MODERN APPROACH-

QUANTITATIVE
APPROACH, SYSTEMS
APPROACH AND
CONTINGENCY
APPROACH
 Modern Management Theory: Quantitative, System and
Contingency Approaches to Management!

The Modern Period (1960 to present). After, 1960 management thought has been turning somewhat
away from the extreme human relations ideas particularly regarding the direct relation between
morale and productivity. Present management thinking wishes equal emphasis on man and
machine.

The modern business ideologists have recognized the social responsibilities of business activities and
thinking on similar lines. During the period, the principles of management reached a stage of
refinement and perfection. The formation of big companies resulted in the separation of ownership
and management.
 Modern Management Theory: Quantitative, System and
Contingency Approaches to Management!

This change in ownership pattern inevitably brought in ‘salaried and professional managers’ in place of ‘owner
managers’. The giving of control to the hired management resulted in the wider use of scientific methods of
management. But at the same time the professional management has become socially responsible to various
sections of society such as customers, shareholders, suppliers, employees, trade unions and other Government
agencies.

Under modern management thought three streams of thinking have beers noticed since 1960:

(i) Quantitative or Mathematical Approach

(ii) Systems Approach.

(iii) Contingency Approach.

 (i) Quantitative or Mathematical Approach

Mathematics has made inroads into all disciplines. It has been universally recognized as
an important tool of analysis and a language for precise expression of concept and
relationship.

Evolving from the Decision Theory School, the Mathematical School gives a quantitative
basis for decision-making and considers management as a system of mathematical
models and processes. This school is also sometimes called, ‘ Operations Research” or
“Management Science School’. The main feature of this school is the use of mixed teams
of scientists from several disciplines. It uses scientific techniques for providing
quantitative base for managerial decisions. The exponents of this school view
management as a system of logical process.
 (i) Quantitative or Mathematical Approach

It can be expressed in terms of mathematical symbols and relationships or models. Different mathematical
and quantitative techniques or tools, such as linear programming, simulation and queuing, are being
increasingly used in almost all the areas of management for studying a wide range of problems.

The exponents of this school believe that all the phases of management can be expressed in quantitative
terms for analysis. However, it is to be noted that mathematical models do help in the systematic analysis
of problems, but models are no substitute for sound judgement.

Moreover, mathematics quantitative techniques provide tools for analysis but they cannot be treated an
independent system of management thought. A lot of mathematics is used in the field of physical sciences
and engineering but mathematics has never been considered as separate school even in these fields.
 (i) Quantitative or Mathematical Approach

The contributions of mathematicians in the field of management are significant. This has contributed
impressively in developing orderly thinking amongst managers. It has given exactness to the
management discipline. Its contributions and usefulness could hardly be over-emphasized. However,
it can only be treated as a tool in managerial practice.
 (i) Quantitative or Mathematical Approach - Limitations

The contributions of mathematicians in the field of management are significant. This has contributed
impressively in developing orderly thinking amongst managers. It has given exactness to the
management discipline. Its contributions and usefulness could hardly be over-emphasized. However,
it can only be treated as a tool in managerial practice.

There is no doubt that this approach helps in defining and solving complex problems resulting in
orderly thinking. But the critics of this approach regard it as too narrow since it is concerned merely
with the development of mathematical models and solutions for certain managerial problems.
 (i) Quantitative or Mathematical Approach - This approach suffers from the
following drawbacks:

(i) This approach does not give any weight age to human element which plays a dominant role in all
organisations.

(ii) In actual life executives have to take decisions quickly without waiting for full information to
develop models.
 (i) Quantitative or Mathematical Approach - This approach suffers from the
following drawbacks:

(iii) The various mathematical tools help in decision making. But decision­ making is one part of
managerial activities. Management has many other functions than decision-making.

(iv) This approach supposes that all variables to decision-making are measurable and inter-
dependent. This assumption is not realistic.

(v) Sometimes, the information available in the business for developing mathematical models are not
upto date and may lead to wrong decision-making.

Harold Knootz. Also observes that “it is too hard to see mathematics as a separate approach to
management theory. Mathematics is a tool rather than a school.”
 (ii) Systems Approach:

In the 1960, an approach to management appeared which tried to unify

the prior schools of thought. This approach is commonly known as
‘Systems Approach’. Its early contributors include Ludwing Von
Bertalanffy, Lawrence J. Henderson, W.G. Scott, Deniel Katz, Robert L.
Kahn, W. Buckley and J.D. Thompson.
 (ii) Systems Approach:

They viewed organization as an organic and open system, which is composed of

interacting and interdependent parts, called subsystems. The system approach is to
look upon management as a system or as “an organised whole” made up of sub­
systems integrated into a unity or orderly totality.
System approach is based on the generalization that everything is inter-related and
inter-dependent. A system is composed of related and dependent element which,
when in interaction, forms a unitary whole. A system is simply an assemblage or
combination of things or parts forming a complex whole.
 (ii) Systems Approach:

One of its most important characteristic is that it is composed of

hierarchy of sub-systems. That is the parts forming the major systems
and so on. For example, the world 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
 The basic features of systems approach are as under:

(i) A system consists of interacting elements. It is set of inter related and inter­
dependent parts arranged in a manner that produces a unified whole.
(ii) The various sub-systems should be studied in their inter- relationships rather,
than in isolation from each other.
(iii) An organisational system has a boundary that determines which parts are
internal and which are external.
(iv) A system does not exist in a vaccum. It receives information, material and energy
from other systems as inputs. These inputs undergo a transformation process within
the system and leave the system as output to other systems.
 The basic features of systems approach are as under:

(v) An organisation is a dynamic system as it is responsive to its environment. It is

vulnerable to change in its environment.
In the systems approach, attention is paid towards the overall effectiveness of the
system rather than the effectiveness of the sub-systems. The interdependence of the
sub-systems is taken into account. The idea of systems can be applied at an
organizational level. In applying system concepts, organizations are taken into
account and not only the objectives and performances of different departments (sub­
systems).
 The basic features of systems approach are
as under:

The systems approach is considered both general and specialized systems. The general systems
approach to management is mainly concerned with formal organizations and the concepts are relating
to technique of sociology, psychology and philosophy. The specific management system includes the
analysis of organisational structure, information, planning and control mechanism and job design, etc.
 Contingency or Situational Approach

The contingency approach is the latest approach to the existing management approaches. During the
1970’s, contingency theory was developed by J.W. Lorsch and P.R. Lawrence, who were critical of
other approaches presupposing one best way to manage. Management problems are different under
different situations and require to be tackled as per the demand of the situation.

One best way of doing may be useful for repetitive things but not for managerial problems. The
contingency theory aims at integrating theory with practice in systems framework. The behaviour of
an organisation is said to be contingent on forces of environment. “Hence, a contingency approach is
an approach, where behaviour of one sub-unit is dependent on its environment and relationship to
other units or sub-units that have some control over the sequences desired by that sub- unit.”
 Contingency or Situational Approach

Thus, behaviour within an organisation is contingent on environment, and if a manager wants to

change the behaviour of any part of the organization, he must try to change the situation influencing
it. Tosi and Hammer tell that organization system is not a matter of managerial choice, but contingent
upon its external environment.

Contingency approach is an improvement over the systems approach. The interactions between the
sub-systems of an organisation have long been recognised by the systems approach. Contingency
approach also recognises that organisational system is the product of the interaction of the sub
systems and the environment. Besides, it seeks to identify exact nature of inter-actions and inter-
relationships.
 Contingency or Situational Approach

This approach calls for an identification of the internal and external variables that critically influence
managerial revolution and organisational performance. According to this, internal and external
environment of the organisation is made up of the organisational sub-systems. Thus, the contingency
approach provides a pragmatic method of analysing organisational sub-systems and tries to integrate
these with the environment.

Contingency views are ultimately directed towards suggesting organisational designs situations.
Therefore, this approach is also called situational approach. This approach helps us to evolve practical
answers to the problems remanding solutions.
 Contingency or Situational Approach

Kast and Rosenzweig give a broader view of the contingency approach. They say, “The contingency
view seeks to understand the inter-relationships within and among sub-systems as well as between the
organization and its environment and to define patterns of relationships or configurations of variables
contingency views are ultimately directed toward suggesting organization designs and managerial
actions most appropriate for specific situations.
Features of Contingency Approach:

Firstly, the contingency approach does not accept the universality of management theory. It stresses
that there is no one best way of doing things. Management is situation, and managers should explain
objectives, design organisations and prepare strategies, policies and plans according to prevailing
circumstances. Secondly, managerial policies and practices to be effective, must adjust to changes in
environment.

Thirdly, it should improve diagnostic skills so as to anticipate and ready for environmental changes.
Fourthly, managers should have sufficient human relations skill to accommodate and stabilise change.

Finally, it should apply the contingency model in designing the organization, developing its
information and communication system, following proper leadership styles and preparing suitable
objectives, policies, strategies, programmes and practices. Thus, contingency approach looks to hold a
great deal of promise for the future development of management theory and practice.
Evaluation:

This approach takes a realistic view in management and organisation. It discards the universal validity
of principles. Executives are advised to be situation oriented and not stereo-typed. So, executives
become innovative and creative.

On the other hands, this approach does not have theoretical base. An executive is expected to know all
the alternative courses of action before taking action in a situation which is not always feasible.