MO1-Introduction to Management

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Part A Principles of Management

Module 1: Introduction to Management

Topics:

Management Concept introduction, Definition Nature Purpose Functions level and types of managers Managerial Roles Skills for Managers Evolution of management thought Fayols fourteen principles of management Recent trends in managementIntroduction

For better or worse, our society is strongly influenced by managers and their organizations.

We all are born in hospitals, we study in schools, we buy in shops, and much of behaviour is influenced by

government agencies. These hospitals, schools, shops, government agencies are Organizations.

We define an organization as a group of people working together in structured and coordinated fashion to

achieve a set of goals.

Goals may include profit, to provide education or knowledge, to provide medical facilities etc. As

organizations play such a vital role in our day to day lives, it is important to understand how they operate

and how they are managed.

Definition of Management

All organizations have to use 4 basic kinds of resources fro their environment.


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1] Human: managerial talent and labour

2] Financial: capital used to finance both ongoing and long term operations.

3] Physical: raw materials, office, production facilities equipment

4] Information: Usable data needed to make effective decisions

Managers are responsible for combining and coordinating these resources to achieve organizations goals

and to do this, managers carry out 4 basic functions:1] Planning and decision making

2] Organizing

3] Leading

4] Controlling


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Mangers engage in above activities to combine 4 resources efficiently and effectively and to work toward

achieving goals of the organization.

Definition

Management can be defined as a set of activities [including planning and decision making, organizing,

leading and controlling] directed at an organizations resources [human, financial, physical and information]

with the aim of achieving organizational goals in an efficient and effective manner

Basic purpose of management is to make sure that an organizations goals are achieved in an efficient and

effective manner.

Management is the accomplishment of results through the efforts of other people

-By Lawrence. A. AppleyManagement is the art of getting things done through and with the people in formally organized groups

-By Koontz HManagement is a process of planning, organizing, actuating and controlling to determine and accomplish

the objectives by the use of people and resources


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-By Terry GIt is the coordination of all resources through the process of planning, organizing, directing and controlling

in order to attain stated objectives

-By SiskEfficiency Vs Effectiveness

Efficient:

Doing the things right Focuses on the process or means of doing things Using resources wisely in a cost effective way and Getting most output from least amount of inputs Efficiency restricted to the present state Efficiency will look at avoiding mistakes or errors Since efficiency is about doing things right, it demands documentation and repetition of the same

steps. Doing the same thing again and again in the same manner will certainly discourage innovation

Effective:

Doing the right things Focuses on achieving the end goal. Making right decisions and successfully implementing them Effectiveness involves thinking long term Effectiveness is about gaining success Effectiveness encourages innovation as it demands people to think, the different ways they can meet

the desired goal.

Who is a Manager?

Manager is the one who plans, makes decisions, organizes, leads and controls human, financial, physical,

and information resources. His job is helping others to do their work.

Good managers can lead organization towards success, whereas poor managers can devastate even the

strongest of organizations.


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Nature of Management

1. Management is universal

Basic principles of management can be applied in all managerial situations regardless of size, nature andlocation of the organization. Universality of managerial tasks and principles also implies that managerial

skills can be transferrable and managers can be trained and developed.

2. MultidisciplinaryBecause it includes knowledge, information from various disciplines like economics, statistics, psychology,

sociology, operations research etc. Management integrates ideas and concepts taken from these disciplines

and presents newer concepts which can be put in to practice for managing organizations.

3. Management is dynamicManagement has framed certain principles which are flexible in nature and change with the changes in the

environment in which the organization exists.

According to Peter Drucker; Managers do not wait for future, they make the future

4.

Relative, not absolute principles

Management principles should be applied according to the need of the organization. A particular

management principle has different strengths in different conditions.

5. Management is a system of authorityA manager is supposed to get things done, rather than doing things himself by using authority. Authority

means right to give orders and power to obtain objective from subordinates. Its a rule making and rule

entering body in an organization.

Management- A Science or an Art

Effective management is a blend of both science and art.


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Science is a systematic body of knowledge that is developed through observation and experimentation and

can be verified. Scientific principles establish a cause and effect relationship between various factors. Mere

knowledge or collection of facts does not qualify as science. It is only when the gathered knowledge is

verified in different geographies and over a period of time it becomes science.

Art is a systematic application of a skill or knowledge for the accomplishment f results. It represents

methods or ways of doing specific things to effect change and accomplish results through deliberate efforts.

