Northern University BangladeshReports on “System Approach and

Contingency Approach”Course Name: Industrial ManagementCourse Code: IPE 4101

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Submission Date: 07 - dec-2015

System Approach of Management

A system is a set of inter-connected and inter-related elements directed to achieve certain goals. This theory views organization as an organic and open system

Faculty : Dr. Moinul Bhuiyan, PhD, Japan

Associate Professor

Dept. of EEE, NUB

Ambarish Biswas (ID-EEE120200188)

Md. Aktaruzzaman (ID-EEE120100169)

Farhad Hossain (ID-EEE120200180)

Salman Bin Muzib (ID-CSE100200619)

composed of many sub-systems. As a system organization is composed of a number of sub-systems viz. production, supportive, maintenance, adaptive managerial, individuals and informal groups.

All these sub-systems operate in an interdependent and interactional relationship. The various subsystems or parts of an organization are linked with each other through communication, decisions, authority responsibility relationships, objectives, policies, procedures and other aspects of coordinating mechanism. Organizations as systems have a variety of goals. The important among them are survival, integration and adaptation with environment and growth.

The major features of the approach to the study of management may be summed up as under:

(1). A system consists of inter-related and interdependent parts.

(2) The approach emphases the study of the various parts in their inter-relationships rather thanin isolation from each other.

(3) The approach brings out the complexity of a real life management problem much more sharplythan any of other approaches.

(4) The approach may be utilized by any of the other approaches.

(5) The approach has been utilized in studying the function of complex organizations and has been utilized as the base for new kinds of organization.

The Systems Approach has an edge over the other approaches insofar as its closeness to reality is concerned. However the problem with the approach is its utter complexity particularly when it comes to a study of large and complex organizations. The conceptual framework of management provided by this approach is too abstract to be useful to practicing managers. The approach recognizes the input of environment but does not functionally relate it to management concepts and techniques.

Contribution of F. W. Taylor:F.W. Taylor is one of the founders (the other two are Max Weber and Henry

Fayol) of classical thought/classical theory of management. He suggested scientific approach to management also called scientific management theory. F. W. Taylor (1856-1915) is rightly treated as the father of scientific management. He suggested the principles of scientific management. His concept of scientific management developed into a movement and dominated the industrial management for several decades after him. His concepts and principles were refined and popularized by several of his followers, notable among them being Henry Gantt, The Gilberths and Emerson.

Principles of Scientific ManagementAccording to Taylor, scientific management in its essence consists of a

philosophy which results in a combination of four important underlying principles of management. First, the development of a true science, second, the scientific selection of the workers, third, their scientific education and development, Froth, intimate co-operation between management and their men. The basic principles of Taylor philosophy of scientific management are as noted below. These principles of scientific management are most crucial aspects of scientific management.

1. The development of 'One best way" of doing a job. This suggests the task of finding out the best method for achieving the objectives of a given job. The

standards are decided scientifically for Jobs and incentive wages were paid for all production above this standard. Here, job analysis and standardization of tools, equipment, machinery, etc. are required.

2. Scientific selection of workers and their development through proper training.

3. Scientific approach by management. The management has to develop a true science in all fields of work activity through scientific investigation and experiments.

4. Close co-operation of managers and workers (labour management relations) for better results and understandings.

5. Elimination of conflict between methods and men. The workers are likely to resist to new methods. This can be avoided by providing them an opportunity to earn more wages.

Benefits / Advantages of Scientific Management1. Application and use of scientific methods.

2. Wide scope for specialization and accurate planning.

3. Minimum wastages of materials, time and money.

4. Cordial relations between workers and management.

5. Benefits to workers (higher wages and less burden of work), management (cost reduction, better quality productions) and consumers (superior goods at lower prices)

Scientific management not only developed a rational approach to solving organizational problems but also contributed a great deal to the professionalization of management. Time and motion studies, scientific selection of workers, work design and one best way to doing a job are some new ideals suggested by Taylor and are responsible for the introduction of Many positive changes in the field of industrial/ production management.

F. W. Taylor’s Contribution to the Development of Management Thought / Science

The contribution of F. W. Taylor to management thought is as explained below:

1. Emphasis on rational thinking: Taylor suggested rational thinking on the part of management for raising efficiency and productivity. He wanted managements

to replace old methods and techniques by Modern methods which will raise productivity and offer benefits to all concerned parties. He was in favour of progressive, scientific and rational thinking on the part of management on all managerial problems. Such progressive outlook is essential for the introduction of new techniques and methods in the Management.

