CHAPTER –TWO

THE DEVELOPMENT OF MANAGEMENT THOUGHTS /

THEORIES

2.1. Management in Antiquity

Management thought has been shaped over a period of centuries by three

major sets of forces. These forces are: Social, economical and political in
nature, and they continue to affect management theory even today.

Despite the inexactness and the relative crudity of management theory and
science, the development of management thought dates back to the days
when people first attempted to accomplish goals by working together in
groups. Since pre-historic times people have been managed in groups and
organizations. Even the simplest of hunting and gathering bands generally
recognized rules and obeyed a leader or a group of decision makers
responsible for welfare of the band. As societies grew larger and more
complex, the need for organizations and managers became
increasingly apparent.

Attempts to develop theories and principles of management, however, are

relatively recent. In particular, the industrial revolution of the 19th century
gave rise to the need for a systematic approach to management. Some
examples in ancient times that shows where management was effectively
used include the following:

i. Egypt - The construction of the Egyptian pyramid (5000-525 BC) is

a testimony of the ancient Egyptian organization and managerial
abilities. The ancient Egyptians constructed the pyramid by 100,000
labor forces for 20 years on 13 hectares of land using 2,300,000
stones. This construction is equivalent with managing a city with a
population of 100,000 for 20 years.

This construction shows how extensively Egyptians used the management

functions of planning, organizing, staffing, directing and controlling. The
following statements best explain the practical applications of the concept of
management in ancient times.

“Comparing the technology and information we have today, managers

of those days exceed managers of today.” Sisk

“The best managers in history are the ones who managed the building
of the pyramids." Peter Drucker

ii. Romans - the ancient Romans also provided numerous illustrations of

effective management. Perhaps the most famous is the Emperor
Diocletian's reorganization of his empire. Assuming his position in
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 A.D. 284, Diocletian soon realized that the empire had acquired an
unmanageable form. There were far too many people and matters of
importance for the emperor to handle individually. Abandoning the old
structure, in which all provincial governors reported directly to him,
Diocletian established more levels in the hierarchy. He reorganized the
Roman Empire as: into 100 provinces with 13 dioceses and 4 major
geographical areas. By doing so he ruled Rome to its best time. The
governors were pushed farther down the structure and, with the help
of other administrators; the emperor was able to more effectively
manage this vast empire. Here the levels of a management are shown
clearly: 4 geographical areas ---13 dioceses --- 100 provinces. After he
divided Rome as such, he appointed 3 people on the divisions and the
rest for himself - Delegation of authority.

iii. Roman Catholic Church - was the most successful formal institution
in the western civilization. Rome achieved greater colonies using the
Catholic Church.

Roman Catholic Church also made important contributions to early

management thought. One was the church's wide use of job descriptions for
its priests, presbyters, and other religious workers. Everyone's duties were
clear, and the chain of command (hierarchy of authority) that extended
from the pope to the laity was created. A second Roman Catholic Church
contribution was that of compulsory staff service, the requirement that
certain members of the church hierarchy seek the advice of the other
hierarchs before making particular decisions. A third was the use of staff
independence, the assignment of certain advisors to key church officials.
Since these advisors were not removable by the official they could give advice
they considered best, without fear of reprisals from superiors.

In short, the most important contributions of Roman Catholic Church for the
development of management are on the areas of:
 Hierarchy of authority: there was a hierarchical structure from
Pope - Bishop - priest - laity.
 Specialization of activities: there was a training to be Pope,
Bishop, Priest and Laity.
 Use of staff managers:
 Compulsory staff service
 Staff independence

iv. Greece - Exhibited a real skill and capacity for management in the
operation of trading companies. They recognized the means to
maximize output through the use of uniform methods and motion
study.

v. Bible - Exodus 18:13-26; this passage tells how Jethro, Moses', father
in-law, observed Moses spending an entire day listening to the
complaints and problems of his people. Then Jethro advised Moses
that he was doing more than one man should and suggested specific
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 steps to relief him of his burden. He first recommended that
''ordinances and laws'' should be taught to the people. In modern
terms, the origination needed a statement of policies, rules and
procedures. Second, he commended that leaders be "selected and
assigned” to be rulers to thousands, and rulers of hundreds, and rulers
of fifties and rulers of tens. That was recommending delegation of
authority. Jethro’s third point, that these rulers should administer
all routine matters and should “bring to Moses the important
questions,” forms the basis of a well known control procedure: the
principle of exception.

