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Page 1: Contemporary management theory



Page 2: Contemporary management theory

Contingency theory

is a class of behavioral theory that claims that there is no best way to organize a corporation, to lead a company, or to make decisions. Instead, the optimal course of action is contingent (dependent) upon the internal and external situation.

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Joan Woodward argued that technologies directly

determine differences in such organizational attributes as span of control, centralization of authority, and the formalization of rules and procedures.

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Some important contingencies for companies are listed below :

1. Technology 2. Suppliers and distributors 3. Consumer interest groups 4. Customers and competitors 5. Government 6. Unions

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Gareth Morgan describes the main ideas underlying contingency in a


Organizations are open systems that need careful management to satisfy and balance internal needs and to adapt to environmental circumstances

There is no one best way of organizing. The appropriate form depends on the kind of task or environment one is dealing with.

Management must be concerned, above all else, with achieving alignments and good fits

Different types or species of organizations are needed in different types of environments

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Fred Fiedler and the CONTINGENCY MODEL

focused on a contingency model of leadership in organizations. This model contains the relationship between leadership style and the favorableness of the situation. Situational favorableness was described by Fiedler in terms of three empirically derived dimensions

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The Three DimensionsSituations are favorable to the leader if all three of these dimensions are high.

leader-member relationship

the most important variable in determining the situation's favorableness

referring to the degree of mutual trust, respect and confidence between the leader and the subordinates.

the leader is generally accepted and respected by followers

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degree of task structure

the second most important input into the favorableness of the situation

referring to the extent to which group tasks are clear and structured

the task is very structured

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leader's position power

obtained through formal authority, which is the third most important dimension of the situation

referring to the power inherent in the leader's position itself

if a great deal of authority and power are formally attributed to the leader's position

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Management and Decision Making

The task of rational decision making is to select the alternative that results in the more preferred set of all the possible consequences. A specific organization has to deliberately determine and specify in appropriate detail and clear language its own goals, objectives, means, ends, and values.

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Managers and Decision Making Managers are constantly called upon to

make decisions in order to solve problems. Decision making and problem solving are ongoing processes of evaluating situations or problems, considering alternatives, making choices, and following them up with the necessary actions. Sometimes the decision-making process is extremely short, and mental reflection is essentially instantaneous. In other situations, the process can drag on for weeks or even months. The entire decision-making process is dependent upon the right information being available to the right people at the right times.

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Symptoms and their Real Causes

Symptoms Underlying Problem

Low profits and/or declining sales Poor market research

High costs Poor design process; poorly trained employees

Low morale Lack of communication between management and subordinates

High employee turnover Rate of pay too low; job design not suitable

High rate of absenteeism Employees believe that they are not valued

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Quite literally, organizations operate by people making decisions. A manager plans, organizes, staffs, leads, and controls her team by executing decisions. The effectiveness and quality of those decisions determine how successful a manager will be.

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The decision-making process involves the following steps:

1. Define the problem.

2. Identify limiting factors.

3. Develop potential alternatives.

4. Analyze the alternatives.

5. Select the best alternative.

6. Implement the decision.

7. Establish a control and evaluation system.

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Define the problem.

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Identify limiting factors. managers need to have

the ideal resources — information, time, personnel, equipment, and supplies — and identify any limiting factors. Realistically, managers operate in an environment that normally doesn't provide ideal resources.

satisfice — to make the best decision possible with the information, resources, and time available

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Develop potential alternatives. brainstorming - one of the best

known methods for developing alternatives is through

Brainstorming usually requires 30 minutes to an hour. The following specific rules should be followed during brainstorming sessions:

Concentrate on the problem at hand - keeps the discussion very specific

Entertain all ideas - the more ideas, the better. Encouragement to freely offer all thoughts on the subject is important and to present ideas no matter how ridiculous they seem

Refrain from allowing members to evaluate others' ideas on the spot. All judgments should be deferred until all thoughts are presented, and the group concurs on the best ideas.

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Analyze the alternatives. Determine the pros & cons

Perform a cost-benefit analysis

Weigh each factor important in the decision, ranking each alternative relative to its ability to meet each factor

The alternative should meet:

Feasibility — Can it be done?

Effectiveness — How well does it resolve the problem situation?

Consequences — What will be its costs (financial and non)to the organization?

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Select the best alternative. The best alternative is

the one that produces the most advantages and the fewest serious disadvantages, such as the alternative with the most pros and fewest cons

In cases where chances of success takes place, a manager simply selects the alternative with the highest probability of success.

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Implement the decision Managers are paid to make

decisions, but they are also paid to get results from these decisions. Positive results must follow decisions. Everyone involved with the decision must know his or her role in ensuring a successful outcome. To make certain that employees understand their roles, managers must thoughtfully devise programs, procedures, rules, or policies to help aid them in the problem-solving process.

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Establish a control & evaluation system Ongoing actions need

to be monitored. An evaluation system should provide feedback on how well the decision is being implemented, what the results are, and what adjustments are necessary to get the results that were intended when the solution was chosen

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Questions that need to be answered after a decision has been implemented

Was the original problem resolved?

