BOH4M UNIT 1 Mr.

Dosman

Modern Management Theory: Quantitative, System and Contingency Approaches to Management!

Throughout history, there have been managers. Well, the reality is that way back in the day they were called
'leaders' or 'adventurers,' but as time went on the term 'manager' began to take hold. No one would ever think
Christopher Columbus 'managed' his way to the Americas or that George Washington 'managed' the U.S.
army. In many cases, these guys knew what they wanted to do or knew what they had to do and did it. Even
today, we typically do not talk about managers per say but rather leaders. 'Manager' has become more of an
adjective than a noun, describing what someone does or their role. 'Bill manages the department'; 'she's a great
manager'; 'he managed the team very well', etc.
What we have to understand is that a leader does indeed manage what they are responsible for. And, over
time, there have been multiple theories of management that have evolved and that these leaders use as a
guiding force behind their management or leadership philosophy. The three most recognized management
theories are:
The Quantitative Approach: This approach is centered on statistics and mathematical techniques -
sounds like a boatload of fun if you ask me.
The Systems Approach: As one could probably guess, this approach focuses on systems that, when put
together, make a whole unit, kind of like a jigsaw puzzle.
The Contingency Approach: This approach believes there is no one system or approach to managing an
organization. These guys believe you take it as it comes but plan to deal with issues if they pop up.
Anyone who has ever had a baby knows moms and dads have contingency plans all over the place just in
case junior gets sick, is hungry or needs a nap.

So in this lesson let's take a look at these different theories and how they shape how leaders (okay, managers)
manage these areas or companies they are responsible for. It's important to understand, though, that in one
company, all these different approaches can be used. There's not one that is better than another, just different,
and sometimes they have to be blended together for a company or organization to run.
Quantitative Approach
Okay, get out your slide rules and calculators, because that is what this approach uses as its guiding principles.
You see, the quantitative approach is solely reliant on statistics and data. The big word we are looking for
here is quantitative, which means the measurement of quantity or amount. So a bunch of really smart people
get together and they crunch and crunch data to decide how a business should run or be managed. Scientists
use this approach a great deal and, in many cases, so do accountants and finance people, mainly because their
world revolves around data. It is not glamorous or creative. Heck, it could even be said it isn't fun, but
someone has to do it, and each part of a company or organization needs people to use this approach.
Think about if you had a manufacturing company that made flying monkeys. Well, someone has to
statistically look at the data to make sure the monkeys are flying as far as they should and monitor if you are
producing any defective monkeys (and no one wants a defective monkey). This data, once it's gathered, is
presented to the company for review and action if needed.

The contributions of mathematicians in the field of management are significant. This has contributed
impressively in developing orderly thinking amongst managers. It has given exactness to the management
discipline. Its contributions and usefulness could hardly be over-emphasized. However, it can only be treated
as a tool in managerial practice

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Limitations:
There is no doubt that this approach helps in defining and solving complex problems resulting in orderly
thinking. But the critics of this approach regard it as too narrow since it is concerned merely with the
development of mathematical models and solutions for certain managerial problems.
This approach suffers from the following drawbacks:
1. It doesnt take into consideration the human element, which is an important part to management. (Can
our employees do it, how will they respond to the new quantity demands.)
2. In reality management decisions needs to be made quickly and without full information.
3. Decision making (controlling) is only one part of managerial activities, there are other elements, like
planning, organizing, and leading
4. Sometimes, the information available in the business for developing mathematical models are not up-
to date and may lead to wrong decision-making.

Systems Approach

Now let's talk a little about the systems approach. When I was younger, I used to play with Legos - those little
building blocks that I could make a house or car out of (okay, I thought it looked like a house or a car, but it
probably looked more like a squid that was in a train wreck). In many ways, the systems approach to
management is very much like Legos. The systems approach takes the viewpoint that a company is really an
interconnected group of systems that all work together (or should work together). The best way to view this
system is by thinking of a company as a machine. You have:
Inputs: Material, information or data that goes into the machine
Processes: Work that is done to the material, information or data while it's in the machine
Outputs: The final product that comes out of the machine
Okay, so in this system, managers see the company as one big machine that has to work together to take inputs
and make them outputs. As an example, let's look at a toaster. The systems approach to management believes
you put in bread, turn on the toaster and, when the process is done, toast comes out, hopefully not burned too
much. Their job or belief is to work with each part of the system to make sure the end result is what is needed
- what went in, what happened while it was in there and what it looked like when it came out.
To compare this to the quantitative approach, a manager that follows that approach would only want to know
data about how long the bread was in the toaster and the level of, well, toasting that happened when it came
out.
So we can begin to see how, in some companies, we have a blending of approaches to managing the work or
organization. One wants to keep and track data to see how the company is functioning, and in many cases, that
data can be presented to the manager that follows the systems approach to make changes needed if things are
not running right in the process.
The basic features of systems approach are as under:
1. A system consists of interacting elements. It is set of inter related and interdependent parts arranged in a
manner that produces a unified whole.
2. The various sub-systems should be studied in their inter- relationships rather, than in isolation from each
other.
3. An organisational system has a boundary that determines which parts are internal and which are
external.

