Although the classical theories of organization had major flaws, they paved the way for the development of contemporary theories of organization, those that have influenced managerial thinking in recent decades.
These more recent theories of organization include:
- The systems approach,
- The behavioural approach and
- The contingency approach.
1. SYSTEMS APPROACH: The
1960s saw a theoretic development that helped in integrating and synthesizing
some of the divergent views coming from traditional, behavioural and management
science sources. This was general systems theory, a way of thinking about any
phenomenon that concentrates on identifying a common set of interdependent
elements, the whole that they represent, and the relationship among the parts
(elements) that determined the unique Characteristics of the whole. Systems
theory, in simple terms, is the big picture that overcomes the common weakness
of viewing things in too narrow perspective.
The emphasis is on the whole
person and the total organization. Just as the ripple effect of throwing a rock
into a quite pond extends a long way in all directions, so most phenomena are inter-related
with much broader range of factors than we normally assume. System theory
attempts to view the organization as a unified purposeful entity composed of
inter-related parts. Rather than dealing separately with the various parts of
an organization, the systems theory gives managers a way of looking at an
organization as a whole and a part of the larger, external environment. In so
doing, systems theory tells us that the activity of any part of an organization
affects the activity of every other part.
The job of a manager is to ensure
that all parts of the organization are co-ordinated internally so that the
organization’s goal can be achieved. A systems view of management for instance,
would recognize that, regardless of how efficient the production department
might be, if the marketing department does not anticipate changes in consumer
taste and work with the product development department in creating what
consumers want, the organization’s overall performance will be hampered.
SOME KEY CONCEPTS: Many of
the concepts of systems theory are finding their way into the language of
management in recent year. In order to keep pace with current developments it
would be necessary for us to discuss the systems vocabulary here.
1. SUB-SYSTEMS: The parts
that make up a whole of a system are called sub-systems. And each system in
turn may be a sub-system of a still larger whole.
(a) Goal Sub-System:
People working together in organizations will have common purposes that bind
their efforts together. Group goal and objectives define a sub-system essential
for total system effectiveness.
(b)
Technical Sub-System: The collective knowledge of individuals using techniques,
equipment, and tools establish a sub-system of technical processes. This system
may include facilities, methods of work and elements of skill.
(c)
Structural Sub-System: Individuals and
groups with inter-related activities illustrate obvious structural sub-systems.
Less obvious interdependent relationships exist that also form part of the
system. These may include, for example, the inter-dependence of purchasing and
production scheduling activities.
(d)
Managerial Sub-System: Managers provide links throughout their organizations to
co-ordinate other sub-systems and to plan, organize, lead and control
organizational processes.
(e)
Psychological Sub-System: Psychological factors influence group behaviour as
well as behaviour of individuals within the groups. The social aspect of people
working in a close proximity influences group activities. These two dimensions
are important factors that affect other sub-systems, and in turn they are
influenced by other sub-systems.
2.
SYNERGY: Synergy means that the
whole is greater than the sum of its parts. A watch that is disassembled has
the same number of parts as one that is properly assembled. However, the
assembled watch has a phenomenon that the disassembled one lacks-it keeps time
(synergy). When the parts of an organization are properly inter-related (such
as an assembly line), the output is much greater than it would otherwise be.
Synergy represents one of the basic challenges of management getting all of the
elements of an organization functioning together so that output is optimal.
3. OPEN AND CLOSED SYSTEMS: A system is considered an open system if it
interacts with its environment: It is considered closed system if it does not.
Clearly, all organizations must interact with and are dependent on their
environment. An organization that is not adaptive and responsive to its
environment would not survive or grow over any extended period of time. It has
to be responsive to demands placed on it by both its internal and external
environments.
4. STEM
BOUNDARIES: Every system has
boundaries that rate it from other systems and from its environments. In a closed
system, the system boundaries are more flexible. Identifying appropriate system
boundaries is a skill that can differentiate effective from ineffective
managers.