If a manager's plan hasn't resolved the problem

Was the wrong alternative selected? Was the correct alternative selected, but

implemented improperly? Was the original problem identified incorrectly? Has the implemented alternative been given

enough time to be successful?

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Abraham MaslowHenry MintzbergFerdinand HerzbergDouglas McGregorWilliam Ouchi

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Maslow’s Hierarchy of Needs

a theory of psychological health predicated on fulfilling innate human needs in priority, culminating in self-actualization.

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According to Maslow, self-actualising people share the following qualities:

Truth: honest, reality, beauty, pure, clean and unadulterated completeness

Goodness: rightness, desirability, uprightness, benevolence, honesty

Beauty: rightness, form, aliveness, simplicity, richness, wholeness, perfection, completion,

Wholeness: unity, integration, tendency to oneness, interconnectedness, simplicity, organization, structure, order, not dissociated, synergy

Dichotomy-transcendence: acceptance, resolution, integration, polarities, opposites, contradictions

Aliveness: process, not-deadness, spontaneity, self-regulation, full-functioning

Unique: idiosyncrasy, individuality, non comparability, novelty

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Perfection: nothing superfluous, nothing lacking, everything in its right place, just-rightness, suitability, justice

Necessity: inevitability: it must be just that way, not changed in any slightest way

Completion: ending, justice, fulfillment Justice: fairness, suitability, disinterestedness,

nonpartiality, Order: lawfulness, rightness, perfectly arranged Simplicity: nakedness, abstract, essential

skeletal, bluntness Richness: differentiation, complexity, intricacy,

totality Effortlessness: ease; lack of strain, striving, or

difficulty Playfulness: fun, joy, amusement Self-sufficiency: autonomy, independence, self-


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Maslow described human needs as ordered in a prepotent hierarchy—a pressing need would need to be mostly satisfied before someone would give their attention to the next highest need.

Maslow described human needs as being relatively fluid—with many needs being present in a person simultaneously.

The hierarchy of human needs model suggests that human needs will only be fulfilled one level at a time.

According to Maslow's theory, when a human being ascends the levels of the hierarchy having fulfilled the needs in the hierarchy, one may eventually achieve self-actualization. However, late in his life, Maslow came to conclude that self-actualization was not an automatic outcome of satisfying the other human needs

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The first four levels are known as 'Deficit needs' or 'D-needs'. This means that if you don't have enough of one of those 4 needs, you'll have the feeling that you need to get it. But when you do get them then you feel content. These needs alone are not motivating.


Maslow used the term metamotivation to describe self actualized people who are driven by innate forces beyond their basic needs, so that they may explore and reach their full human potential.

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Management Roles

He argued that there are ten primary roles or behaviors that can be used to categorize a manager's different functions.

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As a manager, you probably fulfill many different roles every day: as well as leading your team, you might find yourself resolving a conflict, negotiating new contracts, representing your department at a board meeting, or approving a request for a new computer system. Put simply, you're constantly switching roles as tasks, situations, and expectations change.

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The Roles

Mintzberg published his Ten Management Roles in hisbook, "Mintzberg on Management: Inside our StrangeWorld of Organizations," in 1990.

The ten roles are:

Figurehead. Spokesperson.Leader. Entrepreneur.Liaison. Disturbance

Handler.Monitor. Resource Allocator.Disseminator. Negotiator.

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The Three Categories

Category Role

Interpersonal FigureheadLeaderLiaison

Informational MonitorDisseminatorSpokesperson

Decisional EntrepreneurDisturbance HandlerResource AllocatorNegotiator

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Interpersonal CategoryThe roles in this category involve providing information andideas. Figurehead - As a manager, you have social, ceremonial

and legal responsibilities. You're expected to be a source of inspiration. People look up to you as a person with authority, and as a figurehead.

Leader - This is where you provide leadership for your team, your department or perhaps your entire organization; and it's where you manage the performance and responsibilities of everyone in the group.

Liaison - Managers must communicate with internal and external contacts. You need to be able to network effectively on behalf of your organization.

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Informational Category

The roles in this category involve processing information.

Monitor - In this role, you regularly seek out information related to your organization and industry, looking for relevant changes in the environment. You also monitor your team, in terms of both their productivity, and their well-being.

Disseminator - This is where you communicate potentially useful information to your colleagues and your team.

Spokesperson - Managers represent and speak for their organization. In this role you're responsible for transmitting information about your organization and its goals to the people outside it.

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Decisional CategoryThe roles in this category involve using information.

Entrepreneur - As a manager, you create and control change within the organization. This means solving problems, generating new ideas, and implementing them.

Disturbance Handler - When an organization or team hits an unexpected roadblock, it's the manager who must take charge. You also need to help mediate disputes within it.

Resource Allocator - You'll also need to determine where organizational resources are best applied. This involves allocating funding, as well as assigning staff and other organizational resources.

Negotiator - You may be needed to take part in, and direct, important negotiations within your team, department, or organization.

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Statement Notat all




n1 When assigning tasks, I

consider people’s skills and interests.

