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04/02/2023 HSM 2 by Dr Mesfin Addisse 1
UNIT 2:
 History of Management Thought- The
Evolution of Management Theory
Learning Objectives :
 Understand the historical context how the different
management theories developed.
 Distinguish the different approaches of management
theory.

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The History of Management Thought- …
 Management and organizations are products of
their historical and social times and places. Thus
 the need to understand the evolution of
management theory in terms of how people have
wrestled with matters of relationships at
particular times in history.
 Let us compare different ages
 Formal organizations existed for many centuries.
such as:
 The Greek and Roman armies,
 The Roman Catholic Church,
 Period of industrial revolution,
 Early 1900’s

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The History of Management Thought- …
o Did we have similar management experience in
Ethiopia and Africa?
 The Axum monument
 The Lalibela rock hewn churches is the result of
systematically managed effort.
 The Adwa battle
 The Egypt’s great pyramids:
 mobilized human and material resources mobilize 100,000
 have to plan ,implement , ,coordinate , control and report.
What is our problem then?

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The History of Management Thought- …
Our problem in terms of documentation.
 They write, we did not .Still we do not.
 Shall we?
 Few times if we write (rather talk), based on
what?
 Two examples (Stoner) of attempts how to
make organizations efficient and effective since
long before terms such as management came
into common usage:
 Writings of Machiavelli and Sun Tzu considered as
strategists

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The History of Management Thought- …
'Machiavellian' is often used to describe cunning and
manipulative opportunists .
 Machiavelli was a great believer in the virtues of a
republic.
Machiavelli wrote in 1531
 An organization is more stable if members have the
right to express their differences and solve their
conflicts within it
 While one person can begin an organization, "it is
lasting when it is left in the care of many and when
many desire to maintain it."
 A weak manager can follow a strong one, but not
another weak one, and maintain authority.
 A manager seeking to change an established
organization "should retain at least a shadow of the
ancient customs."

6.
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The History of Management Thought- …
 The Art of War, written by the Chinese
philosopher Sun Tzu more than 2,000 years ago.
It was modified and used by Mao Zedong,
 When the enemy advances. we retreat!
 when the enemy halts we harass!
 When the enemy seeks to avoid battle, we
attack!
 When the enemy retreats, we pursue!
Today these rules are being used when planning a
strategy to engage business competitors.

7.
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The Management Theories….
WHY STUDY MANAGEMENT THEORY?
 A theory: is a coherent group of assumptions
put forth to explain the relationship between two
or more observable facts.
 Theories are perspectives with which people
make sense of their world experiences.
 What will happen if we do not have theories?
 Frustration
 in dealing with other people, one has always to
define even the most basic assumptions.

8.
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The Management Theories….
 Thus theories:
 provide a stable focus for understanding what we
experience.
 provide criteria for determining what is relevant.
 help us to communicate efficiently and thus move to more
complex relationships with other people.
 Theories make it possible and challenge us to keep learning
about our world.
 Theories have boundaries and everything can not be
covered by any one theory.
 Thus there is a need for alternative theories and
consideration of the consequences of adopting
alternative beliefs as theories do not work or our
theories no longer seem to "fit" our experience
 The environment is changing.

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The Management Theories….
 Why evolution of Management Theory ?
 Evolution of management theory because
 it developed in bits and pieces over the years
 so many people contributed to the theory and practice
 As an academic study relatively new because
before the 1900 it was only given in 3 universities
unlike chemistry or astronomy.
 Management has inter disciplinary nature: with
different fields history geography , psychology ,
health, education and including religions etc.
 Each discipline and professionals used, interpreted,
and reformulated management according to their
own perspective .

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The Management Theories. Why evolution.….
As a result with each new perspective have come
new questions and assumptions ,
 new research techniques ,
 different technical jargons and
 new conceptual frameworks.
AS a result :
 There is no universally accepted theory of
management. i.e. there is yet no verified general
theory or set of laws for management that we can
apply to all situations.
 Knowing the evolution help us to know how it
was, how it is now and where it is heading
 Despite the emerging new assumptions later ideas
have not replaced earlier ones. Instead, each new
school has tended to complement or coexist with
previous ones.

