BBA bank Wiring Observations Experiments Study Material Notes

BBA bank Wiring Observations Experiments Study Material Notes : Implication Hawthorne expertise Contribution of Barnard social system approach criticisms of Hawthorne experiments Decision theory approach contributions of herbert Simon Contributions of peter Drucker Management science approach Human Behaviour approach Open and closed systems Features of a system approach Implications of system approach :

MCom I Semester Employees Learn Culture Study Material Notes

Bank Wiring Observation Room Experiments

These experiments were carried on between November 1931 and May 1932 with a view to analyse the functioning of small group and its impact on individual behaviour. A group of ourteen male workers was employed in the bank wiring room: nine wiremen, three soldermen, and two inspectors. The work involved attaching wire to switches for certain equipment used in telephone exchange. Hourly wage rate for the personnel was based on average output of each worker while bonus was to be determined on the basis of average group output. The hypothesis was that in order to earn more, workers would produce more and in order to take the advantages of group bonus, they would help each other to produce more. However, this hypothesis did not hold valid. Workers decided the target for themselves which was lower than the company’s target, for example, group’s target for a day was connecting 6,600 terminals against 7,300 terminals set by the company. The workers gave following reasons for the restricted output:

bank Wiring Observations Experiments

1 Fear of Unemployment. The basic reasoning of workers was that if there would be more production per head, some of the workers would be put out of employment.

2. Fear of Raising the Standards. Most workers were convinced that once they had reached the standard rate of production, management would raise the standard of production reasoning that it must be easy to attain.

3. Protection of Slower Workers. The workers were friendly on the job as well as off the job. They appreciated the fact that they had family responsibility that required them to remain in the job. Since slower workers were likely to be retrenched, the faster workers protected them by not overproducing.

4. Satisfaction on the Part of Management. According to workers, management seemed to accept the lower production rate as no one was being fired or even reprimanded for restricted output.

The workers in the group set certain norms of behaviour including personal conduct. The workers whose behaviour was in conformity with both output norm and social norm were most preferred. This study suggested that informal relationships are an important factor in determining the human behaviour. During the course of experiments, workers were counselled for good human relations in the company’s plant. The counselling was in regard to personal adjustment, supervision, employee relations, and management-employee relations. The supervisors tended to understand and accept the problems of workers, and management tried to sense their feelings which were helpful in formulating the action for resolving management-employee conflicts.

bank Wiring Observations Experiments

Implications of Hawthorne Experiments

Hawthorne experiments have opened a new chapter in management by suggesting management through good human relations. Human relations involves motivating people in organisation in order to develop teamwork which effectively fulfils their needs and achieves organisational goals. Hawthorne experiments have tried to unearth those factors which are important for motivating people at workplace. The major findings of the experiments can be presented below:

1 Social Factors in Output. An organisation is basically influenced by social factors. In fact, Elton Mayo, one of the researchers engaged in Hawthorne experiments, has described an organisation as “a social system, a system of cliques, informal status system, rituals. and a mixture of logical, non-logical behaviour. *17 Thus, an organisation is not merely a formal structure of functions in which production is determined by the official prescription but the production norm is set by social norms. Since people are social beings, their social Characteristics determine the output and efficiency in the organisation. Economic rewards and productivity do not necessarily go together. Many non-economic rewards and sanctions affect the behaviour of workers and modify the impact of economic rewards. While motivating! workers, these factors should be taken into account.

2. Group Influence. Workers being social beings, they create groups which may be different from their official groups. In fact, groups are formed to overcome the shortcomings of formal relationships. The group determines the norm of behaviour of members. If a person resists a particular norm of group behaviour, he tries to change the group norm because any deviation from the group norm will make him unacceptable to the group. Thus, management cannot deal with workers as individuals but as members of work group subject to the influence of the group.

3. Conflict. The informal relations of workers create groups, and there may be conflict between organisation and groups so created. The conflict may be because of incompatible objectives of the two. However, groups may help to achieve organisational objectives by overcoming the restraining aspect of the formal relations which produce hindrance in productivity. Conflict may also arise because of maladjustment of workers and organisation. As the individual moves through the time and space within the organisation, there constantly arises the need for adjustment of the individual to the total structure. In the absence of such adjustment, either individual progresses upward at a rapid pace or the organisation structure itself may change over the time while the individual remains standstill. In either event, the change takes place in the position of the individual with respect to organisation structure, hence adjustment is required.

bank Wiring Observations Experiments

4. Leadership. Leadership is important for directing group behaviour, and this is one of the most important aspects of managerial functions. However, leadership cannot come only from a formally-appointed superior as held by earlier thinkers. There may be informal leader as shown by bank wiring experiments. In some areas, informal leader is more important in directing group behaviour because of his identity with group objective. However, a superior is more acceptable as a leader if his style is in accordance with human relations approach, that is, the superior should identify himself with the workers.

5. Supervision. Supervisory climate is an important aspect in determining efficiency and output. Friendly to the workers, attentive, genuinely concerned supervision affects the productivity favourably. For example, in the bank wiring room experiments, an entirely different supervisory climate–more friendly to the workers and less use of authority in issuing orders-existed which helped in productivity, while in regular departments, supervisors were concerned with maintaining order and control which produced inhibiting atmosphere and resulted in lower productivity.

