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experiments, has described an organisation as ―a social system, a system of

cliques, informal status system, rituals and a mixture of logical, non-logical
behaviour.‖ Thus, an organisation is not merely a formal structure of functions in
which production is determined by the official prescription but the production
norm is set by social norms. Since people are social beings, their social
characteristics determine the output and efficiency in the organisation. Economic
rewards and productivity do not necessarily go together. Many non-economic
rewards and sanctions affect the behaviour of workers and modify the impact of
economic rewards. While motivating workers, these factors should be taken into
account.
2. Group Influence. Workers being social beings, they create groups which
may be different from their official group. In fact, groups are formed to overcome
the shortcomings of formal relationships. The group determines the norm of
behaviour of members. If a person resists a particular norm of group behaviour,
he tries to change the group norm because any deviation from the group norm
will make him unacceptable to the group. Thus, management cannot deal with
workers as individuals but as members of work group subject to the influence of
the group.
3. Conflicts. The informal relations of workers create groups, and there
may be conflict between organisation and groups so created. The conflict may be
because of incompatible objectives of the two. However, groups may help to
achieve organisational objectives by overcoming the restraining aspect of the
formal relations which produce hindrance in productivity. Conflict may also arise
because of maladjustment of workers and organisation. As the individual moves
through the time and space within the organisation, there constantly arises the
need for adjustment of the individual to the total structure. In the absence of such
adjustment, either individual progresses upward at a rapid pace or the
organisation structure itself may change over the time while the individual
remains standstill. In either event, the change takes place in the position of the
individual with respect to organisation structure hence, adjustment is required.
4. Leadership. Leadership is important for directing group behaviour, and
this is one of the most important aspects of managerial functions. However,
leadership cannot come only from a formally-appointed superior as held by
earlier thinkers. There may be informal leader as shown by bank wiring
experiments. In some areas, informal leader is more important in directing group
behaviour because of his identity with group objective. However, a superior is
more acceptable as a leader if his style is in accordance with human relations
approach, that is the superior should identify himself with the workers.
5. Supervision. Supervisory climate is an important aspect in determining
efficiency and output. Friendly to the workers, attentive, genuinely concerned
supervision affects the productivity favourably. For example, in the bank wiring

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room experiment, an entirely different supervisory climate—more friendly to the
workers and less use of authority in issuing orders—existed which helped in
productivity, while in regular departments, supervisors were concerned with
maintaining order and control which produced inhibiting atmosphere and resulted
in lower productivity.
6. Communication. The experiments show that communication is an
important aspect of organisation. Through communication, workers can be
explained the rationality of a particular action, participation of workers can be
sought in decision-making concerning the matter of their importance, problems
faced by them can be identified and attempts can be made to remove these. A
better understanding between management and workers can be developed by
identifying their attitudes opinions and methods of working and taking suitable
actions on these.

3.2.4 Criticisms of Hawthorne Experiments

Though Hawthorne experiments have opened a new chapter in
management by emphasising the importance of social factors in output, it is not
without fault. The experiments have been widely criticised by some behavioural
scientists because of lack of scientific objectivity used in arriving at various a
conclusions.
Some critics feel that there was bias and preconception on the part of the
Harvard researchers. One writer developed a detailed comparison between the
conclusions drawn by the researchers and the evidence presented, and found
that their conclusions were almost entirely unsupported. He asked the question,
―how it was possible for studies so nearly devoid of scientific merit, and
conclusions so little supported by evidence, to gain so influential and respected a
place within scientific disciplines and to hold this place for so long. Following
other criticisms have also been made against the Hawthorne experiments :
1. The Hawthorne researchers did not give sufficient attention to the
attitudes that people bring with them to the workplace. They did not recognize
such forces as class consciousness, the role of unions, and other extra-plant
forces on attitudes of workers.
2. The Hawthorne plant was not a typical plant because it was a thoroughly
unpleasant place to work. Therefore, the results could not be valid for others.
3. The Hawthorne studies look upon the worker as a means to an end, and
not an end himself. They assume acceptance of management‘s goals and look
on the worker as someone to be manipulated by management.
In spite of these shortcomings, Hawthorne experiments will be known for
discovering the importance of human factor in managing an organisation. The
experiments have stimulated many researchers to study the human problems in
management.

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(a) Neo-Classical Approach: Advocates of human relations and behavioural
science approach to management are primarily interested in the following areas
of management : (1) Organisation as a social system; (2) Employee motivation
through non-monetary incentives; (3) Democratic leadership; (4) Two-way
communication; (5) Employee development; (6) Group psychology and attitudes;
(7) Human importance in man-machine system. Let us deal with these areas in
brief.
1. The business organisation is not just a techno-economic system.
Basically it is a social system. It is a social organism.
2. The employee can also be motivated by many social and psychological
wants and not solely by economic incentives because his behaviour is also
influenced by feelings, emotions and attitudes. Logical factors (more money) are
less important than emotional factors in determining production efficiency. The
scientific management would ridicule this.
3. Democratic rather than authoritarian leadership is essential in order to
honour demands. Management must learn to develop co-operative attitudes and
not rely merely on command. Matured employees dislike command.
4. Effective two-way communication network is essential to establish
common flow of understanding in any organisation and then only organisation
can attain its goals. Hence, participation becomes an important instrument under
neoclassical approach.
5. Management must take greater interest in employee development and
workers satisfaction as there is a very close connection between morale and
productivity. In other words, productivity and satisfaction go together hand-in-
hand in any business.
6. Informal group and informal organisation must be recognised. Group
psychology plays an important role in any enterprise. We must rely more on
group efforts. Teamwork is the key to productivity. Management is responsible
for team work.
7. Management must develop social skills in addition to technical skills. The
neoclassical theory tried to solve the man machine equation by emphasising that
man is a living entity and he is far more important than the inanimate machine.
Hence, key to higher productivity lies not in technological development alone but
in reality it lies in the employee morale. Where morale is high, output is also high.
Man-to-Man relationships, team spirit, group harmony should be given top
preference by management.
Job structure, job design should receive secondary importance. Job
enrichment is given greater importance. Employees also expect greater
empowerment in planning and implementation (motivation, communication, co-
ordination), functions of management should receive more importance than the
techniques of planning and control.

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3.3 OTHER APPROACHES TO MANAGEMENT
3.3.1 Social Systems Approach
Social systems approach of management has extended the implications
of human relations approach further. This approach was introduced by Vilfredo
Pareto, a sociologist. His ideas were later developed by Chester Barnard who
synthesised the concept of social systems approach. According to this approach
an organisation is essentially a cultural system composed of people who work in
cooperation. As such for achieving organisational goals, a cooperative system
can be developed by under standing the behaviour of people in groups. The
major features of this approach are as follows :
1. Organisation is a social system, a system of cultural relationships.
2. Relationships exist among the external as well as internal environment of
the organisation.
3. Cooperation among group members is necessary for the achievement of
organisational objectives.
4. For effective management, efforts should be made for establishing
harmony between the goals of the organisation and the various groups therein.
(a)CONTRIBUTIONS OF BARNARD: The contributions of Chester Barnard to
management, particularly social systems approach, are overwhelming. His book
‗The Functions of the Executive,’ is regarded as the most influential book on the
management during the pre-modern management era. His analysis of
management is truly a social systems approach since, in order to comprehend
and analyse the functions of executives, he has looked for their major tasks in
the system in which they operate. In determining the tasks of executives, he has
analysed the nature of co-operative social system, as he found non-logical
factors also influencing human behaviour in the organisation. This is a marked
departure from the earlier approach. The major contributions of Barnard can be
presented as follows:
1. Concept of Organisation. Barnard suggests that classical concept of
organisation does not fully explain the features of an organisation. He has
defined formal organisation as a system of consciously coordinated activities of
two or more persons. In his opinion, an organisation exists when the following
three conditions are fulfilled : (i) there are persons able to communicate with
each other; (ii) they are willing to contribute to the action; and (iii) they attempt to
accomplish a common purpose.
2. Formal and Informal Organisations. Organisations can be divided into
two parts : formal and informal. The formal organisation has consciously
coordinated interactions which have a deliberate and common purpose. On the
other hand, the informal organisation refers to those social interactions which do
not have consciously coordinated joint purpose. The informal organisation exists

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to overcome the problems of formal organisation. In fact, Barnard has suggested
that executives should encourage the development of informal organisation to
serve as a means of communication, to bring cohesion in the organisation, and to
protect the individual from dominance and onslaught of the organisation. Both the
formal and the informal organisations depend on each other and there is
continuous interaction between the two. Therefore, in managing an organisation,
the manager should take into account both types of organisation.
3. Elements of Organisation. According to Barnard, there are four
elements of a formal organisation. These are : (i) a system of functionalisation so
that people can specialise, that is, departmentation; (ii) a system of effective and
efficient incentives so as to induce people to contribute to group action; (iii) a
system of power which will lead group members to accept the decisions of the
executives; and (iv) a system of logical decision-making.
4. Authority. Barnard does not agree with the classical view that authority
transcends from the top to down. He has given a new concept of authority which
is termed as ‗acceptance theory of authority‘ or ‗bottom-up authority.‘ In his
opinion a person does not obey an order because it has been given by a superior
but he will accept a communication as being authoritative only when four
conditions are met simultaneously : (i) he can understand the communication; (ii)
he believes that it is not inconsistent with the organisational purpose; (iii) he
believes it to be compatible with his personal interest as a whole; and (iv) he is
mentally and physically able to comply with it.
5. Functions of the Executive. Barnard has identified three types of
functions which an executive performs in a formal organisation. These are : (i)
maintenance of organisational communication through a system of organisation,
that is through formal interactions; (ii) the securing of essential services from
individuals in the organisation so as to achieve organisational purpose; and (iii)
the formulation and definition of organisational purpose.
6. Motivation. Apart from financial incentives which have their own
limitations in motivating the people, Barnard has suggested a number of non-
financial techniques for motivating people. Prominent among these are:
opportunity of power and distinction, pride of workmanship, pleasant
organisation, participation, mutual supporting personal attitudes, and feeling of
belongingness.
7. Executive Effectiveness. To make the executive effective requires a
high order of responsible leadership. While co-operation is the creative process,
leadership is the indispensable fulminator of its forces. Leadership is the most
strategic factor in securing cooperation from the people. Executive leadership
demands high calibre, technological competence, and technical and social skills.
The executive leadership should not have preconceived notions and false
ideologies. It should be above personal predilections and prejudices. The

