MODERN MANAGEMENT THEORIES

I will discuss two modern management theories which are very important for any manager entrusted with critical decision- making responsibilities. They are- System Theory and Contingency theory. Let us take them one by one:

1) System Theory:

Systems theory assumes that views the organization as unified purposeful systems composed of interrelated parts. It believes that any activity taken up by any single department will affect other departments in varying degree of proportions.

Some key concepts:

    a)Subsystem- The department is a subsystem of plant, plant is a subsystem of company, company is        subsystem of conglomerate  or industry , industry is subsystem of national economy and national economy is   subsystem of world economy.

         

      b)  Synergy- It means that each department working  separate and independently will be less efficient that all     departments working in coordination towards goal.

     

       c)  Open and closed subsystem- If a subsystem interacts with the environment , it is called open subsystem  and those subsystems which do not interacts with the environment are called closed system.

     

      d)  System Boundary- Closed system boundary is rigid and less subjected to change. On the other hand    Open Systems are more flexible.

     

      e)    Feedback: In order to control systems, feedback is very important. It can be related to product,                 process, market, demand and changing trends and needs of the customer. It helps company evolve and          pass the test of time.

2) Contingency Theory:

This theory believes that no particular method is best fit for all situations. It depends on many factors which will vary from condition to condition. A contingency manager is expected to see which method to use in that particular case after analysing it thoroughly.

Example:  Suppose a situation where a manager has to decide what is to be done to encourage worker to increase productivity. A classical theorist will say that work methods needs to be changed to simplify the process for worker. A behavioral scientist may say to incorporate job enrichment to allow for greater autonomy and break the monotony by giving more responsibility. In such case it is the responsibility of the manager to decide what to be used. If the labour is unskilled and training cost is high or unfeasible, he should go for work simplification method.  And if worker is skilled driven by pride in their ability, job enrichment will be a better option.

These two theories always need to be kept in mind before taking any decision as it affects the whole company.