Science is concerned with knowing why and art is with the how of application.

Features of Art

Personal SkillsPractical knowledgeResult oriented approachRegular practiceCreativity

Management as an Art

1. Personal Skill: Manager has to use his skill, knowledge to solve many complimented problems on dayto day basis

2. Practical Knowledge: Management dos not merely mean systematic presentation of principles can beapplied in practical to get better results

3. Result Oriented: Management is concerned with accomplishment of objectives, it is result orientedand for that it leads, directs others towards attaining desired goals.

4. Regular Practice: Effectively and effectiveness can be attained through regular practice. Like an artistmanager also practices regularly so that he can work better and can get output in an effective and

efficient manner.5. Creativity: Any art work can be considered as a creative work. Like an art, management is one of the

most creative arts as it deals with getting things done through others by motivating their efforts in an

innovative manner.


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Features of Science

Science is a systematized body of knowledge that use scientific methods for observationScientific principles are evolved on the basis of continuous observationThe scientific principles are exact and have universal applicability without any limitationThe principles establish a cause and effect relationship between various factorsThe validity of scientific principles can be verified and they provide reliable basis for predicting future

events

Management as a Science

1. Systematic body of knowledge: Management is an organized body of knowledge built up bymanagement practitioners, philosophers and thinkers by conducting extensive research andverification of the same over the years. Principles of management make use of scientific methods.

Taylor applied scientific techniques like time and motion study, work study etc.

2. Cause and effect relationship: In management also cause and effect relationship is studied. Poorplanning cause low productivity, lack of employee benefits, low salary cause high attrition, poor

marketing cause less sales etc.

3. Continuous observation: Principles of management have been developed on the basis of continuedobservations by many theorists and practitioners over a period of years.

4. Validity and predictability: Scientific principles represent basic truth and can be applied at all times toall situations. In management also there are certain fundamental principles which can be universally

applied and repeatedly tested to verify its validity and predictability, reliability.

Management as pure science suffers from following limitations;

1. Principles of management dont always have a universal application. Unity of Command, which meansreporting to one superior. It does not mean that he should not report to more than one boss, if

superiors have better understanding, know how to balance between the advantages and

disadvantages of multiple commands, an employee can have more than one superior.

2. Human beings behavior can not be predicted3. Management lack certainty about the result.


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We can conclude that management is a mixture of art and science. As an art it demands certain skills from

its practitioner and as a science it provides its practitioner with a systematic body of knowledge comprising

certain principles laws etc, which have been tested and verified.

Management is a crude science because its application varies from person to person and from one situation

to another. We can conclude that management is a behavioural science.

Is administration and management one and the same?

There is no universally accepted view on this point.

American school of thought says Administrators think- Top level function Managers do- Lower level function

They differentiate management and administration as below;

S.No Particulars Administration Management

1 Nature of workAdministration is a thinking

functionManagement is a doing function

2 Scope

It plays/takes major policy

decisions and is wider in

scope than management

It takes decision within the

framework of administration

3 Level of authority It is a top level management

It is a middle level or junior level

function

4 StatusConsists of owners of

enterprise

It consists of managerial personal

with expertise who may be

employees

5Nature of

organization

Generally, administration

used in Government

organization, education,military and religious

organization

Management is used in business

enterprises with profit orientation

6 Influence

Mostly influenced by

external factors like social,

legal and political

Decisions are influence by internal

factors such as attitudes, values,

opinions, morale etc


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7 Main functions Planning and costing Directing and organizing

8 Skills requiredConceptual and human skills

are required

Technical and human skills are

required

Where as British School of Thought says;oManagement is wider concept than administrationoAdministration is a lower level function of day to day activitiesoManagement is rule making and rule enforcing activityThere is really no clear cut distinction between management and administration.

Management as a profession

Profession means an occupation backed by specialized knowledge, expertise and training.

Features of a profession;

The existence of body of specialized knowledge/techniquesFormalized method of acquiring training, expertise and experienceThe establishment of representative organizations with professionalism as its goalExistence of ethical course for guiding the practicing professionalThe charging of fees based on services rendered but with due regard to the fact the priority is service

over the desire for monetary rewards

Management profession:

Over the past few years management ahs grown in to a distinct discipline backed by systematic body ofknowledge. Number of process, principles, techniques and tools have been developed and they are

important through formalized education and training

Management also focuses on ethical behaviour and developed certain code of conduct to regulateperformance of management professional.