In Ethiopia, the construction of obelisks of Axum, Castle of Gondar, Rock

Hewn Churches of Lalibela, the Wall of Harrar etc. are good examples that
modern management was practiced in ancient time.

2.2. Pre- classical contributors (Pioneer contributors)

A number of individuals in the pre-classical period of the middle and late

1800s began to offer ideas that laid the groundwork for broader inquiries into
the nature of management that followed. Among the principal pre-classical
contributors are Robert Owen, Adam Smith, Henry Poor, and Charles Babbage.

1. Robert Owen (1771 - 1858) - was a British industrialist and an owner-

manager of several successful cotton mills in Scotland.

At that period in history, working and living conditions for employees were very
poor. Child workers were common and the standard working day was 13 hrs
long. Workers were treated in much the same terms as tools and machines.

Owen was called industrialist and reformer because he was one of the first
managers to recognize the importance of human resource in an organization.
Because of this he was considered as ‘father of modern personnel
management.’ His ideas laid the groundwork for human relations movement.
Owen was well ahead of his time in recognizing the importance of human
resources. He was particularly interested in the working and living conditions
of his employees. He said that workers in organizations need special attention
and dignity or respect. As a result, he introduced in his organization the
following:
 Reduce working hrs from 13 hrs to 10½ hrs a day,
 Set a minimum hiring age (10 year) to protect children from the
abuses of employers,
 Provide meal, housing, and shopping facilities for employees,
 Improved working conditions in the factory
He argued, "Improving the condition of employees would inevitability lead to
increased production and profits".

2. Charles Babbage (Prof.) built the first practical mechanical calculator and a
prototype of modern computers. Although English mathematician, Charles
Babbage (1792-1871) is widely known as" the father of modern computing". He
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also made direct contributions to thinking about management. His
management interest stemmed from his difficulties with directing his various
projects. He became convinced that the application of scientific principles to
work processes would both increase productivity and lower expenses. Like the
18th century economist Adam smith, Babbage was particularly enthralled with
the idea of work specialization. Work specialization is the degree to which work
is divided into various jobs. Smith had concentrated mainly on ways to divide
jobs involving physical labor into more specialized tasks, but Babbage carried
the specialization idea a step further by recognizing that not only physical work
but also mental work could be specialized. Furthermore, he was an early
advocator of division of labor principle and the application of mathematics as
the efficient use of facilities and materials in production.

Babbage believed that each factory operation should be analyzed so that the
various skills involved in the operation could be isolated. Each worker would
then be trained in one particular skill and would be responsible only for that
part of the total operation (rather than for the whole task). In this way,
expensive training time could be reduced, and the constant repetition of each
operation would improve the skills of workers and enhance their efficiency.

Division of labor Specialization/improve skills of workers.

Reduce learning time and other expenses.

Emphasizing on efficiency of production, however, Babbage didn’t overlook the

human element of an organization. He said, “The relationship between
management and workers is the reason for the success or failure of the
organization.” Babbage also had some innovative ideas in the area of reward
systems. He devised a profit sharing plan that had two parts, a bonus that was
awarded for useful suggestions and a portion of wages that was dependent on
factory profits. His ideas foreshadowed some modern day group incentive
plans, such as the Scanlon plan in which workers actively participate in
offering suggestions to improve productivity and then share in the profits from
resulting gains. He understood that a harmonious relation between
management and labor could serve to benefit both.

He was an avid proponent of:

 Division of labor
 Economies of scale in manufacturing
 Incentive pay
 Profit sharing
 Application of mathematical concepts in production
 Harmonious relationship between management and workers
Babbage laid the groundwork for much of the work that later became known as
Scientific Management.

2. Adam Smith: Smith made an important contribution to the development of

management thought regarding the impact of division of labor on
manufacturing in his book ‘The Wealth of Nations’ in 1976. His conclusion
was Specialization could lead to increased efficiency. This is because:
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  Specialization increases the dexterity in every particular work person.
 Specialization saves the time lost in passing from one species of work
to another.
 Specialization helps to the invention of great number of machines,
which facilitates and bridge and enable one person to do the work of
many.