2. Introduction of better methods and techniques of production: F. W. Taylor suggested the importance of improved methods and techniques of production. Work-study techniques are his contribution to management thought. He suggested new methods after systematic study and research. Taylor recommended the use of new methods for raising overall efficiency and productivity.

3. Emphasis on planning and control of production: Taylor suggested the importance of production planning and control for high production, superior quality production and also for low cost production. He introduced the concept of production management in a systematic way.

4. Importance of personnel and personnel department: Taylor suggested the importance of manpower in management. He was in favour of progressive personnel policies for the creation of efficient and satisfied labour force. He suggested the need of personnel department and its importance. He favored incentive wage payment to workers.

5. Industrial fatigue and rest pauses: Taylor noted the nature of industrial fatigue and suggested the introduction of suitable rest pauses for removing such fatigue of workers. He wanted to reduce the burden of work on workers through the use of scientific methods.

6. Time and motion study: Taylor introduced new concepts like time study, motion study and work study in the field of industrial management such concepts are for the introduction of new methods which will be more quick, scientific and less troublesome to workers.

The positive view of scientific management was described by Taylor as "Science, not rule of thumb; Harmony, not discord; Co-operation, not individualism; maximum output in place of restricted output. The development of each man to his greatest efficiency and prosperity".

F.W. Taylor a rightly treated as father of scientific management. In fact, through his concept of scientific management, Taylor actually developed a new science of management which is applicable not only to management of industrial units but also to the management of all other business units. He suggested certain techniques which can be applied purposefully to all aspects of management of business activities. This is treated as Taylor’s unique contribution to management thought.

The fundamental principles suggested by F. W. Taylor in his scientific management can be treated as his contribution to management thought. In fact, Taylor suggested scientific attitude and a new philosophy for discarding old and outdated ideas and techniques. He was instrumental for the introduction of new ideas and techniques in the science of management. These ideas aid techniques are now accepted in theory as well as in practice.

Contingency Approach

Definition

Also sometimes called the situational approach.

There is no one universally applicable set of management principles

(rules) by which to manage organizations.

Organizations are individually different, face different situations

(contingency variables), and require different ways of managing.

Conceptual Model of the Contingency Approach

According to this model, the formal structure of an organization defines the

roles of its members in a specific way and thereby directs their behavior to a certain

degree. The performance of the organization depends on the degree to which these

role definitions enable members to cope with the requirements resulting from the

context of the organization. For example if there is strong competition and a high

degree of technological change, decisions about new products and marketing

strategies have to be changed frequently and be taken close to the market.

A formal structure with a high degree of centralization, specialization and

formalization would not fit to the requirements resulting from this situation; rather

roles defined by a low degree of these structural dimensions would enable members

to act in the required flexible way.

The method to analyze and assess these kinds of relationships is the

comparative quantitative analysis; in the most advanced stage a multi-level

quantitative analysis, assigning data to the level of the context, the organization and

its members. These variables are operationalized in quantitative indicators, and data

are collected by standardized questionnaires distributed to several members of each

organization under investigation and afterwards aggregated to different. However,

the basic idea of the situational contingency of a particular object on its context as

well as the idea that the performance of an institution depends on the fit between

its properties and its relevant context is still valid and of great heuristic value as it

suggests the critical examination of too early generalizations and asks for situational

differentiation.

CONCISE DESCRIPTION OF CONTINGENCY THEORY:

There are many forms of contingency theory. In a general sense, contingency

theories are a class of behavioral theory that contends that there is no one best way

of organizing / leading and that an organizational / leadership style that is effective

in some situations may not be successful in others. In other words: The optimal

organization, leadership style is contingent upon various internal and external

constraints.

Four important ideas of contingency theory are:

1. There is no universal or one best way to manage

2. The design of an organization and its subsystems must 'fit' with the

environment

3. Effective organizations not only have a proper 'fit' with the

environment but also between its subsystems

4. The needs of an organization are better satisfied when it is properly

designed and the management style is appropriate both to the tasks

undertaken and the nature of the work group.

There are also contingency theories that relate to decision making. According to

these models, the effectiveness of a decision procedure depends upon a number of

aspects of the situation: the importance of the decision quality and acceptance; the

amount of relevant information possessed by the leader and subordinates; the

likelihood that subordinates will accept an autocratic decision or cooperate in trying

to make a good decision if allowed to participate; the amount of disagreement

among subordinates with respect to their preferred alternatives.

An expanded view of contingency theory is that the structure of an

organization depends on the company's technology and environment and the

effectiveness of the management accounting system is contingent on the

organization's structure.

The location of information in relation to technology and environment has an

important influence on organization structure. In uncertain environments with non-

routine technology, information is frequently internal. Where environments are

certain, or where technology is routine, information is external.