Like a Doctor, Managers [consultants] do charge fees on services renderedPresence of associations like CII, FICCI, AIMA, NIPM etc act as recognized representatives of respective

management disciplines.


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Purpose of Management

1. To achieve is productivity

Management is an active force which acquires uses, organizes factors of production, (men, material,machine, money) and coordinates different interdependent activities in an organization to achieve

organizational goals effectively and efficiently. Without management a countrys resources main as

resources only and dont result in production.

2. To adapt to the changes in the business environmentAs an organization exists in a dynamic environment, management has to adapt the changes which happen

in different sectors like technology, regulatory policies, economic policies, politics, demography etc and

leads the organization towards excellence.

3. To compete, survive and growManagement guides the organization to compete amongst the rivals, survive the threats in the external

environment and achieve growth and prospects through continuous learning and innovation.

4. To meet the expectations of stakeholdersManagement has to meet expectation of various stakeholders like adhering to rules and regulations of the

Government, maximizing returns to the investors, providing good working conditions and benefits to the

employees, maintaining good relationship with clients/suppliers and providing quality goods and services to

customers, meet responsibilities towards society.

Functions of Management

Managers are expected to perform certain functions so that they can get the things done through and with

people in an effective and efficient manner. These managerial functions, which are goal oriented,

interrelated and interdependent, have been classified as below;

Management involves four basic functions:


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These solid lines describe basic logic between activities theoretically.

Practically, dotted arrows show that most managers engage in more than one activity at a time and often

move back and forth between the activities in unpredictable ways. Manager is likely to be engaged in

different activities simultaneously.

Functions of management dont usually occur in a tidy, step-by-step fashion. Managers are constantly

engaged in many different activities. A manager may be helping a colleague develop goals for the next

quarter-planning, discussing a proposed company restructuring- organizing, praising a subordinate for

outstanding performance-leading, and checking on last months sales information- controlling.

1. Planning and Decision Making - Determining courses of actionPlanning means setting an organizations goals and deciding how best to achieve them. In other words it is

the process of selecting mission, goals and objectives of an activity or an organization and determining a

systematic process and actions for their accomplishment. All levels of management engage in planning, but

the extent of time they invest in planning activities vary from one level to another. The formal planning

process consists of a systematic, logical and orderly series of steps to prepare an organization for the future

by determining its goals and objectives, and the means to achieve them. It requires decision-making as it

involves choosing a particular future course of action from different alternatives. The decision is the

threshold point that transforms the planning process into a plan.


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Planning and decision making help to maintain managerial effectiveness, as both serve as guides for future

activities.

2. Organizing coordinating Activities and ResourcesManager has to organize people and other resources necessary to carry out the plan. It is the process of

establishing an organizational structure, assigning roles and responsibilities and tasks to different positions,

and establishing hierarchical, reporting and authority relationships between different positions to

implement plans and accomplish goals in a coordinated manner. Specifically, organizing involves

determining how activities and resources are to be grouped.

3. Leading Motivating and Managing peopleThis function involves a set of processes used to get members of the organization to work together to

further the interests of the organization. Manager has to motivate them by identifying the potential of

individuals in a group and channelizing their energy and behaviour to willingly play an effective role in

achieving organizational objectives. It also helps employees to accomplish their personal objectives. When

managers motivate subordinates, help resolve work group conflicts, influence individuals or teams as they

work, select the most effective communication channel or deal in any way with employee behaviour issues

they leading.

4. Controlling- Monitoring and Evaluating activitiesAfter the goals and plans are set [planning], the tasks and structural arrangements determined

[organizing], and people hired, trained and motivated [leading], there has to be some evaluation of things

are going as planned. To ensure that goals are being met and that work is being completed as it should be,

managers must monitor and evaluate performance. Actual performance must be compared with the

previously set goals. If there are any significant deviations, it is managers job to get work performance back

on track. This process of monitoring, comparing and correcting is what we mean by controlling function.


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Two management theorists named Gulick and Urwick created an ACRONYM [Based on Henry Fayols 14

principles of management]: POSDCORB which describes managerial functions.