Thus, managers were more interested in the mechanical side of the job. That
is, division of labor, coordination of activities, and control of operations.

2.3. Classical Management Theory Approach

This approach is primarily based up on the economic rationality of all

employees. That is people are motivated to work by economic incentive.
Classical management theory consists of three streams (branches) of thought.
These are:

1. The scientific management theory

2. The administrative management theory
3. The bureaucratic management theory

A. The scientific management theory

Frederic Taylor was the first and major contributor of scientific management.
He has been called “the father of scientific management".

He contributed to the field by conducting time and motion study and by

recording his knowledge of management. Taylor believed that there is “one best
way “to perform any task and his objective is to increase productivity by finding
that best way (efficient in production).and then to train workers to do it that
way.

In addition to increasing efficiency Taylor believed that increasing workers pay

is a means of improving productivity. To achieve his objective Taylor introduced
the concept of differential piece work plan for payments of wages. For this
purpose two types of pay standards were established.

A. The standard rate- pay made for workers who meet a certain production
rate.
B. Above the standard rate (higher piece rate) pay made for workers who
produce more than the standard.

Thus workers will be motivated to produce above the standard to get more
payment and productivity will be increased. Finally Taylor set the following
basic principles.
1. Traditional management (rule of thumb or guess work) should be
replaced by scientific systems.
2. Management should improve methods of work and standardize the
methods.
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 3. Workers should be scientifically selected, placed, and trained in the
selected and standardized methods of work.
4. There should be cooperation between management and labor.
5. There should be division of work responsibilities between management
and workers. Managers plan and organize the work and workers
implement it.
6. Mental revolution is necessary with in the minds of workers and
managers to apply all these principles.

Assessing scientific management

Scientific management was successful in increasing productivity and
consequently increasing the wealth that improved living standard of the
workers. The proponents (followers) of scientific management believe that
workers are motivated primarily by a desire to earn money to satisfy their
economic and physical needs. However, they failed that workers have social
needs and that working conditions and job satisfactions are often equally
important.

B. Administrative Management Theory

Administrative theory (some times called functional or process approach) was

developed by Henery Fayol. He believed that management activities at the
upper levels are more significant than other levels.
The early scientific management brought many successes at lower levels of the
organization. However as out put increased and operations grew, organizations
began to be confronted with new management problems. Planning and
coordinating operations become much more important than even before, and
the organization of people in the work-place become a focal point for
consideration. The individuals who were interested in dealing with this problem
began to formulate theories of administration (how to administer), Henery
Fayol being the primary contributor.
In particular Fayol was concerned about the fact that different abilities were
needed as one move up the management ranks .At the lower levels an
individual required greater technical skill in order to supervise workers
effectively. At the upper levels the the individual require administrative ability
in order to get things done through other people ( i.e. in order to coordinate,
administer others ).
Fayol experience leads him to conclude that there were five basic
functions/elements of administration.

1. Planning - Formulating objectives and operating programs

2. Organizing – Coordination of resources for accomplishing the
predetermined objectives.
3. Commanding – Leading effectively
4. Coordinating- orderly arrangement of group efforts to provide unity of
action
5. Controlling – Checking that everything was done according to the plan.

Fayol also developed the following 14 general administrative principles.

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1. Division of work. Workers are given only a small element of work to do, in
which they will specialize. Division of work/ specialization increases
efficiency.
2. Authority & Responsibility:-
Authority – is the right to command to get the work done, whereas
responsibility is the obligation or duty to carry out assigned tasks and to
use authority. Authority should always be equal to responsibility.
3. Discipline: - obedience to organizational regulations, rules, statements of
policies and employment agreements.

4. Unity of Command: - each employee must receive instruction/command

about job only from one person in order to avoid conflicting instructions and
the resulting confusion. Every one should have only one superior.
5. Unity of Direction: - each work groups or departments should operate
under one plan for each group of activities having the same objectives.
6. Subordination of Individual’s interest to organizational interest. The
interest of individual employees should not have priority over the interest of
the organization as a whole. The interest of the organization should be
satisfied before satisfying the individual interest.
7. Remuneration of staff: - All employees should be fairly paid with
appropriate additional incentive for additional efforts.
8. Centralization and decentralization: - While some authority should be
given to the subordinates to make decision all major policy decisions should
be made at the top management Level.
The extent to which authority is centralized (decision made by top managers) or
decentralized (giving authority to decide to subordinates) depends on the
situation and includes such factors as the nature of the task and the abilities
of subordinates.

