Evolution of Management

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Table of Contents
Introduction ............................................................................................................................................. 2
Classical Approach ................................................................................................................................... 2
Administrative Theory......................................................................................................................................... 3
Relevance of Fayol’s Principles Today ....................................................................................................................................... 7
Critical Evaluation ...................................................................................................................................................................... 8
Scientific Management........................................................................................................................................ 9
Principles of Scientific Management ......................................................................................................................................... 9
Techniques of Scientific Management .................................................................................................................................... 10
Critical Evaluation .................................................................................................................................................................... 12
Bureaucratic Approach ...................................................................................................................................... 13
Advantages of Bureaucracy ..................................................................................................................................................... 14
Disadvantages of Bureaucracy................................................................................................................................................. 14
Criticism of Classical Theory .............................................................................................................................. 15
Neo-Classical Approach ......................................................................................................................... 16
Hawthorne Experiments ................................................................................................................................... 16
Contributions ........................................................................................................................................................................... 17
Evaluation ................................................................................................................................................................................ 18

Behavioural Science Approach ............................................................................................................... 19

Appraisal .................................................................................................................................................................................. 20
Comparison between Human Relations and Behavioural Approach....................................................................................... 20

Social System Approach ......................................................................................................................... 21

Open Systems Approach.......................................................................................................................................................... 22
Contributions ........................................................................................................................................................................... 22
Limitations ............................................................................................................................................................................... 23

Modern Organization Theory ................................................................................................................. 23

Contingency Approach ........................................................................................................................... 24
Practical Utility of Contingency Approach ............................................................................................................................... 25
Evaluation of Contingency Approach ...................................................................................................................................... 25
Criticism of Contingency Approach ......................................................................................................................................... 26
Comparison between Systems Approach and Contingency Approach.................................................................................... 26

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Introduction
The evolution of management can be traced back to the days when human beings started living in groups.
One can argue that management took the form of leadership which was essential to coordinate the efforts
of the group members in order to arrange the necessaries of life.

According to Egyptian literature of 1300 B.C., the art of management was being practised in different forms
by different people. The literature clearly indicates the recognition of the importance of organisation and
administration in the bureaucratic setup. Similar records exist for China. According to L.S.Hsu, Confucius’s
parables include practical suggestions for proper public administration and admonitions to choose honest,
unselfish and capable public officers.

Modern management has developed through several stages or approaches. These approaches to the study
of management may be classified as under:
I. Classification Approach
II. Neo-classical Approach
III. Behavioural Science Approach
IV. Social System Approach
V. Modern Organization Approach
VI. Contingency Approach

Classical Approach
The classical theory represents the traditionally accepted views about organisations. In a way, it signifies the
beginning of the systematic study of organisations. That is why it is said to be the oldest school of thought
about organisations and their management.

The classical theories concentrated on organisation structure for the achievement of organisational goals
and also developed certain principles of management.

The classical writers thought of the organisation in terms of its purpose and formal structure. They placed
emphasis on the planning of work, the technical requirements of the organisation, principles of management
and the assumptions of rational and logical behaviour. Thus, the classical theorists dealt almost exclusively
with the anatomy of formal organisation structure.

The classical theory ignored the impact of the external environment on the working of the organisation.
Thus, it treated organisations as closed systems.

The classical thought can be studied under three streams, namely:

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Classical Theory (focus on Management

Principles for efficient organisation)

Administrative Functional
or Process Approach Scientific Management Bureaucratic Approach
(F.W. Taylor) (Max Weber)
(Henri Fayol)

Administrative Theory
As organizations grew and became more complex, the need for a systematic
understanding of the overall management process was felt. Managers became more
concerned with the management of organizations than with improving the efficiency
of individual jobs. They tried to identify the functions of a manager with emphasis on
coordination of resources towards the achievement of stated objectives. This stream
of the classical approach is known as Administrative Theory or Functional Approach
or Management Process Approach. This school of thought is also known as the
‘universalist’ school because it believed that management principles are applicable to
all kinds of group activities.

Henri Fayol is regarded as the father of this thought, i.e., the father of general management. Henri Fayol
defined management in terms of certain functions and then laid down fourteen principles of management
which according to him have universal applicability. He argued that managerial ability can be acquired as any
other teaching ability. He not only recommended formal teaching in management but also practised it by
founding the “Centre for Administrative Studies” in Paris.

Management Principles: Fayol gave the following general principles of management:

1. Division of work
According to this principle, work should be divided into small tasks/jobs; each performed by a specialist
or trained employee. Division of work leads to specialisation. This results in efficient and effective output.
o For example, in a company, there are separate departments for finance, marketing, production
and HR. All the departments perform specialised tasks. This leads to functional specialisation.

2. Authority and Responsibility:

Authority is the right to get things done and responsibility is answerability for certain work. Fayol
suggested that there should be a balance between authority and responsibility. Giving authority without
fixing responsibility may lead to misuse of authority. For example, if a sales manager requires to offer a
credit period of 60 days to negotiate a deal with a buyer (to fetch the company net margin of Rs.25 lakh),
he/she should not be given authority to offer a credit period of 100 days. He/she may misuse his/her
authority.

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At the same time, responsibility without adequate authority will make the subordinate ineffective, i.e.,
he/she will not be able to perform his/her duties properly. For example, suppose the production
manager of a company manufacturing scooters asks his/her foreman to achieve a target production of
250 scooters per day. But he/she does not give him the authority to requisition tools and materials from
the store’s department. The foreman is not able to achieve the target. Then, the production manager
cannot blame him.

3. Discipline
Discipline is the obedience to organisational rules and employment agreements, which are necessary for
the working of the organisation. According to Fayol, discipline requires:
• Good superiors at all levels,
• Clear and fair agreements, and
• Judicious application of penalties

o For example, suppose management and a labour union have entered into an agreement whereby
workers have agreed to work overtime without any additional payments to revive the company
out of loss. In return, the management has promised to increase wages when this mission is
accomplished. Here ‘discipline’ would mean that workers and management both honour their
commitments.

4. Unity of Command
According to Fayol, there should be one and only one boss for every individual employee. Dual
subordination should be avoided. This principle resembles a military organisation.
If an employee gets orders from two or more superiors at the same time, the principle of unity of
command is violated.
Consequences of violation:
• Authority is undermined
• Discipline is in jeopardy
• Order is disturbed and
• Stability is threatened
o For example, suppose a salesperson is asked to make a deal with a buyer by the marketing manager
and is allowed to give a 10% discount by the marketing manager. But the finance manager does not
permit him to offer more than a 5% discount. Now, there is no unity of command. There will be
confusion in the mind of the salesperson regarding whose instructions to follow. This can be avoided
if there is coordination between the two departments.