Planning: process of establishing goals and a suitable course of action for achieving those goalsOrganizing: process of arranging resourcesStaffing: selecting and training individuals for specific job functions and charging them with associated

responsibilities

Directing: process of influencing and motivating employees to perform essential tasks in anorganization

Coordinating: integration of activities of the separate parts of an organization to accomplishorganizational goals

Reporting: process of executives keeping superiors and subordinates informed about what is going onBudgeting: formal quantitative statement of resources allocated for planned activities over stipulated

periods of time

If a manager aspires for successful accomplishment of the assigned task, he has to perform all the above

mentioned functions in an appropriate and integrated manner. Failure in any one of them can negatively

affect entire managerial effort and the accomplishment of goals and objectives.

Level of Managers


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1. Top ManagersThey are relatively small group of executives who manage overall organization. Titles found in this group

are President, CEO, VP, CFO, COO etc. They create organizations goals, overall strategy and operating

policies. They represent (officially) the organization to the external environment by meeting with

government agencies, executives of other organizations etc. Their job is likely to be complex and varied.

They make decisions about such activities as acquiring other companies, investing in R&D, entering or

abandoning various markets, building new plants etc.

2. Middle ManagersThey are the largest group of managers in most organizations. Titles like: plant manager, operations

manager, division head etc. They are responsible for implementing policies and plans developed by top

managers and for supervising and coordinating the activities of lower level managers. Middle managers are

necessary to bridge the upper and lower levels of the organization and to implement the strategies

developed at the top.

3. First Line Managers


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They supervise and coordinate the activities of operating employees. Their common title includes

supervisor, coordinator and office manager. They typically spend a large proportion of their time

supervising the work of subordinates.

Differences between Levels of management

Point of

DifferenceTop Management Middle Management

Lower Level

Management

Action Focus

A small group of

policy makers

deciding the

future of the

organization

Connecting link between

top and lower level people

and manage activities of

other managers

Characterized by

direct contact

with employees

Name of thepost

Chairman,

President CEO,

MD etc

Marketing Manager,

Personnel manager,

Finance Manager

Foreman, section

Head, Junior

Manager etc

Nature of

the work

They generally

spend most of

their time in

making policies,

liaisoning with

government

departments,

envisioning thefuture etc

Middle managers

implement policies

developed by Top

managers and supervise

lower level mangers. They

are involved in meetings,

paper work in giving

instructions to the junior

management andemployees and reporting

to the top management

Responsible for

supervising the

production and

employees.

Types of Managers

1. Based on Management Level


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a. Top ManagersThey are involved in making organizational policies and strategic plans. They are responsible for

performance of the organization as a whole or one of its major parts.

Examples of titles: CEO, VP, President etc

b. Middle ManagersThey implement plans, policies developed by top level managers. And they are also responsible for lower

level managers.

Examples: marketing manager, HR manager, Finance Manager

c. Front Line ManagersReport to middle level managers and directly supervise non-managerial workers or operating employees.

Examples: Team Leader, supervisor

2. Based on the Scope of activitiesa. Functional ManagersThey are responsible for one organizational activity or function like finance, Marketing etc.

b. General ManagersResponsible for complex multi functional units of an organization [whole company or subsidiary]

Example: Plant manager is responsible for all functional areas in the plant including ware housing, finance,

HR, marketing, quality, production etc.

3. Based on work activitya. Line Managers


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Directly contribute to the production of the organization. They carry out basic activities of the organization.

Examples: supervisors, team leaders, sales manager, quality manager, production manager etc

b. Staff ManagersThey are technical experts who merely advice the line managers and support their working. Examples: HR

Managers, Finance Managers, Marketing Managers

Managerial Roles

Research by Henry Mintzberg suggests that managers play ten basic roles:

Interpersonal role

This role includes dealing with other people

Figure Head/ symbolic head


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In this role manager is obliged to perform a number of routine duties of a legal or social nature. These are

typically more ceremonial and symbolic in nature. Example: taking visitors to dinner, attending ribbon

cutting ceremony etc.

Leader

A manager who formally or informally shows subordinates how to do things and how to perform under

pressure is leading. As a leader manager is asked to hire, train and motivate employees. He must balance

the goals of organization and goals of the individuals. Example: encouraging employees to improve

productivity.

Liaison

This role often involves serving as a coordinator or link among people, groups or organizations. Every

manager should establish contact outside the organization, with government, with consumers etc, with the

association of industry for collecting useful information to the organization. This role is concerned with

maintaining and enhancing the image of the organization. Example: coordinating activities of two projects.

Informational Roles

This involves processing of information

Monitor

Manager actively seeks information that may be of value. In this role he seeks and receives wide variety of

internal and external information to develop thorough understanding of organization and environment.