6. Communication. The experiments show that communication is an important aspect of organization. Through communication, workers can be explained the rationality of a particular action, participation of workers can be sought in decision making concerning matter of their importance, problems faced by them can be identified, and attempts can le to remove these. A better understanding between management and workers can veloped by identifying their attitudes, opinions, and methods of working and taking suitable actions on these.

bank Wiring Observations Experiments

Criticisms of Hawthorne Experiments

Though Hawthorne experiments have opened a new chapter in management by emphasising the importance of social factors in output, it is not without fault. The experiments have been widely criticised by some behavioural scientists because of lack of scientific objectivity used in arriving at various conclusions. Some critics feel that there was bias and preconception on the part of the Harvard researchers. One writer developed a detailed comparison between the conclusions drawn by the researchers and the evidence presented, and found that their conclusions were almost entirely unsupported. He asked the question, “how it was possible for studies so nearly devoid of scientific merit, and conclusions so little supported by evidence, to gain so influential and respected a place within scientific disciplines and to hold this place for so long. 18 Following other criticisms have also been made against the Hawthorne experiments:

1 The Hawthorne researchers did not give sufficient attention to the attitudes that people bring with them to the workplace. They did not recognise such forces as class consciousness, the role of unions, and other extra-plant forces on attitudes of workers.

2. The Hawthorne plant was not a typical plant because it was a thoroughly unpleasant place to work. Therefore, the results could not be valid for others.

3. The Hawthorne studies look upon the worker as a means to an end, and not an end himself. They assume acceptance of management’s goals and look on the worker as someone to be manipulated by management. In spite of these shortcomings, Hawthorne experiments will be known for discovering the importance of human factor in managing an organisation. The experiments have stimulated many researchers to study the human problems in management.

bank Wiring Observations Experiments

SOCIAL SYSTEMS APPROACH

Social systems approach of management has extended the implications of human relations approach further. This approach was introduced by Vilfredo Pareto, a sociologist. His ideas were later developed by Chester Barnard who synthesised the concept of social systems approach. According to this approach, an organisation is essentially a cultural system composed of people who work in cooperation. As such, for achieving organisational goals, a cooperative system can be developed by understanding the behaviour of people in groups. The major features of this approach are as follows:

1 Organisation is a social system, a system of cultural relationships.

2. Relationships exist among the external as well as internal environment of the organisation.

3. Cooperation among group members is necessary for the achievement of organisational objectives.

4. For effective management, efforts should be made for establishing harmony between the goals of the organisation and the various groups therein.

bank Wiring Observations Experiments

Contributions of Barnard

The contributions of Chester Barnard to management, particularly social systems approach, are overwhelming. His book “The Functions of the Executive’ is regarded as the most influential DOOR on the management during the pre-modern management era.” His analysis of management is truly a social systems approach since, in order to comprehend and analyse the functions of executives, he has looked for their major tasks in the system in which they operate. In determining the tasks of executives, he has analysed the nature of cooperative social system, as he found non-logical factors also influencing human behaviour in the organisation. This is a marked departure from the earlier approach. The major contributions of Barnard can be presented as follows:

1 Concept of Organisation. Barnard suggests that classical concept of organisation does not fully explain the features of an organisation. He has defined formal organisation as a system of consciously coordinated activities of two or more persons. In his opinion, an organisation exists when the following three conditions are fulfilled: (there are persons able to communicate with each other: (1) they are willing to contribute to the action; and (t they attempt to accomplish a common purpose.

2.Formal and Informal Organisations. An organisations can be divided into two parts: formal and informal. The formal organisation has consciously coordinated interactions which have a deliberate and common purpose. On the other hand, the informal organisation refers to those social interactions which do not have consciously coordinated joint purpose. The informal organisation exists to overcome the problems of formal organisation. In fact, Barnard has suggested that executives should encourage the development of informal organisation to serve as a means of communication, to bring cohesion in the organisation. and to protect the individual from dominance and onslaught of the organisation. Both the formal and the informal organisations depend on each other and there is continuous interaction between the two. Therefore, in managing an organisation, the manager should take into account both types of organisations.

bank Wiring Observations Experiments

3. Elements of Organisation. According to Barnard, there are four elements of a formal organisation. These are: (1) a system of functionalisation so that people can specialise, that is, departmentation; (ii) a system of effective and efficient incentives so as to induce people to contribute to group action; (ii) a system of power which will lead group members to accept the decisions of the executives; and (iv) a system of logical decision making.

4. Authority. Barnard does not agree with the classical view that authority transcends from the top to down. He has given a new concept of authority which is termed as ‘acceptance theory of authority’ or ‘bottom-up authority’. In his opinion, a person does not obey an order because it has been given by a superior but he will accept a communication as being authoritative only when four conditions are met simultaneously: (0 he can understand the communication; (u) he believes that it is not inconsistent with the organisational purpose; (ut he believes it to be compatible with his personal interest as a whole; and (w) he is mentally and physically able to comply with it.

5. Functions of the Executive. Barnard has identified three types of functions which an executive performs in a formal organisation. These are: (0 maintenance of organisational communication through a system of organisation, that is, through formal interactions: 10 the securing of essential services from individuals in the organisation so as to achieve organisational purpose; and (UCI) the formulation and definition of organisational purpose.

6. Motivation. Apart from A part from financial incentives which have their own limitations in motivating people. Barnard has suggested a number of non-financial techniques for motivating Prominent among these are: opportunity of power and distinction, pride of partnership. pleasant organisation, participation, mutual supporting personal attitudes, and feeling of belonging-ness.

7. Executive Effectiveness. To make the executive effective requires a high order of responsible leadership. While cooperation is the creative process, leadership is the indispensable fulminator of its forces. Leadership is the most strategic factor in securing cooperation from the people. Executive leadership demands high calibre, technological competence, and technical and social skills. The executive leadership should not have preconceived notions and false ideologies. It should be above personal predilections and prejudices. The leadership is likely to commit the following four types of errors: (9 the oversimplification of the economy of organisational life; (ii) disregarding the reality of informal organisation and its necessity; (ii) an inversion of emphasis upon the objective and subjective aspects of authority; and (w) a confusion of morality with responsibility. Therefore, executive should take adequate care to overcome these problems.