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The Management Theories. Why evolution.….
 At the same time, each school has continued to
evolve, and some have even merged with
others.
Example: The integrative approaches:
 the systems approach,
 the contingency approach,
 the dynamic engagement approach.
Different Approaches to management theory
 SCIENTIFIC MANAGEMENT THEORY
 THE CLASSICAL PERSPECTIVE
 Operational approach

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The Management Theories:
THE SCIENTIFIC MANAGEMENT SCHOOL
 Production-oriented field of management dedicated
to improving efficiency and minimizing waste.
 focuses on ways to improve the performance of
individual workers (the only way to increase
productivity was to increase the efficiency of
workers.).
 Frederick W. Taylor (1856-1915): father of the
scientific management school.
 To increase efficiency by scientifically designing jobs
Major premises
 there is always one best way and has to be
discovered and put in action
 workers job can be reduced to a science

13.
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The Management Theories:
THE SCIENTIFIC MANAGEMENT SCHOOL: F. Taylor
 Science of shoveling : based his management system
on production-line time studies.
 analyzed and timed steel workers' movements on a
series of jobs. Using time study as his base.
 broke each job down into its components and
designed the quickest and best methods of performing
each component.
 established how much workers should be able to do
with the equipment and materials at hand.
 encouraged employers to pay more productive
workers at a higher rate than others, using a
"scientifically correct" rate that would benefit both
company and worker.
 Thus, workers were urged to surpass their previous
performance standards to earn more pay. This is the
differential rate system.

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The Management Theories:
THE SCIENTIFIC MANAGEMENT SCHOOL: F. Taylor …….
 Frederick W. Taylor saw workers soldiering or
deliberately working beneath their potential
and designed a 4-step method to overcome
this problem
1. breaking the job into its smallest pieces.
2. to select the most qualified employees to perform
the job and train them to do it.
3. supervisors are used to monitor the employees to
be sure they are following the methods
prescribed.
4. continue in this fashion, but only use employees
who are getting the work done.

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The Management Theories:
THE SCIENTIFIC MANAGEMENT SCHOOL: F. Taylor…..
 In summary : the four principles are
 Development of a true science management.
 Scientific selection of workers.
 Scientific education and development of workers.
 Intimate, friendly cooperation between manager and
labor.
 According to Taylor
 the success of these principles required
"a complete mental revolution" on the part of
management and labor.
 Avoid quarrel over profits, and rather try to increase
production because both (labor & management) had a
common interest in increasing productivity.

16.
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The Management Theories:
THE SCIENTIFIC MANAGEMENT SCHOOL :
HENRY L. GANTT (1861-1919)
worked with Taylor
 Gantt reconsidered Taylor's incentive system.
 Abandoned the differential rate system as having
too little motivational impact.
 Every worker who finished a day's assigned work load
would win a 50-cent bonus.
 Supervisor would earn a bonus for each worker who
reached the daily standard, plus an extra bonus if all the
workers reached it.
 This would spur supervisors to train their workers to do a
better job.
 Every worker's progress was rated publicly and
recorded on individual bar charts,--in black on days
the worker made the standard, in red when he or
she fell below it.

17.
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The Management Theories:
THE SCIENTIFIC MANAGEMENT SCHOOL :Henry Gantt….
 Gantt originated the "Gantt chart“-which is a way
to schedule work or a charting system for
production scheduling
”THE GILBRETHS”- Frank B. and Lillian M.
Gilbreth (1868-1924 and 1878-1972)
 a husband and wife team
 helped to find more efficient ways for workers
to produce output.
 Work on fatigue and motion studies
 focused on ways of promoting the individual
worker's welfare.

18.
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The Management Theories:
THE SCIENTIFIC MANAGEMENT SCHOOL :
THE GILBRETHS…
They believed
 the ultimate aim of scientific management was
to help workers reach their full potential as
human beings.
 Motion and fatigue were intertwined: every
motion that was eliminated reduced fatigue.
 important contribution in the field of bricklaying.
 Raise worker morale for obvious physical benefit
and because it demonstrated management’s
concern for the worker.
 changed an 18-step process into a 5-step
process and
 increased productivity by about 200 percent.