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leadership is likely to commit the following four types of errors : (i) the
oversimplification of the economy of organisation life; (ii) disregarding the reality
of informal organisation and its necessity; (iii) an inversion of emphasis upon the
objective and subjective aspects of authority; and (iv) a confusion of morality with
responsibility. Therefore, executive should take adequate care to overcome
these problems.
8. Organisational Equilibrium. Organisational equilibrium refers to the
matching of individual efforts and organisational efforts to satisfy individuals. The
co-operation of individuals with the organisation brings forth new activities. The
organisation must afford satisfaction to individuals comprising it. This is required
to maintain equilibrium in the organisation. This equilibrium is not static but
dynamic. Demands and aspirations of individuals change and the organisation
has to cope with the dynamic situation. The equilibrium of the organisation
depends on the individuals working in it, other organisations and the society as a
whole. Thus, the organisation has to take into account the changes in the
society. The organisational equilibrium can be perceived not only through logical
appraisal but through analysis and intuition. Thus, many non-logical factors also
enter into organisational analysis. Therefore, the reasons for an action should not
only be logical but must also appeal to those attitudes, predilections, prejudices,
emotions, and mental background that cover action.
The above contributions of Barnard show how he was concerned for the
development of the organisation through social systems. His contributions are
regarded quite high in management. This is evident by the ideas expressed by
William Wolf about the book written by Barnard. ―The book is a sociology of
management. Its style of writing was purposely pitched at a high level of
discourse. Barnard was writing for social scientists, not for practitioners. He
believed that the field of management was lacking in concepts and was clouded
by ambiguous and even erroneous thinking. In a sense, he hoped that the
functions would set things right and guide the social scientists to more realistic
studies of organisation and management.‖

3.3.2 Decision Theory Approach

Decision theory approach looks at the basic problem of management
around decision-making-the selection of a suitable course of action out of the
given alternatives. Major contribution in this approach has come from Simon.
Other contributors are March, Cyert, Forrester, etc.
The major emphasis of this approach is that decision-making is the job of
every manager. The manager is a decision-maker and organisation is a decision-
making unit. Therefore, the basic problem in managing is to make rational
decision. From this point of view, decision theory approach has the following
features.

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1. Management is essentially decision-making.
2. The members of the organisation are decision-makers and problem-
solvers.
3. Organisation can be treated as a combination of various decision centres.
The level and importance of organisational members are determined on the basis
of importance of decisions which they make.
4. Quality of decision affects the organisational effectiveness.
5. All factors affecting decision-making are the subject-matter of study of
management. Besides processes and the techniques involved in decision-
making, other factors affecting the decisions are information systems, social and
psychological aspects of decision-makers.
Thus, it covers the entire range of human activities in organisation as well
as the macro conditions with in which the organisation works.
(A)CONTRIBUTIONS OF HERBERT SIMON: Herbert Simon, a Noble prize
winner in Economics, has made significant contributions in the field of
management particularly administrative behaviour and decision making. His
contributions cover both social systems and decision theory approaches, more
particularly the latter. Simon examined the principles of management given by
Urwick and Gullick and found them contradictory and ambiguous. He described
these principles as ‗myths‘, ‗slogans‘; and ‗homely proverbs‘. Simon looked at
organisational problems in totality of socio-psychological context and viewed that
decision making takes place in this context. His major contributions to
management are summarised below:
1. Concept of Organisation. Simon has described an organisation as a
complex network of decisional processes, all pointed towards their influence
upon the behaviour of the operatives. He has viewed the organisation containing
distribution and allocation of decision-making functions. According to him,
physiology of the organisation is to be found in the process whereby organisation
influences the decisions of its members, supplying these decisions with their
devices. Thus, the best way to analyse an organisation is to find out where and
by whom decisions are made.
2. Decision-making. Perhaps the greatest contribution of Simon is in the
field of decision-making. Decision-making is the core of management and
management is synonymous with decision-making. This is why he has been
referred to as decision theorist. According to him, the decision process can be
broken into a series of three sequential steps. These are : (i) intelligent activity:
the initial phase of searching the environment for conditions calling for decisions;
(ii) design activity: the phase of inventing, developing, and analysing possible
course of action to take place; and (iii) choice activity: the final phase of actual
choice selecting a particular course of action from those available.

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3. Bounded Rationality. Simon is of the view that man is not completely
rational. He has criticised the theories which are based on the assumptions of
complete rationality. He has advocated the principle of bounded rationality.
Accordingly, managers do not go for maximum satisfaction out of a decision but
are satisfied with good enough satisfaction from a decision. Managers cannot
maximise on account of various limitations and constraints. A decision is rational
if for achieving the desired ends, appropriate means are adopted. However, it is
not easy to separate the ends from the means because of ends-means chain.
This ends-means chain is seldom and integrated or completely integrated one.
The relationship between organisational activities and ultimate objectives is also
not clear. Moreover, a simple ends-means chain analysis may not help in
reaching accurate conclusion because what is an end at one point of time or at
one level of organisation might be a means at the other time or at other level of
the organisation.
4. Administrative Man. Simon has given the concept of administrative man
as the model of decision-making. The model is based on the following
assumptions : (i) Administrative man adopts satisficing approach in decision-
making rather than the maximising approach of economic man. (ii) He perceives
the world as a simplified model of real world. Thus, he remains content with
simplification. (iii) He can make his choice without first determining all possible
alternatives and without ascertaining that these are in fact all the alternatives. (iv)
He is able to make decisions with relatively simple rule of thumb, or tricks of
trade, or force of habit. The administrative man model describes the decision-
making process of managers truly than alternative theory of economic man.
5. Organisational Communication. Simon has emphasised the role of
communication in organisation. According to him, there are three stages in the
communication process: initiation, transmittal, and receipt of information. There
may be blockade of communication at any of these three stages. In order to
overcome the problem of communication, he has emphasised the role of informal
communication and has attached less importance to the formal network of
authority.

3.3.3 Contributions of Peter Drucker

Among the contemporary management thinkers, Peter Drucker outshines
all. He has varied experience and background which include psychology,
sociology, law and journalism. Through his consultancy assignments, he has
developed solutions to number of managerial problems. Therefore, his
contributions cover various approaches of management. He has written many
books and papers. The more important books are The Practice of Management
(1954), Managing by Results (1964), The Effective Executive (1967), The Age of
Discontinuity (1969), Management: Tasks, Responsibilities and Practices (1974),

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and Management Challenges for 21st Century (1999), The main contributions of
Drucker can be presented as follows :
1. Nature of Management. Drucker is against bureaucratic management
and has emphasised management with creative and innovative characteristics.
The basic objective of management is to lead towards innovation. The concept of
innovation is quite broad. It may include development of new ideas, combining of
old and new ideas, adaptation of ideas from other fields or even to act as a
catalyst and encouraging others to carry out innovation. He has treated
management as a discipline as well as profession. As a discipline, management
has its own tools, skills, techniques, and approaches. However, management is
more a practice rather than a science. Thus, Drucker may be placed in ‗empirical
school of management‘. While taking management as a profession. Drucker
does not advocate to treat management as a strict profession but only a liberal
profession which places more emphasis that managers should not only have
skills and techniques but should have right perspective putting the things into
practice. They should be good practitioners so that they can understand the
social and cultural requirements of various organisations and countries.
2. Management Functions. According to Drucker, management is the
organ of its institution. It has no functions in itself, and no existence in itself. He
sees management through its tasks. Accordingly, there are three basic functions
of a manager which he must perform to enable the institution to make its
contributions for (i) the specific purpose and mission of the institution, whether
business, hospital or university; (ii) making work productive and the worker
achieving; and (iii) managing social impacts and social responsibilities. All these
three functions are performed simultaneously within the same managerial action.
A manager has to act as administrator where he has to improve upon what
already exists and is already known. He has to act as entrepreneur in redirecting
the resources from areas of low or diminishing results to areas of high or
increasing results. Thus, a manager has to perform several functions: setting of
objectives, decision-making, organising, and motivating. Drucker has attached
great importance to the objective setting function and has specified eight areas
where clear objective setting is required. These are : market standing, innovation,
productivity, physical and financial resources, profitability, managerial
performance and development, worker performance and attitude, and public
responsibility.
3. Organisation Structure. Drucker has decried bureaucratic structure
because of its too many dysfunctional effects. Therefore, it should be replaced.
He has emphasised three basic characteristics of an effective organisation
structure. These are : (i) enterprise should be organised for performance; (ii) it
should contain the least possible number of managerial levels ; and (iii) it must
make possible the training and testing of tomorrow‘s top managers—giving