5. Unity of Direction
All the units of an organisation should be moving toward the same objectives through coordinated and
focused efforts. Each group of activities must be having the same objective and must have “one head
and one plan”. This ensures unity of action and coordination.
o For example, If a company is manufacturing motorcycles as well as cars, then it should have two
separate divisions. Each division should have its own in charge, plans and resources. The working
of two divisions should not overlap on any account.

6. Subordination of individual interest to general interest

According to this principle, the interests of the organisation should take priority over the interests of any
one individual employee.

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o For example, a company may want to get maximum output from its employees at a competitive
cost (salary), while an employee may want to get a maximum salary while working the least. Here,
the interest of the company will supersede the interest of the employee.

This is so because larger interests of various stakeholders, i.e., workers, owners, shareholders, creditors,
customers and society cannot be sacrificed for one individual or a small group of individuals who want to
exert pressure on the company.
A manager can ensure this by his/her exemplary behaviour. For example, he/she should not fall into
the temptation of misusing his/her powers for individual/family benefit at the cost of the larger general
interest of the workers/company. This will ensure the same behaviour by the workers.

7. Remuneration of employees: Remuneration of employees should be just and equitable so as to give

maximum satisfaction to both employees and the organisation.
- The employees should be paid fair wages/salaries, which would give them at least a reasonable
standard of living
- at the same time, it should be within the paying capacity of the company.
This will ensure good relations between workers and management. Consequently, the working of the
company would be smooth.

8. Centralisation and Decentralisation

The concentration of decision-making authority by top management is called centralisation. On the other
hand, the delegation of authority throughout all the levels of the organisation is called decentralisation.
Those organisations in which decision-making authority lies with the top management are termed
centralised organisations whereas those in which decision-making authority is pushed down the chain of
command are decentralised organisations.
• Fayol says that an organisation should have a balance between complete centralisation and
decentralisation. For example, the major decisions like setting up of goals, plans, policies and
strategies can be centralised; but there can be a policy of decentralisation for the activities of routine
work such as the purchase of raw materials, assignment of targets to workers, etc.
An organisation can never be completely centralised or completely decentralised. As an organisation
grows in size and complexity, there is a tendency to move towards decentralised decision-making. This is
because, in large organisations, employees are more directly and closely involved with the business
operations than the top management.

9. Scalar Chain
An organisation consists of superiors and subordinates. The formal lines of authority from highest to
lowest ranks are known as the ‘Scalar Chain’. According to Fayol, ‘organisations should have a chain of
authority and communication that runs from top to bottom and should be followed by managers and
the subordinates.’
We consider a situation where there is one head ‘A’ who has two lines of authority under him/her. One
line consists of B-C-D-E. Another line of authority under ‘A’ is L-M-N-O. if ‘E’ has to communicate with
‘O’, who is at the same level of authority, he/she has to transverse the route E-D-C-B-A-L-M-N-O.

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According to Fayol, this chain should be violated in the normal course of formal communication. However,
if there is an emergency then ‘F’ can directly contact ‘P’ through ‘Gang Plank’. There is a shorter route that
has been provided so that communication is not delayed in case of an emergency.
o Example: A worker cannot directly contact the CEO of the company. If at all he/she has to, then
all the formal levels, i.e., foreman, superintendent, manager, director, etc. must know about the
matter. However, in an emergency, it can be possible that a worker can contact the CEO directly.

10. Order
The principle of ‘order’ states that – ‘a place for everything (everyone) and everything (everyone) on
its (his/her) place.” Essentially, it means orderliness.
According to Fayol, “people and materials must be in suitable places at the appropriate time for
maximum efficiency”
If there is a fixed place for everything (everyone) and it (he/she) is there, there will be no hindrance in
the activities of the business/factory. This will lead to increased productivity and efficiency.

11. Equity
The principle emphasises kindness and justice in the behaviour of managers towards workers. There
should be no discrimination on account of sex, religion, language, belief, nationality, caste, etc. This will
ensure loyalty and devotion. There will be cordial relations between managers and workers.
o For example, Nowadays in MNCs, we find people of various nationalities working together in a
discrimination-free environment. Equal opportunities are available for everyone to rise.

12. Stability of personnel

According to this principle, employees once selected, should be kept at their post/position for a
maximum fixed tenure. In other words, they should have a stability of tenure. They should be given
reasonable time to show results.
Fayol suggests that labour turnover should be minimised to maintain organisational efficiency.
The stability of tenure of personnel is good for the business because of the following reasons:
I. Any adhocism will create instability/insecurity among employees. They would tend to leave the
organisation.
II. Recruitment, selection and training costs of new employees will be high.
III. There will be poor output levels and customer service till new employees are appointed.

13. Initiative
Initiative means eagerness to initiate action without being asked to do so. In other words, it means taking
the first step with self-motivation.
According to Fayol, subordinates should be encouraged to make and execute plans within the prescribed
limits of authority.

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For example, a good company has an employee suggestion system whereby initiative/suggestions, which
result in cost/time reduction, is rewarded.

14. Esprit de corps

‘Espirit de corps’ means unity is strength. According to Fayol, management should promote a team spirit
of unity and harmony among employees.
A manager should replace ‘I’ with ‘We’ in all his/her conversations with workers to foster team spirit.
This will rise to a spirit of mutual trust and belongingness among team members. It will also minimise
the need for using penalties.
Management should promote teamwork, especially in large organisations; otherwise, it will result in a
loss of coordination and hence the organisation will not be able to achieve its objectives.

- Fayol warned that these principles are flexible guidelines rather than hard and fast laws. They should be
used with discretion rather than blindly.