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The Management Theories:
THE CLASSICAL ORGANIZATION THEORY SCHOOL
 Scientific management was concerned with
increasing the productivity of the shop and the
individual worker While
 Classical organization theory grew out of the need to
find guidelines for managing such complex
organizations as factories.
 Administrative management focuses on managing
the total organization.
CLASSICAL ORGANIZATION THEORY SCHOOL
 focuses on managing the total organization.
 concerned with the entire range of managerial
performance
 comprehensive analysis of management involves
studying the management function as a whole

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The Management Theories:
CLASSICAL ORGANIZATION THEORY SCHOOL :
HENRI FAYOL
Henri Fayol (1841-1925)
 founder of the classical management school
 organizational functions Vs the total organization
 Taylor was basically concerned with organizational
functions
 Fayol was interested in the total organization.
 Faith in scientific methods,
 investigate managerial behavior and tried to
systematize it.
 believed that sound management practice falls into
certain patterns that can be identified and analyzed.
 From this basic insight, he drew up a blueprint for a
cohesive doctrine of managers

21.
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The Management Theories: CLASSICAL ORGANIZATION THEORY
SCHOOL : HENRI FAYOL……
Henry Fayol's universal approach assumes
 that all organizations, regardless of purpose or
size, require the same management process.
 And this rational process can be reduced to
separate functions and principles of management.
 Fayol believed that management is a skill like any
other- one that could be taught once its underlying
principles were understood. Managers are nurtured
than born (nature).
 The first to identify the four management
functions: planning, organizing, leading, and
controlling.
 he developed guidelines for managers to follow.
These guidelines form fourteen principles for
effective management.

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Theories: CLASSICAL ORGANIZATION THEORY SCHOOL :
Fayol’s 14 Principles of management
1.Division of Labor. The more people specialize, the
more efficiently they can perform their work.
 Effort and attention are focused on special portion of
the task.
 Work specialization is the best way to use human
resource.
 This principle is observed by the modern assembly
line.
2.Authority. Managers must give orders so that they can
get things done.
 Authority and responsibility should be closely related.
3.Discipline. Members in an organization need to respect
the rules and agreements that govern the
organization.

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Theories: CLASSICAL ORG. THEORY . : Fayol’s 14 Principles……
 discipline results from good leadership at all
levels of the organization, judiciously enforced
penalties for the sake of promoting common
efforts.
4.Unity of Command. Each employee must
receive instructions from only one person.
reporting to more than one manager, conflicts
in instructions and confusion of authority
5.Unity of Direction. The entire organization
should be moving toward a common objective,
in a common direction.

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Theories: CLASSICAL ORG. THEORY . : Fayol’s 14 Principles……
6.Remuneration. Consideration of variables such as
cost of living, success of the organization etc. to
determine rate of payment to both employees and
employers.
7.Subordination of Individual Interest to the Common
Good. In any undertaking, the interests of
employees should not take precedence over the
interests of the organization as a whole.
8.Centralization. Decreasing the role of subordinates
in decision making is centralization; increasing
their role is decentralization.
 Fayol believed that managers should retain final
responsibility,
 but should at the same time give their
subordinates enough authority to do their jobs
properly.

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Theories: CLASSICAL ORG. THEORY . : Fayol’s 14 Principles……
 The problem is to find the proper degree of
centralization in each case.
9.The Hierarchy. Lower line managers should always
inform upper level managers.
10.Order. To increase efficiency and coordination
,materials & people should be in the right place
at the right time.
 People, in particular, should be in the jobs or
positions they are most suited to.
11.Equity. All employees should be treated equally.
12.Stability of Staff. Retaining productive employees
should always be a high priority of management.
A high employee turnover rate undermines the
efficient functioning of an organization.

