5 Approaches of Management

Dr.Shafali Nagpal

4.1  Learning Objective

4.2  Introduction

4.3 Early Management Thoughts

4.4 Classical Approach

4.5 Modern Management Approach

4.6 Quantitative Approach

4.7 System Approach

4.8 Summary

4.1 Learning Objective

After completing this module, you will be able to:

Objective

1. To understand the concept of approaches of management
2. To know different management practices
3. To examine the effectiveness of the directorate approaches towards organizational development

Introduction

Environmental change and uncertainty, work technology, and the size of a company are all identified as environmental factors impacting the effectiveness of different organizational forms. According to the contingency perspective, stable environments suggest mechanical structures that emphasize centralization, formalization, standardization, and specialization to achieve efficiency and consistency. Certainty and predictability permit the use of policies, rules, and procedures to guide decision-making for routine tasks and problems. Unstable environments suggest organic structures which emphasize decentralization to achieve flexibility and adaptability. Uncertainty and unpredictability require general problem-solving methods for no routine duties and challenges. Paul Lawrence and Jay Lorsch suggest that organizational units operating in differing environments develop different internal unit characteristics and that the greater the internal differences, the greater the need for coordination between units.

Joan Woodward found that financially successful manufacturing organizations with different types of work technologies (such as unit or small batch; large-batch or mass-production; or continuous-process) differed in the number of management levels, a span of management, and the degree of worker specialization. She linked differences in the organization to firm performance and suggested that certain organizational forms were appropriate for certain types of work technologies.

The contingency approach (the situational approach): Managers, consultants, and researchers tried to apply the concepts of the major schools to real-life situations, and the approach emerged. The methods that were quite effective in one situation did not work in others. The explanations were sought as to why an organizational development program works brilliantly in one situation and fails miserably in another. Results differ because of a difference in cases is a logical answer to such questions under this approach. Thus a technique that works in one case does not necessarily work in others.

Accordingly, a manager has to identify the technique that will, in a particular situation, under special circumstances, and at a given time works successfully and contributes to the achievement of managerial goals.

If management desires to increase the productivity, a new work-simplification scheme may be prescribed by a classical theorist, while a psychologically motivating climate and a technique of job enrichment regarding both difference in scope and responsibility and greater autonomy to make decisions may be prescribed by the behavioural scientist. However, the manager under the contingency approach goes for the solution that suits the best in a given situation. Work simplification is appropriate if the workers are unskilled and resources and training opportunities are limited, and a job-enrichment program is more efficient for craftsmen motivated by pride in their abilities.

The contingency approach worked as a milestone in the development of management thought as it deals with each situation differently giving a unique solution specifically required for that set of organizational relationships under the given circumstances.

Source: https://image.slidesharecdn.com/teorimanajemenmoderen-kelompok/modern-management-theories

Features of Contingency Approach:

The main features of contingency approach are as follows –

The applications and its effects are contingent on the situation. As management is entirely situational, the conditions and complexity of the situation determine which measure or technique is applicable. Since management’s success depends on its ability to compete with the environment, it should sharpen its skills to anticipate and comprehend with environmental changes. It is the ‘If’ and ‘then’ approach to management. Management has to determine and take action, e.g. if workers have strong physiological needs, then financial motivators should be adopted. There is not an only single way to manage. They (managers) must not consider management principles and techniques universal. Every situation is unique by itself and requires a different perspective and different handling.

Practical Utility of Contingency Approach

The contingency approach has real usage in the management world. It is action-oriented in nature. The main contributions of contingency approach are:

The reserve approach provides a clear picture of the realities of the managerial job. It is not suggestive of pre-conceived principles. It is free from value judgments and exhorts managerial choices to be made in the light of environmental factors.

