1

ORGANIZATIONAL BEHAVIOUR- I

Dr. Prachi Agarwal

Associate Professor
 Unit I: Principles of Management
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 Management: Concept, Nature, Scope and Functions. Management Level,

Management roles, Managerial skills, Manager as a planner & strategist:
 Fundamentals of Planning, planning at different levels.
 Evolution of Management Concepts: Scientific Management theory,
Weber’s bureaucratic system of management, Fayol’s Principles of
Management, Behavioral Approach to Management, Hawthorne Studies,
Theory X, Theory Y & Theory Z, System Theory, Contingency Theory.
Why Study OB & Management?

 The better you can work with people, the more

successful you will be in both your personal and
your professional lives.

 Employers want to hire employees who can participate in

managing the firm.
 Even non managers (Individual Contributors) are being trained
to perform management functions.
Why Study OB & Management?

 The study of management builds the skills needed in today’s workplace to

succeed in:
 Becoming a partner in managing your organization through participative
management.
 Working in a team and sharing in decision making and other management
tasks.
 The study of management also applies directly to your personal life in
helping you to:
 Communicate with and interact with people every day.
 Make personal plans and decisions, set goals, prioritize what you will do, and
get others to do things for you.
 Society Needs Leaders and Team Players
 Be Successful in the Community, Social, Professional, Recreational and Other
Organizations.
 Become Leaders for a “Just and Humane World”
What Is An Organization?

 A formal and coordinated group of people who function to

achieve particular goals.
 These goals cannot be achieved by individuals acting alone.

Characteristics of an Organization
 An organization has a structure.

 An organization consists of a group of people striving to reach

goals that individuals acting alone could not achieve.

Common Characteristics of Organizations
THE CHANGING ORGANIZATION

© Prentice Hall, 2002

Organization
Two or more people who work together in a structured way to
achieve a specific goal or set of goals.

Goals
Purpose that an organization strives to achieve; organizations often
have more than one goals; goals are fundamental elements of
organization.

The Role of Management

To guide the organizations towards goal accomplishment.
Management

 Management
 The process of getting things done, effectively and efficiently, through
and with other people
 Harold Koontz says, "Management is the art of getting things done
through and within formally organized group."
 Henry Fayol, "To mange is to forecast and plan, to organize, to
compound, to co-ordinate and to control."
 Efficiency
 Means doing the thing correctly; refers to the relationship between
inputs and outputs; seeks to minimize resource costs
 Effectiveness
 Means doing the right things; goal attainment
Efficiency and Effectiveness in Management

Efficiency (Means) Effectiveness (Ends)

Resource Goal
Usage Attainment

Low Waste High Attainment

Management Strives For:

Low resource waste (high efficiency)
High goal attainment (high effectiveness)
© Prentice Hall, 2002
 The performance of organizations depends to a large extent on
how their resources are allocated and their ability to adapt to
changing conditions.
 Successful organizations know how to manage people and
resources efficiently to accomplish organizational goals and to
keep those goals in tune with changes in the external
environment.
Management in the New Millennium

 A firm can be efficient by making the best use of people,

money, physical plant, and technology.

 It is ineffective if its goals do not provide a sustained

competitive advantage.

 A firm with excellent goals would fail if it hired the wrong

people, lost key contributors, relied on outdated technology,
and made poor investment decisions.
Nature of Management
Management—a process

 As a process, management refers to a series of inter - related

functions.
 “Management is a distinct process consisting of planning,
organizing, directing and controlling, performed to
determine and accomplish stated objective by the use of
human beings and other resources”.
Management—an activity-

-According to Koontz, “Management is what a manager does”.