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Theories: CLASSICAL ORG. THEORY . : Fayol’s 14 Principles……
13.Initiative. Subordinates should be given the freedom
to conceive and carry out their plans, even though
some mistakes may result.
Encourage employees to do through self direction.
14.Espirit de Corps. Promoting harmony and team spirit
among members to give the organization a sense of
unity. Even small factors should help to develop the
spirit .
 For example, the use of verbal communications
instead of formal, written communication whenever
possible.
• Are managers born or made ?
 Before Fayol, it was generally believed that "managers
are born, not made."
 Fayol insisted, management was a skill like any other--
one that could be taught once its underlying principles
were understood.

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Theories: CLASSICAL ORGANIZATION THEORY SCHOOL :
MAX WEBER (1864-1920)
 a German sociologist
 emphasis how organizational resources are best
utilized to attain goals
 he stressed the need for a bureaucratic organization
marked by clear division of labor, a strictly defined
hierarchy of authority, governed by clearly defined
regulations and lines of authority.
 sought to improve the performance of organizations
by making their operations predictable and
productive.
Main efforts of organizing efforts should include
1.detailed procedures and rules
2. a clearly outlined organizational hierarchy and
3. mainly interpersonal relationship between
organizational members.

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Theories: CLASSICAL ORG.. THEORY..: MAX WEBER …….
He named the management system that contains
these components to be a bureaucracy.
 Bureaucracy: he believed that in its pure form
bureaucracy represented an ideal or completely
rational form of organization.
 Do people do the way Weber wanted it?
 Many did not do what Weber wanted.
Main concepts
 A consistent system of abstract rules
 any goal-oriented organization consisting of
thousands of individuals would require the carefully
controlled regulation of its activities,
 a continuous organization of official functions bound
by rules
 a system of rules ensures a rational approach to
organization a degree of uniformity and coordination

29.
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Theories: CLASSICAL ORG.. THEORY …: MAX WEBER …….
the rationale for rules is
 manager can use them to eliminate uncertainty in
the performance of tasks due to differences
between various individuals.
 A set of rules and regulations helps in providing the
continuity and stability an organization needs.
Positions arranged in a hierarchy
 the need for a strictly defined hierarchy governed by
clearly defined regulations and lines of authority.
 The lower one is under the control of the higher
office.
 Authority of a supervisor based upon expert
knowledge
 Authority decreases/ diminishes with succeeding
level below thus resulting chain of command.

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Theories: CLASSICAL ORG.. THEORY…: MAX WEBER …….
Specialization and division of labor
 activities and objectives were rationally thought out
and divisions of labor were explicitly spelled out.
 Tasks necessary to accomplish goals are divided into
highly specialized jobs.
Rationale
 Job holders
 became experts in their jobs
 Are responsible for their performance
 THUS: Manager knows the exact limits of each
sphere of competence in order to avoid interfering in
spheres of others
 technical competence
 technical competence should be emphasized for
employment and that performance evaluations
should be made entirely on the basis of merit. Thus
promotions on the basis of seniority and achievement.

31.
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Theories: CLASSICAL ORG… THEORY…: MAX WEBER …….
 Impersonal relationships:
 emotional attachments have to be avoided in decision
making
 Many think of bureaucracies as vast, impersonal
organizations that put impersonal efficiency ahead of
human needs.
 But: Weber's model of bureaucratic management
clearly advanced the formation of huge corporations
such as Ford.
 Although bureaucracy has been successful for many
companies,
 General Electric and Xerox have become "bureaucracy
busters," why?
 throwing away the organization chart and
 replacing it with ever-changing constellations of teams,
projects, and alliances with the goal of unleashing
employee creativity.

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The Management Theories:
THE BEHAVIORAL SCHOOL:
 Successful management depends largely on
managers’ ability to understand and work with
people who have a variety of backgrounds, needs,
perceptions and aspirations.
 The behavioral school emerged from the human
relations movement which is an effort to make
managers more sensitive to their employees’ needs
 the classical approach did not achieve the needed
efficiency and workplace harmony, people did not
always follow predicted or expected patterns of
behavior.
 Thus: The behavioral approach to management
emphasizes increasing productivity through
understanding of people and adapt the organization
to them (the “people side” of their organization).