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responsibility to a manager while still he is young. He has identified three basic
aspects in organising: activity analysis, decision analysis, and relation analysis.
An activity analysis shows what work has to be performed, what kind of work
should be put together, and what emphasis is to be given to each activity in the
organisation structure. Decision analysis takes into account the four aspects of a
decision : the degree of futurity in the decision, the impact of a decision over
other functions, number of qualitative factors that enter into it, and whether the
decision is periodically recurrent or rare. Such an analysis will determine the level
at which the decision can be made. Relation analysis helps in defining the
structure and also to give guidance in manning the structure.
4. Federalism. Drucker has advocated the concept of federalism.
Federalism refers to centralised control in decentralised structure. Decentralised
structure goes far beyond the delegation of authority. It creates a new
constitution and new ordering principle. He has emphasised the close links
between the decisions adopted by the top management on the one hand and by
the autonomous unit on the other. This is just like a relationship between federal
government and state governments. In a federal organisation, local
managements should also participate in the decisions that set the limits of their
own authority. Federalism has certain positive values over other methods of
organising. These are as follows : (i) it sets the top management free to devote
itself to its proper functions; (ii) it defines the functions and responsibilities of the
operating people; (iii) it creates a yardstick to measure their success and
effectiveness in operating jobs; and (iv) it helps to resolve the problem of
continuity through giving the managers of various units education in top
management problems and functions while in an operating position.
5. Management by Objectives. Management by objectives (MBO) is
regarded as one of the most important contributions of Drucker to the discipline
of management. He introduced this concept in 1954. MBO has further been
modified by Schleh which has been termed as ‗management by results‘. MBO
includes method of planning, setting standards, performance appraisal, and
motivation. According to Drucker, MBO is not only a technique of management
but it is a philosophy of managing. It transforms the basic assumptions of
managing from exercising control to self-control. Therefore, in order to practise
MBO, the organisation must change itself. MBO has become such a popular way
of managing that today it is regarded as the most modern management
approach. In fact, it has revolutionalised the management process.
6. Organisational Changes. Drucker has visualised rapid changes in the
society because of rapid technological development. Though he is not resistant
to change, he feels concerned for the rapid changes and their impact on human
life. Normally, some changes can be absorbed by the organisations but not the
rapid changes. Since rapid changes are occurring in the society, human beings

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should develop philosophy to face the changes and take them as challenges for
making the society better. This can be done by developing dynamic
organisations which are able to absorb changes much faster than static ones.
Drucker‘s contributions have made tremendous impact on the
management practices. His contributions have been recognised even by the
management thinkers of Socialist Bloc. For example, Vishiani, a USSR
management thinker, writes about Drucker as follows : ―Drucker shows a certain
foresightedness and understanding of the development prospects of modern
production when he opposes the view that worker is no more than an appendage
of machine. Moved by the desire to strengthen the position of capitalism, he
endeavours to give due consideration also to some objective treads in production
management. Drucker, therefore, tells the industrialists not to fear a limited
participation of the workers in the management of production processes. He
warns them that if they do not abandon that fear, the consequences may be fatal
to them.‖ Drucker is perhaps the only Western management thinker who has
attracted so much attention of the communist world.

3.3.4 Management Science Approach

Management science approach, also known as mathematical or
quantitative measurement approach, visualises management as a logical entity,
the action of which can be expressed in terms of mathematical symbols,
relationships and measurement data. The primary focus of this approach is the
mathematical model. Through this device, managerial and other problems can be
expressed in basic relationships and, where a given goal is sought, the model
can be expressed in terms which optimise that goal. This approach draws many
things from the decision theory approach and, in fact, provides many techniques
for rational decision-making. The major features of this approach are as follows :
1. Management is regarded as the problem-solving mechanism with the
help of mathematical tools and techniques.
2. Management problems can be described in terms of mathematical
symbols and data. Thus every managerial activity can be quantified.
3. This approach covers decision-making, systems analysis and some
aspects of human bahaviour.
4. Operations research, mathematical tools, simulation, models, etc., are the
basic methodologies to solve managerial problems.
Management science approach is a fast developing one in analysing and
understanding management. This has contributed significantly in developing
orderly thinking in management which has provided exactness in management
discipline. Various mathematical tools like sampling, linear programming, game
theory, time series analysis, simulation, waiting line theory, etc., have provided
more exactness in solving managerial problems. However, it is very difficult to

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call it a separate school of management because it does not provide the answer
for the total managerial problems. Moreover, many managerial activities are not
really capable of being quantified because of involvement of human beings who
are governed by many irrational factors also.

3.3.5 Human Behaviour approach

Human behaviour approach is the outcome of the thoughts developed by
behavioural scientists who have looked at the organisation as collectivity of
people for certain specified objectives. Since management involves getting things
done by people, the study of management must revolve around human
behaviour. The approach, also known as ‘leadership’ ‘behavioural science’ or
human resource approach, brings to bear the existing and newly-developed
theories and methods of the relevant behavioural sciences upon the study of
human behaviour. In contrast to human relations approach which assumes that
happy workers are productive workers, human behaviour approach has been
goal and efficiency-oriented and considers the understanding of human
behaviour to be the major means to that end. The human behaviour approach
emphasises human resources in an organisation more as compared to physical
and financial resources. Since this approach studies human behaviour ranging
from personality dynamics of individuals at one extreme to the relations of culture
at the other, this can be divided into two groups: interpersonal behaviour
approach and group behaviour approach. Writers on interpersonal behaviour
approach are heavily oriented towards individual psychology while writers on
group behaviour approach rely on social psychology and emphasise on
organisational behaviour.
Among the many individual and social psychologists who have
contributed to management are Maslow (need hierarchy), Herzberg (motivation-
hygiene theory and job enrichment), McGregor (theory X and Y), Likert
(management systems and linking pin model), Argyris (immaturity-maturity
theory, integration of individual and organisational goals, and pattern of A B
analysis), Blake and Mouton (managerial grid), Sayles (interpersonal behaviour),
Bennis (organisational development), Fiedler (contingency model of leadership
styles), Tannenbaum and others (continuum approach of leadership). Besides,
notable contributions have come from those who have expanded a particular
concept formulated earlier to make it more practicable. They include Leavitt,
Stogdill, Vroom, Reddin, etc.
Apart from psychologists who have concentrated more on individual
behaviour in organisation, significant contributions have come from sociologists
who have studied human behaviour in group and have emphasised on group
behaviour. No table among them are Homans (human group), Bakke (fusion
process), Lewin (group dynamics), Katz and Kahn (social psychology of

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organisations). Some others have attempted to integrate the various views such
as Debin, Dalton, Selznick, etc.
Major conclusions of the contributions made by behaviouralists can be
presented as follows :
1. People do not dislike work. If they have helped to establish objectives,
they will want to achieve them. In fact, job itself is a source of motivation and
satisfaction to employees.
2. Most people can exercise a great deal of self-direction, self-control and
creativity than are required in their current job. Therefore, there remains
untapped potential among them.
3. The manager‘s basic job is to use the untapped human potential in the
service of the organisation.
4. The manager should create a healthy environment wherein all
subordinates can contribute to the best of their capacity. The environment should
provide a healthy, safe, comfortable and convenient place to work.
5. The manager should provide for self-direction by subordinates and they
must be encouraged to participate fully in all important matters.
6. Operating efficiency can be improved by expanding subordinate
influence, self direction and self-control.
7. Work satisfaction may improve as a ‗by-product‘ of subordinates making
full use of their potential.

3.3.6 Systems Approach to Management

The systems approach to management and organisation indicates a new
stream of management thought under modern theory of management. Since
1950, we have a period of refinement, extension and synthesis of management
thought and practice. While the behavioural and quantitative schools were
developing new concepts and techniques of management, a new direction in
management thought appeared which is usually called as the systems approach.
Basically it took up where the process management school left off in attempting
of unify management theory. It stresses the inter-relatedness and
interdependence of all activities within an organisation. It includes operations
research, behavioural sciences social technical systems, management
information systems and industrial dynamics.
Industrial engineering time and motion study, operations research (called
management science) and systems analysis have refined and streamlined
scientific management. Similarly, we have parallel growth and refinement in
personnel management and industrial relations. The human relations approach is
itself now refined and we have adopted more objective and value based
approach to understand persons in organisations. This was due to increasing use
of psychology, sociology, psychiatry in the investigation of human behaviour in

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organisations. The greatest influence upon current management thought is, of
course, due to adoption of systems approach to our organisations and
management.
The systems approach was developed only after 1950. It is the recent
contribution to management thought. It was stimulated by the development of
operations research. Modern theory considers an organisation as an open
adaptive system which has to adjust to changes in its environment. An
organisation is now defined as a structured process in which individuals interact
(act and react) for attaining objectives. Classical theory defined organisation as
the structure of relationship, powers, objectives, roles, activities, communications
and others factors that exist when persons work together. It represented only
mechanistic structure. Modern definition also incorporates humanistic approach.
Neoclassical theory defined organisation as a group of people with a common
objective and it emphasised the humanistic approach.
(a)What is a System?
The word system is derived from Greek word meaning to bring together
or to combine. A system is a set of inter-connected and inter-related elements or
component parts which operate together to achieve certain goals. When relating
systems to organisations, a system is an established arrangement of
components which leads to the accomplishment of particular objectives as per
plan. This definition has three significant parts: (1) Every system is goal-
oriented and it must have a purpose or objective to be attained. The objective
provides the basis for evaluating functions performed within the system. (2) In
designing the system we must establish the necessary arrangement of
components. This is nothing but organising function of management. (3) Inputs of
information, material and energy are allocated for processing as per plan so that
the outputs can achieve the objective of the system viz., productivity and
satisfaction.
Plans Inputs Outputs

