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Systems and Contingency Approaches

SYSTEM APPROACH TO MANAGEMENT

In the 1960, an approach to management appeared which try to unify the prior schools of thought. This approach is commonly known as ‘Systems Approach’. Its early contributors include Ludwing Von Bertalanfty, Lawrence J. Henderson, W.G. Scott, Deniel Katz, Robert L. Kahn, W. Buckley and J.D. Thompson.

They viewed organisation as an organic and open system, which is composed of interacting and interdependent parts, called subsystems. The system approach is top took upon management as a system or as “an organised whole” made up of sub- systems integrated into a unity or orderly totality.

Systems approach is based on the generalization that everything is inter-related and inter­dependent. A system is composed of related and dependent element which when in interaction, forms a unitary whole. A system is simply an assemblage or combination of things or parts forming a complex whole.

One its most important characteristic is that it is composed of hierarchy of sub-systems. That is the parts forming the major system and so on. For example, the world can be considered-to be a system in which various national economies are sub-systems.

In turn, each national economy is composed of its various industries, each industry is composed of firms’ and of course a firm can be considered a system composed of sub-systems as production, marketing, finance, accounting and so on.

Features of Systems Approach:

(i) A system consists of interacting elements. It is set of inter-related and inter-dependent parts arranged in a manner that produces a unified whole.

(ii) The various sub-systems should be studied in their inter-relationships rather, than in isolation from each other.

(iii) An organizational system has a boundary that determines which parts are internal and which are external.

(iv) A system does not exist in a vacuum. It receives information, material and energy from other systems as inputs. These inputs undergo a transformation process within a system and leave the system as output to other systems.

(v) An organisation is a dynamic system as it is responsive to its environment. It is vulnerable to change in its environment.

In the systems approach, attention is paid towards the overall effectiveness of the system rather than the effectiveness of the sub-systems. The interdependence of the sub-systems is taken into account. The idea of systems can be applied at an organizational level. In Appling system concepts, organizations are taken into account and not only the objectives and performances of different departments (sub-systems).

The systems approach is considered both general and specialized systems. The general systems approach to management is mainly concerned with formal organizations and the concepts are relating to technique of sociology, psychology and philosophy. The specific management system includes the analysis of organizational structure, information, planning and control mechanism and job design, etc.

Systems theory is useful to management because it aims at achieving the objectives and it views organisation as an open system. Chester Barnard was the first person to utilize the systems approach in the field of management.

Evaluation of System Approach:

The systems approach assists in studying the functions of complex organizations and has been utilized as the base for the new kinds of organizations like project management organisation. It is possible to bring out the inter-relations in various functions like planning, organizing, directing and controlling. This approach has an edge over the other approaches because it is very close to reality. This approach is called abstract and vague. It cannot be easily applied to large and complex organizations. Moreover, it does not provide any tool and technique for managers.

CONTINGENCY APPROACHES TO MANAGEMENT

The ‘Contingency Approach to Management’ is relatively a new approach to manage­ment.

It is an extension of the system approach. The basic idea of the contingency approach is that the organisation has to come up with different situations in different ways. There is no single best way of managing applicable to all situations.

In order to be effective, the internal functioning of an organisation must be consistent with the demands of the external environment. The managers must keep the functioning of an organisation in harmony with the needs of its members and the external forces.

The contingency approach to management is based on the idea that there is no single best way to manage. Contingency refers to the immediate contingent circumstances. Effective organizations must tailor their planning, organizing, leading, and controlling to their particular circumstances. In other words, managers should identify the conditions of a task, the requirements of the management job, and people involved as parts of a complete management situation. The leaders must then work to integrate all these facets into a solution that is most appropriate for a specific circumstance.

The main characteristics of the Contingency Approach to management

(i) Management is entirely situational. The application and effectiveness of any tech­nique is contingent on the situation.

(ii) Management should match its approach to the requirements of the particular situa­tion. To be effective, management policies and practices must respond to environmental changes. The organisation structure, the leadership style, the control system—all should be designed to fit the particular situation.

(iii) As management’s success depends on its ability to cope with its environment, it should sharpen its diagnostic skills so as to anticipate and comprehend environmental changes.

(iv) The managers should understand that there is no one best way to manage.

(v) Because of the specific organisation-environment relationship, no action can be universal. It varies from situation to situation.

Contingency approach is pragmatic in nature. It avoids vague judgements and widens the horizons of practicing managers. It guides them to be alert and adaptive to environmental factors while choosing their techniques and styles. They get the opportunity of becoming innovative and creative.

The contingency approach has a wide-ranging applicability and prac­tical utility in organisation and management. It advocates comparative analysis of the organizations to bring about matching between the organizational structure and situational peculi­arities. Hence, this approach is also known as ‘Situational Approach to Management’.

The contingency approach focuses attention on specific situational factors that affect the management strategy. It requires the managers to develop skill in situational analysis. It com­bines the mechanistic and humanistic approaches to fit the particular situation.

It is an improvement over the system approach as it not only examines the relationships between the sub-systems of an organisation but the relationship between the organisation and its environ­ment too.

Factors that influence the contingency theory are numerous. These include the following:

  • The size of the organization
  • How the firm adapts itself to its environment
  • Differences among resources and operations activities
  • Assumption of managers about employees
  • Strategies
  • Technologies being used
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