The dimensions of structure and control include authority structure and

activities structure, i.e., rules and procedures that determine the discretion of

individuals. Authority relates to social power. In the contingency model,

decentralized authority is more appropriate where uncertain environments or non-

routine technology exist. Centralized authority is more appropriate when

environments are certain. The graphic illustration below reflects my interpretation of

these theoretical concepts.

The Functionalist View of Contingency Theory

Contingency theories from a functionalist perspective where the assumption is

that management control systems are developed, or adopted to aid in achieving

desired organizational goals and outcomes. The appropriate management

accounting system is contingent on the external environment, technology,

organizational structure, organizational size, organizational strategy and national

culture. The graphic below illustrates this functionalist perspective.

The Importance of Contingency Plans

Contingency Planning

A contingency plan is a plan devised for a specific situation when things could

go wrong. Contingency plans are often devised by governments or businesses who want to be prepared for anything that could happen.

Business and government contingency plans need to include planning for

marketing to gain stakeholder support and understanding. Stakeholders need to be

kept informed of the reasons for any changes, the vision of the end result and the

proposed plan for getting there. The level of stakeholders' importance and influence

should be considered when determining the amount of marketing required, the

timescales for implementation and completion, and the overall effectiveness of the

plan.

If time permits, input and consultation from the most influential stakeholders should

be incorporated into the building of any contingency plan as without acceptance from these people any plan will at best encounter limited success.

The goal of Contingency Planning is to mitigate business risks due to a mission

critical functional failure caused, directly or indirectly, by non-compliant hardware or

software, vendor, package, embedded device, supplier or external interface or

environment. With little time left, companies must quickly solidify backup strategies

for business units and technical teams.

Management is discovering, however, that contingency planning is not

necessarily intuitive. One financial institution described the process as a "tail

chasing" exercise because they could not determine where various aspects of the

plan began or ended. It is important, therefore, to understand how your organization

can build contingency plans that are both comprehensive enough to deal with

impending issues, yet practical enough to be clearly articulate and applied.

Contingency planning addresses all aspects of a given year 2000 failure across

an enterprise. These failures may include technology failures, power outages and the

inability of customers to acquire products or services. Planning teams must

accommodate the upward, downward or lateral ripple effect of any failure that of a

critical business function, regardless of that failure originates.

Contingency planning is a non-linear process that cannot be performed by a

single task force or business or business unit. The planning process must rather be

approached as a centrally coordinated, yet highly distributed series of facilitation

exercises. In order for management to successfully initiate a contingency planning

project, they must incorporate two key sets of deliverables; the bottom-up, tactical

portion of the plan and the top-down, business-driven component of the plan.

The bottom-up process assesses tactical impacts of a system problem, project

overrun, and data interface error or supply chain interruption. Project teams may

already by building bottom-up contingency plans to deal with localized year 2000

failures. But bottom-up planning does not consider business-driven priorities,

revenue continuity, enterprise-wide impacts or the ripple effect of a system or supply

chain failure. This is where top-down planning comes into play.

Top-down contingency planning deals with failures in mission critical functions

and the ability of business units to work around or contend with those failures to

ensure business continuity. This process, which readies businesses for potential

interruptions in ongoing operations, should be deployed across various business

units, infrastructure (telecommunications, power, facilities, etc.) teams and

executive committees.

Contingency (Situational) Approach comparison with other theories

Introduced in 1967, Fiedler's contingency theory was the first to specify how

situational factors interact with leader traits and behavior to influence leadership

effectiveness. The theory suggests that the "favorability" of the situation determines

the effectiveness of task- and person-oriented leader behavior.

Favorability is determined by

(1) The respect and trust that followers have for the leader;

(2) The extent to which subordinates' responsibilities can be structured and

performance measured;

(3) The control the leader has over subordinates' rewards. The situation is most

favorable when followers respect and trust the leader, the task is highly structured,

and the leader has control over rewards and punishments.

The advantages of contingency approach :

More complete information

More alternatives are generated

Acceptance of solutions are increased

The legitimacy of the solution is increased.

The disadvantages of contingency approach :

Minorities can dominate (more powerful)

Pressures to conform are applied by more powerful members

Time consuming

Responsibility for the solution is ambiguous.

The contingency approach to management is based on the idea that there is

no single best way to manage. Contingency refers to the immediate contingent

circumstances. Effective organizations must tailor their planning, organizing, leading,

and controlling to their particular circumstances. In other words, managers should

identify the conditions of a task, the requirements of the management job, and

people involved as parts of a complete management situation. The leaders must

then work to integrate all these facets into a solution that is most appropriate for a

specific circumstance.

THE END