Management Concepts has been a long-time respected leader within the Federal government. Their expertise in the area of management and teaching has made them leaders in the field of management studies. Their long standing association with the American Enterprise Network and other similar groups have solidified their position as the top choice in management consulting. In fact, in some cases, they are considered the best in the industry.
Management Concepts has also earned an enviable reputation as an innovator in the business realm. They have produced a series of unique management concepts that have become the industry standard. In addition, the company has repeatedly proven their abilities to meet the needs and expectations of their clients. In doing so, they have worked their way into a number of “top industries,” including aerospace and defense, software development, energy, communications, banking, and more. To date, the company continues to be at the forefront of scientific management theory and application, being viewed as the leading authority in their respective fields.
One of the most innovative and influential management concepts developed by Fiedler and his associates is contingency management theory. Contingency management theory is the guiding principle behind contingency planning – a sound management approach to addressing potential problems before they occur. The approach utilizes a structured, repeatable process that systematically addresses problems as they arise instead of waiting for them to arise in response to a previously identified risk factor.
According to the contingency theory, problems do not “self-correct” once they arise. Instead, they must be addressed in a proactive manner. To do this, problem resolution must begin by identifying what in a company’s processes is causing a problem and then crafting a plan of action to address those factors. Following these steps is an effective way to ensure that problems do not snowball and ultimately result in significant losses.
Fiedler first introduced the Scientific Management concept in his book Applied Scientific Management (eds., W.R. Johnson, 1986, pp. 101-120). The Scientific Management concept is a condensed version of many of the more elaborate management theories of the past, including those such as organizational behavior, planning theory and problem solving theory. Although some of the topics covered in the book such as motivating employees and building organizational unity bore some resemblance to other older theories, such as Elster’s organizational psychology or organizational capital, nothing in the book suggested the application of statistical methods or the application of complex mathematical analysis.
The second chapter of Applied Scientific Management focused on the topic of risk. A contingency management approach is not based on the premise that all risks are equal. Rather, the assumption is that companies should be able to identify which risks pose the greatest risk of failure and take preventative measures to mitigate those risks. Using statistical methods, the theory maintains that companies should allocate appropriate amounts of resources to various potential failure causes. One example of this is where there are four types of investments – namely, equities, fixed income instruments, short-term investments and long-term investments – and only two of them are more likely to fail than the others. In the case of the equities, a ten percent failure probability would translate into an investment with a value of only ten percent.
The third chapter of the book looked at three management theories: the vision theory, the experience theory and the knowledge theory. The vision theory postulates that companies must develop a “vision” of their future in order to successfully invest in it; the experience theory maintains that companies develop new ways of doing things and new methods of doing things so as to achieve success; and the knowledge theory maintains that companies improve their knowledge and expertise base through regular research and analysis. Following these chapters, the contributors suggested that managers adopt a framework of nine management concepts. These include five perspectives on leadership, five concepts related to financial management, five concepts related to learning and two concepts that pertain to organizational culture.
Another important contribution made by these contributors was to show that there is a relationship between the management concept and financial risk. As they noted, a firm that adopts the “vision” perspective is less likely to fail because it tends to focus on attaining its long-term objectives. Meanwhile, a firm that adopts the experience perspective will fail because it tends to focus on the short-term rather than the long-term. On the other hand, a firm that manages through the knowledge perspective will succeed mainly because it has a well-developed expertise base. Finally, a company that adopts the knowledge perspective is able to overcome financial risk because it tends to minimize internal risks by deploying internal and external resources effectively.