Example: reading periodicals and reports, maintaining personal contacts, scanning industry reports to stay

abreast of developments.

Disseminator

This role involves transmitting information received from outsiders or from subordinators to members of

the organization. Example: holding informational meetings, sending memos outlining new organizational

initiatives.


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Spokesperson

Here the manager transmits information to outsiders on organizations plans, policies, actions, results etc. It

formally relays information to people outside the unit or outside the organization. Example: holding board

meetings, giving information to media, representing organization before chamber of commerce or

consumer group etc.

Although roles of figurehead and spokesperson are similar, there is one basic difference between them.

When a manager acts as a figurehead, his presence as a symbolic head of the organization is what is of

more interest. But in spokesperson role, however manager carries information and communicates it to

others in a formal sense.

Decisional Roles

This role relates to decision making.

Entrepreneur

Manager is the voluntary initiator of the change. He constantly looks for innovative methods to increase

profit and reduce cost. He searches organization and its environment for opportunities and initiates

improvement projects to bring about changes. Example: developing new ideas for innovation.

Disturbance Handler

Manager is responsible for taking corrective action when organization faces important unexpected

disturbances. Example: resolving conflict between two subordinates, handling problems like strikes, or

problems in public relations.

Resource Allocator

Manager is responsible for the allocation of all organizational resources-men, money, material, machinery,

methods. Example: reviewing and revising budget requests.

Negotiator


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Manager enters in to negotiations with other groups or organizations as a representative of the company.

Example: Participating in government contracts, an agreement with consultancy, a long term relationship

with supplier. Negotiations may also be internal to organizations. Example: negotiate with another

department for additional support.

Managerial Skills

Technical Skills

Job specific knowledge and techniques needed to proficiently specific tasks. These skills tend to be more

important for lower level managers because they typically are managing employees who are using tools

and techniques to produce the organizations products or service the organizations customers.

Human Skills

These involve the ability to wok well with other people, both individually and in group. Because

managers directly deal with people, these skills are essential and equally important to all levels

of management. Managers with good human skills know how to get best out of their people.

They know how to communicate, motivate, lead and inspire enthusiasm and trust.

Conceptual Skills


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Managers use to think and to conceptualize about abstract and complex situations. Using these

skills, managers must see the organization as a whole, understand the relationships among

various subunits and visualize how the organization fits into its broader environment.

Evolution of Management Thought

Introduction

First known management ideas were recorded in 5000 BC when Sumerian Traders developed

written records for government. The Egyptians used management functions of planning,

organizing, and controlling when they constructed the Pyramids. It would not have been

possible to manage large Roman Empire without application of sound management principles.

It reflected in their military hierarchy and public administration systems.

Early writings on Management

Sun Tzus The Art of War:

This book on military strategy was written by Chinese General Sun Tzu in the 6th

Century BC.

Highlights:

Success can be achieved by being aware of utilizing the organizations strengths and utilizingthem to exploit weaknesses of the rival or enemy.

The book also emphasizes the importance of discipline in order to get the things donethrough coordinated group effort.

Chanakyas Arthashastra:

Arthashastra developed around 3rd

Century BC, written by Chanakya deals with the governance

of kingdom by a king or a leader.

Highlights:

The book lays down principles that should be taken into consideration by a leader whilemaking policies of governance and people management.

Also focuses on importance of creation of departments, development of detailed job profilesand qualifications of administrators who had to manage these departments as directors.

Management breakthroughs and practices over the last 4000 years


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The Early Management Approaches/Classical ApproachClassical school of thought evolved in the early 20

thCentury. The first important management

ideas and writings are called as classical management perspective. This approach focused on

attainment of efficiency and productivity in an organization setting. The approach consists 3

branches;


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Scientific ManagementAdministrative ManagementBureaucratic managementScientific Management

Productivity emerged as a serious problem during early 20th

Century. Business was expanding,

capital or funds were ready, but labour was in short supply. Then managers began to search for

ways to utilize existing labor efficiently. Due to this, experts began to focus on ways to improve

performance of individual workers. This led to scientific management.

F.W. Taylor played dominant role in developing this approach. Other contributors are Frank and

Lillian Gilbreth, Henry Gantt, Emerson.

Frederick Winslow Taylor [1856-1915]: graduated in science and engineering through evening

study. In 1878 he joined as worker at Midvale Steel Works. In 1898 he joined Bethlehem Steel

Company as Engineer. He acknowledged as Father of Scientific Management.