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Theories: THE BEHAVIORAL SCHOOL:
THE HUMAN RELATIONS MOVEMENT
 describe the ways in which managers interact
with their employees.
 The human relations movement arose due to
historical influences
 Threat of unionization
 THE HAWTHORNE studies
 Philosophy of industrial Humanism
THE HAWTHORNE studies/experiments.
 The human relations movement grew out of a
famous series of studies conducted at the
Western Electric Company from 1924 to 1933,
near Chicago.
 The influence of different working conditions
(temperature, working hours, etc.) on
productivity.

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Theories: The Behavioral School:
THE HUMAN RELATIONS MOVEMENT: THE HAWTHORNE…….
 The Hawthorne Studies began as an attempt to
investigate the relationship between the level of
lighting in the workplace and worker
productivity.
 The results
 When the test group's lighting was improved or
lighting conditions were made worse, productivity
tended to increase.
 the control group's output also rose even though it
experienced no changes in illumination
a. Subjects enjoy working in the test room
b. The new supervisory relationship during the study
allowed the workers to be free to work with out fear.
Sympathetic supervision had further reinforced their
motivation.
c. they know they are part of an important undertaking
and subjects become friendly because they had been

35.
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Theories: The Behavioral School:
THE HUMAN RELATIONS MOVEMENT: THE HAWTHORNE…….
singled out for special attention, both the test and the
control groups had developed a group pride that
motivated them to improve their work performance.
d. special relationship with the controls
 Conclusion
 The researchers concluded that employees would
work harder if they believed
1. management was concerned about their welfare and
2. supervisors paid special attention to them. This
phenomenon was subsequently labeled the Hawthorne
Effect.
 Informal work groups-the social environment of
employees have a positive influence on productivity.
 associations and friendships with co-workers influenced
by their shared antagonism toward their bosses, giving
meaning to their working lives and provided some
protection from management.
 group pressure was a stronger influencer of productivity
than management demands.

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Theories: The Behavioral School:
THE HUMAN RELATIONS MOVEMENT: THE HAWTHORNE…….
 To Mayo, then, the concept of "social man“
 "social man"-motivated by social needs, wanting
rewarding on-the-job relationships, and
responding more to work-group pressures than to
management control-was necessary to
complement the old concept of "rational man"
motivated by personal economic needs.
MARY PARKER FOLLETT (1868-1933)
 One of the contributors of the classical school
theory
 introduced many new elements especially in the
area of human relations and organizational
structure.

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Theories: The Behavioral School: THE HUMAN RELATIONS MOVEMENT:
MARY PARKER FOLLETT (1868-1933)
 Thus initiated and gave insight for the emerging
behavioral and management science schools.
 Follett was convinced that no one could become
a whole person except as a member of a group;
human beings grew through their relationships
with others in organizations.
Believing in relationships
 management "the art of getting things done
through people."
 Address coordination and the power of the group,
where individuals could combine their diverse
talents into something bigger.

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Theories: The Behavioral School: THE HUMAN RELATIONS MOVEMENT:
MARY PARKER FOLLETT……
Advice:-
 How to establish and maintain coordination with in
the organization by addressing human element and
communication
 Do not consider coordination through close
supervision.
 Rather Coordination can be attained easily through
direct horizontal and person communication
 When coordination problem exists it can be solved
with speaking peer workers
 Coordination should be major for planning process &
maintaining coordination should be a continuing
process
 Continuing because existence of coordination today
does not mean for tomorrow

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Theories: The Behavioral School: THE HUMAN RELATIONS MOVEMENT:
MARY PARKER FOLLETT……
 Like Taylor
 labor and management shared a common purpose
 but the artificial distinction between managers and
subordinates obscured this natural partnership.
 Strong belief in the power of the group, where individuals
could combine their diverse talents into something bigger.
 OTHER CONTRIBUTION
Follett's "holistic" model
 management meant more than just what was happening
inside a particular organization.
Rather management must take
 into account not just individuals and groups, but the effects of
such environmental factors as politics, economics, and biology.
 The model paved the way for management theory to include a
broader set of relationships, some inside the organization and
some across the organization's borders.