9. The scalar chain (line of authority): - The communication should follow a

single uninterrupted chain of authority (often presented by the neat boxes
and lines of an organization chart) from rank to rank from top management
to the lowest level position in an organization. However, this proved to be
very time-consuming, incase where people in different departments but at
the same level of hierarchy, need to communicate with each other. Fayol
solved this problem by introducing the “ Gang plank policy “, where such
people could communicate with each other directly, but with the permission
of their superiors.
10. Order: - materials and people should be placed in the right place at the
right time. In particular people should be in the jobs or positions best suited
to them to increase efficiency.
11. Equity: - Managers should be both fair and friendly to the subordinates.
12. Stability of staff/personnel: -avoiding unnecessary rate of employee
turnover and long term commitment should be encouraged. It results in a
sense of belongingness to the organization which creates dedication and
better outputs.

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13. Initiative: - Subordinate should be encouraged to generate new ideas,
formulate and carrying out their plans. This creates belongingness and
motivation.
14. Esprit décops: - there should be team sprit harmony/ and cooperation
between employers. This unity creates strength. Management should
encourage this team sprite.

Assessing the administrative Management

The classical administrative management theory focuses on managers and
their actions rather than an overall structure or work, like scientific
management, administrative management is oriented toward increasing
production but in different way at higher level.
Today we tend to avoid thinking in terms of universal principles, rather in
terms of unique demands of each situation.
Principles are essential to the practice of management, if they provide flexibility
to make situational adaptations.

C. The bureaucratic theory (Max Weber 1864-1920)

Weber was a sociologist who felt responsibility to improve organizational

performance. As an advocate of bureaucratic organization, he was concerned
on how the overall structure of an organization influences managerial
effectiveness. Thus, the focus of bureaucratic management is on improving
organizational structure. An organization’s structure consists of its positions
and their relationships, including such factors as organizational objectives,
policies, procedures and operating systems.
For the bureaucratic theory the source of power is the rational-legal authority.
Rational-legal authority is the right to exercise authority based on position;
that is where acceptance arises out of the office or position of the person in
authority as bounded by the rules and procedures of the organization.

Weber’s bureaucratic management is characterized by:

1. Formal system of rules: formal guidelines for the behavior of all

employees while they are on the job considered positively, rules can help
provide discipline in an organization. Adherence to the rules ensures
uniformity of procedures and operations and helps to maintain
organizational stability. It results consistency in behavior.
2. Impersonality: maintaining impersonal relationship between
organizational members, reliance on rules and evaluating employees
according to these rules and objective data.
3. Vertical structure: ranks jobs according to the amount of power and
authority given to each position within the organization. It makes clear to
each employee exactly where he or she stands in relation to every other
employee.
4. Division of labor: the process of dividing duties into simpler, more
specialized tasks to promote efficiency.
5. Authority structure: determines the rights to make decisions of varying
importance at different levels within the organization.
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 6. Life-long career commitment: the job security is guaranteed as long as
the employee is technically qualified and performs satisfactorily. It
ensures educational and experience based employment and promotion.
Bureaucratic organizations, such as the civil service, often relay on the
results of written and oral exams, amount of formal education and
previous work experience to determine management rank.
7. Rationality-running the organization logically and scientifically.
8. Written records. The successful and continuous operation depends to a
large extent up on written records.
9. It is relatively continuous in operation.

Advantages of Bureaucracy
a) Since rules and procedures are applicable to all, making the
management process easier to implement.
b) The overlapping and conflicting of job duties are eliminated.
c) Hiring and promotions are based on merit and expertise.
d) The division of labor makes the workers specialists.
e) The organization continues, even of the individuals leave their position.