8. Organisational Equilibrium. Organisational equilibrium refers to the matching of individual efforts and organisational efforts to satisfy individuals. The cooperation of Individuals with the organisation brings forth new activities. The organisation must afford satisfaction to individuals comprising it. This is required to maintain equilibrium in the organisation. This equilibrium is not static but dynamic. Demands and aspirations of individuals change and the organisation has to cope with the dynamic situation. The equilibrium of the organisation depends on the individuals working in it, other organisations, and the society as a whole. Thus, the organisation has to take into account the changes in the society. The organisational equilibrium can be perceived not only through logical appraisal but through analysis and intuition. Thus, many non-logical factors also enter into organisational analysis. Therefore, the reasons for an action should not only be logical but must also appeal to those attitudes, predilections, prejudices, emotions, and mental background that cover action.

bank Wiring Observations Experiments

The above contributions of Barnard show how he was concerned for the development of the organisation through social systems. His contributions are regarded quite high in management. This is evident by the ideas expressed by William Wolf about the book written by Barnard. The book is a sociology of management. Its style of writing was purposely pitched at a high level of discourse. Barnard was writing for social scientists, not for practitioners. He believed that the field of management was lacking in concepts and was clouded by ambiguous and even erroneous thinking. In a sense, he hoped that the functions would set things right and guide the social scientists to more realistic studies of organisation and management.

bank Wiring Observations Experiments

DECISION THEORY APPROACH

Decision theory approach looks at the basic problem of management around decision making-the selection of a suitable course of action out of the given alternatives. Major contributions in this approach have come from Simon. Other contributors are March, Cyert, Forrester, etc. The major emphasis of this approach is that decision making is the job of every manager. The manager is a decision maker and organisation is a decision-making unit. Therefore, the basic problem in managing is to make rational decision. From this point of view, decision theory approach has the following features:

1 Management is essentially decision making.

2. The members of the organisation are decision makers and problem solvers.

3. Organisation can be treated as a combination of various decision centres. The level and importance of organisational members are determined on the basis of Importance of decisions which they make.

4. Quality of decision affects the organisational effectiveness.

5. All factors affecting decision making are the subject-matter of study of management.

Besides processes and the techniques involved in decision making, other factors affecting the decisions are information systems, and social and psychological aspects of decision-makers. Thus, it covers the entire range of human activities in organisation as well as the macro conditions within which the organisation works.

bank Wiring Observations Experiments

Contributions of Herbert Simon

Herbert Simon, a Noble prize winner in Economics, has made significant contributions in the field of management particularly administrative behaviour and decision making. His contributions cover both social systems and decision theory approaches, more particularly the latter. Simon examined the principles of management given by Urwick and Gullick and found them contradictory and ambiguous. He described these principles as ‘myths’, ‘slogans’: and ‘homely proverbs’. Simon looked at organisational problems in totality of sociopsychological context and viewed that decision making takes place in this context. His major contributions to management are summarised below:21

1 Concept of Organisation. Simon has described an organisation as a complex network of decisional processes, all pointed towards their influence upon the behaviour of the operatives. He has viewed the organisation containing distribution and allocation of decisionmaking functions. According to him, physiology of the organisation is to be found in the process whereby organisation influences the decisions of its members, supplying these decisions with their devices. Thus, the best way to analyse an organisation is to find out where and by whom decisions are made.

2. Decision Making. Perhaps the greatest contribution of Simon is in the field of decision making. Decision making is the core of management and management is synonymous with decision making. This is why he has been referred to as decision theorist. According to him, the decision process can be broken into a series of three sequential steps. These are: (1) intelligent activity: the initial phase of searching the environment for conditions calling for decisions; (11) design activity: the phase of inventing, developing, and analysing possible course of action to take place; and (iii) choice activity: the final phase of actual choice selecting a particular course of action from those available.

3. Bounded Rationality. Simon is of the view that man is not completely rational. He has criticised the theories which are based on the assumptions of complete rationality. He has advocated the principle of bounded rationality. Accordingly, managers do not go for maximum satisfaction out of a decision but are satisfied with good enough satisfaction from a decision. chain is seldom an integrated or completely integrated one. The relationship between “ganisational activities and ultimate objectives is also not clear. Moreover, a simple ends sans chain analysis may not help in reaching accurate conclusion because what is an nd at one point of time or at one level of organisation might be a means at the other time or at other level of the organisation.

bank Wiring Observations Experiments

4. Administrative Man. Simon has given the concept of administrative man as the model of decision-making. The model is based on the following assumptions: ( Administrative man adopts satisficing approach in decision making rather than the maximising approach of economic man. (1) He perceives the world as a simplified model of real world. Thus, he remains content with simplification. (iii) He can make his choice without first determining all possible alternatives and without ascertaining that these are in fact all the alternatives. (iv) He is able to make decisions with relatively simple rule of thumb, or tricks of trade, or force of habit. The administrative man model describes the decision-making process of managers truly than alternative theory of economic man.

5. Organisational Communication. Simon has emphasised the role of communication in organisation. According to him, there are three stages in the communication process: initiation, transmittal, and receipt of information. There may be blockade of communication at any of these three stages. In order to overcome the problem of communication, he has emphasised the role of informal communication and has attached less importance to the formal network of authority.

bank Wiring Observations Experiments

Contributions of Peter Drucker

Among the contemporary management thinkers, Peter Drucker outshines all. He has varied experience and background which include psychology, sociology, law, and journalism. Through his consultancy assignments, he has developed solutions to number of managerial problems. Therefore, his contributions cover various approaches of management. He has written many books and papers. The more important books are: The Practice of Management (1954), Managing by Results (1964), The Effective Executive (1967). The Age of Discontinuity (1969), Management: Tasks, Responsibilities and Practices (1974), and Management Challenges for 21st Century (1999). The main contributions of Drucker can be presented as follows:

1 Nature of Management. Drucker is against bureaucratic management and has emphasised management with creative and innovative characteristics. The basic objective of management is to lead towards innovation. The concept of innovation is quite broad. It may include development of new ideas, combining of old and new ideas, adaptation of ideas from other fields or even to act as a catalyst and encouraging others to carry out innovation. He has treated management as a discipline as well as profession. As a discipline. management has its own tools, skills, techniques, and approaches. However, management is more a practice rather than a science. Thus, Drucker may be placed in ’empirical school of management’. While taking management as a profession, Drucker does not advocate to treat management as a strict profession but only a liberal profession which places more emphasis that managers should not only have skills and techniques but should have right perspective putting the things into practice. They should be good practitioners so that they can understand the social and cultural requirements of various organisations and countries

2. Management Functions. According to Drucker, management is the Gardan in itself, and no existence in itself. He sees management institution. It has no functions in itself, and no existence in itself. He be account. A manager has to act as administrator where he has to improve upon what already exists and is already known. He has to act as entrepreneur in redirecting the resources from areas of low or diminishing results to areas of high or increasing results. Thus, a manager has to perform several functions: setting of objectives, decision making, organising, and motivating. Drucker has attached great importance to the objective setung function and has specified eight areas where clear objective setting is required. These are: market standing, Innovation, productivity, physical and financial resources, profitabuty. managerial performance and development, worker performance and attitude, and public responsibility

bank Wiring Observations Experiments

3. Organisation Structure. Drucker has decried bureaucratic structure because of its too many dysfunctional effects. Therefore, it should be replaced. He has emphasised three basic characteristics of an effective organisation structure. These are: (9 enterprise should be organised for performance: (11) it should contain the least possible number of managerial levels; and (tt) it must make possible the training and testing of tomorrow’s top managersgiving responsibility to a manager while still he is young. He has identified three basic aspects in organising: activity analysis, decision analysis, and relation analysis. An activity analysis shows what work has to be performed, what kind of work should be put together, and what emphasis is to be given to each activity in the organisation structure. Decision analysis takes into account the four aspects of a decision: the degree of futurity in the decision, the impact of a decision over other functions, number of qualitative factors that enter into it, and whether the decision is periodically recurrent or rare. Such an analysis will determine the level at which the decision can be made. Relation analysis helps in defining the structure and also to give guidance in manning the structure.

4. Federalism. Drucker has advocated the concept of federalism. Federalism refers to centralised control in decentralised structure. Decentralised structure goes far beyond the delegation of authority. It creates a new constitution and new ordering principle. He has emphasised the close links between the decisions adopted by the top management on the one hand and by the autonomous unit on the other. This is just like a relationship between federal government and state governments. In a federal organisation, local managements should also participate in the decisions that set the limits of their own authority. Federalism has certain positive values over other methods of organising. These are as follows: (0 it sets the top management free to devote itself to its proper functions: (i) it defines the functions and responsibilities of the operating people; (ii) it creates a yardstick to measure their success and effectiveness in operating jobs; and (iv) it helps to resolve the problem of continuity through giving the managers of various units education in top management problems and functions while in an operating position.

5. Management by Objectives. Management by objectives (MBO) is regarded as one of the most important contributions of Drucker to the discipline of management. He introduced this concept in 1954. MBO has further been modified by Schleh which has been termed as ‘management by results’. MBO includes method of planning, setting standards, performance appraisal, and motivation. According to Drucker, MBO is not only a technique of management but it is a philosophy of managing. It transforms the basic assumptions of managing from exercising control to self-control. Therefore, in order to practise MBO, the organisation must change itself. MbO has become such a popular way of managing that today it is regarded as the most modern management approach. In fact, it has revolutionalised the management process.

6. Organisational Changes. Drucker has visualised rapid changes in the society because of rapid technological development. Though he is not resistant to change, he feels concerned for the rapid changes and their impact on human life. Normally, some changes can be absorbed by the organisations but not the rapid changes. Since rapid changes are occurring in the society, human beings should develop philosophy to face the changes and take them as challenges for making the society better. This can be done by developing dynamic organisations which are able to absorb changes much faster than static ones.

Drucker’s contributions have made tremendous impact on the management practices. His contributions have been recognised even by the management thinkers of Socialist Bloc. For example, Vishiani, a USSR management thinker, writes about Drucker as follows: “Drucker shows a certain foresightedness and understanding of the development prospects of modern production when he opposes the view that worker is no more than an appendage of machine. Moved by the desire to strengthen the position of capitalism, he endeavours to give due consideration also to some objective trends in production management. Drucker, therefore, tells the industrialists not to fear a limited participation of the workers in the management of production processes. He warns them that if they do not abandon that fear, the consequences may be fatal to them.”22 Drucker is perhaps the only Western management thinker who has attracted so much attention of the communist world.

bank Wiring Observations Experiments

MANAGEMENT SCIENCE APPROACH

Management science approach, also known as mathematical or quantitative measurement approach, visualises management as a logical entity, the action of which can be expressed in terms of mathematical symbols, relationships, and measurement data. The primary focus of this approach is the mathematical model. Through this device, managerial and other problems can be expressed in basic relationships and, where a given goal is sought, the model can be expressed in terms which optimise that goal. This approach draws many things from the decision theory approach and, in fact, provides many techniques for rational decision making. The major features of this approach are as follows:

1 Management is regarded as the problem-solving mechanism with the help of mathematical tools and techniques.

2.Management problems can be described in terms of mathematical symbols and data. Thus, every managerial activity can be quantified.

3. This approach covers decision-making, systems analysis, and some aspects of human behaviour.

4. Operations research, mathematical tools, simulation, models, etc., are the basic methodologies to solve managerial problems.