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CHESTER I. BARNARD (1886-1961)
 The Functions of the Executive.
 used his work experience and his extensive reading
in sociology and philosophy to formulate theories
about organizations.
Major elements of his views
 A.
1. people come together in formal organizations to
achieve ends they cannot accomplish working
alone.
2. But as they pursue the organization's goals, they
must also satisfy their individual needs.
Thus his central thesis: An organization operate
efficiently and survive only when
 the organization’s goals are kept in balance with the
aims and needs of the individuals working for it.

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BARNARD……..
 B. Principle how workers can work in stable and
mutually beneficial relationships over time.
 In formal organizations to meet their personal goals
people form informal groups such as cliques.
 For its survival, an organization must use these
informal groups effectively, even if they sometimes
work at purposes that run counter to management’s
objectives.
 recognition of the importance and universality of this
"informal organization" was a major contribution to
management thought.
C.
 individual and organizations purposes could be kept
in balance if managers understood an employee's
zone of indifference :
 what the employee would do without questioning the
manager's authority.

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BARNARD……..
 the more activities fell within an employee's zone of
indifference (what the employee would accept), the
smoother and more cooperative an organization would
be.
 Executives had a duty
 to instill a sense of moral purpose in their employees.
 to learn to think beyond their narrow self-interest and
make an ethical commitment to society.
 D. role of the individual worker as "the basic strategic
factor in organization.
E.
 organization is the cooperative enterprise of
individuals, working together as groups
 he set the stage for the development of a great deal
of current thinking.
 Today companies are increasingly using teams as the
building blocks of the organization. Because

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BARNARD……..
 Today companies are increasingly using teams as
the building blocks of the organization. Because
 teams generally are self-managing, supervisory
roles are limited.
 Management provides direction by giving each team
a common purpose and holds the teams
accountable for measurable performance goals.
F. Acceptance of authority
 Organizational chart
 the source of authority is not determined by a
decree (Order) from the formal organization
 but by weather or not authority is accepted by those
existing under the authority .
 Authority exists and exact obedience only if it is
accepted.

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BARNARD……..
Authority is accepted
1.if an individual understand the order being
communicated
2. if an individual believes the order is
consistent with the purpose of the
organization
3. if an individual sees the order is
compatible with his/her personal interests
4. if an individual is physically and mentally
able to comply with order.

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BARNARD……..
According to Bernard To increase acceptance of
authority managers follow certain guidelines :
 formal channels of communication used by the
manager and are familiar to all members
 each member has a formal organizational channel
to receive orders
 line of communication is direct between manager
and employee
 the chain of command is used to issue orders
 manager possesses adequate communication skill
 managers use formal communication lines only for
organizational purposes
 a command is authenticated as coming from a
manager

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THE MANAGEMENT
SCIENCE SCHOOL
Management science focuses specifically on
using scientific methods and mathematical
techniques to the development of
mathematical models.
These models help organizations to try out
various activities with the use of a computer.
Modeling can help managers locate the best
way to do things

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The Management Science School….
History:
World War II, Great Britain and then USA.
Formation of Operational Research (OR)
Team to solve complex problems in Warfare using
leading scientists.
The teams used computers to perform the thousands
of calculations involved in mathematical modeling.
After the war
Complicated industrial and transportation and
communication technologies brought problems that
could not be solved easily by conventional/usual
means.
Thus OR specialists to help managers come up with
answers to these new problems.

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The Management Science School….
OR procedures were formalized into the
management science school.
The management science school gained popularity
through two postwar phenomena.
 The development of high-speed computers and of
communications among computers provided the means
for tackling complex and large-scale organizational
problems.
Robert McNamara implemented a management
science approach at Ford Motor Company in the
1950s and 1960s, Where "crunching the numbers" is
the central way that management decisions are
reached and justified; a mixed team of specialists
analyze the problem and propose a course of action
to management (see below).