Disadvantage /drawbacks of Bureaucracy

a. There is too much red- tape and paperwork
b. Excessive adherence to the rules and regulations. Employees are treated
like machines and not like human beiges.
c. Employees become resistant to change and new ideas because they are
bounded by formal rules.
d. It overlooked the impact or influence of behavioral factors and the role of
informal organization over formal organization

Generally the expected benefits of bureaucratic management are efficiency and

consistency.

A bureaucracy functions best when many routine tasks need to be done. Bureaucratic
management is most appropriate for routine organizational activities where productivity is the
major objective. But it is not appropriate for the highly flexible organization which faces many
non-routine activities where creativity and innovations are important.

In the dynamic society the innovative, creative organization is becoming the

rule rather than the exception.

Critiques on the classical theories

1. They regarded the human resources as an inert object ((instrument). They
gave inadequate attention to human factors; rather, they gave prior concern
for efficiency and productivity. They did not deal with the informal or social
relation ships and psychological aspects of work. They emphasized with
formal aspect of the organization.

2. Classical management theory concentrated on internal aspects management

as work measurement, efficiency and effective organization structure. It
disregarded the influence of external environment on internal organizations.

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 D. The Behavioral Management Theory

The proponents of behavioral school recognized employees as individuals with

concrete human needs, as part of work groups, and as members of a large
society. Employees are assets that can be developed not nameless robots
expected to follow orders blindly.

The different theorists who had concern for people in the work environment
organizations are given below.

Robert Own (1771-1858)

He is considered as the father of modern personnel management. He asserted
that the quality and quantity of workers’ output were influenced by conditions
both on and off the job.

George Elton Mayo (1880-1949)

Mayo and his associates were primarily concerned with the link between the
psychological aspects of work and productivity, or more specifically the effect of
working conditions on productivity.
The prominent work of Mayo is the Hawthorne (1924-1933) plant experiment
conducted in Western Electric Company near Chicago.

The research was carried in three phases:

Phase one: Relation between productivity of labor and physical working
environment:
Here an increase in the intensity of light was made on a certain work group.
However, the degree of influence of the change of the physical-working
environment on productivity was not much strong.

Phase two: Relationship between productivity of labor and the individual

participant’s attitude at his/here work.
In this new phase, a small group of workers was placed in a separate placed
and a number of variables were changed: wages were increased, rest periods of
varying lengths were introduced, the work day and work week were shortened.
The groups were also allowed to choose their own rest periods and to have a
say in the suggested changes. Again results were not clear. Then, it was
concluded that financial incentives were not causing the productivity
improvements.

Phase three: Relation between productivity of labor and small informal group.
The interaction of small informal groups and the collective attitude of these
groups and individuals toward the job were observed. It was recognized that
the cognitive style and value judgment of an employee is determined by his/her
interaction with other members. It was concluded that, if the existence of the
small informal groups and their interest is recognized it would result good
organizational performance. The above studies heightened management’s
awareness of the social needs of workers and showed how an organization’s
social environment influenced productivity.
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Finally, the conclusions of Mayo and his Associates were:
1. Employees are essentially social beings not merely natural economic beings.
2. As social beings, employees are members of groups. Thus, managers should
always relate to individuals with full awareness of the nature of groups and
their influence on individual behavior.
2. Managers using good human relations will achieve productivity.

Abraham Maslow (1964)

A humanistic psychologist, teacher and practicing manager-developed a need-
based theory of motivation. Maslow’s theory is now considered central to
understanding human motivations and behavior.

In 1943, in an article for psychological Review-“A theory of human motivation”.

Maslow identified and analyzed five basic needs which the believed underlay all
human behavior.

These needs relate to:

a. Physiology-the need for food water, air and sex.
b. Security-the need for safety. E.g job security
c. Social or affiliation-the need for friendship, interaction and love.
d. Esteem-the need to be respected and to get recognition
e. Self-actualization –the ability to reach one’s potentials.

Maslow’s theory assumed the following:

1. Only unsatisfied need can influence behavior; a satisfied need is not a

motivator.
2. A person’s needs are arranged in a priority order of importance
3. A person will at least minimally satisfy each level of need before feeling
the need at the next level.
4. If need satisfaction is not maintained at any level, the unsatisfied need
will become a priority once again. For example, for a person who is
presently feeling social needs, safety will become a priority once again if
he or she is fired.
Abraham Maslow’s hierarchy of human needs

Self-Actualization needs
Esteem needs
Social needs

Safety needs

Physical needs

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Douglas McGregor
In this 1960 publishing- “The Human Side of Enterprise” McGregor explained
that all earlier managers operated from one or two basic assumptions about
human behavior: These are Theory X and Theory Y.

