Friday, August 15, 2008

Introduction to Public Management: Integrative Management Theories

by Alan S. Cajes

Integrative Management Theories

The open-systems theory, contingency theory, organizational development approach, industrial humanism, and the limited rationality theory are generally referred to as the integrative approaches to management. These theories attempt to study organizations holistically as distinguished from the “piece-meal” approach of earlier theories like the bureaucratic model, scientific management, administration school, human relations resources school.

Open-Systems Theory

The techniques used in public management come from the “systems approach to problem solving[1].” The basic idea of the systems approach is the interrelationship between the internal and external environment of an organization. The internal environment includes the processes, machines, equipments, people, managers, etc. while the external environmental generally covers the inputs or raw materials that the organization uses, the outputs or what the organization produces, and the stakeholders such as the customers, suppliers, etc. Any change in the internal or external environment will have an impact on the whole organization.

When the ISO standards, for instance, became widely accepted in the 90s, businesses in the country adopted and instituted the standards of ISO 9000 and 14000 in their respective organizations. Here, the demand of the external environment for high-quality and environment-friendly products and services required business organizations to modify their internal processes.

Under the open-systems theory, organizations are viewed as sets of “variables that are interrelated in such a way that changes in one variable effect changes in other variables[2].” This theory basically claims that organizations exhibit similar characteristics such as the following: 

  • “As open systems, organizations constantly seek and import resources (inputs) in both human and material form and transform these inputs into products and services, using internal social and technological processes (throughputs).
  • “Open systems export their products to the external environment, and these outputs usually become the inputs of other organizations.
  • “Organization structures develop around patterned activities that form stable and predictable input, throughput, and output cycles.
  • “Over time, structural differentiation and task specialization are common system responses to the search for resources and adaptiveness, and, as the organization becomes more complex, managerial structures for coordination and control become more elaborate.
  • “Feedback, in the form of information about environmental responses to organizational activities (outputs), is used to keep the system on course with regard to its goals and to evaluate the performance of the organization and its sub-units.
  • “Open systems seek equilibrium or a stable state, both internally and in relation to external forces, and they achieve equilibrium through a constant process of adaptation to their environments[3].”
The open-systems theory is inspired by recent developments in the physical sciences, particularly theoretical physics and ecology. The organizational characteristics shown above, for instance, are directly related to the characteristics of natural processes like the water and nitrogen cycles. In the same way that there are models used in natural resources management, open-systems organizations can also be studied through models. The use of techniques such as inventory controls and just-in-time approaches help managers in predicting and controlling organizational performance. These techniques fall under the field of total quality management (TQM), which is one of the recent and notable approaches under the systems-theory. 

Contingency Theory 

The situational or contingency theory developed in the late 1950s. It denies the claim that there is a single best way of managing organizations because of the various and shifting variables or contingencies that will affect the needs and operation of an organization. Management approach, therefore, needs to change or adapt to the changing business factors.

In terms of organizational structure, the theory stresses the importance of the organization’s size, the technology it uses, the environment where the organization operates, etc. These factors vary from one organization to another, as well as from one part of the organization to another. Thus, there is no one best way to structure an organization. Since the various parts of an organization are influenced by contingencies, they may need to be structured differently.

The theory emphasizes that managers have little or no control over internal and external factors that may affect their organization. Although managers can strategize on how to respond to such factors, they always face the risk that the organization may not be able to produce what is expected.

Minimizing risk through contingency planning is a key organizational approach under the contingency theory. This involves the avoidance or reduction of fire-fighting approaches, which often divert an organization’s resources and focus away from the intended course of activities. One way by which a manager could minimize business risks is by manipulating or influencing the organization’s external contingencies by advertising and marketing interventions, entering into partnerships with government and industry associations, etc.

An important contribution of the contingency to the field of management is the implied need for managers to continually search for practices and techniques that they can use in responding to specific organizational situations. Thus, the need for organizations to build their knowledge bases using appropriate information management systems, including project and process monitoring systems.