1. Objectives 1. Information 1. Information

2. Policies 2. Energy 2. Energy
3. Procedures 3. Materials 3. Products
4. Programme 4. Services
5. Schedules 5. Satisfaction
6. Methods

Goals & Plans Resources Saleable products

Services

Fig. 3.1 The Design of a Basic System

Note: (1) Generally there are three basic inputs that enter the process or
of the system viz., information (technology) energy (motive power) and materials
to be transformed into goods. (2) If the output is service, materials are not

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included in the inputs. (3) If we have manufacturing company, output is goods or
materials. If we have a consulting firm, output is information or advice. If we have
a power generating company, output is energy. (4) The feature which define and
delineate a system forms its boundary. The system is inside the boundary; the
environment is outside the boundary.
(b)Systems Approach Applied to an Organisation.
When systems approach is applied to an organisation, we have the
following features of an organisation as an open adaptive system: (1) It is a
subsystem of its broader environment. (2) It is goal-oriented people with a
purpose. (3) It is a technical subsystem— using knowledge, techniques,
equipment and facilities. (4) It is a structural subsystem—people working
together on interrelated activities. (5) It is a psychosocial system— people in
social relationship. (6) It is co-ordinated by a managerial subsystem creating,
planning organising, motivating, communicating and controlling the overall efforts
directed towards set goals.
Elements of environment include persons, physical resources, climate,
economic and market conditions, attitudes, competition, and laws. The
environment offers both opportunities and risks. Management overcomes risks
and exploits opportunities.
AN ORGANISATION AS AN OPEN ADAPTIVE SYSTEM
(SIMPLE FEEDBACK IN A CONTROL SYSTEM)

Fig. 3.2 An Organisation as an Open Adaptive System.

(Dotted circle points out Environment Area)

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Notes: (1) Modern theory regards an organisation as an open-system
consisting of five basic parts or elements: (a) Input. (b) Process of
transformation, (c) Output. (d) Feedback in a control system and (e)
Environment. (2) The organisation and its environment are interdependent. (3) It
is an open system which adapts to changing needs of the environment through a
process of feedback— an perhaps systems approach has attracted the
maximum attention of thinkers in management particularly in the present era.
Though this approach is of comparatively recent origin, starting late 1950, it has
assumed considerable importance in analysing the phenomena of management.
It is an integrating approach which considers management in its totality based on
empirical data. The basic idea of systems approach is that any object must rely
on a method of analysis involving simultaneous variations of mutually dependent
variables. This happens when systems approach is applied in management.
(c)Features of a System
A system is an assemblage of things connected or interrelated so as to
form a complex unity; a whole composed of parts and sub-parts in orderly
arrangement according to some scheme or plan. This has been defined as ―an
organised or complex whole; an assemblage or combination of things or parts
forming a complex unitary whole.‖ On the basis of this definition, various features
of a system can be identified.
1. A system is basically a combination of parts, subsystems. Each part may
have various sub-parts. When a subsystem is considered as a system without
reference to the system of which it is a part, it has the same features of a system.
Thus, a hierarchy of systems and subsystems can be arranged. For example, the
universe is a system of heavenly bodies which includes many subsytems of stars
called galaxies. Within a galaxy, there is solar system. When we consider galaxy
as a system, solar system may become a subsystem but we can also consider
solar system consisting of so many planets. In the same way, an organisation is
a system of mutually dependent parts, each of which may include many
subsystems.
2. Parts and sub-parts of a system are mutually related to each other, some
more, some less; some directly, some indirectly. This relationship is not natural,
given, or unalterable in a social system. The relationship is in the context of the
whole. Any change in one part may affect other parts also. Therefore, how
various parts are given relationship is important for the functioning of the system.
3. A system is not merely the totality of parts and subparts but their
arrangement is more important. The whole becomes greater than the total of
individual parts because of the type of arrangement made in these parts and
subparts. Thus, a system is an interdependent framework in which various parts
are arranged.

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4. A system can be identified because it has a boundary. In the case of
physical system, this boundary is quite visible and, therefore, the system can be
identified easily. However, in the case of a social system, the boundary is not
visible because it is not like a line or wall that functions to preserve or to define
what is inside. Instead, the boundary maintains proper relationship between the
system and its environment—objects lying outside the system. Identification of
this boundary in the case of human organisation facilitates the management of a
system by differentiating those which can be controlled because they are the
parts of the system and those which cannot be controlled because they are
outside the system.
5. The boundary of a system classifies it into two parts: closed system and
open system. All living organisms are open systems while all non-living systems
are closed systems. The major differences between the two will be identified
shortly.
6. System transforms inputs into outputs. This transformation process is
essential for the survival of the system. There are three aspects involved in this
transformation process: inputs, mediator, outputs. Inputs are taken from the
environment, transformed into outputs, and given back to the environment.
Various inputs may be in the form of information, money, materials, human
resources, etc. Outputs may be in the form of goods and services. The total
relationship may be called as input-output process and system works as
mediator in this process. However, in this process, system restores some of the
inputs taken from the environment. Restoring the inputs taken from the
environment helps the system maintain its structure and avoid decay and death.
Thus, the system can grow over the period of time. For example, a business
organisation survives and grows over the period of time by earning profit in the
process of transforming inputs into outputs. Profit is essential for the organisation
of survive.
(d)Open and Closed Systems
The boundary of a system classifies it into two parts: closed system and
open system. All living organisms are open system while all non-living systems
are closed system. The major differences between the two are as follows :
1. Closed systems are those that have no interaction with environment, that is,
no outside system impinges on them or for which no outside systems are to be
considered. Open systems are those that ineract with their environment, that is,
they have systems with which they relate, exchange, and communicate.
2. Closed systems are self-contained and self-maintaining as they do not
interact with the environment. Open systems interact with their environment and
in this in interaction; they import energy and export output. Because of this
interaction, closed systems are rigid and static but open systems are dynamic
and flexible as they are subject to change by environment forces.

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3. Closed systems are generally mechanical, for example, an automatic watch.
Therefore, once they are set, they work. However, open systems are affected by
environmental factors and they have to be adjusted according to environment.
Thus, they require restructuring because of change in environment.
4. Closed systems are like close loop while open systems are characterised by
negative entropy. They import more energy than is expended or consumed.
Thus, they can grow over the period of time. When this relationship is reversed,
the open systems decline.
5. Open systems have feedback mechanism that helps them to maintain
homoeostatic, a kind of equilibrium. Homoeostatic is a process through which a
system regulates itself around a stable state. For example, human body works
on the principle of homoeostatic. It maintains its temperature relatively at a
constant level despite variations in the environmental temperature. Similarly
thermostat maintains this equilibrium. However, organisational equilibrium is not
static. It being a dynamic system, gets feedback to maintain dynamic
equilibrium. In closed systems, there is no such feedback mechanism.
The distinction between closed and open systems is there but really no
system is a closed one but has some properties of open systems. The
classification of various systems into closed and open is not very proper.
Therefore, it is more appropriate to think of systems in terms of the degree to
which they are open or closed rather than using a dichotomy of open-close.
(e)Features of Management as System
Under the systems approach, management is regarded as a system. It
draws heavily from systems concepts. When systems concepts are applied to
management, it is taken in the following ways :
1. Management as a Social System. Management can be considered as a
system. Therefore, management has all the characteristics of a system as
discussed above. However, management is a social system and unlike biological
or mechanical systems, it has the characteristics of social systems. This concept
of social system is quite different from co-operative social system as discussed
earlier. Management as a system consists of many subsystems which are
integrated to constitute an entity.
2. Management as Open System. Management, like any other social
system, is an open system. It interacts with its environment. Out of this
interaction, it takes various resources, allocates and combines these resources
to produce desirable outputs which are exported to the environment. Thus,
management works as input-output mediator. These features of management
suggest that it is not free to decide the things on its own but due weightage have
to be given to the environmental factors affecting the management of an
organisation. Consideration is required at the levels of taking inputs, transforming
them into outputs, and exporting the outputs to the environment.