Management science approach is a fast developing one in analysing and understanding management. This has contributed significantly in developing orderly thinking in management which has provided exactness in management discipline. Various mathematical tools like sampling, linear programming, game theory, time series analysis, simulation, waiting line theory, etc., have provided more exactness in solving managerial problems. However, it is very difficult to call it a separate school of management because it does not provide the answer for the total managerial problems. Moreover, many managerial activities are not really capable of being quantified because of involvement of human beings who are governed by many irrational factors also.

bank Wiring Observations Experiments

HUMAN BEHAVIOUR APPROACH

Human behaviour approach is the outcome of the thoughts developed by behavioural scientists who have looked at the organisation as collectivity of people for certain specified objectives. Since management involves getting things done by people, the study of management must revolve around human behaviour. The approach, also known as ‘leadership’, ‘behavioural science’ or ‘human resource’ approach, brings to bear the existing and newly-developed theories and methods of the relevant behavioural sciences upon the study of human behaviour. In contrast to human relations approach which assumes that happy workers are productive workers, human behaviour approach has been goal and efficiency-oriented and considers the understanding of human behaviour to be the major means to that end. The major differences between human relations and human behaviour approaches have been presented in Chapter 22. The human behaviour approach emphasises human resources in an organisation more as compared to physical and financial resources. Since this approach studies human behaviour ranging from personality dynamics of individuals at one extreme to the relations of culture at the other, this can be divided into two groups: interpersonal behaviour approach and group behaviour approach. Writers on interpersonal behaviour approach are heavily oriented towards individual psychology while writers on group behaviour approach rely on social psychology and emphasise on organisational behaviour.

Among the many individual and social psychologists who have contributed to management are Maslow (need hierarchy), Herzberg (motivation-hygiene theory and job enrichment), McGregor (theory X and theory Y). Likert (management systems and linking pin model). Argyris (immaturity-maturity theory, integration of individual and organisational goals, and pattern of A B analysis), Blake and Mouton (managerial grid), Sayles (interpersonal behaviour), Bennis (organisational development). Fiedler (contingency model of leadership styles). Tannenbaum and others (continuum approach of leadership). Besides, notable contributions have come from those who have expanded a particular concept formulated earlier to make it more practicable. They include Leavitt, Stogdill, Vroom. Reddin, etc.

Apart from psychologists who have concentrated more on individual behaviour in organisation, significant contributions have come from sociologists who have studied human behaviour in group and have emphasised on group behaviour. Notable among them are Homans (human group). Bakke (fusion process), Lewin (group dynamics), and Katz and Kahn (social psychology of organisations). Some others have attempted to integrate the various views such as Dubin, Dalton, Selznick, etc.

Major conclusions of the contributions made by behaviourists can be presented as follows:

1 People do not dislike work. If they have been helped to establish objectives, they will want to achieve them. In fact, Job itself is a source of motivation and satisfaction to employees.

2. Most people can exercise a great deal of self-direction, self-control, and creativity than are required in their current job. Therefore, there remains untapped potential among them

3. The manager’s basic job is to use the untapped human potential in the service of the organisation.

4. The manager should create a healthy environment wherein all subordinates can contribute to the best of their capacity. The environment should provide a healthy. safe, comfortable, and convenient place to work.

5. The manager should provide for self-direction by subordinates and they must be encouraged to participate fully in all important matters.

6. Operating efficiency can be improved by expanding subordinate influence, self-direction, and self-control.

7. Work satisfaction may improve as a ‘by-product’ of subordinates making full use of their potential

bank Wiring Observations Experiments

SYSTEMS APPROACH

Perhaps systems approach has attracted the maximum attention of thinkers in management particularly in the present era. Though this approach is of comparatively recent origin, starting late 1960, it has assumed considerable importance in analysing the phenomena of management. It is an integrating approach which considers management in its totality based on empirical data. The basic idea of systems approach is that any object must rely on a method of analysis involving simultaneous variations of mutually dependent variables. This happens when systems approach is applied in management,

Features of a System

A system is an assemblage of things connected or interrelated so as to form a complex unity: a whole composed of parts and sub-parts in orderly arrangement according to some scheme or plan. This has been defined as “an organised or complex whole; an assemblage or combination of things or parts forming a complex unitary whole. “23 On the basis of this definition, various features of a system can be identified

1 A system is basically a combination of parts, subsystems. Each part may have various subparts. When a subsystem is considered as a system without reference to the system of which it is a part, it has the same features of a system. Thus, a hierarchy of systems and subsystems can be arranged. For example, the universe is a system of heavenly bodies which includes many subsystems of stars called galaxies. Within a galaxy, there is solar system. When we consider galaxy as a system, solar system may become a subsystem but we can also consider solar system consisting of so many planets. In the same way, an organisation is a system of mutually dependent parts, each of which may include many subsystems.

2. Parts and sub-parts of a system are mutually related to each other, some more, some less; some directly, some indirectly. This relationship is not natural, given, or unalterable in a social system. The relationship is in the context of the whole. Any change in one part may affect other parts also. Therefore, how various parts are given relationship is important for the functioning of the system.

3. A system is not merely the totality of parts and subparts but their arrangement is more important. The whole becomes greater than the total of individual parts because of the type of arrangement made in these parts and subparts. Thus, a system is an interdependent framework in which various parts are arranged.

4. A system can be identified because it has a boundary. In the case of physical system, this boundary is quite visible and, therefore, the system can be identified easily. However, in the case of social system, the boundary is not visible because it is not like a line or wall that functions to preserve or boundary maintains proper relationship that functions to preserve or to define what is inside. Instead, the maintains proper relationship between the system and its environment outside the system. Identification of this boundary in the case of human organisation facilitates the management of a system by differentiating those which can be controlled because they are the parts of the system and those which cannot be controlled because they are outside the system.

5. The boundary of a system classifies it into two parts: closed system and open system. organisms are open systems while all non-living systems are closed systems. The major differences between the two will be identified shortly.