Relevance of Fayol’s Principles Today

The basic principles of management have stood the test of time. These are relevant even in today’s
business scenario. However, some modifications may be needed in these principles to suit the particular
situation. A few examples of various principles of management and their relevance are given below:

Degree of division of work

Total task cannot be performed
1. Division of work differs from one organisation to
by one person
another.
2. Authority and Complete equality is not always
The two must go together
responsibility possible.
Type of discipline may be
Essential for smooth functioning different in different firms, e.g..,
3. Discipline
of every business firm. self-discipline, or army type of
discipline
In some cases, an employee
4. Unity of Command Usually followed may be asked to report two
bosses.
Department of a business firm
In some business firms, matrix
5. Unity of Direction usually organised as per this
structure is used.
principle
6. Subordination of
Some employees may not
individual interest to Essential for common good
follow this principle
common interest
In the unorganised sector this
7. Remuneration Just and fair in most cases principle may be violated by
many firms
Some decentralisation found in Degree of decentralisation may
8. Centralisation
every firm. differ from firm to firm
Maybe violated to speed up
9. Scalar Chain Usually followed in most cases
communications
10. Order Used to avoid chaos Degree of order may vary
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Employers have to be equitable

Cases of inequity reported in
11. Equity to ensure good relations with
some firms
employees
In the interest of the employer Companies may have to
12. Stability of tenure
too. retrench employees
Employees suggestion useful for Some employers do not permit
13. Initiative
employer. employees to take initiative
In some organisations there is
14. Espirit de corps Unity relevant for all.
lack of espirit de corps

Critical Evaluation
Fayol was the first to systematize the classical school. His theory retains much of its force till today. Many of
his concepts and principles are taken for granted by managers now. The principles of administrative theory
have the potential to comprehend and cope with the growing complexity of organisations to the extent they
seek to bring order, structure and certainty through rules, regulations, policies and practices. Fayol’s theory
has, however, been criticized on the following grounds:

1. Too formal: Fayol’s theory is said to be very formal. However, in any specific and analytical study, facts
and observations have to be presented in a formal manner.

2. Vague: Some of the concepts have not been properly defined. For example, the principle of division of
work does not tell how the task should be divided. Again, to say that an organisation needs coordination
is merely to state the obvious. In the words of Herbert Simon, “administrative theory suffers from
superficially, over simplification and lack of realism”

3. Inconsistency: Principles of the administrative theory were based on personal experience and limited
observations. They are generalizations and lack empirical evidence. They have not been verified under
controlled scientific conditions. Some of them are contradictory. For example, the unity of command
principle is incompatible with the division of work. The theory does not provide guidance as to which
principle should be given precedence over the other.

4. Pro-management bias: Administrative theory does not pay adequate attention to workers. Workers are
treated as biological machines or inert instruments in the work process.

5. Historical value: Fayol’s theory was relevant when organizations operated in a stable and predictable
environment. It seems less appropriate in the turbulent environment of today. For example, present-day
managers cannot depend entirely on formal authority and must use persuasion to get the work done.
Similarly, the theory views organizations as power centres and does not recognize the role of a
democratic form of organization.

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Scientific Management
The impetus for the scientific management approach came from the first industrial
revolution. Because it brought about such an extraordinary mechanism of industry,
this revolution necessitated the development of new management principles and
practices.

Frederick W. Taylor was the first person who insisted on the introduction of scientific
methods in management and it was he who, along with his associates, made the first
systematic study of management. He launched a new movement in 1910 which is
known as ‘Scientific Management’. That is why Taylor is regarded as the father of
scientific management.

Scientific management means knowing exactly what you want men to do and seeing that they do it in the
best and cheapest way.
F.W. Taylor

Scientific management implies the application of science to management. It means conducting business
activities according to standardised tools, methods and trained personnel in order to increase the output,
improve its quality and reduce costs and waste.

Principles of Scientific Management

The basic principles of scientific management are as follows:
1. Develop a true science for each element of a worker’s job to replace the old rule of thumb method.
Each element of a job and the motions required to perform should be scientifically analysed to determine
and use the most efficient ways of doing it. Intuition, experience and hit-or-miss methods are replaced
by scientific methods.
The selection of scientific methods will result in a tremendous saving of human efforts, time and
materials.

2. Harmony, not discord: Taylor emphasised that there should be complete harmony between the
management and workers. Both should realise that each one is important. To achieve this, Taylor
advocated a complete ‘Mental Revolution’ on the part of both management and workers.

Mental Revolution
The basic idea behind the principles of scientific management is to change the mental attitudes of the
workers and the management towards each other. Taylor called it ‘Mental Revolution’. The mental
revolution has three aspects:
a) All out efforts for an increase in production
b) Creation of the spirit of mutual trust and confidence
c) Inculcating and developing the scientific attitude towards problems

Taylor suggested that management should try to find the best methods of doing various jobs and
introduce standardised materials, tools and equipment so that wastages are reduced. The workers
should be disciplined, loyal and sincere in fulfilling the tasks assigned to them. They should not indulge
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in wastage of resources. Both the management and workers should trust each other and cooperate in
achieving maximum production.

According to Taylor – “Prosperity for the employer cannot exist for a long time unless it is accompanied
by prosperity for the employees.”

3. Cooperation, not individualism: This principle is an extension of the principle of ‘Harmony, not discord’.
According to this principle, there should be complete cooperation between the labour and the
management instead of individualism. Competition should be replaced by cooperation. Both should
realise that they need each other. For this, management should not close its ears to constructive
suggestions made by employees and should reward their suggestions which result in a substantial
reduction in costs.
For all important decisions taken by the management, workers should be taken into confidence.
According to Taylor, there should be an almost equal division of work and responsibility between workers
and management. Management should work almost side by side with the workers helping, encouraging,
and smoothing the way for them. This is called the ‘paternalistic style’ of management, whereby the
employer takes care of the needs of the employees.

4. Development of each and every person to his/her greatest efficiency and prosperity: According to
Taylor, to increase efficiency each person should be scientifically selected and the work assigned should
suit his/her physical, mental and intellectual capabilities. To increase efficiency, they should be given the
required training to learn the ‘best method’. Efficient employees would produce more and earn more.
This will ensure the greatest efficiency and prosperity for both company and workers.

Techniques of Scientific Management

1. Functional Foremanship
Functional foremanship is an extension of the principle of ‘Division of work and specialisation’ to the
shop floor level of a factory. It is a technique which aims to improve the quality of supervision on the
shop floor by putting workers under eight specialist foremen.
In this technique, planning is separated from execution so that the foremen under ‘planning incharge’
may concentrate on planning the job of workers, and the foremen under ‘production incharge’ may
involve themselves in the execution of jobs.
Taylor suggested four foremen for planning and four foremen for execution, as shown below:

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Role of foremen under planning incharge:

• Route clerk – specifying the route of production
• Instruction card clerk: drafting instruction for workers
• Time and cost clerk: Preparing time and cost sheet
• Discipline officer: Ensuring discipline

Role of foremen under production incharge:

• Gang boss – keeping machines and tools, etc. ready for operation by workers
• Speed boss – timely and accurate completion of job
• Repair boss – ensuring proper working conditions of machines and tools
• Inspector – checking the quality of work

2. Standardisation and Simplification of work

Standardisation of work refers to the process of setting standards for every business activity, e.g..,
standardisation of process, raw material, time, product, machinery, methods and working conditions.
Þ Objectives of standardisation of work are:
• To reduce a given line or product to fixed types, sizes and characteristics
• To establish standards of excellence and quality of materials
• To establish standards of performance of workers and machines
• To establish interchange ability of manufactured parts and products

Simplification of work aims at eliminating unnecessary diversity of products.