-Management as an activity includes –
• Maintains a communication link.
• Involved in decisions of different kinds.
• Involves in achieving goals through people.
 Management—a discipline

 Management as a discipline specifies certain code of conduct for

managers & indicates various methods of managing an enterprise.  
 Any branch of knowledge that fulfils following two requirements is
known as discipline:
1. There must be scholars & thinkers who communicate relevant
knowledge through research and publications.
2. The knowledge should be formally imparted by education and
training program.
Management—a science

 Science is a systematic body of knowledge pertaining to a

specific field of study that contains general facts which
explains a phenomenon.
 It establishes cause and effect relationship between two or
more variables and underlines the principles governing their
relationship.
 These principles are developed through scientific method of
observation and verification through testing.
Universal need for management

© Prentice Hall, 2002

 Basic Managerial Functions
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 Henri Fayol identifies five functions of management, viz.

planning, organizing, commanding, coordinating and
controlling.
 Luther Gulick states seven such functions under the catch
word "POSDCORB' which stands for planning, organizing,
staffing, directing, coordinating, reporting and budgeting.
Basic Managerial Functions

Organizing

Planning Leading

Controlling
Management process:
planning, organizing,
leading, and
controlling
 Planning
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 Planning is the most fundamental and the most pervasive of all

management functions.
 If people working in groups have to perform effectively, they
should know in advance what is to be done, what activities they
have to perform in order to do what is to be done, and when it is to
be done.
23

 It thus involves:
 (a) determination of long and short-range objectives;
 (b) development of strategies and courses of actions to be
followed for the achievement of these objectives;
 (c) formulation of policies, procedures, and rules, etc., for
the implementation of strategies, and plans.
 Organizing
24

 Organizing involves identification of activities required for

the achievement of enterprise objectives and implementation
of plans;
 grouping of activities into jobs;
 assignment of these jobs and activities to departments and
individuals;
 delegation of responsibility and authority for performance,
and
 provision for vertical and horizontal coordination of
activities.
 Organizing
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 Organizing thus involves the following sub-functions :

 (a) Identification of activities required for the achievement of
objectives and implementation of plans.
 (b) Grouping the activities so as to create self-contained jobs.
 (c) Assignment of jobs to employees.
 (d) Delegation of authority so as to enable them to perform their
jobs and to command the resources needed for their performance.
 (e) Establishment of a network of coordinating relationships.
 Directing
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 Directing is the function of leading the employees to perform

efficiently, and contribute their optimum to the achievement of
organizational objectives.
 Jobs assigned to subordinates have to be explained and clarified,
they have to be provided guidance in job performance and they
are to be motivated to contribute their optimum performance
with zeal and enthusiasm.
 The function of directing thus involves the following sub-
functions :
 (a) Communication
 (b) Motivation
 (c) Leadership
Controlling

 Controlling is the function of ensuring that the

divisional, departmental, sectional and individual
performances are consistent with the predetermined
objectives and goals.

 Controlling implies that objectives, goals and

standards of performance exist and are known to
employees and their superiors.
28

 Thus, controlling involves the following process :

 (a) Measurement of performance against
predetermined goals.
 (b) Identification of deviations from these goals.
 (c) Corrective action to rectify deviations.
 Fill Ups
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 Planning, organizing, directing and controlling are

the…………….
  Which of the following would be included in the
"controlling function" ?
a) measuring results against corporate objectives.
b) explaining routines.
c) setting standards
d) giving assignments.
 Fill Ups
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 Specific, short-term statements detailing how to achieve an

organization's goals is known as its:
a) vision.
b) mission statement.
c) objectives.
d) operational planning.

 Motivation is related to:

a) planning.
b) Controlling
c) Leading
d) Tactical decisions
 Management Roles
31

 Role

A set of expectations of how

one will behave in a given
situation.
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Levels of Management

Strategic Managers

Tactical Managers

Operational Managers
Strategic Managers

 The firm’s senior executives with overall

responsibility for the firm.
 Developing the company’s goals
 Focus on long-term issues
 Emphasize the growth and overall effectiveness of the organization

 Concerned primarily with the interaction between the

organization and its external environment.
Tactical Managers

 Responsible for translating the general goals and

plans developed by strategic managers into specific
objectives and activities.
 Shorter time horizon
 Coordination of resources

 These are middle managers

Operational Managers

 Line managers who supervise the operations of the

organization.