Organization Development

The basic proposition of this approach to management is that organizations are changeable. Thus an organization can solve its problems by effecting changes or improvements in the parts of the organization. Most of the strategies and techniques under this approach “focus on motivation, morale and performance and can include group dynamics, role playing, critical incidents research, participative management, organizational learning and development, sensitivity training, group encounters, conflict resolution and communication techniques[4].”
Organization development (OD) involves four basic phases, namely, diagnostic, action planning, implementation, and evaluation. In the diagnostic phase, “an OD specialist works with management to define clearly the reasons for the problem and to decide which organizational characteristics are involved[5].” The action-planning phase involves the formulation of the proposed strategy or intervention to address the identified problem. In this phase, an OD specialist may use focused-group discussions involving the key stakeholders of the problem to determine the “most important points of intended impact or leverage[6].” In the implementation phase, an OD specialist uses applicable tools and techniques to solve the identified problem. In the last phase, an OD specialist, together with the key stakeholders, reviews the implementation of the OD strategy or intervention to assess its effectiveness vis-à-vis the desired outcome.

OD specifically aims to formulate the strategy or intervention needed to produce change(s) in behavior of the organization or parts of the organization. Its general objective is “to create an ongoing organizational capacity to solve problems[7].”

Industrial Humanism

Industrial humanism, following William G. Scott and Terence R. Mitchell[8], uses “social-psychological concepts and research findings to the design of jobs and the conduct of the managerial process[9].” The proponents of this theory claim that “aspects of the formal structure such as depersonalization, task specialization, and close supervision alienate and frustrate many workers, with resulting adverse effects on performance[10].”

Industrial humanism or the organizational psychology approach focuses on “problems associated with understanding and improving the social-psychological interface between the worker and the organization[11].” Its basic assumptions include the following: 

  • “The average employee wants and will respond positively to work that is interesting and also allows some discretion and the opportunity to shape his or her work environment;
  • “In many cases, jobs can be redesigned so as to satisfy basic psychological needs;
  • “Close supervision and control-oriented administrative structures do not automatically produce efficiency;
  • “Tightly centralized decision-making in a rigidly hierarchical format often causes workers to feel powerless and subject to constant manipulation, and
  • “Authoritarian management prevents the healthy psychological development of the person; over the long run, it fails to produce the desired contributions to organizational efforts[12].”
Limited Rationality Theory

Herbert Simon propounded this theory as a reaction to the rational-comprehensive model, which assumes that decision-makers have complete information and can make informed and intelligent decisions all the time. Simon’s alternative model contains the following assumptions, which are opposed to those of the rational-comprehensive model: 

  • “Organizational actors frequently do not agree on basic values, goals, and outcome preferences and, therefore, these are often vague and contradictory;
  • “Decision makers typically do not know all of the possible alternatives available or their consequences;
  • “More often than not, managers respond to problems on the basis of preconceived notions and habitual patterns;
  • “The motives and values which come together to define a problem and structure the search for solutions have their roots in group-based perspectives as opposed to an organizational point of view, and
  • “Organizational decision makers never have perfect information and they have, for technical and psychological reasons, only a limited capacity to analyze the information they have.[13]
The value of Simon’s model may be expressed in this way: Since decision makers have limited rationality, the structure and processes of an organization are given due importance because they help in increasing people’s organizational rationality. Workers, for instance, bring in competencies in their workplaces, thereby helping the organization solve work-related problems. In turn, an organization could help improve the competencies of workers through training programs and other forms of interventions. This process would result in improved rationality both at the individual and organizational levels.

[1] Ibid., 63
[2] Koya Azumi and Gerald Hage, Organizational Systems (Lexington, Mass.: Heath, 1972), 11 quoted by Felix A. Negro and Lloyd G. Nigro, Modern Public Administration, 123
[3] Felix A. Negro and Lloyd G. Nigro, Modern Public Administration, 123
[4] Division for Public Economics and Public Administration, Department of Economics and Social Affairs, Rethinking Public Administration: An Overview, 64
[5] Felix A. Negro and Lloyd G. Nigro, Modern Public Administration, 122
[6] Ibid.
[7] Ibid.
[8] See William G. Scott and Terence R. Mitchell, Organization Theory: A Structural and Behavioral Analysis, rev. ed. (Homewood, III.: the Dorsey Press, 1972), 27-29.
[9] Felix A. Negro and Lloyd G. Nigro, Modern Public Administration, 120
[10] Ibid.
[11] Ibid.
[12] Ibid. 121
[13] Ibid. 119

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