• It results in savings of the cost of labour, machines and tools
• It implies reduced inventories, fuller utilisation of equipment and increasing turnover.

3. Work-Study
a) Method Study: Taylor suggested that management should find out ‘one best way’ to perform the task.
For example for designing a car, the assembly line production will need to decide the sequence of
operations, a place for men, machines and raw materials, etc. This is a method study.
The objective of the Method study is to find out the best way of doing a job so as to minimise the cost of
production and maximise the quality and satisfaction of the customer.

b) Motion Study: Motion study refers to the study of movements like lifting, putting objects, sitting,
changing positions, etc. which are undertaken while doing a typical job.
In recent times, Videography can be used to identify different types of motions – productive, incidental
and unproductive,
The objective/aim of the motion study is to eliminate the unproductive or unnecessary
motions/movements so that it takes less time to complete the job efficiently.

c) Time Study: It determines the standard time taken to perform a well-defined job. Time measuring
devices (e.g.., stopwatch) are used for each element of the task. The standard time is fixed for the whole
task by taking several readings/observations.
o For example, on the basis of several observations, it is determined that the standard time taken by
the worker to make one lunch box is 30 minutes. So, in one hour he/she will make 2 boxes. Assuming
that a worker works for 8 hours a day, he/she should make 16 lunch boxes per day. Now, this is the
standard task a worker has to perform. Wages can be decided accordingly.

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The objective of the time study is to determine the number of workers to be employed, frame suitable
incentives schemes and determine labour costs.

d) Fatigue Study: Fatigue, physical or mental, has an adverse effect on workers’ health and efficiency.
Fatigue study helps in reducing fatigue among the workers.
The objective of the fatigue study is to determine the amount and frequency of rest intervals in
completing a task.

4. Differential Piece Wage System: It is a technique which differentiates between efficient and less efficient
workers. It rewards efficient workers and motivates the less efficient ones to improve their efficiency.
• In this wage system, there are two-piece rates – one for those workers who produce the standard
output or more, and the other for those who produce less than the standard output. The
difference in wages is enough for the inefficient worker to be motivated to perform better in
future.

Standard output (per worker per day): 100 units

Wage rate I : Rs. 4 per unit (for output >= 100 units)
Wage rate II: Rs. 3 per unit (for output <100 units)

c110*Rs.4 = Rs. 440110*Rs.4

Worker A = Rs. 440cWorker B
Actual output 110 units 80 units
Total wages 110*Rs.4 = Rs. 440 80*Rs.3 = Rs. 240

Difference in units produced = 30

Difference in wages = Rs.200

According to Taylor, this loss will be the strongest motivator for worker B to reach standard performance
in future.

Critical Evaluation
Taylor’s ideas caught the imagination of several individuals and organizations in the USA and Europe.
Scientific management led to a tremendous increase in productivity and wages. However, his scientific
approach to every aspect of management created suspicion in the minds of workers and trade unions. They
feared that working harder and faster might eventually lead to the exhaustion of all available jobs and
retrenchment.
Scientific management has been criticised on the following grounds:
1. Mechanistic Approach: The main criticism is that scientific management ignores the human element in
production and is devoid of human touch. It treats workers as factors of production and not as human

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beings. Too much emphasis is placed on technical aspects of work ignoring the human side. Therefore,
Taylor and his associates were ridiculed as ‘efficiency experts’ and ‘time study analysts’

2. Unrealistic Assumptions: Scientific management is based on the assumption that people are rational
and motivated by material gains. Taylor and his associates concentrated on the physical and economic
needs of people. Letter experience has revealed that financial gain is not the only one thing that matters.
Workers also want job satisfaction, participation and recognition.

3. Narrow View: Scientific Management is quite limited in scope. Taylor focused completely on efficiency
on the shop floor. As consequence management became the study of shop management while the more
general aspects were overlooked. Scientific management has thus been described as a theory of
industrial engineering. It does not deal with the management of the total organisation.

4. Impractical: Many ideas of Taylor are said to be infeasible in practice. For example, planning cannot fully
be separated from doing because these are two sides of the same job and are not different jobs. Similarly,
functional foremanship is likely to create problems because it violates the principle of unity of command.

5. The exploitation of Labour: In the name of increasing efficiency, workers were forced to speed up
affecting their physical and mental health. Specialisation and standardisation make the jobs dull and
monotonous.

Bureaucratic Approach

Max Weber contributed to the organisation theory by propagating bureaucracy as

an ideal form of organisation. His model is characterised by the following features:

1. Division of work: There is a high degree of specialisation or division of labour in a

bureaucratic organisation. Tasks are divided into very specialised jobs and each
member performs his specialized function in a predictable manner.

2. Rules and Regulations: The rules, regulations and procedures are clearly laid down
by the top administration. Their benefits are as under-
• They standardised operations and decisions
• They serve as receptacles of past learning
• They protect incumbents and ensure the quality of treatment

3. Hierarchy of Authority: There is a hierarchy of authority in the organisation. Each lower position is under
the control of a higher one. Thus, there is a unity of command.

4. Technical Competence: Selection and promotion of jobholders are based on their technical
competence. Qualifications are prescribed for each job/position. Special training is given to provide
knowledge of rules and administrative processes.

5. Record Keeping: Every decision and action is recorded in a wide array of written documents and
preserved in its original as well as draft form. The official records serve as the memory of the
organization and make it independent of the individuals.

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6. Impersonal Relations: A notable feature of bureaucracy is that relationships among individuals are
governed through the system of official authority and rules. Official positions are free from personal
involvement, emotions, and sentiments. Thus, decisions are governed by rational factors rather than
personal factors. This impersonality concept is used in dealing with organizational relations as well as
relations between organizations and outsiders.

According to Weber, there are three types of legitimate authority in organizations:

Traditional
Rational Legal Authority Charismatic Authority
Authority
This type of authority is
It means the authority which a
vested in a legally
person acquires because he people obey a person due to
established position or rank
belongs to a particular class or their belief that the person has
within the organization’s
occupies a position that by some special power or appeal.
hierarchy, e.g., chief
tradition possesses authority
executive of a company
e.g., member of a royal family.

Weber considers rational-legal authority as the most important. Traditional authority overlooks the
competence of the leader whereas charismatic authority is very emotional and irrational.

