Theories of Management - Contemporary management approaches - Chapter 1 - Part 8

D. Contemporary management approaches:

Classical, Behavioral and scientific management approaches tend to focus more on the internal workings of organizations. The contributions of each school's of thought are still being applied today. However both researchers and practitioners are now giving more attention to interaction of the organizations with their external environment. The contemporary approaches to management include:

1.                The Systems Theory

2.                The Contingency Theory

a. Contingency theory of management

Contingency theorists argue that each organizational circumstance is unique and as a result management approaches should be selected and applied based on the specific situation at hand. The contingency theory therefore supports the view that "there is no one best way to manage" and emphasizes the use of any management approach - scientific, behavioral and quantitative - provided it is suited to the organizational situation and helps managers to manage more effectively. This theory implies that managers can make decisions based on the situation at hand rather than a "one size fits all" method. A manager takes appropriate action based on aspects most important to the current situation.

b. System theory of management

In the systems theory, organizations are seen as systems composed of a set of      interdependent parts which co-ordinate their efforts in order to achieve common goals. Organizational systems operate on the basis of four elements:

1.      Inputs - the organizational resources, e.g. raw materials, human resources, financial resources, information and equipment.

2.      Transformation processes - the conversion of inputs into outputs through managerial functions, technological operations and production activities

3.      Outputs - the results of the transformation processes, which include profits/losses, goods/services and so on. Some of these outputs, like for example products and services, are returned to the environment for use by other organizations and individuals.

4.      Feedback - the environment's reactions to these outputs are relayed back to the system.

This approach allows managers to assess their organization’s interaction with the larger environment. An open system is an organizational system which interacts with its environment whereas a closed system is one that does not do so and is therefore self-sufficient. However, in reality, an organization cannot be a totally closed system because for survival, an organization has to interact with its environment.