The contingency approach does not suggest that findings of earlier approaches are useless. It recognizes that managerial functions and principles are useful but should be used with discretion and care to suit the specific situation. It is close to real world. It guides the managers that effectiveness of any technique is contingent on the given situation. It realizes that significant differences exist between each situation. Moreover, the best solution is the one that is responsive to the peculiarities of the particular situation. Contingency theory is beneficial to organizations because of the potential for learning from specific situations and using these lessons to influence future management of the same or similar situations. The ability to adapt to external pressures and changes is also an advantage. Contingency theory may also produce more well-rounded leaders who can develop their skills in multiple areas.

Humanistic Approach

Humanistic management theories were developed in the 20th century in reaction to earlier theories of scientific management that emphasized productivity and profit above all other concerns. According to the Humanistic Management Center, an approach to management must include three key dimensions to be considered humanistic. The first is respect for the basic dignity and humanity of employees, customers and anyone else affected by the company’s actions. The second is that all business decisions must include thoughtful, ethical analysis. The third is that business decisions should be made in dialogue with all those who will be affected by them.

The Humanistic Management Center advocates a paradigm shift away from economistic views on market activities towards a humanistic approach. To move from criticism of the status quo towards a fruitful discourse on alternatives we have developed a three-stepped approach offering guidance and an anchor for reflection on managerial decisions as well as decision-making processes. We understand humanistic management by three interrelated dimensions. These are firstly that we as humans deserve and rightfully expect our dignity to be respected under all circumstance. Secondly, that ethical consideration must form part and parcel of business decisions and thirdly that actively embracing corporate responsibilities is contingent upon initiating and maintaining an ongoing dialogue with stakeholders.

Firstly, that genuine respect for the dignity of every person is the foundation for interpersonal interaction, including any interactions taking place in business contexts. Part of what makes us human is our shared vulnerability. Investigating humanistic management is therefore based on the fundamental acceptance that the condition humane entails our common need for protection of our human dignity. Respecting every person, in all its depth and complexity, as individually unique and collectively worthy of complete freedom from exploitation is a shared endeavour of societies and all their institutions. We must therefore never view people as mere means of production within economic processes but embrace every person as ends in themselves.

Secondly, that ethical reflection must form an integrated part of business decisions. If one follows through on certain respect for the dignity of all persons, one must accept that decisions that impact others must be examined regarding their consequences for all those affected. Humanistic management consequently criticizes one-dimensional managerial objectives such as profit maximization. Economic rationality becomes incompatible with protecting human dignity whenever it leaves no room for the balancing of interests of stakeholders based on the quality of the arguments articulated. When factual power overrides argumentative power – as any paradigm that proclaims the maximization of particular interests demands – those interests that cannot enforce their consideration are excluded and suppressed. However, equally respecting all stakeholders is a necessary precondition of the unconditional respect for the dignity of all persons affected by a company’s activities. In short, without the integration of ethical considerations into managerial decision making, claims of assuming corporate responsibility are little more but a hollow catch phrase.

Thirdly, that seeking normative legitimacy for corporate activities is crucial for assuming corporate responsibilities. This third dimension, which is to be understood as the dialogical extension of ethical reflection on corporate conduct, allows for the aligning of good intentions with activities that have the potential to produce good outcomes. The integration of ethical reflection into business decisions alone can be seen as a monological process in which the decision-maker might, in all sincerity, fail to see the concerns of others, leading to what we may call honest mistakes. Therefore, the third guiding principle – seeking normative legitimacy – is necessary to ensure that the outcomes of (monological) ethical reflection are tested by entering into a dialogue with those who may challenge any aspect of a business’s conduct. The only managerial decision about whether a certain action is ethically sound is thereby transferred to the “moral site” of stakeholder dialogue, where the manager shares the responsibility with the interested parties to embark on a course of action that is acceptable to all parties.

Source: http://upload.wikimedia.org/wikipedia/en/e/ee/Phenomenal_field.jpg Consequences of Humanistic Approach

Humanistic Management Network advocates a paradigm shift away from economistic views on market activities towards a humanistic approach. To move from criticism of the status quo towards a fruitful discourse on alternatives we have developed a three-stepped approach offering guidance and an anchor for reflection on managerial decisions as well as decision-making processes. We understand humanistic management by three interrelated dimensions.