2 I doubt myself and my ability to succeed.

3 I expect nothing less than top-notch results from people.

4 I expect higher quality work from my people than I sometimes deliver myself.

5 When someone is upset, I try to understand how he or she is feeling.

6 When circumstances change, I can struggle to know what to do.

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Statement Notat all

Rarely Sometimes



7 I think that personal feelings should be allowed to get in the way of performance and productivity.

8 I am highly motivated because I know I have what it takes to be successful.

9 Time spent worrying about team morale is time that’s wasted.

10 I get upset and worried quite often in the workplace.

11 My actions show people what I want from them.

12 When working with a team, I encourage everyone to work toward the same goal.

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at allRarel







13 I make exceptions to my rules and expectations – it’s easier than being the enforcer all the time!

14 I enjoy planning for the future.

15 I feel threatened when someone criticizes me.

16 I take time to learn what people need from me so they can be successful.

17 I’m optimistic about life, and I can see beyond temporary setbacks and problems.

18 I think that teams perform best when individuals keep doing the same tasks and perfecting them, instead of learning new skills and challenging themselves.

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You need to work hard on your leadership skills. The good news is that if you use more of these skills at work, at home, and in the community, you'll be a real asset to the people around you. You can do it – and now is a great time to start!


You're doing OK as a leader, but you have the potential to do much better. While you've built the foundation of effective leadership, this is your opportunity to improve your skills, and become the best you can be.


Excellent! You're well on your way to becoming a good leader. However, you can never be too good at leadership or too experienced

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Motivation-Hygiene Theory

To better understand employee attitudes and motivation, he performed studies to determine which factors in an employee’s work environment causes satisfaction or dissatisfaction.

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Two Factor Theory "The Dual Structure Theory"

Herzberg proposed the Motivation-Hygiene Theory, also known as the Two factor theory (1959) of job satisfaction. According to his theory, people are influenced by two sets of factors: those causing job satisfaction (and presumably motivation) and those causing job dissatisfaction. He called the satisfiers the motivators and the dissatisfiers the hygiene factors. Using the term hygiene in the sense that they are considered maintenance factors that are necessary to avoid dissatisfaction but that by themselves do not provide satisfaction.

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Motivator Factors (Leading to


Hygiene Factors (Leading to


•Achievement•Recognition•Work Itself•Responsibility•Promotion / Advancement•Growth

•Pay and Benefits•Company Policy and Administration•Relationship with the boss•Relationships with co-workers•Supervision•Work conditions The distinction between the two opposites

portray the two distinct human needs. First, there are physiological needs that can be fulfilled by money to purchase food and shelter. Second, there is the psychological need to achieve and grow ad this need is fulfilled by activities that cause one to grow.

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Theory x and Theory Y

McGregor identified the people belonging to the first category as the managers who would focus more on authoritative approach to management (Theory X), while those falling in the second category as the one who would focus more on self-control by the workers (Theory Y).

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Theory X management assumes employees are:

› inherently lazy› will avoid work if they can › they inherently dislike work› show little ambition without an enticing

incentive program › will avoid responsibility whenever they can

management believes that workers need to be closely supervised and comprehensive systems of controls developed

if the organizational goals are to be met, theory X managers rely heavily on threat and coercion to gain their employees' compliance

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Beliefs of this theory lead to:› mistrust› highly restrictive supervision› a punitive atmosphere› blaming someone in the end

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Theory Y management assumes employees to be:

› ambitious› self motivated› exercise self-control› enjoying their mental and physical work duties› creative problem solvers› viewing work as natural as play

theory Y managers believe that employees will learn to seek out and accept responsibility and to exercise self-control and self-direction in accomplishing objectives to which they are committed

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A Theory Y manager believes that:› most people will want to do well at work› the satisfaction of doing a good job is a strong

motivation› Theory Y as a positive set of beliefs about


HUMAN RESOURCE DEVELOPMENT includes:› managers communicating openly with

subordinates› minimizing the difference between superior-

subordinate relationships› creating a comfortable environment in which

subordinates can develop and use their abilities

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This theory would lead to:› trust› sharing of decision making› having subordinates have a say in

decisions that influence them

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Theory Z

Theory Z focused on increasing employee loyalty to the company by providing a job for life with a strong focus on the well-being of the employee, both on and off the job promoting stable employment, high productivity, and high employee morale and satisfaction

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Theory Z Japanese consensus management style

based on the assumptions that:› employees want to build cooperative

relationships with their employers, peers, and other employees in the firm; for this they

› require high degree of support in the form of secure employment and facilities for development of multiple skills through training and job rotation

› they value family life, culture and traditions, and social institutions as much as material success

› they have well-developed sense of dedication, moral obligations, and self-discipline

› they can make collective decisions through consensus

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Theory Z include:› an improvement of people skills› empowering employees› stimulating change› helping employees balance work with life

conflicts› improving ethical behavior

companies using these theories have shown improvements in:› turnover rates› productivity› effectiveness› efficiency› organizational behavior› job satisfaction

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