Advantages of Bureaucracy
I. Competence: There is proper delegation of authority in the organisation. People are given tasks
according to their competence.
II. Rules and Regulations: Because of rules and regulations, all actions are taken carefully. There is a
consistency of actions.
III. Rationality: The behaviour of the employees is rational. They make decisions as per laws, rules and
regulations. They don’t go by their whims, emotions or prejudices.
IV. Predictability: The behaviour of the employees is predictable. It is known how they will react under
different situations as guidelines are already there in writing.
V. Efficiency: Bureaucracy leads to efficiency in the organisation. There is a division of work leading to
specialisation which results in efficiency.
VI. Impartiality: Officials are guided by the policies, rules and regulations rather than their personal whims
and faces. They are not supposed to shower personal favours on anybody.

Disadvantages of Bureaucracy
I. Rigidity in Operations: Rules and regulations in a bureaucracy are often rigid and inflexible. Strict
compliance with rules and regulations discourages initiative and creativity. It may also provide a cover to
avoid responsibility for failures.
• The bureaucratic structure is not effective in turbulent or dynamic environments. It can’t undergo
the change required by the fast-changing environment.
II. Delay and Red Tape: The rules may be followed in letter and not in spirit. Thus, the rules may become a
source of inefficiency leading to delays in operations. The rules may be misused by the persons
concerned with the implementation of rules. Red tape and technicalities may follow as a result.
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III. Goal Displacement: Goal displacement may take place in a bureaucratic organisation. The bureaucrats
may give priority to rules and regulations or the secondary goals and forget about the primary goals. In
other words, means become the ‘ends’ and the ends or goals become the ‘means’ leading to goal
displacement.
IV. Ineffective Communication: The bureaucratic structure is tall consisting of several layers of executives.
Thus, communication from the top level to the lowest level will take a very long time.
V. Lack of personal touch: Bureaucracy is based on impersonal relationships. It does not allow inter-
personal relations between employees and informal groups in the organisation.

Criticism of Classical Theory

The fundamental objectives against the classical theory are discussed below:
I. Narrow view of organisation: The value of a classical theory is limited by its narrow concentration on
the anatomy of formal organisation. In order to achieve rationality, the classical writers ignored the
human relations aspect. The interplay of individual personality, informal groups and inter-organisational
conflicts in the formal organisation were neglected. It is said that the focus of the classical theory is on
‘organisation without people’
II. Assumption of a closed system: Classical theorists viewed the organisation as a closed system, i.e.,
having no interaction with the environment. This assumption is totally unrealistic. A modern organisation
is an open system which has continuous interaction with the environment through the exchange of
inputs and outputs and various types of information.
III. Assumption about Human Behaviour: The human beings were treated like any other factor of
production. They were supposed to obey their superiors. The classical writers ignored the social,
psychological and motivational aspects of human behaviour.
IV. Economic rewards as main motivators: The assumption that people at work can be motivated solely
through economic rewards is also wrong. Several types of research in human behaviour have
contradicted this assumption. Non-monetary factors like better status and job enrichment can also
motivate the workers.
V. Lack of empirical verification: The classical principles are mostly based on personal experience and
limited observations of the practitioners. They are not based on empirical research. They lack a precision
and comprehension framework for analysis. Moreover, it is not clear whether these principles are action
recommendations or simply definitions.
VI. Excessive emphasis on rules and regulations: Weber’s ideal bureaucracy, a major constituent of classical
theory, suggested strict adherence to rules and regulations. The scope for individuals initiative is thus
limited. The result is red-tapism in the organisation. Observation of rules and regulations becomes the
main objective while the real objectives for which these rules and regulations are formed are forgotten

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Neo-Classical Approach
The classical writers including Weber, Taylor and Fayol neglected the human relations aspect. The neo-
classicists focussed on the human aspect of the industry. They modified the classical theory by emphasizing
the fact that organisation is a social system and the human factor is the most important element within it.
They conducted some experiments (known as Hawthorne Experiments) and investigated informal
groupings, informal relationships, patterns of communication, patterns of informal leadership, etc. This led
to the development of the Human Relations Approach. Elton Mayo is generally recognized as the father of
the Human Relations School.

The human relations approach is concerned with the recognition of the importance of the human element
in organisations. It revealed the importance of social and psychological factors in determining workers’
productivity and satisfaction. The neo-classical or human relations approach put stress on inter-personal
relations ad informal groups at the workplace.

The human relations argued that the achievement of organisational objectives is impossible without the
willing cooperation of people and such cooperation cannot be automatically secured or ordered. It has to be
consciously achieved. The neo-classical approach advocated a people-oriented organisation structure which
will integrate both formal and informal organisations.

The basic tenets of neo-classical theory or human relations approach are as under:
I. The business organisation is a social system
II. The behaviour of an individual is dominated by the informal group of which he is a member
III. An individual employee cannot be motivated by economic incentives alone. His social and psychological
needs must be satisfied to improve the level of management.
IV. In an organisation, it is ultimately a cooperative attitude and not the mere command which yields results.
V. Management must aim at developing social and leadership skills in addition to technical skills. It must
take interest in the welfare of workers.
VI. Morale and productivity go hand in hand in an organisation.

Hawthorne Experiments

George Elton Mayo is considered the father of the neo-classical approach. He was
the leader of the team which conducted the famous Hawthorne Experiments. These
experiments were conducted during 1924-32 at a plant of the Western Electric
Company. The plant was located at Hawthorne near Chicago in the USA. A brief
description of these experiments is given below:

I. Illumination Experiment: The object of this experiment was to assess the effect of illumination on
employees. Two groups were selected from among the employees. One group was placed in a room
where the lighting remained constant. The other group was placed in another room where the lighting
varied periodically. Surprisingly, the output of both groups increased steadily. It was concluded that
lighting was a minor factor and there were other more important factors influencing the output. The

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result prompted researchers to investigate other factors affecting the output. It was later concluded that
productivity is not dependent upon physical conditions alone but human psychological conditions also.

II. Relay Assembly Test Room Studies: The relay assembly tests were designed to evaluate the effect rest
periods and hours of work have on efficiency.
In this experiment, a small homogeneous work group was constituted. Several new elements were
introduced to the work atmosphere of this group. These included shorter working hours, rest pauses,
improved physical conditions, friendly and informal supervision, free social interaction among group
members, etc. Productivity and morale increased considerably during the period of the experiment.
Morale and productivity are maintained even if improvements in working conditions are withdrawn. The
researchers concluded that socio-psychological factors such as a feeling of being important, recognition,
attention, participation, cohesive work groups, and non-directive supervision held the key to higher
productivity.

III. Mass Interview Program: In this experiment, a large number of workers were interviewed to judge their
attitudes and opinions on the factors influencing productivity. It was found that the opportunity to talk
freely about things that are important to workers had a positive effect on their morale and productivity.