6. System transforms inputs into outputs. This transformation process is essential of the survival of the system. There are three aspects involved in this transformation process: inputs, mediator, outputs. Inputs are taken from the environment, transformed into outputs, and given back to the environment. Various inputs may be in the form of information, money, materials, human resources, etc. Ouputs may be in the form of goods and services. The total relationship may be called as inputoutput process and system works as mediator in this process. However, in this process, the system restores some of the inputs taken from the environment. Restoring the inputs taken from the environment helps the sytem maintain its structure and avoid decay and death. Thus, the system can grow over the period of time. For example, a business organisation survives and grows over the period of time by earning profit in the process of transforming inputs into outputs. Profit is essential for the organisations to survive.

Open and Closed Systems

The boundary of a system classifies it into two parts: closed system and open system. All living organisms are open system while all non-living systems are closed system. The major differences between the two are as follows:

1 Closed systems are those that have no interaction with environment, that is, no outside system impinges on them or for which no outside systems are to be considered. Open systems are those that interact with their environment, that is, they have systems with which they relate, exchange, and communicate

2. Closed systems are self-contained and self-maintaining as they do not interact with the environment. Open systems interact with their environment and in this interaction, they import energy and export output. Because of this interaction, closed systems are rigid and static but open systems are dynamic and flexible as they are subject to change by environmental forces.

3. Closed systems are generally mechanical, for example, an automatic watch. Therefore, once they are set, they work. However, open systems are affected by environmental factors and they have to be adjusted according to environment. Thus, they require restructuring because of change in environment.

4. Closed systems are like close loop while open systems are characterised by negative entropy. They import more energy than is expanded or consumed. Thus, they can grow over the period of time. When this relationship is reversed, the open systems decline.

5. Open systems have feedback mechanism that helps them to maintain homoeostatis a kind of equilibrium. Homoeostatis is a process through which a system regulates Itself around a stable state. For example, human body works on the principle of homoeostatis. It maintains its temperature relatively at a constant level despite Variations in the environmental temperature. Similarly thermostat maintains this equilibrium. However, organisational equilibrium is not static. It, beings a dynamic system, gets feedback to maintain dynamic equilibrium. In closed systems, there is no such feedback mechanism.

The distinction between closed and open systems is there but really no system is a closed one but has some properties of open systems. The classification of various systems into closed and open is not very proper. Therefore, it is more appropriate to think systems in terms of the degree to which they are open or closed rather than using a dichotomy of open-close.

Features of Management as System

Under the systems approach, management is regarded as a system. It draws heavily from systems concepts. When systems concepts are applied to management, it is taken in the following ways:

1 Mangement as a Social System. Management can be considered as a system. Therefore, management has all the characteristics of a system as discussed above. However, management is a social system and unlike biological or mechanical systems, it has the characteristics of social systems. This concept of social sytems is quite different from cooperative social system as discussed earlier. Management as a system consists of many subsystems which are integrated to constitute an entity.

2. Management as Open System. Management, like any other social system, is an open system. It interacts with its environment. Out of this interaction, it takes various resources, allocates and combines these resources to produce desirable outputs which are exported to the environment. Thus, management works as input-ouput mediator. These features of management suggest that it is not free to decide the things on its own but the weightage has to be given to the environmental factors affecting the management of an organisation. Consideration is required at the levels of taking inputs, transforming them into ouputs, and exporting the outputs to the environment.

3. Adaptive. Organisation being an open system, its survival and growth in a dynamic environment demands on adaptive system which can continuously adjust to changing environment. Management tends to achieve environmental constancy by bringing the external world under control, or bringing internal modification of organisational functioning to meet the needs of the changing world. Since there is a provision of feedback mechanism, management can evaluate its performance and take corrective actions. In fact, the basic role of management is considered in terms of its adaptability to environment.

4. Dynamic. Management as a system is dynamic. It suggests that management attempts at achieving equilibrium in the organisation. However, this equilibrium is not static as happens in mechanical systems. Management moves towards growth and expansion by preserving some of the energy. Managerial effectiveness depends on this energy exchange. Therefore, it is not only the internal processing process that determines the effectiveness of management but also how it interacts with the changing environment in terms of talking inputs and giving outputs also determines its effectiveness. 5. Probabilistic. Management is probabilistic and not deterministic. A deterministic model always specifies the use of model in a condition with pre-determined results. Therefore, the outcome of an action can be predicted accurately. For example, if one wants to get the total of 250 and 500, he can press the button of a calculator and get 750. This is possible because the outcome is certain. In the case of probabilistic model, the outcome can be assigned only probability and not certainty. For example, if a coin is tossed, the probability of getting a head is 0.5. But one cannot say with certainty that there will be 50 heads out of tossing of a coin 100 times. Management being probabilistic points out only the probability and never the certainty of the performance and consequent results. Management has to function in the face of many dynamic variables and there cannot be absolute predictability of these variables. For example, we make forecast of future events but the forecast is relevant to a certain degree only and not to the level of certainty. This is what management takes into account.

5. Multilevel and Multidimensional. Systems approach of management points out the multilevel and multidimensional features of management. It has both macro and micro approach. At macro level, it can be applied to suprasystem, say, a business system as a whole. At micro level, it can be applied to an organisation. Even it can be applied to a subsystem of an organisation. However, it has the same characteristics at all these levels: suprasystem level, system level, subsystem level. Thus, both parts and whole are equally important in managing.

6. Multivariable. Management is multivariable and involves taking into account many variables simultaneously. This feature of management suggests that there is no simply cause-effect phenomenon, rather an event may be the result of so many variables which themselves are interrelated and interdependent. This interrelatedness and interdependence makes managing quite a complex process. Thus, it realises the complexity of management.

