Modern Theory: Modern Management Theory

Modern theory of management theory focuses on the complex issues of the organization and the individuals working in that organization. It highlights the different needs, wants, aspirations, motives and potentials of the employees. Thus, the universal applicability of management principles is difficult to practice in real life situations. New and sophisticated strategies should be formulated for resolving the issues related to employees and the organization.

The modern management theory portrays the view-point of the employees against view of ‘rational economic man’ defined in the classical theory and the view of ‘social person’ explained in the neoclassical theory. The modern management theory came into existence in the year 1950. The modern management approach is viewed as an enhancement to the earlier discussed management theories. Thinkers of modern management and their contribution are as follows:

  1. Management Science Theory.
  2. Social System Theory.
  3. Decision-Making Theory.

Management Science Theory

Management science is often mistaken for the scientific management of classical theory. The theory of management science is also termed as quantitative approach. The classical management theorist developed various scientific management techniques. The management science approach has emerged from some of techniques identified by the classical management thinkers.

Due to complex situations faced by the modern day managers, they are expected to have updated and advanced information for making effective and quick decisions. Quantitative techniques are used in the management science approach for effective decision-making. Many quantitative tools are developed for analyzing the information and with the aid of high speed computers complicated calculations can now be easily done.

The Quantitative Management or Mathematical School stresses on the fact that decision-making or organizing are rational processes that are carried out in every organization. This process can be conveyed with the help of mathematical symbols and relationships.

Russell L. Ackoff is recognized as one of the most prominent contributors of School of Management Science. F.W.Lanchester and Thomas A. Edison are other contributors in the field of Operational Research.

The quantitative school measures the problems, evaluates the answer to the problems, examines the solution before selecting the most feasible one and then finally suggests it. the decisions are the best and perfect in comparision with the decisions in the behavioural approach where the decisions are ‘satisfying’ in nature. This approach does not include any personal prejudices, opinions, emotions and instinct.

Social System Theory

Social system theory was founded by a sociologist named, Vilfredo Pareto. Social systems approach is an extension of human relations approach. Pareto’s concept was further development by Chester Barnard, who combined the social systems approach with the human relations approach. This concept considers and organization as a system based on cultures, where people from different backgrounds work with cooperation and harmony.

This system of formal organisation is different from the authority based management concept. Formal organization is a system of consciously coordinated actions working towards achieving mutual organizational objectives. According to this approach, people who are a part of a formal organization work together in cooperation, share rewards and also help each other in achieving the overall organisational goals. Social systems theory is formal in nature. It shares a lot of similarity with the behavioural approach which is against the concept of an “economic man”. It views an organization as a social organism which is liable to the pressures and struggles of the cultural environment. It studies and analyses the impact of social behaviour of an individual and behaviour of a group on management concepts.

Decision-Making Theory

The decision-making theory concentrates on the managerial decision-making process in an organization. It considers it as a central management task of prime importance. All the functions of management are based on sound decision-making. Herbert A. Simon, a lending supporter of decision theory school, considers “managing” and “decision-making” as similar concepts.