Scientific Management is the systematic study of relationships between people and tasks for

the purpose of redesigning the work process to increase efficiency. Taylor believed that if the

amount of time and effort that each worker expended to produce a unit of output (a finished

good or service) could be reduced by increasing specialization and the division of labour, then

the production process would become more efficient. Taylor believed that the way to createthe most efficient division of labour could best be determined by means of scientific

management techniques, rather than intuitive or informal rule-of-thumb knowledge. Based on

his experiments and observations as a manufacturing manager in a variety of settings, he

developed four principles to increase efficiency in the workplace:

Principle 1: Study the way workers perform their tasks, gather all the informal job knowledge

that workers possess, and experiment with ways of improving the way tasks are performed.

Principle 2: Codify the new methods of performing tasks into written rules and standardoperating procedures.

Principle 3: Carefully select workers so that they possess skills and abilities that match the

needs of the task, and train them to perform the task according to the established rules and

procedures.


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Principle 4: Establish a fair or acceptable level of performance for a task, and then develop a

pay system that provides a reward for performance above the acceptable level.

Steps in Scientific Management:

After scientifically applying different combinations of procedures, techniques and tools Taylor

succeeded in getting that level of productivity. He put the right person on the job with correct

tools and equipment, had the worker follow his instructions exactly and motivated the worker

with an economic incentive of a significantly higher daily wage. Using similar approaches for

other jobs, Taylor was able to define the one best way for doing each job.

Frank and Lillian Gilbreth [1878-1972]:

The husband-wife team of Frank and Lillian Gilbreth made a significant contribution to the

discipline of management through their emphasis on work methods. They were most

prominent followers of F.W. Taylor.

Features/Contributions of Scientific Management:

One best way to do the job/work study: analyzing different operations performed in a work,eliminating unnecessary operations and finding one best way to the job

Time study, motion study and fatigue studyTime study: to determine the time required for each movement

Motion study: study of movements of workers and machines to ensure performance of only

necessary activities

Fatigue study: shows when employees are getting tired and when management should provide

rest periods to increase efficiency, productivity of workers

Differential wages linked to productivityCareful selection and training of workersDivision of labour and distribution of work between management and workers


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Harmonious relationships between management and workersOverall objective was to improve efficiency of the labour.

Criticisms:

Scientific management approach ignored the human touch in an organization and viewedworkers as machines.

Taylors theory was narrow in scope and was applicable only to the shop floor of a factoryTaylor advocated extensive specialization and division of work which resulted in monotony of

workers.

Some employers started exploiting the workers.Administrative Management

This approach focuses on managing whole organization. Henry Fayol is the main contributor of

this approach.

Henry Fayol [1841-1925]

A French industrialist by profession, Henry Fayol regarded as Father of Modern Management

Theory.

He suggested conceptual framework for studying management by dividing industrial activities

into 6 groups

Technical [Production]Financial [searching and optimal utilization of capital]Commercial [buying, selling, exchange]Security [protection of property and people]Accounting [maintenance of records and statistics]Managerial [planning, organizing, staffing, directing, controlling]He identified 5 managerial functions to carry out these activities; planning, organizing,

commanding, coordinating and controlling. Fayol was the 1st

management thinker to recognize

need for management teaching. He believed that management was an activity common for all

organizations including government agencies. He published a famous book named General and


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Industrial Management. In his book, he presented 14 principles of management for running an

organization efficiently.

Fayols 14 principles of management:

1. Division of Work:Division of total task lightens the work; specialization [one person does only one thing]

increases the efficiency and output.

2. Parity between Authority and responsibility:Managers should balance between both. They should have right to give orders and should own

accountability for the task

3. Discipline:Respect of authority and following rules. Clarity of rules, built in rewards, punishments help to

maintain discipline

4. Unity of Command:One should receive orders from only one superior

5. Unity of Direction:There should be single plan and head for each group of activity with same objective/ direction

6. Subordination of Individual interests to general interestsIndividuals interests should be harmonious with organizations interests. Integrate the both

7. Fair remuneration to workers:Remuneration should be based on cost of living, business condition. Additional works should

get incentives. This increases morale and efficiency

8. Centralization:Major decisions should be taken by Top Management, operations level decision making power

can be given to lower level.