7. An Integrated Approach. Systems approach of management takes an integrated view of managing. It identifies the reason for a phenomenon in its wider context taking into account the total factors affecting the phenomenon. In other approaches, a particular phenomenon has been explained in terms of a single factor or cluster of factors. Management tries to integrate the various factors to find out the reasons behind a phenomenon. It emphasises how the management of one subsystem of the organisation should be taken in relation with others because other subsystems become environment for the given system. Thus, the problem in one subsystem should not be traced into the subsystem only but in a much wider context. This is true for the management of whole organisation also.

Implications of Systems Approach

Systems approach of management provides an integrated approach of managing. This considers management in its totality. The integrative approach of managing can be best understood by quoting Churchman on the system approach of management. He writes as follows:

The quotation aptly describes how management problems should be seen in an organisation, that is, by taking the totality of the organisation and not a part of it. This Implies that there should be integration of various forces affecting management. We have entered a period that forces us to find out more accurate answers to the questions involving the wholeness of an operation. This age of synthesis forces management to think out in new and different ways, as suggested by the systems approach. In this view, the whole is not merely a combination of its different parts but more than that. This more can be achieved by combining the various parts in a particular way.

Systems approach possesses the conceptual level of managerial analysis much higher than any other approach. It discards the simplistic approach of managerial analysis and suggests that management of an organisation must be consistent with the demands of organisational environment and the needs of its members. It provides a framework through which organisation-environment interaction can be analysed and facilitates decision making, since the system within which managers make decisions can be provided as a more explicit framework, and decision making is easier to handle.

Limitations of Systems Approach

Though systems approach possesses conceptual framework of much higher order as compared to other approaches, it may be emphasised that this in no way is the unified theory of management Systems approach came in a big way in managerial analysis and raised the hope of becoming a general and unified theory of management. A general and unified theory can be applied to all types of organisations, presenting their comprehensive analysis so that those who want to study organisations from different angles can derive knowledge. This was exactly expected of systems approach. However, this promise could not be fulfilled because systems approach suffers from two limitations.

1 Abstract Approach. It is often suggested that systems approach is too abstract to be of much use of practising managers. It merely indicates that various parts of the organisation are interrelated. Similarly, an organisation is a social system and, therefore, is related with other organisations in the society. This is true and significant for managing. But it fails to spell out precisely relationships among these. Therefore, its contribution to managing is limited. For example, it is one thing to say that economic forces trigger social, technical, and psychological changes in the organisation. But this is not enough for managing an organisation. What is required is a statement of what economic forces initiate what social, technological, and psychological changes.

2. Lack of Universality. Systems approach of management lacks universality and its precepts cannot be applied to all organisations. For example, systems approach provides modern structural forms, cybernetic system for control and communication. These systems are suitable for large and complex organisations but are not suitable for small organisations. Since most modern organisations are large and complex, it is argued that systems approach is applicable in general. This may be true but the role of a theory is not to prescribe actions for a particular category of organisations, rather, the theory should specify the relationships mong different variables which can be applied to all organisations.

CONTINGENCY OR SITUATIONAL APPROACH

Contingency or situational approach is an important addition to the paradigm of modern management theory and approach. In one way, this is an extension of systems approach.

The basic idea of contingency approach is that there cannot be a particular management action which will be suitable for all situations. Rather, an appropriate action is one which is designed on the basis of external environment and internal states and needs. Contingency theorists suggest that systems approach does not adequately spell out the precise relationship between organisation and its environment. Contingency approach tries to fill this gap by suggesting what should be done in response to an event in the environment.

Some researchers distinguish between contingency and situational approaches by suggesting that situational management implies that what a manager does depends on a given situation. Contingency approach, on the other hand, suggests an active interrelationship between the variables in a situation and the managerial actions devised. Thus, contingency approach takes into account not only given situations but also the influence of given solutions on behaviour patterns of an organisation. Despite these differences and emphasis on varying factors, themes of both the approaches are common. In fact, some authors believe that the term contingency is misleading and they should have used the term situational.25 Nevertheless, both terms are used interchangeably.

The basic theme of contingency view can be presented by quoting Tosi and Hammer. They say that:

1 Management action is contingent on certain action outside the system or subsystem as the case may be.

2. Organisational action should be based on the behaviour of action outside the system so that organisation should be integrated with the environment.

3. Because of the specific organisation-environment relationship, no action can be universal. It varies from situation to situation.

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Relationship between Systems and Contingency Approaches

Contingency approach has emerged out of the systems approach. Contingency theorists have accepted the basic tenets of systems approach. They accept the basic features of organisation-environment relationship and dynamic nature of organisation. However, they feel that systems approach is too abstract to apply for managerial action. This can be overcome by modifying systems framework and translating it into operational framework. Therefore, both approaches are related but they differ in certain context. A comparison between the two can be presented as follows:

1 Model of Human Being. The range of activities of human beings is different under two approaches. Systems approach usually employs a richer model of human beings than Contingency approach. The former takes into account the full range of human behaviour in organisation while contingency approach, by and large, is interested in structural aptation of organisation to its task environment. Therefore, contingency theorists talk mostly in terms of structural change in the organisation in response to a change in the environment.

2. Organisational Variables. Systems approach is very broad in considering the organisational variables. It tries to cover personal, social, technical, structural, and environmental variables. Therefore, managing involves establishing relationships among these variables and considering them in taking any action. Contingency approach, on the other hand, concentrates on structural adaptation of organisation. This approach tends to predict the ultimate outcome of a disturbance of the organisational equilibrium by a change in the task environment.

3. Evolution. Major contributors in sysetms approach have been social psychologists while sociologists have contributed to contingency approach. Contingency approach has been built up over systems approach. Therefore, it is possible that both approaches may merge or profoundly influence each other. In fact, there are signs of convergence of two approaches. This is likely to continue and systems approach may specify situations under which a particular type of organisation can function well. In fact, equifinality character of open system suggests that different strategies can be adopted by an organisation facing a particular problem. Similarly, contingency approach may provide the process by which the organisation may adapt to its task environment. Both these efforts are quite similar.