5. INPUT-TRANSFORMATION-OUTPUT MODEL: An
open system receives inputs from its environment which it transforms into
output in interaction with environmental variables. For a business firm, input would be material, labour and capital. The transformations
process would turn these inputs into finished products or services. The system’s success depends on successful interactions with its environment: that is, those groups or institutions upon which it is dependent. These might include suppliers, unions, financial institutions, government agencies and customers. The sale of outputs generate revenue, which can be used to pay wages and taxes, buy inputs, repay loans, and generate profit for shareholders. If revenues are not large enough to satisfy environmental demands, the organization shrinks or dies. Thus, a system has flows of information, materials and energy, These enter the system from the environment as inputs, undergo transformation process within the system and exit the system as outputs.
output in interaction with environmental variables. For a business firm, input would be material, labour and capital. The transformations
process would turn these inputs into finished products or services. The system’s success depends on successful interactions with its environment: that is, those groups or institutions upon which it is dependent. These might include suppliers, unions, financial institutions, government agencies and customers. The sale of outputs generate revenue, which can be used to pay wages and taxes, buy inputs, repay loans, and generate profit for shareholders. If revenues are not large enough to satisfy environmental demands, the organization shrinks or dies. Thus, a system has flows of information, materials and energy, These enter the system from the environment as inputs, undergo transformation process within the system and exit the system as outputs.
6. FEEDBACK: According to J.F. Stoner, feedback is the key to system controls. As operations of the system proceed, information is feedback to the appropriate people or perhaps to a computer so that the work can be accessed and, if necessary, corrected. Feedback provides warning signals regarding impending dangers, for example, complaints from customers provide negative feedback calling attention production improvements and so on.
EVALUATION: The practical implications of systems theory for
managers are enormous. Most effective managers operate with a systems
mentality even though they may not be consciously aware of it. As a matter of
course, executives ask what effect a decision will have on others. They think
before they act, implying a process of evaluating the impact their actions will
have.
A
conscious commitment to systems thinking requires explicit responsibility for
forming decisions in terms of how the entire organization will be affected.
With a systems perspective, general managers can more easily maintain a balance
between the needs of .the various parts of the enterprise and goals of the firm
as a whole.
2. CONTINGENCY APPROACH: The
problem with universal principles management as advocated by early theorists is
that few principles are universal. Research has shown that management methods
used in one circumstance seldom work the same way in others. Some employees are
most often motivated by economic gains while others have greater need for
challenging work. Still others care only
about protecting their egos. The same individual may he motivated by different things
in a variety of situations. Contingency theory is based on the premise that
situations dictate managerial action that is, different situations call for
different approaches. No single way of solving problems is best for all
situations. This is because tasks and people in organizations differ. The
advocates of this theory are Selznik Burns, Stalker and Woodward.
3.BEHAVIOURAL APPROACH: The Behavioural Approach applies the knowledge of
the behaviour sciences - psychology, sociology, and anthropology - to managing
people. We have seen that human relationists believed that people are social
beings who are motivated by social interactions, that their job performance
will increase when the job gives them opportunities to socialized. Behavioural
scientists felt this to be an oversimplified model of human motivation and
began to undertake serious investigations. A number of behavioural scientists
have contributed to the development of this approach. Among the forerunners was
Abram Maslow, who developed a hierarchy of human needs, which became the basis
for explaining work motivation in organizations. According to Maslow people
generally have five basic needs (physiological, safety, social self-esteem and
self-actualization) and they satisfy these needs in order of importance.
Behaviour scientists believe that people will be productive if they are given
opportunities to use their abilities and creative skills. Building On Maslow’s
theory of human needs, many behavioural scientists (Chris Argris, Douglas Mc
Gregor, Rnesis Likert) argued that existing jobs and managerial practices
should be redesigned and restructured to give employees an opportunity to
satisfy their higher- order needs, although working independently, they
proposed a common theme: People are basically good and, in order to stimulate their
performance, management should humanize work.. They argued,, for instance, for
increased participation by employees in those decisions that affect them,
demonstration by management of greater trust and confidence in people,
increased emphasis be given to integrating individuals and organizational goals
and allowing employees to self- monitor their own activities in place of
external control measures. These behavioural writers introduced a strong
humanist orientation to the manager’s job.
Contributions: The outpouring of
behavioural research in the 1960s and 1970s tremendously increased knowledge
about how people behave in organizations. The advancement in behavoural science
has made significant contribution to the development of Human Resource Management,
which emphasizes the effective utilization of human resource in organization.
The concept of job enrichment (making job interesting), management by
objectives (a goal setting process conducted jointly by employees and their
superiors) and positive reinforcement (rewarding good performance) were results
of behavioual science approach.