 Directly involved with non-management employees

 Implementing the specific plans developed with tactical
managers.
 This is a critical role to the organization.

 Operational managers are the link between management

and non-management staff
 Management Skills
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As the manager mover from supervisory to top management,

conceptual skills become more important than technical, but
people/human skills remain important at all levels.
General Skills for Managers

 Conceptual skills
 A manager’s mental ability to coordinate all of the
organization’s interests and activities
 Interpersonal skills
 A manager’s ability to work with, understand, mentor, and
motivate others, both individually and in groups
 Technical skills
 A manager’s ability to use the tools, procedures, and
techniques of a specialized field
 Political skills
 A manager’s ability to build a power base and establish the
right connections
Specific Skills for Managers

 Behaviors related to a manager’s effectiveness:

 Controlling the organization’s environment and its resources.
 Organizing and coordinating.
 Handling information.
 Providing for growth and development.
 Motivating employees and handling conflicts.
 Strategic problem solving.
42

Is Management a recent concept?

Evolution of Management

 Management and Organizations are the products of their

historical and social times and places.
 Thus, we can understand the management theory in terms of
how people have wrestled with matters of relationships at
particular times in history.
Evolution of modern
management began in
the late nineteenth
century, after the
industrial revolution.

Economic, technical and

cultural changes
Mechanization changed
systems like crafts
production into large
scale manufacturing,
where semi or unskilled
workers operated
machineries.
Evolution of Management

 The Industrial Revolution’s Influence On

Management Practices:

 Machine power began to substitute for human power

 Lead to mass production of economical goods
 Improved and less costly transportation systems became
available
 Created larger markets for goods.
 Larger organizations developed to serve larger markets
 Created the need for formalized management practices.
 Small-scale Large-scale
Crafts Production Mechanized Manufacturing

Managed by engineers who only had

Technical orientation

Problems faced:

•How to handle people

•Social problems relating to working together
in large groups
•How to increase efficiency of the worker-task mix
Famous economist, Adam
Smith, journeyed around
England in 1700’s studying
the effects of industrial
revolution.
 Division of Labor
 Skill development
 Specialized task allotment
 Time measurement
Job Specialization Division of Labor

Better Increased
Organizational Efficiency
performance
 With insights gained from Adam Smith’s observations,
other managers and researchers began to investigate how to
improve job specialization to increase performance. They
focused on how to organize and control the work process.
 Key Management Theories: An Overview
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I. Classical Contributions
 Classical approach
 The term used to describe the hypotheses of the scientific
management theorists and the general administrative theorists.
 Scientific management theorists

a) Fredrick W. Taylor
b) Frank and Lillian Gilbreth,
c) Henry Gantt
 General administrative theorists

a) Henri Fayol
b) Max Weber
A. Scientific Management

“An application of science to management.”

“The art of knowing exactly what is to be done in the

best and the cheapest way.”
A. FEDRICK WINSLOW TAYLOR
(1856-1915)
Father of Scientific Management

“one best way for doing the job”

 Scientific Management
a) Frederick W. Taylor (1865-1915)
 Scientific Management Theory arose in part from the need to increase
productivity.
 The Principles of Scientific Management

 Advocated the use of the scientific method to define the “one best
way” for a job to be done.
 Believed that increased efficiency could be achieved by selecting the
right people for the job and training them to do it precisely in the one
best way.
 To motivate workers, he favored incentive wage plans. Taylor called his
plan differential rate system.
 Separated managerial work from operative work.
 Four Principles
of
Scientific Management
 Principle 1
Science not the rule of thumb

 Scientific investigation should be used for taking managerial

decisions instead of basing on opinion, institution or thumb rule.