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3. Adaptive. Organisation being an open system, its survival and growth in
a dynamic environment demands an adaptive system which can continuously
adjust to changing environment. Management tends to achieve environmental
constancy by bringing the external world under control, or bringing internal
modification of organisational functioning to meet the needs of the changing
world. Since there is a provision of feedback mechanism, management can
evaluate its performance and take corrective actions. In fact, the basic role of
management is considered in terms of its adaptability to environment.
4. Dynamic. Management as a system is dynamic. It suggests that
management attempts at achieving equilibrium in the organisation. However, this
equilibrium is not static as happens in mechanical systems. Management moves
towards growth and expansion by preserving some of the energy. Managerial
effectiveness depends on this energy exchange. Therefore, it is not only the
internal processing process that determines the effectiveness of management
but also how it interacts with the changing environment in terms of taking inputs
and giving outputs also determines its effectiveness.
5. Probabilistic. Management is probabilistic and not deterministic. A
deterministic model always specifies the use of model in a condition with
predetermined results. Therefore, the outcome of an action can be predicted
accurately. For example, is one wants to get the total of 250 and 500, he can
press the button of a calculator and gets 750. This is possible because the
outcome is certain. In the case of probabilistic model, the outcome can be
assigned only probability and not certainty. For example, if a coin is tossed, the
probability of getting a head is 0.5. But one cannot say with certainty that there
will be 50 heads out of tossing of a coin 100 times. Management being
probabilistic points out only the probability and never the certainty of the
performance and consequent results. Management has to function in the face of
many dynamic variables and there cannot be absolute predictability of these
variables. For example, we make forecast of future events but the forecast is
relevant to a certain degree only and not to the level of certainty. This is what
management takes into account.
6. Multilevel and Multidimensional. Systems approach of management
points out the multilevel and multidimensional features of management. It has
both macro and micro approach. At macro level, it can be applied to supras
system, say, a business system as a whole. At micro level, it can be applied to
an organisation. Even it can be applied to a suprasystem of an organisation.
However, it has the same characteristics at all these levels : subsystem level,
system level, and subsystem level. Thus, both parts and whole are equally
important in managing.
7. Multivariable. Management is multivariable and involves taking into
account many variables simultaneously. This feature of management suggests

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that there is no simple cause-effect phenomenon, rather an event may be the
result of so many variables which themselves are interrelated and
interdependent. This interrelatedness and interdependence makes managing
quite a complex process. Thus, it realises the complexity of management.
8. An Integrated Approach. Systems approach of management takes an
integrated view of managing. It identifies the reason for a phenomenon in its
wider context taking into account the total factors affecting the phenomenon. In
other approaches, a particular phenomenon has been explained in terms of a
single factor or cluster of factors. Management tries to integrate the various
factors to find out the reasons behind a phenomenon. It emphasises on how the
management of one subsystem of the organisation should be taken in relation
with others because other subsystems become environment for the give system.
Thus, the problem in one subsystem should not be traced into the subsystem
only but in a much wider context. This is true for the management of whole
organisation also.
(f)Implications of Systems Approach
Systems approach of management provides an integrated approach of
managing. This considers management in its totality. The integrative approach of
managing can be best understood by quoting Churchman on the systems
approach of management. He writes as follows:
‗‗There is a story often told in logic text about a group of blind men who
were assigned the task of discovering an elephant. Each blind man was located
at a different part of the body. A horrendous argument arose in which each
claimed to have a complete understanding of the total elephantine system. What
is interesting about this story is not so much the fate of the blind men but the
magnificent role that the teller had given himself, namely, the ability to see the
whole elephant and consequently the ridiculous behaviour of the blind system
describers. The story is in fact a piece of arrogance. It assumes that a very
logically astute man always gets on the top of a situation, so to speak, and looks
at the foolishness of the people who are incapable of seeing the whole.‖
The quotation aptly describes how management problems should be
seen in an organisation, that is, by taking the totality of the organisation and not a
part of it. This implies that there should be integration of various forces affecting
management. We have entered a period that forces us to find out more accurate
answers to the questions involving the wholeness of an operation. This age of
synthesis forces management to think out in new and different ways, as
suggested by the systems approach. In this, view, the whole is not merely a
combination of its different parts but more than that. This more can be achieved
by combining the various parts in a particular way.
Systems approach possesses the conceptual level of managerial analysis
much higher than any other approach. It discards the simplistic approach of

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managerial analysis and suggests that management of an organisation must be
consistent with the demands of organisational environment and the needs of its
members. It provides a framework through which organisation-environment
interaction can be analysed and facilitates decision-making, since the system
within which managers make decisions can be provided as a more explicit
framework, and decision-making is easier to handle.
(g)Limitations of Systems Approach
Though systems approach possesses conceptual framework of much
higher order as compared to other approaches, it may be emphasised that this in
no way is the unified theory of management. Systems approach came in a big
way in managerial analysis and raised the hope of becoming a general and
unified theory of management. A general and unified theory can be applied to all
types of organisations, presenting their comprehensive analysis so that those
who want to study organisations from different angles can derive knowledge.
This was exactly expected of systems approach. However, this promise could not
be fulfilled because systems approach suffers from two limitations.
1. Abstract Approach. It is often suggested that systems approach is
too abstract to be of much use to practising managers. It merely indicates that
various parts of the organisation are interrelated. Similarly, an organisation is a
social system and, therefore, is related with other organisations in the society.
This is true and significant for managing. But it fails to spell out precisely
relationships among these. Therefore, its contribution to managing is limited. For
example, it is one thing to say that economic forces trigger social, technical and
psychological changes in the organisation. But this is not enough for managing a
organisation. What is required is a statement of what economic forces initiate
what social, technological and psychological changes.
2. Lack of Universality. Systems approach of management lacks
universality and its precepts cannot be applied to all organisations. For example,
systems approach provides modern structural forms, cybernetic system for
control and communication. These systems are suitable for large and complex
organisations but are not suitable for small organisations. Since most modern
organisations are large and complex, it is argued that systems approach is
applicable in general. This may be true but the role of a theory is not to prescribe
actions for a particular category of organisations, rather, the theory should
specify the relationships among different variables which can be applied to all
organisations.
If systems approach is seen in this perspective, some people believe that
the approach is as incomplete as any other. In fact, they argue that this approach
does not offer anything new. The managers have been doing their jobs seeing
the problems as a network of interrelated elements with interaction between
environments inside and outside of their organisations. Looking into these

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shortcomings of systems approach, researchers have tried to modify the systems
approach. This attempt had led to the emergence of a separate, though related,
approach, situational or contingency approach.

3.3.7. Contingency or Situational Approach

Contingency or situational approach is an important addition to the
paradigm of modern management theory and approach. In one way, this is an
extension of systems approach. The basic idea of contingency approach is that
there cannot be a particular management action which will be suitable for all
situations. Rather, an appropriate action is one which is designed on the basis of
external environment and internal states and needs. Contingency theorists
suggest that systems approach does not adequately spell out the precise
relationship between organisation and its environment. Contingency approach
tries to fill this gap by suggesting what should be done in response to an event in
the environment.
Some researchers distinguish between contingency and situational
approaches by suggesting that situational management implies that what a
manager does depends on a given situation. Contingency approach, on the other
hand, suggests an active interrelationship between the variables in a situation
and the managerial actions devised. Thus, contingency approach takes into
account not only given situations but also the influence of given solutions on
behaviour patterns of an organisation. Despite these differences and emphasis
on varying factors, themes of both the approaches are common. In fact, some
authors believe that the term contingency is misleading and they should have
used the term situational. Nevertheless, both terms are used interchangeably.
The basic theme of contingency view can be presented by quoting Tosi
and Hammer. They say that:
―When a subsystem in a organisation behaves in response to another
system or subsystem, we say that response is contingent on environment.
Hence, a contingency approach is an approach where the behaviour of one
subunit is dependent on its environmental relationship to other units or subunits
that have control over the consequences desired by that subunit.‖
Judged in the light of this statement, contingency approach has the
following features:
1. Management action is contingent on certain action outside the system or
subsystem as the case may be.
2. Organisational action should be based on the behaviour of action outside
the system so that organisation should be integrated with the
environment.
3. Because of the specific organisation-environment relationship, no action
can be universal. It varies from situation to situation.

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(a)Relationship between Systems and Contingency Approaches
Contingency approach has emerged out of the systems approach.
Contingency theorists have accepted the basic tenets of systems approach. They
accept the basic features of organisation-environment relationship and dynamic
nature of organisation. However, they feel that systems approach is too abstract
to apply for managerial action. This can be overcome by modifying systems
framework and translating it into operational framework. Therefore, both
approaches are related but they differ in certain context. A comparison between
the two can be presented as follows :
1. Model of Human Being. The range of activities of human beings is
different under two approaches. Systems usually employs a richer model of
human beings than contingency approach. The former takes into account the full
range of human behaviour in the organisation while contingency approach, by
and large, is interested in structural adaptation of organisation to its task
environment. Therefore, contingency theorists talk mostly in terms of structural
change in the organisation in response to a change in the environment.
2. Organisational Variables. Systems approach is very broad in
considering the organisational variables. It tries to cover personal, social,
technical, structural and environmental variables. Therefore, managing involves
establishing relationships among these variables and considering them in taking
any action. Contingency approach, on the other hand, concentrates on structural
adaptation of organisation. This approach tends to predict the ultimate outcome
of a disturbance of the organisational equilibrium by a change in the task
environment.
3. Evolution. Major contributors in systems approach have been social
psychologists while sociologists have contributed to contingency approach.
Contingency approach has been built up over systems approach. Therefore, it is
possible that both approaches may merge or profoundly influence each other. In
fact, there are signs of convergence of two approaches. This is likely to continue
and system approach may specify situations under which a particular type of
organisation can function well. In fact, equifinality character of open system
suggests that different strategies can be adopted by an organisation facing a
particular problem. Similarly, contingency approach may provide the process by
which the organisation may adapt to its task environment. Both these efforts are
quite similar.
(b)Implications of Contingency Approach
Contingency approach is an important addition to the paradigm of modern
theory of management. It is the sophisticated approach to understand the
increasing complexity of organisations. It emphasises the multivariate nature of
organisations and attempts to understand how organisations operate under
varying conditions. The approach is directed towards suggesting organisational