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4. A system does not exist in a vacuum. It receives information, material and energy from other systems as
inputs. These inputs undergo a transformation process within the system and leave the system as output
to other systems.
5. An organisation is a dynamic system as it is responsive to its environment. It is vulnerable to change in
its environment.

This approach suffers from the following drawbacks:

1. It doesnt recognize the different part of an organization might have different goals and targets that at
times may conflict with one another
2. Decision making process will take a really long time if communication and agreement has to occur
cross all parts of the organization.

Contingency Approach

All this planning and thought is great, but you know what, stuff happens - systems break down, parts are not
correct, people call in sick and buildings slide into the ocean. Thus, it is the contingency approach to
management that takes this viewpoint into account by believing there is no one set way to manage a company.
In a nutshell, these are the people that believe the car will run, and we'll get to the destination, but we'll always
have a spare tire, lug wrench and cell phone in case what is supposed to happen (the car getting to where it is
supposed to go) does not happen.

Features of Contingency Approach:

Firstly, the contingency approach does not accept the universality of management theory. It stresses that there is
no one best way of doing things. Management is situation, and managers should explain objectives, design
organisations and prepare strategies, policies and plans according to prevailing circumstances. Secondly,
managerial policies and practices to be effective, must adjust to changes in environment.
Thirdly, it should improve diagnostic skills so as to anticipate and ready for environmental changes. Fourthly,
managers should have sufficient human relations skill to accommodate and stabilise change.
Finally, it should apply the contingency model in designing the organization, developing its information and
communication system, following proper leadership styles and preparing suitable objectives, policies, strategies,
programmes and practices. Thus, contingency approach looks to hold a great deal of promise for the future
development of management theory and practice.

Evaluation:

This approach takes a realistic view in management and organisation. It discards the universal validity of
principles. Executives are advised to be situation oriented and not stereo-typed. So executives become
innovative and creative.
On the other hands, this approach does not have theoretical base. An executive is expected to know all the
alternative courses of action before taking action in a situation which is not always feasible.

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BOH4M UNIT 1
Modern Management Theory: Quantitative, System and Contingency Approaches to Management!
Quantitative Approach to Management System Approach to Management
Definition:
This approach is centered on statistics and
mathematical techniques.
Advantages:
-cost effective
-can be time-tested to determine the significance of
their edge
-eliminate behavioral biases from the investment
process
-reduce operational risks
Disadvantages:
(i) This approach does not give any weight age to
human element which plays a dominant role in all
organizations.
(ii) In actual life executives have to take decisions
quickly without waiting for full information to
develop models.
(iii) The various mathematical tools help in decision
making. But decision making is one part of
managerial activities. Management has many other
functions than decision-making.
(iv) This approach supposes that all variables to
decision-making are measurable and inter-
dependent. This assumption is not realistic.
(v) Sometimes, the information available in the
business for developing mathematical models are not
up to date and may lead to wrong decision-making.
Mr. Dosman
Definition:
This approach focuses on systems that, when put
together, make a whole unit.
Advantages:
The systems approach to management introduces a
structured configuration where personnel work as a
combined unit. The system is efficient; it provides an
orderly plan of action with personnel having clearly
defined responsibilities that overlap and interlock to
ensure that absence of a member results in minimal
loss of productivity. By improving workflow, it frees
the management of the routine details of operations
management. Feedback provides a good basis of
control, leading to higher quality of products.
Overall, the approach improves strategic and
management decision-making due to the
interrelationships between the various subsystems.
Disadvantages:
1. It doesnt recognize the different part of an
organization might have different goals and
targets that at times may conflict with one
another
2. Decision making process will take a really long
time if communication and agreement has to
occur cross all parts of the organization.
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BOH4M UNIT 1 Mr. Dosman

Contingency Approaches to Management

Definition:

This approach believes there is no one system or approach to managing an organization. These guys believe
you take it as it comes but plan to deal with issues if they pop up.

Advantages:

The contingency approach enables management to change employee roles to meet the individual needs of a
given project quickly. The highly-tailored nature of project assignments also increases the chances a
company will have the right people in place to complete a job to the satisfaction of the client.

Disadvantages:

The contingency approach is also a reactive model of business management. This means personnel do not
plan ahead to mitigate the risks of a given project and only develop strategies to solve problems as needed.
This can result in a sudden lack of skilled personnel to meet a given project challenge.

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