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The Manag.. Science Sch…. Robert McNamara…..
 1.Observe the system
 2. based on the observation the team constructs a
mathematical model that shows, in symbolic terms, all
relevant factors bearing on the problem and how they are
interrelated. And consequences of chaining the system can
be predicted
 3. deducing/assuming/reasoning: use the model to deduce
how the system will behave under conditions that have not
been observed but could be observed if the changes were
made
 By changing the values of the variables in the model (such
as increasing the cost of raw materials) and analyzing the
different equations of the model with a computer, the team
can determine the effects of each change.

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The Manag.. Science Sch…. Robert McNamara…..
 4. Testing : test the model by performing an experiment on
the actual system to see if the effects of change predicted
using the model actually occur when the changes are made.
 Eventually, the management science team presents
management with an objective basis for making a decision.
 Importance
 Management science forecasts the future based on
the past and present
 Managers can now deal with the "what if the future
looks like this?“
questions that previous management theories could
not handle.

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The Manag.. Science Sch…. Robert McNamara…..
 Limitations
 Mathematical modeling tends to ignore
relationships
 Emphasis on only the aspects of the organization
that can be captured in numbers, missing the
importance of people and relationships.

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INTEGRATING THE MANAGEMENT THEORIES
THE SYSTEM APPROACH
 A system is a number of interdependent parts
functioning as a whole for some purpose.
 The main premise /assertion/idea/basis of system
theory is :
 to understand fully the operation of an entity it must be
viewed as a system.
 the activity/modification of any segment of an
organization affects, in varying degrees, the activity of
every other segment. i.e. interrelatedness
 each part has a role that helps the whole to function

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INTEGRATING….. THE SYSTEM…
 To modern management the importance is
 Analysis is based on research data
 Addressees interrelatedness and interdisciplinary
among components of organization.
 because System theory integrates various specialized
fields so as the system as whole can be better
understood.
 Systems approach to management views
 the organization as a unified, purposeful system
composed of interrelated parts. THUS
 Systems oriented managers make decisions only after
they have identified the impact of these decisions on
other departments and on the entire organization.

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INTEGRATING….. THE SYSTEM…
 SUBSYSTEMS
 Are the parts that make up the whole of a system
 Interdependent subsystems such as production,
finance, and human resources etc.
 Each system in turn may be a subsystem of a still
larger whole.
 Thus a department is a subsystem of a plant, which
may be a subsystem of a company, which in turn may
be a subsystem of a conglomerate or an industry,
which again is a subsystem of the national economy,
which is a subsystem of the world system.
 Interdependent subsystems such as production,
finance, and human resources work toward synergy.
 SYNERGY: as separate departments within an
organization cooperate and interact, they become
more productive than if each were to act in isolation.

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INTEGRATING….. THE SYSTEM…
Types of systems
1.OPEN SYSTEM: constantly interacting with the
environment.
2. Closed system: not influenced and not interact with
the environment.
 All organizations interact with their environment, but
the extent to which they do so varies.
 SYSTEM BOUNDARY. Each system has a boundary
that separates it from its environment.
 In a closed system, the system boundary is rigid;
 in an open system, the boundary is more flexible.
 What are interrelated parts of a management system?

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INTEGRATING….. THE SYSTEM… Types…..
 Management system composed of interrelated
parts:
 Organizational input
 organizational process
 organizational output
 flow.
 A system has flows of information, materials, and
energy (including human energy). These
 enter the system from the environment as inputs
(material or human resources),
 undergo transformation processes within the system
(operations that alter them: technological and managerial
processes),
 exit the system as outputs (products or services),
 Feedback: reactions from the environment.
Feedback is the key to system controls.

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INTEGRATING….. THE SYSTEM… Types…..
 With the systems approach managers
 cannot function confined to organization chart
 must mesh/connect their department with the
whole organization /employees and departments
 have to communicate also with other organizations
as well.
 System theory does
 emphasize the dynamic and interrelated nature of
organizations and the management task.
 provides a framework to plan actions and anticipate
both immediate and far reaching consequences
 allows to understand unanticipated consequences
as they develop
 Entropy is the process that leads to decline.