 Study the way workers perform their tasks, gather all the informal
job knowledge that workers possess, and experiment with ways of
improving the way tasks are performed (time and motion
information).

 Try different methods to see which is best.

 Principle 2
Codify the new methods of performing tasks

 There should be new rules and methods of performing tasks.

 There should be standard operating procedures.

 Principle 3
Scientific selection training and development

 Selection means to choose the best employee according to the need.

Their skill and experience must match the requirement of the job.

 Scientific development refers to criteria for promotions, transfers

etc.. So that work is done with full efficiency.

 Carefully select workers so that they possess skills and abilities that
match the needs of the task, and train them to perform the task
according to the established rules and procedures.
 Principle 4
Division of work/ responsibility

 The responsibility of workers and management should be properly

divided & communicated so that they can perform them in an
effective way and should be reward for the same.

 Establish a fair or acceptable level of performance for a task, and

then develop a pay system that provides a reward for performance
above the acceptable level.

 Workers should benefit from higher output.

61

https://www.youtube.com/watch?v=vK0BjIA6njs
Application of Taylor’s Theory in the Modern Workplace

 Assembly Line Plants as Prototypical Examples

 System of Remuneration (quotas - commission)
 Re-Design - Reengineering
 Benchmarking
 Data are used to refine, improve, change, modify, and eliminate
organizational processes
 Management by Objectives
 Operations Research
  Balanced Scorecard
  Just-in-time and Lean Manufacturing
  Total Quality Management
  Six Sigma &
  Business Process Reengineering.
 B. FRANK B GILBRETH & LILLIAN M
GILBRETH (1912-1924)

Time and Motion Studies

Followers of Taylor, Frank B Gilbreth (1868-1924) pioneered time and

motion study.
 Time and Motion Study

b) Frank B Gilbreth (1868-1924)

1. Break and analyze every individual action necessary to perform
a particular task into each of its component actions.

2. Find better ways to perform each component action.

3. Reorganize each component action so that it is more efficient-

less cost of time and effort.

4. Their goal was to maximize the efficiency with which each

individual task was performed.
 C. HENRY GANTT (1910 - 1915 )
Project Scheduling – The Gantt Chart

 A protégé and associate of Frederick Taylor, he designed a project

scheduling model for increasing the efficiency of project execution
and completion.
Major Contributions of Scientific
Management

Demonstrated the importance of compensation for

performance

Initiated the careful study of tasks and jobs

Demonstrated the importance of personal selection

and training

Managerial Practice:
Time and Motion Study
Piece Rate Incentive System
2. Administrative Management
 General administrative theorists
 The study of creating an organizational structure that leads to high efficiency and
effective-ness.

 Organizational structure is the system of task and authority relationships that

control how employees use resources to achieve the organization’s goals.

 Focused on principles that could be used by managers to coordinate the internal

activities of organizations

 Two of the most influential theories:

a) Theory of Bureaucracy –Max Weber
b) Process Management Theory – Henri Fayol
 A. MAX WEBBER (1864-1920)
Father of Bureaucratic Management theory

“The Theory of Social and Economic

Organization/Bureaucracy”
69

 Max Weber (Germany)

 Reasoned that any goal oriented organization consisting of thousands
of individuals would require the carefully controlled regulation of
activities, hence he developed the theory of bureaucratic
management that stressed the need for a strictly defined hierarchy
governed by clearly defined regulations and lines of authority.

