Modern Theory of Management

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  • 0:07 Manage Is an Adjective
  • 2:16 Quantitative Approach
  • 3:24 Systems Approach
  • 5:18 Contingency Approach
  • 7:26 Summary
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Lesson Transcript
Instructor: Rob Wengrzyn
Modern management theory has changed the way managers look at their jobs. Advancements and refinements in management theory and practice have enabled managers and managerial systems to evolve. In this lesson, we will look at modern management theories.

'Manager' Is an Adjective

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 se 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.

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.

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