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Implications of Contingency Approach

Contingency approach is an important addition to the paradigm of modern theory of management. It is the sophisticated approach to understand the increasing complexity of organisations. It emphasises the multivariate nature of organisations and attempts to understand how organisations operate under varying conditions. The approach is directed towards suggesting organisational designs and managerial actions most appropriate to specific situations. The major implications of contingency approach are as follows:

1 Management is entirely situational and there is nothing like universal principles of management or one best way of doing a particular thing. What managers do depends on the circumstances and environment. Lorsch and Lawrence have described the implication of situational management as follows:

2. The approach suggests suitable alternatives for those managerial actions which are generally contingent upon external and internal environment such as organisational design, strategy formulation, decision systems, influence systems, leadership, and organisational improvement. In all these cases, action alternatives cannot be arranged in advance but have to be identified and adjusted according to the situations in which decisions in respect of these have to be made.

3. Conungency approach suggests that since organisation interacts with its environment, neither the organisation nor any of its subsystems is free to take Absolute action. Rather, it has to modify and adjust the actions subject to various Torces like social, political, technical, and economic. Besides, the actions should be according to the needs of internal state of the organisation or its subsystems. Thus, the basic problem of managing is to align the internal state with the external state.

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Limitations of Contingency Approach

In spite of the various contributions, contingency approach has not been acknowledged as a umed theory of management because it suffers from some limitations. These limitations are of the following nature:

1 Inadequate Literature. Contingency approach suffers from inadequately of literature. Therefore, it has not adequately spelled out various types of actions which can be taken under different situations. It is not sufficient to say that ‘managerial action depends on the situation. The approach should provide if this is the situation, this action can be taken.’. Unless this is done, the approach cannot offer much assistance to the practice of management. No doubt, researches have been conducted in this direction but, by and large, they have not satisfied the needs of managers.

2. Complex. The suggestion of the approach is very simple, that is, managers should do according to the needs of the situation. However, when put into practice, this becomes very complex. Determination of situation in which managerial action is to be taken involves analysis of a large number of variables with multifarious dimensions. Therefore, there is a possibility that managers, who are always short of time, may ignore the thorough analysis of all these variables and may resort to short-cut and easier way.

3. Difficult Empirical Testing. Contingency approach, being complex, presents problems in testing the precepts of the theory. For empirical testing of a theory, it is necessary that some methodology is available. No doubt, methodology is available but because of the involvement of too many factors, testing becomes difficult. For example, contingency theory suggests that greater the degree of congruence between various parts of organisational components, the more effective will be organisational behaviour at various levels. This lacks the empirical validity and hence cannot be adopted to managerial actions.

4. Reactive not Proactive. Contingency approach is basically reactive in nature. If merely suggests what managers can do in a given situation. For a given organisation, suprasystem constitutes environment and management can be applied to suprasystem also. Therefore, managers are responsible to manage the environment in such a way that they avoid the undesirable aspects of environment. Since the managers are quite powerful in the society. they must be in a position to provide a sense of direction and guidance through innovative and creative efforts specially in coping with the environmental changes.

No doubt, these limitations are valid, but the situation remains that at micro level. managers have to manage according to contingency approach. They should not ignore the importance of taking actions according to the needs of the situations. For analysing the situations, they will have to use their highest skills.

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DISCUSSION QUESTIONS

1 “There is a confusion in management theory. This confusion has also been heightened by the tendency for many newcomers in the field to cast aside significant observations and analyses of the past on the grounds they are a priori in nature.” Discuss this statement and trace out reasons for management theory jungle.

2. Assess the contributions of scientific management to the development of management thought. How did Taylor propose to modify the functioning of foreman?

3. Scientific management involves in its essence complete mental revolution on  he part of the workers and an equally complete mental revolution on the part of management.” Examine this statement

4. Assess the contributions of Henry Fayol to management thought.

5. In what respect have Fayol’s principles of management resulted in contributions to management mehods that are different from the techniques of Taylor’s scientific management?

6. Discuss the contributions of ‘Hawthorne Experiments in the development of managerial thinking. How did behavioural scientists modify the basic findings of ‘Hawthorne Experiment?

7. Assess the contributions of Barnard and Simon to management thought.

8. Assess the contributions of Peter F. Drucker in the development of8. management.

9. What do you understand by a system? Discuss management as a system bringing out its basic features as such.

10. Bring out the significance of the statement, ‘effective management is always contingency or situational management.’ How does systems approach of management differ from contingency approach?

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Case: Farm Equipment Limited

Farm Equipment Limited (FEL) is engaged in manufacturing farm equipment of different types. It markets its equipment through a network of distributors located nation-wide. Besides, it also exports its equipment to different countries. The Chairman of the company is quite satisfied with performance of the company. One day, a meeting of distributors held at the company’s headquarters. In the meeting, the Chairman also participated. After some discussion about the distribution strategy, almost all distributors urged the Chairman to introduce some new models to satisfy the changing demands of customers. The Chairman who had engineering background recognised the implications of distributors’ ddestions but suggested that Introduction of the new models would require heavy

production line would be very costly. His argument was, “The company has been quite successful even with a limited number of models. Therefore, instead of introducing new models, it would be more appropriate to cut the cost of production of the existing models and reduce their price. After all that customers want is value for their money.” With this argument, the Chairman decided not to introduce new models but insisted to cut the cost and price of the existing models. However, he agreed to seek the opinion of a consultant to test the validity of his decision.

QUESTIONS

1 It is often said that to be successful, an organisation must be an open system. What management implications, does this statement have and how can this statement be applied in this case?

2. Suppose that you are required to work as a consultant to FEL, what suggestions will you give to the company and why? What additional information will you require from the company to make your suggestions?

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