 Bureaucracy: Ideal type of organization characterized by division of

labor, a clearly defined hierarchy, detailed rules and regulations, and
impersonal relationships
Weber’s Ideal Bureaucracy

 Hierarchical Management Structure

 Each level controls the levels below and is controlled by the level
above. Authority and responsibilities are clearly defined for each
position.
 Division of Labor
 Tasks are clearly defined and employees become skilled by specializing
in doing one thing. There is clear definition of authority and
responsibility.
 Formal Selection Process
 Employee selection and promotion are based on experience,
competence, and technical qualification demonstrated by examinations,
education, or training. There is no nepotism.
Weber’s Ideal Bureaucracy

 Career Orientation
 Management is separate from ownership, and managers are career
employees.
 Formal Rules and Regulations
 Rules and regulations are documented to ensure reliable and
predictable behavior. Managers must depend on formal organizational
rules in employee relations.
 Impersonality
 Rules are applied uniformly to everyone. There is no preferential
treatment or favoritism.
72

 Weber thought bureaucracy would result in the highest level of efficiency,

rationality, and worker satisfaction. In fact, he felt that bureaucracy was so
logical that it would transform all of society. Unfortunately, Weber did not
anticipate that each of the bureaucratic characteristics could also have a
negative result. 

 The “pyramid” organizational structure, with responsibility split into

divisions, departments, and teams, is based on principles of bureaucracy.

 Today, the term “bureaucracy” has taken on negative connotations. It is

associated with excessive paperwork, apathy, unresponsiveness, and
inflexibility. 
B. HENRI FAYOL (1841-1925)

The Administrative School of Management

74

 Henri Fayol (France)

 Is generally hailed as the founder of the classical management school.
 Taylor was concerned with basic organizational function, however,
Fayol was interested in total management.
 Fourteen Principles of Management: Fundamental or universal
principles of management practice
 He enumerated 6 functions / roles of management.

 Forecasting
 Planning
 Organizing
 Commanding
 Coordinating
 Controlling
Fayol’s Fourteen Principles of Management

• Division of work • Centralization

• Authority • Scalar chain
• Discipline • Order
• Unity of command • Equity
• Unity of direction • Stability of tenure
• Subordination of of personnel
the individual • Initiative
• Remuneration • Esprit de corps
76

 Division of Work
 Dividing work among the workforce helps improve the
quality of the overall product. (Specialisation)
 Authority and Responsibility
 While authority enables the management to delegate
work, responsibility makes them accountable for any
work done under their leadership.
77

 Discipline
 Employees must obey and respect the rules that govern the
enterprise.
 Unity of Command
 A person should ideally answer to just one boss. If an
employee is given work from more than one boss, there arises
a conflict of interest.
 Unity of Direction
 This principle is crucial as it incorporates the idea of a
workforce working a singular direction with a unified aim.
 ‘One manager one plan’ 
78

 Subordination of Individual Interest

 This principle states that the interest of an individual will.
Be subordinate to the objectives of the organization.
  Remuneration
 Compensation for work done should be fair to both
employees and employers.
 Centralisation
 Depending on the size of the organization, it is important
that the power is centralized to an extent that the decision
making is judicious at all levels and not arbitrary. 
79

 Scalar Chain
 The graded chain of authority from top to bottom through
which all communications flow .
 If the chain creates communication delays, cross
communication is permitted
 Order
 Materials and people should be at the right place at right time.
 A place for everything and everything in its place and a place
for everyone and everyone in its place
 Equity
 Employees should be treated with equality and respect. 
80

 Stability of tenure
 An employee is able to deliver better when he is secure in his
job.
 Initiative
 Sometimes groundbreaking ideas come from unexpected
places. The management must encourage its employees to
take initiatives in the organization. 
 Esprit de Corps
 This is one of the core principles. The management must
ensure that the team remains constantly motivated and are
cooperative with each other. 
 Apply the Concept
81

 Nutan Tiffin Box service was started in Mumbai by the

Mumbai Dabbawalas. The Dabbawalas who are the soul of
entire Mumbai aim to provide prompt and efficient services
by providing tasty homemade tiffin to all office goers at the
right time and place. The service is uninterrupted even on
the days of bad weather, political unrest and social
disturbances. Recently, they have started online booking
system through their website ‘mydabbawala.com’.

