Industrial Management

1. Northern University Bangladesh
Reports on “System Approach and
Contingency Approach”
Course Name: Industrial Management
Course Code: IPE 4101
Submitted To:
Submitted By:
SubmissionDate:07-dec-2015
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)

2. 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
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 than
in isolation from each other.
(3) The approach brings out the complexity of a real life management problem
much more sharply
than 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

3. 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 Management
According 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

4. 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 Management
1. 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:

5. 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 theintroduction 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. Hesuggested certain techniques which

6. 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.

7. 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:

8. 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.

9. 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.

10. 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.

11. 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

12. 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 2000failure 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

13. 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.

15. 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 themanagement 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