The first theory (theory- X), viewed workers as being lazy and needing to be
coerced, controlled and directed.

The second (Theory- Y) described people as McGregor thought them to be:

responsible, willing to learn and given the proper initiatives, inherently
motivated to exercise ingenuity and creativity.
McGregor told managers that if they give employees a chance to contribute and
to take control and responsibility, they would do so (McGregor 1960)
The focus of behavioral approach extends from the study of individual behavior
on the one hand, to the study of large groups and organizations on the other.
Three of the broadly based areas of interest for behavioral scientists are
individual behavior, group behavior and organization development.

The behavioral approach uses the concepts of psychology, sociology,

anthropology, and other behavioral theories to assist managers in
understanding human behavior in the work environment. The emphasis of the
behavioral approach focuses on the interrelationships between people, work,
and organizations. It also concentrates on such topic as motivation
communication, leadership and work group formation which can assist
managers with the people aspects of their jobs.

2.4. The Modern Management Theories

It includes three approaches:
A. Quantitative approaches
B. System approach
C. Contingency (situational approach)

1. Quantitative Management Theory (Management science

Approach)

The theorist of management science view managing primarily as mathematical

process, concepts, symbols and models.

Their belief is that is managing or organizing or planning or decision making is

logical process; it can be expressed in mathematical symbols and relationships.
The techniques of management science are well-established parts of the
problem solving weapon of most large organizations. The techniques are used
in such activities as production scheduling, development of product strategies,
planning of human resource development programs linear programming,
computers, maintenance of optimum inventory levels etc.

Thus the central idea of management science (quantitative approach is the

practice of scientific method and the application of mathematics, statistics and
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other quantitative techniques to management decision making and problem
solving.

The essence of quantitative management approach is found in the following

characteristics:
1. Managerial decision making problem solving,
2. Based on economic decision criteria-such as costs, revenues and rate of
return on investment.
3. Use of formal mathematical models – possible solutions to problems are
specified as mathematical equations and then analyzed according to
mathematical rules and formulas.
4. Frequent use of computers – heavy reliance is placed on electronic
computers and their advanced processing capabilities.

Limitations
1. Some managers complain that the concepts and language of management
sciences are too complicated for ready understanding and implementation.
2. It fails to address psychological and behavioral components of work place
activities-variables, which may not be quantifiable.

2. The Management System (Systems Approach)

The systems view is recently developed concept of management. When this

concept is applied to organization and management studies it help to ties all so
for developed facts of organization and management and provide very
integrated approach to managers.

The systems approach views the entire organization as an integrated

functioning organization- as a dynamic structure in which every part interacts
to produce a whole, as an open system which depends on the environment
for its inputs and outputs. As an open system, the organization depends for its
inputs such as labor and materials, and outputs such as products and services
on the external environment. For this reason, the systems view gives mangers a
way of looking an organization as a whole and as a part of the larger external
environment

The organizational system comprises interacting components known as

subsystems such as the information, the management and technical
subsystems. The activity of any subsystem of an organization in varying degree
affects the activity of every other subsystems and thereby the activity of the
whole organizational system. Each subsystem has to strive for the attainment
of the objectives of the organization depends on the collective effort of these
subsystems.
According to the systems approach, an organizational system has four major
components.

a. Inputs - are the various human, financial, equipment and

informational resources required to produce goods and services.

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 b. Transformation process - are the organization's managerial and
technological abilities that are applied to convert
inputs in to outputs.
c. Outputs - are the products, services and other outcomes produced
by the organization.
d. Feedback - is information about results and organizational status
relative to the environment. It is a key to system control.