 Owing to their tremendous popularity amongst the happy

and satisfied customers and members, the Dabbawalas were
invited as guest lecturer by top business schools.
82

 The Dabbawalas operate in a group of 25-30 people

alongwith a group leader. Each group teams up with
other groups in order to deliver the tiffins on time.
They are not transferred on frequent basis as they
have to remember the addresses of their customers.
 They follow certain rules while doing trade—no
alcohol during working hours; no leaves without
permission; wearing white caps and carrying ID
cards during business hours.
83

 Recently, on the suggestion of a few self-motivated

fellow men, the dabbawalas thought out and executed
a plan of providing food left in tiffins by customers
to slum children. They have instructed their
customers to place red sticker if food is left in the
tiffin, to be fed to poor children later.
84

 State any principle of management given by Fayol

and one characteristic of management mentioned in
the above case.
85

 Nikita and Salman completed their MBA and started working

in a multi-national company at the same level. Both are
working hard and are happy with their employers. Salman had
the habit of backbiting and wrong reporting about his
colleagues to impress his boss. All the employees in the
organisation knew about it. At the time of performance
appraisal, the performance of Nikita was judged better than
Salman.

 Even then their boss, Mohammad Sharif decided to promote

Salman stating that being a female, Nikita will not be able to
handle the complications of a higher post.
Faculty Orientation Program - July 2019
 Identify and explain the principle of management, which was
 II. Neo-Classical Theory of Management (1920-1950)
86

The Behavioral School: The Organization is People

Recognized employees as individuals with concrete, human
needs, as parts of work groups, and as members of a
larger society
a) Human Relations Theory (Hawthorne Studies)
b) Emergence of Organizational Behavior theory
87

a) Human Relations Approach – A movement in

management thinking and practice that emphasized
satisfaction of employees basic needs as the key to
increased worker productivity.
 The Hawthorne Studies
Elton Mayo

Study of worker efficiency at the Hawthorne Works of the Western Electric Co.
during 1924-1932.
 4 Phases of Hawthorne Experiments

89

1. Illumination Experiments
2. Relay Assembly Test Room Experiments
3. Mass Interviewing Programme
4. Bank Wiring Observation Room Experiment
 Illumination Studies
90

 Measured Light Intensity vs. Worker Output

 Result : – Higher worker productivity and satisfaction at all

light levels
– Worker productivity was stopped with the light levels reached
moonlight intensity.
 Conclusions: – Light intensity has no conclusive effect on

output – Productivity has a psychological component

 Concept of ‘Hawthorne Effect’ was created

 The Hawthorne Effect— the tendency of people to behave

differently (perform better) when they receive attention

 Relay Assembly Test Experiments
91

 To determine the effect of changes in various job conditions on group

productivity 
 The researchers set up a relay assembly test room two girls were chosen.
 These girls were asked to choose four more girls as co-workers. 
  The work related to the assembly of telephone relays. Each relay consisted
of a number of parts which girls assembled into finished products.
 The experiments started with introducing numerous changes in sequence.
 An observer was associated with girls to supervise their work.
 Before each change was introduced, the girls were consulted.
 They were given opportunity to express their viewpoints and concerns to
the supervisor. 
 Following were the changes and resultant outcomes:
92

 Pay Incentives (Each Girls pay was based on the other 5 in the
group) . Productivity
 Use of Rest Periods (Two 5 minutes break) Later increased to
10 minutes. Productivity
 The rest period was reduced to five minutes but frequency
was increased. Productivity
 Company Sponsored Meals (Morning Coffee & soup along
with sandwich) Productivity
 Length of Work Day & Work Week (5pm, 4:30 pm, 4pm,
Saturday off) Productivity
93

 As each change was introduced, absenteeism decreased,

morale increased, and less supervision was required.
 The researchers decided to revert back to original position,

that is, no rest and other benefits. Surprisingly, productivity

increased further instead of going down.
 Conclusions:

– Positive effects even with negative influences – workers output

will increase as a response to attention
– Strong social bonds were created within the test group.
Workers are influenced by need for recognition, security and
sense of belonging
 Mass Interviewing Programme
94

 About 20,000 interviews were conducted between

1928 and 1930 to determine employees’ attitudes
towards company, supervision, insurance plans,
promotion and wages. 
 It was discovered that workers’ behaviour was
being influenced by group behaviour.
 However, this conclusion was not very satisfactory
and, therefore, researches decided to conduct
another series of experiments.
 Bank Wiring Observation Room Experiment
95

 To find out the impact of small groups on the individuals.