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designs and managerial actions most appropriate to specific situations. The
major implications of contingency approach are as follows:
1. Management is entirely situational and there is nothing like universal
principles of management or one best way of doing a particular thing. What
managers do depends on the circumstances and environment. Lorsch and
Lawrence have described the implication of situational management as follows:
―Underlying this new approach (contingency approach) is the idea that the
internal functioning of organisations must be consistent with the demands of the
organisation task, technology, or external environment, and the needs of its
members if the organisation is to be effective. Rather than searching for the
panacea of the one best way to organise under all conditions, investigators have
more and more tended to examine the functioning of organisations in relation to
the needs of their particular members and the external pressures facing them.
Besically, this approach seems to be leading to the development of a
‗contingency theory of organisation with the appropriate internal states and
processes of the organisation contingent upon external requirements and
member needs.‖
2. The approach suggests suitable alternatives for those managerial
actions which are generally contingent upon external and internal environment
such as organisational design, strategy formulation, decision systems, influence
systems, leadership, and organisational improvement. In all these cases, action
alternatives cannot be arranged in advance but have to be identified and
adjusted according to the situations in which decisions in respect of these have
to be made.
3. Contingency approach suggests that since organisation interacts with
its environment, neither the organisation nor any of its subsystems is free to take
absolute action. Rather, it has to modify and adjust the actions subject to various
forces like social, political, technical, and economic. Besides, the actions should
be according to the needs of internal state of the organisation or its subsytems.
Thus, the basic problem of managing is to align the internal state with the
external state.
(c)Limitations of Contingency Approach
In spite of the various contributions, contingency approach has not been
acknowledged as a unified theory of management because it suffers from some
limitations. These limitations are of the following nature:
1. Inadequate Literature. Contingency approach suffers from
inadequacy of literature. Therefore, it has not adequately spelled out various
types of actions which can be taken under different situations. It is not sufficient
to say that ‗managerial action depends on the situation.‘ The approach should
provide ‗if this is the situation, this action can be taken‘. Unless this is done, the
approach cannot offer much assistance to the practice of management. No

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doubt, researches have been conducted in this direction but, by and large, they
have not satisfied the needs of managers.
2. Complex. The suggestion of the approach is very simple, that is,
managers should do according to the needs of the situation. However, when put
into practice this becomes very complex. Determination of situation in which
managerial action is to be taken involves analysis of a large number of variables
with multifarious dimensions. Therefore, there is a possibility that managers, who
are always short of time, may ignore the thorough analysis of all these variables
and may resort to short-cut and easier way.
3. Difficult Empirical Testing. Contingency approach, being complex,
presents problems in testing the precepts of the theory. For empirical testing of a
theory, it is necessary that some methodology is available. No doubt,
methodology is available but because of the involvement of too many factors,
testing becomes difficult. For example, contingency theory suggests that greater
the degree of congruence between various parts of organisational components,
the more effective will be organisational behaviour at various levels. This lacks
the empirical validity and hence cannot be adopted to managerial actions.
4. Reactive not Proactive. Contingency approach is basically reactive in
nature. It merely suggests what managers can do in a given situation. For a
given organisation, suprasystem constitutes environment and management can
be applied to suprasystem also. Therefore, managers are responsible to manage
the environment in such a way that they avoid the undesriable aspects of
environment. Since the managers are quite powerful in the society, they must be
in a position to provide a sense of direction and guidance through innovative and
creative efforts specially in coping with the environmental changes.
No doubt, these limitations are valid, but the situation remains that at micro
level, managers have to manage according to contingency approach. They
should not ignore the importance of taking actions according to the needs of the
situations. For analysing the situations, they will have to use their highest skills.

3.3.8 Mckinsey’s 7-S Approach

Mckinsey developed 7-S framework for management:
1. Strategy, i.e., systematic allocation of resources to realise
strategic goals.
2. Structure, e.g., organisation structure.
3. Systems, e.g., information system, control system.
4. Style, e.g., managerial style.
5. Staff. e.g., staffing.
6. Shared values, e.g., human values in humanising an organisation.
7. Skills, e.g., professional skills, strategy skills.

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It is a simple, easy to remember framework. Practicing managers and
teachers like it. But managerial functions of planning-action-control cycle covers
them and the cycle is followed in management books.

3.3.9 The Operational Approach

It emphasises typical operations involved in management e.g., line and
staff, departmentation. It draws on all other managerial approaches. It has
practical application to managing. However, it is based mostly on management
process approach. It is almost similar to functional approach.

3.3.10 The Managerial Roles Approach

Prof. Mintzberg describes ten roles played by a manager. These are
grouped into three categories. (A) Interpersonal roles covers the first three roles:
Figurehead role, leader role and liaison role. The next three as informational
roles cover receiver, giver and transmitter of information. The final four are
termed as decisional roles such as entrepreneurial, handler of disturbances,
allocator of resources and negotiator debating with third parties and workers
unions.
A key point about the role of managers is, of course, the capability or
adaptability of manager to many different uses in addition to those mentioned
above. Much will depend upon your job and the circumstances. The specialist
manager must also possess the quality of versatility.
Really speaking, the roles described by Mintzberg are evidences of all well-
known managerial functions, e.g., interpersonal role is a leading function,
allocation of resources is a planning function. We have many other roles played
by a manager in addition to those ten roles, e.g., acting as a trouble shooter,
innovator, recruiter, etc.
In interpersonal relations, particularly, manager must remember that he as
a human being deals with other human beings. Here, human values, ethical and
moral, play a very important role. He must constantly think of values.

3.4 CHARACTERISTICS OF MODERN MANAGEMENT

THOUGHT
1. The Systems Approach: An organisation as a system has five basic
parts: (1) input, (2) process, (3) output, (4) feedback, and (5) environment. It
draws upon the environment for inputs (resources).
Management allocates and combines these resources or inputs to
produce certain desirable outputs. The success of these outputs can be
judged by means of feedback. If necessary, we have to modify our mix of
inputs to produce outputs as per changing demands and changing
environment.

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2. Dynamic: We have a dynamic process of interaction occurring within
the structure of an organisation. The equilibrium of a organisation and its
structure is itself dynamic or changing. The classical theory assumed static
equilibrium.
3. Multilevel and Multidimensional: Systems approach points out
wheels within wheels or complex multilevel and multidimensional character.
We have both a micro and a macro approach. A company is micro (little
world) within a business system. It is macro (the great world) with respect to
its own internal units. Within a company as a system we have: (1) production
subsystem, (2) finance subsystem, (3) marketing subsystem, (4) personnel
subsystem. All parts or components are interrelated. Both parts as well as
the whole are equally important. At all levels, organisations interact in many
ways.
4. Multimotivated: Classical theory assumed a single objective, for
instance, profit. Systems approach recognises that there may be several
motivations behind our actions and behaviour. Management has to
compromise and integrate these multiple diverse objectives e.g., economic
objectives and social objectives, i.e., productivity and satisfactions
(shareholders, employees, customers, community and society).
5. Multidisciplinary: Systems approach integrates and uses with profit
ideas emerging from different schools of thought. Management freely draws
concepts and techniques from many fields of study such as psychology,
social psychology, sociology, ecology, economics, mathematics, operations
research, systems analysis, etc.
6. Multivariable: It is assumed that there is no simple cause-effect
phenomenon. An event may be the result of so many factors which
themselves are interrelated and interdependent. Some factors are
controllable, some uncontrollable. Intelligent planning and control are
necessary to face these variable factors. We do not live in a vacuum or in a
system unaffected by outside influences. We live in a dynamic and complex
(macro cosm) the great world system.
7. Adaptive: The survival and growth of an organisation in a dynamic
environment demands an adaptive system which can continuously adjust to
changing conditions. A viable organisation and its environment are in a
dynamic equilibrium. An organisation is an open system adapting itself
through the process of feedback. We have human or machine controller to
provide necessary corrections on the basis of feedback of information in
order to achieve desired results.
8. Probabilistic: Management principles point out only the probability
and never the certainty of performance and the consequent results. We
have to face so many variables simultaneously. How can we have absolute

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predictability of events? Our forecasts are mere tendencies. Of course,
Intelligent forecasting and planning can reduce the degree of uncertainty to
a considerable extent, projects and information decision systems in future. A
mechanistic or bureaucratic approach to management is appropriate when:
(1) Environment is unchanging; (2) Emphasis is on efficiency, (3) Emphasis
is on routine jobs, many rules and procedures. An organic or behavioural
managerial approach is preferred when: (1) We have fast changing
environmental, (2) We want flexibility, (3) Emphasis is on less specialised
jobs, fewer rules, procedures, etc. and (4) Employees can exercise self-
control and self-discipline. Systems approach/leads to holism.

3.5 MANAGEMENT THOUGHT IN THE LIGHT OF INDIAN

ETHOS AND INSIGHT
Western management thought could not produce the true holistic and
integrative principles for management philosophy. Indian ancient wisdom
provides value-based holistic approach to link our ancient culture and modern
management so that we can have a new and authentic philosophy of
management.
The essential link is found in holism starting with the course of subjective
management, a new movement in management thinking and practice, a
movement that will make ‗the managerial revolution‘ of 21st century.
The holistic or integrative principle is a goal that unites all the different
aspects of business into ONE common social, economic and ecological goal.
Business organisation based on objective terms (conveniently ignoring subjective
terms) was concerned exclusively with what is preyas of socially desired in
contrast with what is socially and ecologically desirable or needed, i.e., Sreyas
(which is conveniently ignored).
Under holism, we have to develop unity and harmony between : (1) spirit
and science, (2) values and skills, (3) subject and object, (4) left-brain skills and
right-brain skills (5) subjective and object, (6) Management of self and
management of other people for getting things done through and with them. (7)
man and machine, (8) economic development and human/ecological
development, (9) profit motive and social responsibility, (10) individual benefit
and public benefit, (11) internal development and external development, (12)
quality of life i.e., standard of life and quantity of life or standard of living. We
want enriched quality of life for all. Wealth is not merely for rising consumption. It
is essentially a means for public good.
Under the Western management thought according to current accepted
definition, business is created by society as its instrument of wealth and welfare,
functioning for socially desired goals, through result-oriented means, in short-
term success and continuous conflict between individuals and businesses.