IV. Bank Wiring Observation Room Study: In this experiment, a group of fourteen workers was put under
close supervision. The pay of every member was made dependent on the performance of the group as a
whole. It was found that the informal group had its own norms of performance and various forms of
social pressure were exercised to enforce these norms. As a result, output could not increase despite the
group incentive scheme.

Contributions
The main conclusions (contributions) of Hawthorne Experiments:
I. Social System: The organisation, in general, is a social system composed of numerous interacting parts.
The social system defines individual roles and establishes norms that may differ from those of formal
organisations. The workers follow a social norm determined by their co-workers, which defines the

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proper amount of work, rather than try to achieve the targets management thinks they can achieve, even
though this would have helped them to earn as much as they physically can.

II. Social Environment: The social environment on the job affects the workers and is also affected by them.

III. Informal Organisation: The informal organisation does also exist within the framework of formal
organisation and it affects and is affected by the formal organisation.

IV. Group Dynamics: At the workplace, the workers often do not act or react as individuals but as members
of groups. A person who resists pressure to change his behaviour as an individual often changes it quite
readily if the group of which he is a member changes its behaviour. The group plays an important role in
determining the attitudes and performance of individual workers.

V. Informal Leader: There is an emergence of informal leadership as against formal leadership and the
informal leader sets and enforces group norms. He helps the workers to function as a social group and
the formal leader is rendered ineffective unless he conforms to the norms of the group of which he is
supposed to be incharge.

VI. Two-way communication: Two-way communication is necessary because it carries necessary

information downward for the proper functioning of the organisation and transmits upward the feelings
and sentiments of people who work in the organisation.

VII. Non-economic Reward: Money is only one of the motivators, but not the sole motivator of human
behaviour. Man is diversely motivated and socio-psychological factors act as important motivators.

Evaluation
Hawthorne Experiments proved a landmark in the evolution of management thought. They made a
significant contribution towards humanising organization and management. These experiments directed
attention towards social and psychological needs, informal groups, motivation, morale, communication,
leadership, etc. Several new sub-disciplines like industrial psychology, individual sociology, social psychology
and group dynamics emerged.

Hawthorne Experiments have been criticised on the following grounds:

I. Pro-Management Bias: In Hawthorne studies, the ends of the company were assumed to be correct.
Mayo has in fact been criticised for implying that management is always logical whereas workers are
largely driver by emotions.

II. Clinical Bias: The research methods used in Hawthorne Studies overstressed empirical observations.
Mayo’s work has been described as “radical empiricism”

III. Doubtful Validity: The reactions of small groups of American women can hardly be taken as sufficiently
representative to provide a valid solution in different countries. The conclusion cannot be generalised.

IV. True but Irrelevant: The conclusions of Hawthorne Experiments are true but irrelevant. Some
industrialists argue that the main object of a business is to make profits rather than to keep workers
happy.
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V. Limited focus on work: The human relations approach lacks adequate focus on work. It puts all the
emphasis on interpersonal relations and on the informal group.

VI. Over-emphasis on Group: The human relations approach emphasises group and group decision-making.
But in practice, groups may create problems and collective decision-making may not be possible.

VII. Over-stress on Socio-psychological factors: The human relations approach undermines the role of
economic incentives in motivation and gives excessive stress on social and psychological factors. If the
wages are too low, the employees will feel dissatisfied despite good interpersonal relations at the
workplace. Thus, it may be said that the human relations approach seeks to exploit the sentiments of
employees for the benefit of the organisation.

Despite the criticism, Hawthorne’s studies are regarded as ‘a milestone and a turning point’ in the history
of man at work and in the development of management thought. These studies challenged some of the basic
postulates of the classical approach and focused attention on the human factor in the industry. This revealed
the inadequacy of studying the workers in isolation and focusing on the physical aspects of the industry. The
studies indicated that an improved understanding of the human factor in the organization was necessary for
achieving major gains in productivity.

Behavioural Science Approach

The human relations movement focused on interpersonal relations and overlooked the wider subject of
organizational behaviour.
Organizational behaviour involves the study of attitudes, behaviour, and performance of individuals and
groups in an organizational setting. It is also known as the human resource approach because it stresses the
development of human beings for the benefit of both individuals and the organisation.

The behavioural approach is multi-dimensional and inter-disciplinary in nature. Under it, the knowledge is
drawn from behavioural sciences, e.g. psychology, sociology, anthropology, etc is applied to understand,
explain and predict human behaviour. Therefore, this approach is also known as the Behavioural Science
Approach.

Under the behavioural science approach, the knowledge drawn from behavioural sciences is applied to
explain and predict human behaviour. It focuses on human behaviour in the organisation. It lays emphasis
on the study of motivation, leadership, communication, group dynamics, participative management, etc.

Further, the behavioural scientists made the following propositions:

a) An organisation is a socio-technical system.
b) Individuals differ with regard to attitudes, perceptions and value systems. As a result, they behave
differently to different stimuli under different conditions.
c) People working in the organisation have their needs and goals which may differ from organisational
goals. Attempts should be made to achieve fusion between organisational goals and human needs.
d) A wide range of factors influences inter-personal and group behaviour of people in organisations.

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Þ The main features of the Behavioural Science Approach are as follows:

• Behavioural science is an inter-disciplinary approach and integrates the knowledge drawn from different
disciplines (psychology, sociology, anthropology, economics, political science and history) for the study
of human behaviour
• It is an applied science with the objective to apply various researches to solve organisational problems
• It is also a normative science which not only suggests cause and effect relationships but also prescribes
ways and means to solve organisational problems and effects results
• It focuses attention on people from a humanistic point of view. It accepts the value of an individual as a
thinking, feeling and living organism and his needs and motivations play important role in determining
his behaviour in the organisation
• It is goal-oriented. It recognizes goal conflicts in the organisation and suggests reconciliation of goals of
the individuals and the organisation for a better organisation climate and greater organizational
effectiveness
• It adopts a systems approach which takes into account all the factors affecting organisational behaviour

The sum up, the behavioural science approach gives emphasis on increasing productivity through motivation
and leadership. The central core of this approach lies in the following aspects of human behaviour:
- Motivation, leadership. Communication, participative management and group dynamics

The behavioural sciences have provided managers with a systematised understanding of one of the most
critical factors in the process of management – the human element. Insights evolving from that
understanding have been used to design work situations that encourage and increase the productivity of
employees.
It has enabled organizations to formulate programmes to more efficiently train workers and managers, and
it has effects in numerous other areas of practical significance.