These are:

• Firstly, that we as humans deserve and rightfully expect our dignity to be respected under all circumstances.
• Secondly, that ethical consideration must form part and parcel of business decisions, and Thirdly, that actively embracing corporate responsibility is contingent upon initiating and maintaining an ongoing dialogue with all stakeholders.

The Humanistic Management Network defends human dignity in the face of its vulnerability. The dignity of the person lies in her or his capacity to define, autonomously, the purpose of her or his existence. Since human autonomy realizes itself through social cooperation, economic relations and business activities can either foster or obstruct human life and well-being. Against the widespread objectification of human subjects into human resources, against the common instrumentalization of people into human capital and a mere means for profit, we uphold humanity as the ultimate end and fundamental principle of all economic activity.

Mechanistic approaches

DEFINITION: According to Black’s Law Dictionary mechanistic organization is “the organization is hierarchical and bureaucratic. It is characterized by its (1) highly centralized authority, (2) formalized procedures and practices, and (3) specialized functions. The mechanistic organization is relatively easier and simpler to organize, but rapid change is very challenging. Contrast to the organic organization.”

Although a new company’s small size may not require a strict organization of work and workers, growth demands order. Organizing tasks and employees produces a business structure. “Mechanistic” describes the strictest and most formal of these structures. Mechanistic companies have fine divisions of labour, resulting in highly specialized jobs; they rely on management for control, creating a bureaucracy; and they have many rules and a strict chain of command. The company can be likened to a machine, its many parts synchronized to produce a standard, predictable output. In the early twentieth century, the Industrial Age was well under way, and mass production had taken hold. Business thinkers were studying work and workplaces, coming up with ideas on how to best promote the highest possible efficiency and productivity. They viewed workplaces like machines. The mechanistic organization evolved from this, featuring job specialization, a bureaucratic management hierarchy, centralized power resting at the top of the organization and many rules. These characteristics do indeed produce efficiency and productivity. The mechanical organizational structure also lets a company benefit through economies of scale, especially as applied to mass production.

Description

Because of their hierarchy, mechanical structures are vertically oriented. The most mechanistic are the functional organizational structure, with its tall, triangular shape. Many workers from the structure’s foundation, grouped into departments by similar activities such as production. Above them sits their managers. When each employee narrowly specializes in some limited part of a larger whole, one manager can easily supervise many employees and has a wide “span of control.” The span of control gets smaller moving up the organization, where managers manage other managers. The central power of the company crowns it all.

Advantage

• In a mechanistic organization, activities are divided into different groups by common nature.
• Works are distributed among the subordinates by their skills and efficiency.

Proper discipline

In this organization structure, top level management has centralized power. There is a system of chain of command from the top level to secondary levels. Subordinates are responsible for their immediate superiors. Therefore, all the subordinates perform activities according to best of their ability.

Minimize supervision cost

In a mechanistic organization, works are divided among the employees by their specialization. It means the right job is assigned to the right person. It helps to minimize supervision cost as all the subordinates perform activities according to best their capabilities.

Quick decision and implementation

In this organization, only top level management involves in the decision-making process. It does not consult with subordinates in decision-making process. Therefore, quick decision and its implementation become possible. Moreover, in this competitive market environment, quick decision and its implementation are essential for business success.

Network position

There is the provision of a network of position in the management hierarchy. Top level management provides instruction and guidance to middle-level managers, middle-level managers to lower level managers and again lower level managers to operating level employees. This network is taken into consideration while communicating information. It helps for the timely flow of information.

Fixation of responsibility

In this organizational structure, each has given specific responsibility by ability. He can neither transfer job to others nor avoid it. Thus, the concerned employee needs to accomplish given job himself. It develops the feeling of self-responsibility among the employees.