 A group of 14 male workers were formed into a small work group.
 The work involved attaching wire with switches.
 Hourly wage for each worker was fixed on average output of each
worker.
 Bonus was also on the basis of group effort.
 It was assumed that high efficient workers will put pressure on less
efficient workers, but it not happen.
 Workers established their own standard of output because of various
other social pressures- fear of unemployment, fear of increase in output,
desire to protect slow workers etc.
 Result: – No appreciable changes in output
The Hawthorne Studies at Western Electric

 The Hawthorne Effect— the tendency of people to behave differently (perform

better) when they receive attention.
 Key Findings

1. Economic incentives are less potent than generally believed.

2. Dealing with human problems is complicated and challenging.
3. Leadership practices and work-group pressures strongly influence
productivity, satisfaction, and performance.
4. Personal problems influence worker productivity.
5. Effective communication is critical to success.
6. Factors embedded in the social system influence behavior.
b) Emergence of Organizational Behavior theory
McGregor’s Theory X and Theory Y
 Theory X and Theory Y were introduced by Douglas
McGregor based on two diagonally opposite views of
human behaviour.
 Theory X
 McGregor assumed that average human being dislikes work and will try to
avoid it if possible.
 Employees are lazy, they must be controlled, coerced and even punished
to achieve organizational goals.
 Average employee do not accept responsibility and seek direction from
their superiors. They lack ambition.
 McGregor therefore recommends organizations so structured that enable
close supervision, tight control and mangers must exert energy to achieve
organizational objective.
 Theory Y
 Theory Y suggests that average human being likes work and takes it as
natural as play. Employees can exercise self-direction and self-control and
given the proper working conditions, average person seeks
responsibilities.

 McGregor felt that wisdom is widely spread among the employees and
they are innovative and can take quality decisions. It therefore assumes
that management must appreciate the potential among employees and
adopt such management practices like delegation, job enlargement and
management by objective.

 McGregor in his theory displayed a total recognition of humanistic

approach.
 III. Modern theory of management

A) Management Science
B) Organization-Environment Theory
a) Systems Considerations
b) Contingency theory
 A. Management Science
 Uses rigorous quantitative techniques to maximize
resources.
 Quantitative management: utilizes linear
programming, modeling, simulation systems.
 Operations management: techniques to analyze all
aspects of the production system.
 Total Quality Management (TQM): focuses on
improved quality.
 Management Information Systems (MIS): provides
information about the organization.
B) Organization-Environment Theory

a) Systems Theory/Approach to Management

 Kast and Rosenzwing , “defines system as an organized,

unitary whole composed of two or more interdependent parts,

components, or sub – systems and delineated by identifiable
boundaries from its environmental system”.
 It acts as a self sufficient unit.

 Any organisation is looked upon as an artificial system, the

internal parts of which work together to achieve established

goals and the external parts to achieve interplay with the
environment including customers, the general public,
suppliers and government.
103
a) Systems Theory/Approach to Management

 From the above definition following aspects stand out:

 A system has several parts. These are dynamic in nature and
therefore interact with each other.
 The parts or systems are interdependent and interrelated.
 The interdependence is required due to specialized nature of
job, division of labour, sharing of limited resources and
scheduling of activities.
a) Systems Theory/Approach to Management