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INTEGRATING THE MANAGEMENT THEORIES
THE CONTINGENCY APPR0ACH
The answer to any really engrossing question in economics is: ”It depends”. The task of the
economist, is to specify upon what it depends, and in what ways.
The Contingency Appr0ach/The Situational
Approach
 why methods highly effective in one situation failed to
work in other situations?
 Results differ because situations differ; a technique that
works in one case will not necessarily work in all cases.
 The contingency approach emphasized that
 what managers do in practice depends or is contingent
upon a given set of circumstances situation. ’’if-then’’
relationship. If this situational variable exist this is what the
manager will do.
 Example- experienced/skilled versus inexperienced workers

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INTEGRATING….. THE SYSTEM… Types…..
The premise is
 Although there is probably no one best way to solve
a management problem in any one organization,
there probably is one best way to solve any given
management problem in any one organization.
 What are the challenges / problems in
implementing the contingency approach?
 perceiving organizational situation as they
exist
 to Identify which technique will,
 under particular circumstances,
 at particular time,
best contribute to the attainment of management
goals.

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INTEGRATING….. THE SYSTEM… Types…..
 Then how does the contingency approach represent
an important turn in modern management theory?
 It portrays/ describes each set of organizational
relationships in its unique circumstances.
 Unique situation
 The contingency approach provides a framework for
integrating the knowledge of management thought.
 HOW?
 It allows the use of management practices using
traditional, behavioural, and systems view points
independently or in combination to deal with various
circumstances.
 It calls for fitting the structure of the organization
to various possible or chance events.

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INTEGRATING THE MANAGEMENT THEORIES
THE DYNAMIC ENGAGEMENT APPROCH
 The dynamic engagement approach recognizes that
an organization's environment is changing fast.
 Dynamic
 opposite of static
 continuous change, growth, and activity
 Engagement
 the opposite of detachment
 intense involvement with others.
 AN ERA OF DYNAMIC ENGAGEMENT. WHY? (The
need to have new ways of thinking about relationships
and time.)
1.Boundaries between cultures and nations are blurred and
2. New communications technology makes the world a "global
village,"
3.The scope of international and intercultural relationships is
rapidly expanding.

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INTEGRATING …..THE DYN. ENGA. ….
 Six different themes
 new organizational environments
 ethics and social responsibility
 globalization and management
 inventing and reinventing organizations
 cultures and multiculturalism
 Quality
 NEW ORGANIZATIONAL ENVIRONMENTS
 According to The dynamic engagement approach
 an organization's environment is not composed of a set of
fixed, impersonal forces.
 is a complex, dynamic web of people interacting with each
other.
 Thus in addition to their own concerns,
 understand what is important to other managers both within
their and at other organizations.
 The theory of competitive strategy,
 managers can influence conditions in an industry
when they interact as rivals, buyers, suppliers.

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ETHICS AND
SOCIAL RESPONSIBILITY
 Important ethical concepts
 Focus on values and excellence
 values that guide people in their organizations,
 the organization culture that embodies those values,
 and the values held by people outside the organization.
 managers must exercise moral courage by placing the value
of excellence at the top of their agendas.
 WHAT DOES SOCIAL RESPONSIBILITY IMPLIE ?
 GLOBALIZATION AND MANAGEMENT
 Easy connection even to the remotest corners
 managers are global citizens
 a "borderless" world where managers treat all customers as
"equidistant" from their organizations.

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INVENTING AND REINVENTING
ORGANIZATIONS
Search for ways to unleash the creative potential of
employees and themselves
Issues for managers to rethink about the traditional
standard organization structures
"Liberation management" challenges the kinds of rigid
organization structures that inhibit people's creativity.
 CULTURES AND MULTICULTURALISM
 various perspectives and values that people of different
cultural backgrounds bring to ones organizations are not
only a fact of life but a significant source of contributions.
 QUALITY
 Total Quality Management (TQM) : to provide products and
services that are responsible to strong customer and
competitive standards.

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INVENTING AND REINVENTING ORGANIZATIONS
 QM emphasizes achieving customer
satisfaction by providing high quality goods
and services.
 Reengineering the organization redesigns the
processes that are crucial to customer
satisfaction.