Appraisal
The study of human behaviour is of great significance in management. Since an individual is a product of a
social system, his behaviour is not determined by organisational force alone, but many forces like perception,
attitudes, habits and socio-cultural environment also shape his behaviour. Therefore, in understanding
human behaviour in the organisation, all these factors must be taken into account. The behavioural approach
suggests how the knowledge of human behaviour can be used in making people more effective in the
organisation.

Comparison between Human Relations and Behavioural Approach

Point of Comparison Human Relations Behavioural Approach

Focus on the individual, his Focus on groups and group
Focus needs and behaviour, highlights behaviour, Highlights group
inter-personal relationships relationships
Based on Hawthorne Based on human relations
Basis
Experiments movement
Group dynamic, informal
Motivation, morale and job
Key Concepts organization and motivation
satisfaction
through job enrichment

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Conflict in organizations is always Conflicts is not only inevitable

View of Conflict destructive and can always be but may even be beneficial,
minimized cannot always be resolved
Modest concerns limited to
Broadband and multiple
improving working conditions,
concepts such as the impact of
interpersonal relations,
technology on jobs, jobs
Concerns supervisory styles, and
redesign, group dynamics,
communication systems for
motivation, leadership and
increasing job satisfaction and
organizational development
morale
Pioneered by Elton Mayo and his Pioneered by McGregor, Likert,
Pioneers
associates etc.
People are considered alike
without regard to differences in Recognises differences among
Treatment of People
their needs, beliefs, attitudes individuals
and perception
Considers organisation a social Considers organisation a socio-
Perspective of Organisation
system with a culture of its own technical system
Scope Narrow Wide

Social System Approach

According to Social System Approach, an organization is a cooperative system in which persons are able to
communicate with each other and are willing to contribute to a common purpose. It is based on the
generalisation that an organisation is a system and its components are interrelated and interdependent. A
system is an interrelated set of elements that are organised according to a plan and function as a whole. Its
important feature is that it is composed of a hierarchy of sub-systems.

The world as a whole can be considered to be a system in which various national economies are sub-systems.
In turn, each national economy is composed of its various industries, each industry is composed of firms, and
of course, a firm can be considered a system composed of sub-systems such as production, marketing,
finance, accounting and so on. Thus, each sub-system may comprise several sub-systems and, in turn, each
sub-system may be further composed of sub-systems. Chester Barnard is regarded as the founding father of
this system.

An organisation as a system has the following characteristics-

I. A system is goal-oriented.
II. A system consists of several sub-systems which are interdependent and interrelated.
III. A system is engaged in the processing or transformation of inputs into outputs.
IV. An organisation is an open and dynamic system. It has continued with the external environment as
its gets inputs from the environment and also supplies its output to the environment. It is sensitive
to its environment such as government policies, competition in the market, changes in tastes of
people, etc.
V. A system has a boundary which separates it from other systems.

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Open Systems Approach

A system may be closed or open. A closed system is self-sufficient and does not recognise the external
environment. A closed system concentrates completely on internal relationships i.e., the interaction
between sub-systems only. Because of a lack of interaction with the environment, it is unable to monitor
changes occurring in the external environment. On the other hand, an open system has an active interface
with the environment through the input-output process. It can respond to the changes in the environment
through the feedback mechanism. That is why modern authors consider the organisation as an open system.

An open system obtains inputs, such as raw materials, labour, capital, technology, and information from the
environment. Operations are performed on the inputs combined with the managerial process to produce
desirable outputs which are supplied to the environment (i.e., customers). Through a feedback process, the
environment’s evaluation of the output becomes part of the inputs for further organisational activity. If the
environment is satisfied with the output, business operations continue. If it is not, changes are initiated
within the business system to that the requirements of the customers are fully met. This is how an open
system responds to the forces of change in the environment.

Contributions
I. The systems approach examines inter-relationship and inter-dependency between different parts of an
organisation. It suggests a balance between different sub-systems so as to ensure the efficiency and
growth of the system.
II. The systems approach calls attention to the dynamic and adaptive nature of the organisation. A change
in environment calls for modification in the organisation. It acknowledges environmental influences
which were overlooked in the earlier approaches.
III. The systems approach represents balanced thinking for organisation and management. It exherts
managers to avoid analysing problems in isolation and to develop integrated or holistic thinking in place
of fragmented and piecemeal approaches.

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IV. The systems approach stresses the dynamic and multi-dimensional nature of organisations. It provides a
strong conceptual framework for meaningful analysis and understanding of organisations. It recognises
the interaction, between different variables in the environment. It provides clues to the complex
behaviour of people in the organisation.

The systems approach is criticised as being too abstract and vague. It cannot easily be applied to practical
problems. It does not offer specific tools and techniques for practising managers. Moreover, this approach
does not recognise differences in systems. It fails to specify the nature of interactions and inter-
dependencies between an organisation and its external environment.

Limitations
The system approach is not free from drawbacks. Its critics have pointed out the following deficiencies:
I. Lack of Unification: The systems approach cannot be considered a unified theory of organisation. A
unified theory is one which can be applied to all types of organisations and present a comprehensive
analysis so that various people who want to study organizations from different angles can derive
knowledge. That is what the systems approach was expected to do so. However, the systems approach
failed to do so.
II. Abstract Analysis: The systems theory is too abstract to be of much use to practising managers. It
indicates that various parts of the organisation are interrelated and this inter-relationship is dynamic.
But it has failed to spell out the precise relationship between various sub-systems.
III. Limited View of Organisation-Environment Interface: This systems approach has failed to specify the
nature of interactions and inter-dependencies between an organisation and its external environment.
IV. Limited Application: The systems approach has limited application. It does not provide an action
framework applicable to all types of organisations. For example, modern structural designs, such as
matrix organisation, cybernetic, control and communication systems are applicable to smaller
organisations.

Thus, the systems theory has not lived up to the expectations it raised at the beginning. It is promoted to
provide an adequate and comprehensive explanation of organisations, but this promise does not seem to
be fulfilled.

Modern Organization Theory

Modern organization theory is considered far superior to the earlier theories due to the following features:
a) The open system of Organization: The classical theory treated organisation as a closed system. But
modern theory considers the organisation as an open system which has continuous interaction with the
environment. It gets various resources from the environment and transforms them into outputs desired
by the environment.

b) Adaptive Change: Organisation is an open system, its survival and growth in a dynamic environment
demand an adaptive system which can continuously adjust to changing environment. Management tends
to bring changes in the sub-systems of the organisation to cope with the challenges of environmental
forces.