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Under Indian ethos and insight business was created by society as an
instrument of wealth for welfare, to attain socially desirable or needed goals (i.e.,
shreyas and not preyas goals), through ethically worthy means (i.e., value-driven
means and value-driven goals), resulting in a generation of healthy, wholesome
individuals who carry human and ethical values and positive impulses in their
community.
If management adopts value-oriented holistic management as per ancient
Indian insight, the practice of management will surely acquire a new look or
appearance. Developing Macro Vision is the practical need of the day. The times
are rapidly changing. It will no longer be a purely objective exercise to achieve
only external results even at the cost of internal disharmony and unrest. On the
other hand, it will give equal emphasis on subjective and objective aspects of
development of individual, organisations and society. Indian insight wants
individuals (managers and workers) to emerge as important positive, wholesome,
harmonious individuals with a sense of growing towards their own total fulfillment.
In this way, managers will be able to create a healthy, wholesome, harmonious
and happy community, of which the managers themselves will be satisfied
members.
We can have both increasing standard of life and also increasing standard
of living for all members of the society and the nation. We shall assure enriched
quality of life and also enriched material prosperity. Individuals, organisation and
society all will have sustained economic growth without ecological damages, e.g.,
pollution of environment.
The Indian wisdom insists on concepts such as yajna spirit (sacrificing
individual desires in favour of social benefits), sreyas (preferring long-term
benefits over short-term preyas gains), sharing in joy and a sense of cosmic
harmony.
Here, business is regarded as a means for the evolution of human society
towards its own perfection, with all its activities being supplementary to and
justifiable only in terms of perfection. Means and ends both will honour human
and ethical values.
In spite of many streams of management thought in the West, we have still
the unstable state of management theory. We need a modern synthesis to pull
together ideas from all stream of thought. Indian Insight can bring about
synthesis through holistic approach and reconcile all dualities. Holistic approach
alone can give us the Macro Vision of Life as ONE expressing MANY diverse
Forms. Let us develop the Vision of Unity in Diversity.
Eastern Insight can introduce integration or synthesis in management
theory and practice. Let us Eastern Wisdom with the Western Management
techniques.

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Chart 3.1
EVOLUTION OF ORGANISATION AND MANAGEMENT THEORY

Traditional Theory Modifications Emerging View or

Systems Approach
Taylor Mayo (Hawthrone Studies) Views on organisation as:
Scientific Management Human Relations 1. Open, adaptive system
(Efficient Task Performance) Maslow, MacGregor, etc.; in a broader environment.
Weber Behavioural sciences
Bureaucratic Model (Psychological, cultural 2. Goal oriented; including
(Authority and Structure) and sociological issues) 3. A technical subsystem
Fayol Quantitative decisionmaking 4. A structural sub system
Administrative or pro- —Management sciences 5. A psycho-social sub-
cess Management (OR) (Economic-technical system and coordinated
Rationality) by
Theory (Universal Man- 6. A managerial system.
agement Principles). (socio-economic and
technological system)
1900-1930 1930-1960 1960-onwards

Two broad modifications in traditional theory were introduced:

(1) behavioural sciences (psychologists, sociologists and aunthropologists)
emphasized psycho-social system and the human aspects of management;
(2) Management sciences emphasised the economic-technical system and
quantification, mathematical models and the application of computer technology.
Behavioural sciences have a humanistic approach while management
sciences and traditional school of management do not have direct interest in
human factors or value.
Behavioural sciences are gaining unique importance in the evolution of
good organisational behaviour through appropriate humanised organisation
structure, man-machine organisation motivation, job structure work environment,
democratic participative leadership.
Under this systems approach we have integration of:
(1) classical school,
(2) behavioural sciences,
(3) management science, and
(4) decision-making school of management thought. Structure and ongoing
process are given equal importance.
Internal and external environment shall determine structure and process of
organisation and management.
Thus we have wide acceptance for systems based contingency approach to
management.

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Chart 3.2
CLASSICAL VERSUS HUMANISTIC DESIGNS

Mechanistic or Classical Design Organic or Humanistic Design

1. Closed systems view of organ- 1. Open and adaptable systems
isolations — all variables under view of organisation existing in
management control — static a dynamic environment.
environment.
2. Full division of work leading 2. Moderate division of work lead-
to job specialisation and ing to job enlargement, job
standardisation. enrichment.
3. Higher degree of centralisation. 3. Higher degree of decentrali-
sation.
4. Authority and command lead- 4. Authority, subject to acceptance
ing to bureaucratic, authoritari- from subordinates, leading to
an and autocratic management. democratic participative manage-
ment — decisions by consensus.
5. Tight hierarchical structure 5. Loose project organisation and
with chain of command, and management by consultation and
management by command. participation.
6. Vertical communication down- 6. Multidirectional and free comm-
ward more dominant. unication, Inter/Intra Network.
7. Negative environment for deve- 7. Positive environment for deve
lopment of human resources lopment of human resources due
due to limited decentralisation. to adequate decentralisation.
8. Organisation could satisfy only 8. Ample scope for motivation
maintenance of economic needs. needs-higher level wants.
9. Relatively tight and close con- 9. Increasing reliance on manage-
trol over subordinates. ment by objectives (self-control)
10. Rigid policies, procedures, 10. Flexible policies, procedures,
rules and methods — leading methods leading to humanistic
to mechanistic organisation. and flexible organisation.
11. Formal organisation dominat- 11. Integration of formal and informal
ing due to autocratic approach. organisation due to democratic
approach.
12. Threatening and performance 12. Supportive and development
oriented job environment. oriented job environment.
13. Production centred approach of 13. Customer-employee oriented
management. management approach.
14. Theory X approach of 14. Theory Y approach of
leadership. leadership.

Modern management theory has adopted systems-based contingency

approach to organisation and management.

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Organisation/management structure, processes and technology in a firm
constitute the internal environment forces. Social, economic, technological
(research and development) legal and political variable constitute the external
environment of the firm.Concepts of management and organisation are
influenced by internal and external environment of a firm.Situation,
circumstances, and environment factors determine appropriate techniques of
organisation and management. Hence, no universal functions and principles of
management and organisation.
(1) In a certain environment linear programming, inventory, models,
brakemen analysis can be effectively used to compute the optimal
action/outcome.
(2) In an environment of risk, the general rule is to maximise expected (likely)
outcome. In risk situations PERT and other tools such as statistical quality
control could help in making the decision.
(3) In an uncertain environment, decision-making needs intuitive skills,
drawing on experience and creative abilities as well as power of judgments.

3.6 SUMMARY
Classical approach satisfied the basic economic needs of the
organisation and society. Now neoclassical approach is trying to satisfy personal
security and social needs of workers. Both approaches must be suitably
integrated to emphasise the need not only for recognition of human values but
also for recognition of productivity simultaneously. Modern management must
have the twin primary objectives, viz., productivity (classical approach) and
satisfaction (neoclassical approach). Decision-making under uncertainty is a real
challenge to management. Uncertainty is almost inherent in business. All
strategic decisions in planning involve element of uncertainty. Higher
management is responsible for such unprogrammed decisions. Computer and
OR tools cannot secure unprogrammed decisions.

3.7 SELF - ASSESSMENT QUESTIONS

A. Very Short Answer Questions
Q. 1. Define neo-classical Theory.
Q. 2. Explain the concept of Behavioural Approach.
Q. 3. Define a system.
Q. 4. Conceptually define management science approach.
B. Short Answer Questions
Q. 1. Explain the Hawthrone Experiments.
Q. 2. Evaluate Decision Theory Approach.
Q. 3. Discuss the contributions of Peter Drucker in the field of
management.

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C. Long Answer Questions
Q. 1. Explain the Implications of Hawthorne‘ Experiments.
Q. 2. Discuss the criticism of Hawthorne Experiments.
Q. 3. Comment on systems and contingency approach.
Q.4. Compare and contrast the classical new-classical and modern
approach towards organisations.

3.8 FURTHER READINGS

1. LM Prasad: Principles and Practice of Management (Sultan Chand & Sons)
2. George R Teery : Principes of Management (Richard D Irwin Inc)
3. Harold Koontz and Heizweihrich : Essentials of Management (Mcgraw Hill
series in Management)
4. Peter F Drucker : Frontiers of Management (Heinemann London)
5. Peter F Drucker : Managing for future (Tata Mcgraw Hill)
6. J.S. Chandan : Management theory and Practice (Vikas Publishing House
Pvt Ltd.)