Effective management

It is a bureaucratic form of organization structure. In this organization, there are specific rules, regulations, policies and working system. The top-level management has sole authority in decision-making process. There is a system of chain of command from the top level to secondary levels. Therefore, the manager can effectively manage the organization.

Disadvantages

As the mechanical structure gained widespread and prolonged use, researchers and organizational designers found that the very mechanization that allows for productivity, economy and efficiency also causes problems. The structure’s inherent bureaucracy hampers efforts to respond to outside market forces quickly. Innovation has to wait on red tape. Rigid control and job specialization mean employees are not free to be creative problem-solvers. As mere cogs, staff morale may be low. Finally, grouping employees by function contribute to departmental isolation. Interdepartmental cooperation and communication suffer in mechanical structures.

Work overload on manager

In a mechanistic organization, there is the provision of centralized authority and decision-making authority is vested in the top level manager. Besides, the manager needs to involve in day to day supervision and guidance. Hence it maximizes work overload on manager due to which he can not involve in creative and innovative works.

Autocratic leadership

The mechanistic organization emphasizes to autocratic leadership. The system of delegation of authority to subordinates by given responsibility does not prevail. Subordinates need to accomplish given job. They have no right to provide suggestions and information to the manager. It does not support for expansion and diversification of business.

Static and rigid

It is a static, rigid and tightly controlled structure. It emphasizes on standardized activities. There is no provision of change in the working system and procedures by changing the environment of the society. In such cases, it is harder to adapt the organizational activities in the dynamic environment.

More formalization

There is the provision of rules, regulations and policies for official activities. All subordinates need to work in accordance with specified rules and policies of the organization. They cannot use their skill and efficiency while doing work. The fulfilment of more formalization makes difficulty for a quick decision and smooth functioning of the organization.

Impractical decision

There is no provision of participation of subordinates in decision-making process. They have no right to provide suggestions and information to managers at the time of taking a decision. Only top-level manager is involved in decision-making process. Since limited persons are involved in decision-making, there is the possibility of the impractical decision.

One way communication

It emphasizes in autocratic leadership. The information is communicated vertically only from the top level to secondary levels. Here only the manager provides information of instruction and guidance to subordinates. Such one-way system of communication does not support for the smooth functioning of the organization.

Hard for coordination

In this structure, specific work is assigned to individuals by their skills. They perform the given task properly. However, there is no mechanism for maintaining coordination over their performance. Hence top level management needs to spend more time.

CHARACTERISTICS: Employees are often found working in groups and share input on tasks. There are usually teams that handle one task. Communication is open between employees, managers and executives though they are typically just known as ‘the owner’. There is a greater scale of verbal communication between parties. There is also more face-to-face time within the hierarchy of power.

STRUCTURE: Companies in an organic organization structure typically have a more open communication and contribution to tasks at hand. The structure of the business is more adaptable and flexible to changes. The environment is unpredictable, but because of the freedom afforded the employees and management, it is better maintained. Good examples of this type of structure would be Google and the coveted positions that lie within the Facebook Corporation. Organic organizations have quickly realized that a happy workplace makes for a happy employee.

Mechanistic Structures Include:

• Belief upper management is better capable of making decisions
• Management instructions must be followed
• Communication and control must proceed through hierarchical routes
• More emphasis toward completing a task opposed to achieving company goals
• Employees are more jobs specialized and placed into certain departments
• Low differentiation of tasks

Summary

The Environmental factors of an organization like uncertainty, technology, work technology, and the size of a company impact the effectiveness of different organizational forms. Different approaches advocate different views. In contingency approach stable environments suggest mechanistic structures that emphasize centralization, formalization, standardization, and specialization to achieve efficiency and consistency. The Humanistic Management Center advocates a paradigm shift away from economistic views on market activities towards a humanistic approach. In mechanistic organization, activities are divided into different groups on the basis of common nature. Works are divided among the subordinates on the basis of their skills and efficiency.

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