TRANSFORMATION OUTPUTS
INPUTS
Human - Products
- Transforming - Services
Finance
Resources and adding - Human
Material
utility satisfaction
Information
- Organizational
- survival and
- growth
- Social benefit

Feedback

Contemporary systems theory finds it helpful to analyze the effectiveness of

organizations according to the degree to which they are open or closed. There
are two types of systems: open and closed

Open system
It is one that continually interacts with its environment and therefore is well
informed about changes within its surroundings and its position relative to
these changes. The open system engages in such interactions in order to take
in new inputs and learn about how its outputs are received by various
important outside elements.

It is a system which interacts with external environment and is dynamic and

adaptive with the change in the environment. It has permeable boundary
between itself and the broader supra system. E.g. social systems, biological
systems

Organizations that operate closer to the open end of the system share certain
characteristics that help them survive and prosper. Some are: negative entropy,
differentiation, and synergy.

Entropy - refers to the tendency of systems to decay over time. Or, it states
that systems will decay overtime if they don't interact with the environment. It
is a natural process by which all things tend to breakdown or die. If a system
does not bring in or receive inputs and energy from its environment, it will
eventually cease to exist.

In contrast, negative entropy is the ability of open systems to bring in new

energy in the form of inputs and feedback from the environment in order to
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delay or arrest entropy, the decaying process. Organizations must monitor
their environment, adjust to changes, continuously bring in new inputs in
order to survive and prosper.

Differentiation - is the tendency of open systems to become more complex.

The increased complexity usually stems from the addition of specialized units
to handle particularly troublesome or challenging parts of an environment.

Synergy - the main gist of this concept is "the whole is greater than the sum of
its parts." This means that an organization ought to be able to achieve its
goals more effectively and efficiently than would be possible if parts are
operated separately. It emphasizes on the importance of working together in a
cooperative and coordinated fashion. The simultaneous action of different parts
of an open system functioning in a harmonious and integrated manner
produces more total effect than the sum of the separated effort of individual
parts.

Steady state - the balance to be maintained between inputs flowing in from

the external environment and the corresponding outputs returning to it.
Organizations should adapt to environmental changes. Steady state is the
tendency of maintaining equilibrium condition by making constant and
proportional adjustment in response to changes in its environment. An
organization in steady state is not static, but in dynamic form of equilibrium.

Closed system
A closed system is a system that does little or no interaction with its
environment and receives little feedback. It has rigid boundary. E.g. physical
systems, mechanical systems.

Subsystems - the parts that make up the whole of the system. Each system
may be a subsystem of a still larger whole until we reach the larger supra
system.
Department, plant, industry, national economy, the world system sequential
relationship can show us the system-subsystem formation.

According to the systems viewpoint, managers are likely to be more successful

if they attempt to operate their units and organizations as open systems that
are carefully attuned to the factors in the environment that could significantly
affect them. Hence, the system approach views organizations as open systems
having interdependence and interactions between the organization and its
environment and among various subsystems to exchange information and
energy.

Characteristics of A System

1. Every system is comprised of many sub systems which are

interdependent.
2. Every system is part of a larger one

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 3. It is complex and inter- related, in such a manner that a change in one is
a change in the other.
4. Every system has a specific purpose to which all its parts & sub- systems
contributes for achieving the general objective.
5. Each entity of the system receives information or energy from an other
part.
6. A system has a tendency to remain in equilibrium by maintaining a
balance among various forces.
7. A system can’t exist in isolation

3. Contingency Management Theory

The contingency management is based on the premises that managers’

preferred actions or approaches depend on the variables of the situations they
face. According to this view there is no one best way of managing or managerial
technique universally applicable in all situations; rather, it depends upon a
given set of circumstances. The idea is that what works in one situation may
not work in another.

According to the contingency approach, then, the task of managers is to

identify which technique will, in particular situation, under particular
circumstances and at a particular time, best contribute to the attainment of
management goals. For example, if followers are mature, then participative,
leadership will be more effective than if followers are immature. As to the
contingency approach, each organization if unique and that each situation
must be analyzed separately. It recognizes both similarities and differences
among organizations but still emphasize that the primary managerial role is to
seek congruence between the organization and its environment and among its
various subsystems.

The existence of these different theories confuses the users, but thanks to
contingency theory it has the solution for this. It says be flexible and
situational.

Generally we should have a cumulative knowledge of all the previous theories

and our knowledge is still incomplete and should be open for the future up
comings.

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