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UNIT 4: SKILLS AND ROLES OF

MANAGAMENT PROFESSIONALS
STRUCTURE
4.1 Introduction
4.2 Objectives
4.3 Tasks of a Professional Manager
4.3.1 Providing purposeful direction
4.3.2 Managing survival and growth
4.3.3 Maintaining relations with various society segments
4.3.4 Meeting the challenge of increasing competition
4.3.5 Managing for innovation
4.3.6 Building human organisation
4.3.7 Maintaining balance between creativity and conformity
4.3.8 Postponing managerial obsolescence
4.3.9 Meeting the challenge of change
4.3.10 coping with growing public criticism and political opposition
4.3.11 coping with increasing levels of aspiration
4.3.12 maintaining firm‘s efficiency in terms of profit generation
4.4 Roles Performed By A Professional Manager
4.4.1 The Roles
4.4.2 Applying the Model
4.5 Responsibility of a Professional Manager
4.5.1 Responsibility towards the Society
4.5.2 Responsibility towards the Government
4.5.3 Responsibility towards the Union
4.5.4 Responsibility towards the Industry and Competition
4.5.5 Responsibility towards the Distributers and Retailers
4.5.6 Responsibility towards the Suppliers
4.5.7 Responsibility towards the Employees
4.5.9 Responsibility towards the Customers
4.5.8 Responsibility towards the Shareholders
4.6 Summary
4.7 Glossary
4.8 References/Suggested Readings
4.9 Question Bank

4.1 INTRODUCTION
There is a lot of confusion over the much widely used terms, professional
management and professional managers. Some researchers contend there is
nothing like professional management. Management is a discipline. There are

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practitioners of this discipline who practise management as a profession and thus
are professional managers. Just as there are doctors and lawyers by profession
similarly there are professional managers. As doctors practise medicine,
managers practise management. The only difference between professional
managers and other professionals is that, while the latter must possess a formal
degree in their discipline, a professional manager need not have a formal degree
or education in management. He or she may have learnt the necessary skills and
gained competence from one‘s own experience.
The second characteristic of a professional manager is that his or her
primary concern is the organisation or the company with which one works. This
may be in the private or public sector or in a multinational company. A
professional manager always has the company‘s overall perspective in mind and
all the actions are guided by the company‘s objectives irrespective of the
managerial level one is working at. The third most important characteristic of a
professional manager is that he or she is responsible for performance. Managing
involves collecting and utilising resources (money, men, materials and machines)
in the most optimal manner for achievement of some pre-determined objectives
or results. It is the professional manager‘s responsibility to utilise resources to
produce the required results. Responsibility and performance are really the key
words in defining a manager‘s role. Performance implies action, and action
necessitates taking specific steps and doing certain tasks.

4.2 OBJECTIVES
 To understand the term ―management professional‖
 To develop familiarity with various tasks of a professional manager, and
 To develop familiarity with various roles of a professional manager, and
 To know what exactly are the tasks which a manager has to undertake in
the course of managing an organisation.
 To understand the various responsibilities of a professional manager.
Let us first take up the various tasks which a manager is expected to do
to produce results.

4.3 TASKS OF A PROFESSIONAL MANAGER

4.3.1 Providing purposeful direction
A manager can be compared to the captain of a ship who has first to set
the course to reach the destination and then steer the ship along the course.
Similarly, a manager has to, first of all, set objectives which the firm must
achieve. Objectives provide the direction in which the firm must move. Having
decided upon the objectives, the manager must constantly monitor the progress
and activities of the firm to ensure that it is moving in the desired direction. This is

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the first and foremost task of every manager. If you are a part of the top
management team then you will be very actively involved in this task through the
process of defining the mission and objectives for the entire organisation. If you
are a manager reporting to the top manager, it is your task to see that the actions
of the people who work for you in your department or division are in the desired
direction. It is your task as a manager to prevent all such actions which take your
company away from the direction set by the top management.
All actions and decisions must be evaluated on the basis of their
contribution towards achievement of the company‘s objectives. However, this
should not give you the idea that objectives or direction once set will hold good
for all times to come or that any movement away from the current line or
production or activity is always undesirable. The key point is that all movements
and actions must be consistent with achievement of the objectives.
To ensure consistency it is important that the manager carefully thinks
through each alternative course of action and evaluates its potential to contribute
towards attainment of objectives.

4.3.2 Managing survival and growth

―Survival of the fittest‖ is the law of the jungle which is equally applicable
to the competitive market place where firms struggle and fight for survival.
Ensuring survival of the firm is a critical task of the manager. But that alone is not
enough. The manager has also to actively seek growth. No matter how big or
powerful a firm may be today, it is sure to be left behind in the race by newer,
healthier and more efficient firms if it is does not pursue growth. Two sets of
factors impinge upon the firm‘s survival and growth:
i) The first is the set of factors which are internal to the firm and are
largely controllable. These internal factors are choice of technology, efficiency of
labour, competence of managerial staff, company image, emphasis on customer
care, financial resources, etc.
ii) The second set of factors influencing the firm‘s ability to ensure survival
and growth are those which are external to the firm and over which it has little or
no control. These external, environmental factors refer to government policy,
laws and regulations, changing customer tastes, attitudes and values, increasing
competition or even natural calamities. For example tourism to India was
adversely effected because of the epidemic in Surat and many tourism firms
suffered heavy losses because of cancellations.

4.3.3 Maintaining firm’s efficiency in terms of profit generation

Efficiency is the ratio of output to the input. A manager has not only to
perform and produce results, but to do so in the most efficient manner possible.
To produce results a manager requires inputs in the form of money, men,

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materials and machines. The more output that the manager can produce with the
same input, the greater will be the profit generated. Profit is the surplus or
difference the manager can generate between the value of inputs and outputs.
Profit is essential for the survival and growth of any business. A manager
may decide to forego some profit today for the profits which are being sought for
tomorrow but in the long run one must understand that no business can survive if
it does not make profits. Business activity is undertaken to satisfy a need of the
society in a manner which yields profits. A business is not a philanthropic or
charitable activity which is run merely to provide some goods and services
irrespective of whether it is making a profit.
Profit generated can be used for expansion, upgrading of technology,
growth or paying dividends. Profits are one of the cheapest sources of financing
growth, as they involve no interest liability, nor putting the freedom at stake by
having representatives of financial institutions sit on your board of directors. Profit
gives you the cushion to take risk, think big and venture into relatively unknown
areas.
A profitable firm can turn unprofitable because of obsolete technology,
inability to meet high fixed cost structures, high levels of wastage, or simply
because the product or service is no longer in demand by customers.
4.3.4 Meeting the challenge of increasing competition
In today‘s fast changing world, one of the very critical tasks of every
manager is to anticipate and prepare for the increasing competition. Competition
is increasing in terms of more competitors, more products and services, wider
variety of products, better quality of products and a customer who is, today,
better informed and more aware than ever before. The increasing reach and
popularity of electronic media as a means of information has also contributed to
the increasing competition. The manager today has more potential customers to
sell to and easy access to these customers. Yet the market is crowded with many
competitors wooing the same customers.
Till a decade ago, the Times of India group of newspapers and
magazines reigned supreme in magazine market with its ‗Illustrated Weekly of
India‘ being the only Indian family magazine and ‗Filmfare‘ the only notable film
magazine. The former could be found in most homes which had a minimum level
of literacy and affluence. And ‗Filmfare‘ was the only magazine for people
interested in films. The introduction of ‗India Today‘ and ‗Stardust‘ brought about
a radical change starting in a modest fashion. ‗India Today‘ is probably the most
widely read general interest magazine while ‗Stardust‘ has blazed its own unique
trend-setting trail of popularity. In the wake of the success of these two
magazines, many other magazines followed, such as general interest
magazines, film magazines, women‘s magazines, children‘s magazines, special
interest magazines, etc. All these new magazines have better reading content,

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more colour, better layout and are very glossy and attractive to look at. Unable to
match these new magazines the circulation of the ‗Illustrated Weekly of India‘
and ‗Filmfare‘ slumped. However, in the last years these two magazines have
been attempting to regain the lost ground and have succeeded to some
measure. But they can certainly never again enjoy the leading position which
they once did.
In developed countries the concept of competition is very closely linked to
that of obsolescence. Companies keep introducing successively new tourism
products with minor variations, and persuading the customers to discard their old
travel habits for newer ones.

4.3.5 Managing for innovation

Innovation is finding new, different and better ways of doing existing
tasks. In the context of business, innovation has to be defined in terms of the
additional value it imparts to the existing products or services. Value is not
expressed in terms of increased cost or price but in terms of the difference it
makes to the customer.
A television manufacturing company, after years of painstaking effort,
introduced a circuit with a neat and clean layout which was extremely easy to
service. The company spent large amounts of money promoting this new circuit
and its improved servicing but the customers were not impressed and sales did
not pick up as per expectation. Customers were not convinced because they
could not really perceive the difference and importance of the circuit since its
impact on performance was very marginal. The marketing consultant to the
company recommended that instead of using plywood the company should use
transparent plastic back-covers for the chassis. This would allow the customers
to see the circuit and decide for themselves the truth of the company‘s claim.
This is an innovation because it makes a vital difference to the customers who
can see and understand for themselves the improvement.
Very often it is the customer who provides the source of innovation. For
example a study conducted by Eric Von Hippel and James Utter back on the
source of innovation in the scientific instruments business revealed that more
than 75 per cent of ideas for innovations came from users. Same is true in the
tourism sector as many tourists have their own ideas about a holiday and
accordingly itineraries are prepared or services are provided.
To plan and manage for innovation is an on-going task. The first thing the
manager must do is to maintain close contact and relation with customers. The
firm‘s frontline managers provide the most direct link for the company with its
customers. The task of the manager is to train them to keep their eyes and ears
open for any type of information, ideas, suggestions, complaints, criticisms, and
feed it back to the company. An extensive innovation study conducted by

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