The document discusses two contemporary management perspectives: the system approach and contingency approach. The system approach views an organization as a set of interrelated parts that work together as a unified whole. It recognizes that decisions in one department impact other departments. The contingency approach suggests there is no universally optimal way to manage, and the best approach depends on situational factors like organization size, task routines, environmental uncertainty, and individual differences. It stresses that management must adapt to different situations.

1. SYSTEM AND CONTINGENCY
APPROACH
R.ArunKumar,AP/Mech,RIT

2. Contemporary approach:
 Most of the early approaches focused on managers’ concerns
inside the organisation.
 In 1960s, management researchers began to look what was
happening in the external environment outside the
boundaries of the organization.
R.ArunKumar,AP/Mech,RIT

3. Contemporary approach:
 Two contemporary management perspectives
1. System approach
2. Contingency approach
R.ArunKumar,AP/Mech,RIT

4. System theory
 Systems theory is a basic theory in the physical sciences but had
never been applied to organized human efforts.
 In 1938, Chester Barnard, a telephone company executive, first
wrote in his book, ‘The Functions of an Executive’, that an
organization functioned as a cooperative system.
R.ArunKumar,AP/Mech,RIT

5. System theory
 It wasn’t until the 1960s that management researchers began to
look more carefully at systems theory and how it related to
organizations.
R.ArunKumar,AP/Mech,RIT

6.  System – System is a set of interrelated and independent
parts arranged in a manner that produces a unified whole.
 Organization is made up of “interdependent factors” including
individuals, groups, attitudes, motives, formal structure,
interactions, goals, status and authority.
 Managers coordinates activities in all the parts of the
organization and they ensure that all the department work
together and achieve their goal.
 When a managers takes decision he/she has to consider its
impact on the other department as well.
R.ArunKumar,AP/Mech,RIT

7. Types of Systems
 Closed system – do not depend on environment
 Open system – Depend on environment
R.ArunKumar,AP/Mech,RIT

8.  For example, the systems approach recognizes that, no matter
how efficient the production department might be, the
marketing department better anticipate changes in
customer tastes and work with the product development
department in creating products customers want, or the
organization’s overall performance will suffer.
R.ArunKumar,AP/Mech,RIT

9.  In addition, the systems approach implies that decisions and
actions in one organizational area will affect other areas.
 For example, if the purchasing department doesn’t acquire
the right quantity and quality of inputs, the production
department won’t be able to do its job.
R.ArunKumar,AP/Mech,RIT

10.  The systems approach recognizes that organizations are not self-
contained.
 They rely on their environment for essential inputs and as outlets
to absorb their outputs.
 No organization can survive for long if it ignores government
regulations, suppliers relations, or the varied constituencies on
which it depends.
R.ArunKumar,AP/Mech,RIT

11. Contingency approach
 The contingency approach sometimes called the situational
approach says that organizations requires different ways of
managing.
 The early management theorists came up with management
principles that they generally assumed to be universally applicable.
R.ArunKumar,AP/Mech,RIT

12. Contingency approach
 Later research found exceptions to many of these principles.
 For example, division of labour is valuable and widely used,
but jobs can become too specialized.
 Bureaucracy is desirable in many situations, but in other
circumstances, other structural designs are more effective.
 Management is not based on simplistic principles to be
applied in all situations.
R.ArunKumar,AP/Mech,RIT

13.  Different and changing situations require managers to use
different approaches and techniques.
 A good way to describe contingency is “If this is the way my
situation is, then this is the best way for me to manage in this
situation.
 Management researchers continue working to identify these
situational variable.
R.ArunKumar,AP/Mech,RIT

14.  More than 100 different variables have been identified – it
represents those that are most widely used and gives you an idea of
what we mean by the term contingency variable.
 The primary value of the contingency approach is that it stresses
that there are no simplistic or universal rules for managers.
R.ArunKumar,AP/Mech,RIT

15. Four popular contingency variables:
1. Organization size – As size increase so the problem of
coordination.
2. Routine of task technology – e.g. leadership styles, structure of
an organization.
3. Environmental uncertainty – Customer requirement.
4. Individual differences – e.g. Motivation techniques
R.ArunKumar,AP/Mech,RIT