 Creating various departments that carries out the work in

the organization, sub departments and sections.
 Work is carried out by teams and groups who performed
specialized task to accomplish overall organizational
objective.
 Change in one department affect the other departmental
work.
106

 Features Of Systems Approach to Management:

1. Open or Closed Systems
1. An open system is one that is dependent on the
outside environment for survival
2. Interdependent parts
1. A system is a set of interdependent parts which
together form a unitary whole that perform some
function. An organisation is also a system which
consists of four interdependent parts viz., task,
structure, people and technology.
107

3. Consideration of whole system

No part of the system can be precisely analyzed and under-
stood apart from the whole system. Conversely, the whole
system cannot be exactly evaluated without understanding all its
parts.
4. Information, energy and material
There are three basic inputs that enter the processor of the
system viz., information (technology), energy (motive power)
and materials to be transformed into goods.
108

5. Defined boundaries
Each system including an organisation has its own boundaries
which separate it from other system in the environment.
6. Synergy
When separate departments within an organisation cooperate
and interact, they become more productive than if they had acted in
isolation

7. Feedback mechanism
A system can adopt and adjust itself to the changing
environment through the feedback mechanism.
109

Merits of Systems Approach

1. It stresses that managers should avoid analyzing problems in
isolation but should develop the skills for integrated thinking
on management problems.
2. The systems approach provides a unified focus to
organizational efforts. It provides a strong conceptual
framework for meaningful analysis and understanding of
organisations.
3. Systems approach provides clues to the complex behavior of
organisation.
110

 A common deficiency of the classical and behavioral

schools is that they have stress one aspect of the
organisation at the cost of others. The classical
approach emphasizes on 'task' while behavioral
approach emphasizes on 'people‘.
b) The Contingency Approach

 The contingency/situational approach which attempts to

integrate the various schools of management thought in an
orderly manner.

 The basic theme of contingency approach is that organisations

have to deal with different situations in different ways. There
is no single best way of managing applicable to all situations.

 In order to be effective, the internal functioning of the

organisation must be consistent with the needs and demands
of the external environment.
 Features of the Contingency / Situational Approach
112

1. Management is entirely situational.

2. Management should match its approach as per the requirements of the

situation. The policies and practices used should be suitable to
environmental changes

3. The success of management depends on its ability to cope up with its

environment. Because of the specific organization – environment
relationship, no action can be universal. It various from situation to
situation.

4. Organizational systems are not absolute. They have to adjust or modify

considering social, political, technical and economic situations.
113

 Radhika opens a jewellery showroom in Jaipur after

completing a course in jewellery designing. She has employed
eleven persons in her showroom. For greater productivity, she
divides the work into small tasks and each employee is trained
to perform his/her specialised job. The sales persons are
allowed to close a deal with a buyer by giving a maximum of
10% discount, whereas the decision to give any further
discount rests with Radhika as the final authority.
114

 In the earlier days of starting of the business, five of her

employees were asked to put in extra hours of work. In return
she had promised to give them a special incentive within a
year. Therefore, after six months when the business was doing
well, she awarded a cash bonus to each of these employees to
honour her commitment. However, when it comes to settling
the conflicts among her employees, she tends to be more
biased towards her female employees.
115

1. Identify and explain the various principles of management

that are being applied by Radhika by quoting lines from the
paragraph.
2. Identify and explain the principle of management which is
being violated by Radhika by quoting lines from the paragraph.
116

 Division of Work:  “For greater productivity, she divides the

work into small tasks and each employee is trained to perform
his/her specialised job.”
 Centralisation and Decentralisation: “The sales persons are
allowed to close a deal with a buyer by giving a maximum of
10% discount, whereas the decision to give any further
discount rests with Radhika as the final authority.”
 Discipline: “Therefore, after six months when the business
was doing well, she awarded a cash bonus to each of these
employees to honour her commitment.”
117

 Radhika has violated “Equity”

 “However, when it comes to settling the conflicts
among her employees, she tends to be more biased
towards her female employees.”