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c) Integrative: The classical theory focused on formal organizations, whereas neo-classical theory
concentrated on informal organizations.
Modern organization theory considers both formal and informal organizations and tries to integrate
these with the concepts drawn from behavioural and quantitative approaches. Problems in an
organization are dealt with in an integrated rather than in a piecemeal manner. This provides better and
holistic solutions rather than patchwork.

d) Traditional and neo-classical theorists were prescriptive in nature: They provided some appropriate
ways to design and manage organizations. The focus was on prescribing ‘one best way’, but the systems
approach adopts a realistic view and recognizes the complex problems organizations face. It considers
both formal and informal relations and tries to generate unique solutions to unique problems that
organizations face.

Contingency Approach
The contingency approach is a relatively new approach to organization and management. It is related to the
system approach. The belief that organizations are open systems widened the perspective further leading
to the development of the contingency approach. It is also known as the situation approach.

The contingency approach is based on the belief that there is no one best way to tackle the problems of
management. The application of management principles and practices is contingent upon the environment.
In the words of Kast and Rosenzweig, “The contingency view seeks to understand the inter-relationships
within and among sub-systems as well as between the organisation and to define patterns of relationships
of variables”.

The basic theme of the contingency approach is that there is no single best way of managing applicable in
all situations. The best solution is that one that is responsive to the peculiarities of the given situation.
Significant differences exist between one substation and others. Therefore, management should deal with
different situations in different ways. In other words, the effectiveness of any technique is contingent on the
given situation. The conditions and complexities of the situation determine which approach is applicable and
effective. The approach or technique should be chosen keeping in view the peculiarities of each situation. It
is the responsibility of management to analyse the contingencies or conditions peculiar to each situation and
then choose the right approach to deal with it.

The contingency approach rejects the universality of management concepts. It appeals to common sense.
But it is much more than common sense. It requires the ability to analyse and diagnose a managerial situation
correctly. It also requires knowledge and understanding of different principles, techniques and styles of
management. The use of a contingency approach is not possible without the ability to match the
management knowledge and skills to the demands of the given situation.

It also stresses that there is no one best style of leadership which will suit every situation. The effectiveness
of a particular leadership style will vary from situation to situation. For instance, participative leadership may
be more effective in an organisation employing professional personnel in a high technology operation in an
atmosphere of non- materialistic orientation and free expression. On the other hand, authoritarian
leadership would be more effective in an organisation which employs unskilled personnel on routine tasks
with social values oriented towards materialism and obedience to authority.
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Practical Utility of Contingency Approach

The main contributions of the contingency approach are as follows:
I. The contingency approach provides a clear view of the managerial job. The classical approach suggests
pre-conceived principles and techniques as having universal validity ignoring the situational differences.

II. The contingency approach has common sense value and wide-ranging practical utility. It widens the
horizons of managers from the concepts, principles, and techniques of management theory. It goads
them to be alert and adaptive to changing situational needs. In promotes analytical, critical and multi-
dimensional thinking with the help of which managers can innovate new and better approaches and
widen their choice.

III. The contingency approach does not suggest that the findings of earlier approaches are useless. Rather it
attempts to integrate them and make them contingent upon the demands of the situation. It recognizes
that managerial functions and principles are useful but should be used with discretion and care to suit
the specific situation.

IV. The approach accepts that organizations and their environment are too dynamic to be always effectively
managed in the same manner. Managers must be capable of changing their approach and style to match
the changes in the environment. This approach stresses the need for a comparative study of
organizations so as to develop guidelines for coping with different situations.

Evaluation of Contingency Approach

The contingency approach guides the managers to be adaptative to environmental variables. In other words,
managers should develop situational sensitivity and practical sensitivity. Adoption of this approach can be
useful in the formulation of strategies, design of effective organisation structure, planning informative
systems, establishing communication and control systems, shaping motivational and leadership approaches,
resolving conflicts, managing changes, etc.

The contingency approach highlights the multivariate nature of organisations and explains how
organisations operate under varying conditions. With its help, managers can design structures which are
highly appropriate to the respective situations. If an organisation is operating in a stable environment, it can
have a mechanistic structure characterized by a high degree of differentiation, centralisation of authority,
rigid hierarchical relationships, rules and regulations, etc. But if the environment is dynamic, an organic
structure would be more appropriate. The organic structure is characterized by decentralised decision-
making, collaborative relationships, open communication, the scope of innovative decision-making, etc.

The contingency approach is an improvement over the system approach. The systems approach only
examines the relationships between sub-systems of the organisation. But the contingency approach also
examines the relationship between the organisation and its environment. The contingency approach
appears to hold considerable promise for the future development of management theory and practice.

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Criticism of Contingency Approach

The contingency approach is not free from criticism. Critics argue that it adds confusion to the practice of
management by stressing that, “it all depends on the situation”. The manager is swamped with so many
ideas which are humanly impossible to comprehend. He has no tested and proven prescriptions to depend
upon. Critics also point out that without a theoretical foundation; it is almost impossible to research to gain
valuable information or develop a knowledge base.

Some critics argue that the approach does not incorporate all aspects of the systems theory. The approach
is very complex and suffers from a paucity of literature. It suggests a reactive strategy for coping with
environmental changes. A proactive approach would be more effective for managers. It is also said that there
is nothing new In contingency theory because even classical theorists like Fayol cautioned managers to use
principles in the light of changing conditions.

The contingency approach does not recognise the influence of management concepts and practices on the
environment. Moreover, the literature on the contingency approach is yet not adequate. Some experts call
the contingency approach as mere common sense. However, the contingency approach is much more than
common sense. It requires the ability to correctly diagnose the situation and the skill of choosing the
managerial style that meets the requirements of the situation.

Comparison between Systems Approach and Contingency Approach

Systems Approach Contingency Approach

It identifies the nature of inter-dependencies and

It lays emphasis on the inter-dependencies and
the impact of environment on organisational
interactions among systems and sub-systems.
design and managerial style.
It main focus is on the internal environment and Its main focus is on the external environment as a
sub-systems of the organisation. unique entity.
It treats all organizations alike. Size of the
Each organisation is to be studied as a unique
organisation, and its socio-cultural setting are not
entity.
considered.
It follows an action-oriented approach and so is
It studies organisation at the philosophical level.
pragmatic. It is based on empirical studies.
The impact of environment on the organisation
It simply lays down that the organisation interacts
structure and managerial style is the major
with the environment.
concern of contingency approach.
It provides a theoretical model of understanding It studies for down-to-earth action oriented
the organisation and its sub-systems. approach to organisational problems.
It Suggests deterministic solutions of It suggests probabilistic and pragmatic solutions
management problems and of management problems.
It does not comment on the validity of the It rejects the blind application of the classical
classical principles of management. principles of management.

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