environment emerges as crucial variable Managing requires constant monitoring of environment to overcome complacency and obsoletness

Open System Theory

Thus OST:

Provides a framework analyzing and understanding an organization and required management system/practices Does not negate other theories we have studied Merely encourages to recognize all organizations are same but they are all different

Contingency Theory

This theory is also different from the rest we have discussed earlier and

Provides another framework analyzing and understanding an organization and required management system/practices Does not negate other theories we have studied Emphasizes the differences among organizations and seeks to identify variables contingencies affecting

Organizational structure Performance and Effectiveness

Contingency Theory

Environment affects organizational behavior James Thomson identified stability and homogeneity are crucial contingencies for structure Organizations adapt to unstable heterogeneous environment through

Decentralization Increase in monitoring units and Complex divisional structure

Contingency Theory

Different contingencies have different impact

Laurence and Lorsch Stability impacts differentiation, formalization and centralization Organizational technology Basic work flow, process and methods Fred Fiedler Leadership styles: Different situations with different leders would give different outputs

Thus Contingency Theory

Substituted it all depends for One best way

Planning Learning overview

How do managers plan?

What types of plans do managers use?

What are the useful planning tools and techniques?

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How do managers plan?

Planning The process of setting objectives and determining how to best accomplish them. Objectives Identify the specific results or desired outcomes that one intends to achieve. Plan A statement of action steps to be taken in order to accomplish the objectives.

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How do managers plan?

Steps

in the planning process:

Define your objectives. Determine where you stand vis--vis objectives. Develop premises regarding future conditions.

Analyze and choose among action alternatives.

Implement the plan and evaluate results.

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The roles of planning and controlling in the management process.

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How do managers plan?

Benefits of planning:

Improves focus and flexibility. Improves action orientation. Improves coordination.

Improves time management.

Improves control.

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A sample means-ends chain for total quality management.

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What types of plans do managers use?

Short-range and long-range plans Short-range plans = 1 year or less Intermediate-range plans = 1 to 2 years Long-range plans = 3 or more years
People

vary in their capability to deal effectively with different time horizons. Higher management levels focus on longer time horizons.

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What types of plans do managers use?

Strategic and operational plans Strategic plans set broad, comprehensive, and longer-term action directions for the entire organization. Operational plans define what needs to be done in specific areas to implement strategic plans.

Production plans Financial plans Facilities plans Marketing plans Human resource plans

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What types of plans do managers use?

Policies and procedures Standing plans

Policies and procedures that are designed for repeated use.

Broad guidelines for making decisions and taking action in specific circumstances. Plans that describe exactly what actions are to be taken in specific situations.

Policy

Rules or procedures

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What types of plans do managers use?

Budgets and project schedules Single-use plans
Only used once to meet the needs and objectives of a well-

defined situation in a timely manner.

Budgets

Single-use plans that commit resources to activities, projects, or programs. Fixed, flexible, and zero-based budgets. One-time activities that have clear beginning and end points. Project management and project schedules.

Projects

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What are the useful planning tools and techniques?

Forecasting

Making assumptions about what will happen in the future. Qualitative forecasting uses expert opinions. Quantitative forecasting uses mathematical and statistical analysis. All forecasts rely on human judgment. Planning involves deciding on how to deal with the implications of a forecast.

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What are the useful planning tools and techniques?

Contingency

planning

Identifying alternative courses of action that can be implemented to meet the needs of changing circumstances. Contingency plans anticipate changing conditions. Contingency plans contain trigger points.

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Study Question 3: What are the useful planning tools and techniques?
Scenario planning

A long-term version of contingency planning. Identifying alternative future scenarios. Plans made for each future scenario.

Increases organizations flexibility and preparation for

future shocks.

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What are the useful planning tools and techniques?

Benchmarking

Use of external comparisons to better evaluate current performance and identify possible actions for the future.

Adopting best practices of other organizations that

achieve superior performance.

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What are the useful planning tools and techniques?

Use of staff planners

Coordinating the planning function for the total

organization or one of its major components.

Possible communication gaps between staff planners and line management.

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What are the useful planning tools and techniques?

Participation and involvement

Participatory planning requires that the planning process include people who will be affected by the plans and/or will help implement them. Benefits of participation and involvement:

Promotes creativity in planning. Increases available information.

Fosters understanding, acceptance, and commitment to the final plan.

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How participation and involvement help build commitments to plans.

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