9. Scalar Chain:This is a chain of superiors from highest to lowest ranks. Authority should run from top to

bottom in proper channel. This chain is necessary to ensure unity of command and effective


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communication. If the chain creates communication delays, cross-communication [gangplank principle]

can be permitted, if agreed by all parties and superiors are kept informed.

10.Order:There should be a place for everything and every thing should be in its place

11.Equity:Managers should be kind and fair to their workers

12.Stability of tenure of personnel:Try to minimize employees turnover, build long term commitment, a sense of belongingness

among their subordinates. Provide job security

13.Initiative:

Managers should encourage their subordinates to take initiatives.

14.Esprit de corps:[ team spirit]Management should create team spirit among employees for harmony and unity

Comparison of Taylors Theory with Fayols Theory

Similarities

a. Both of them realized the universality of management.b. Both applied scientific methods to the problems of management.c. Both identified the importance of contribution of personnel and their managementd. Both wanted to improve managerial practicese. Both of them developed managerial ideas through practical experiments.f. Both of them advocated mutual cooperation between employers and employeesDissimilarities

a. Taylor focused his attention on shop floor. Whereas Fayol was concentrating onadministration which is concerned with top level

b. Taylor was mainly concentrated on improving productivity. Fayol attempted to give auniversal theory of management


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c. Taylor called his theory as Theory of Scientific Management while Fayol named his theoryas General Theory of Administration.

d. Fayol looks into management with wider perspective than Taylore. Taylors philosophy has undergone lot of changes in Modern day management, while

Fayols principles have stood the just of time and are applicable even today.

Bureaucratic Management

The approach focuses on the development and implementation of rational guidelines like

organizations structure, hierarchy of authority, rules and procedures, Division of roles and responsibilities, for managing work in an organization.Max Weber [1864-1920], a German Sociologist is the main contributor to this approach. He is

known as the Father of Modern Sociology.

He proposed following principles to manage organizations;

a. Clearly specified hierarchy of authority; who report to whomb.

Written rules and regulations should be developed which specifies employees how tobehave in an organization.

c. Fair selection and evaluation systemd. Clearly specified roles and responsibilities.


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Neo Classical Approaches

Unlike classical management perspective, neo classical approaches focused on human

behaviour and relationships.

Behavioural Science Approach

The approach focused more emphasis on individual attitudes and behaviors and on groupprocesses. It also recognized the importance of behavioural processes in the work place. Elton

Mayo [1880-1949] and his associates conducted research [Hawthorne studies], a series of

experiments that focused on behaviour in the workplace [Hawthorne plant of Western Electric

Company near Chicago.]

First Study/Phase: Illumination Study [1924]: Two groups were selected Experimental Group and Control Group. Study involved

manipulating illumination for one group of workers and comparing their productivity with

another group. Experimental group was exposed to various lighting intensity. And control

group was exposed to constant intensity.

But as a surprise, both the groups produced the same output.2nd Phase- Relay Assembly Test[1925]The experimental group of employees was given


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Freedom to fix work schedules Six breaks of five minutes per shift were allowed Work day and week were shortened Work was simplified Financial incentives for increased production Friendly supervision These kinds of special attention and treatment enhanced productivity ( i.e. Hawthorne

Effect)

3rdPhase: [1928] Interviewing Program Interviewed 21000 employees to find the reasons for increased productivity. Informal work groups and their productivity norms were recognized as the main causes for

productivity.

4th Phase: Bank Wiring Observation Room Experiment[1929] Workers were engaged in the assembly of terminal banks for the use in telephone

exchanges. 14 men worked in bank wiring room for 7 months.

Team work and performance based incentives introduced. It was expected that highly efficient workers pressure on others to work more to get more

bonuses. But it dint happen. Efficient workers did not pressure the others to work more for

benefiting by incentive scheme.

Group established its own standard of output & this was enforced by various methods ofsocial pressure. They formed group norms to regulate the productivity.

Over produced named: rate busters Under produced named: chiselersThe group norms were

Dont turn out too much work Dont turn out too little work


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Dont tell supervisors anything that would harm a colleague Dont be too officious-rather follow group normsThus social norms, group norms, beliefs, sentiments had greater impact in influencing

individual behaviour rather than economic incentives offered by management.

Implications of Hawthorne studies

Suggested managing through good human relationsInvolves motivating people, team work, group influence etcConsider the human factor as they are social beingsHuman relation Approach

The approach proposed that workers respond primarily to the social context of the workplace,

including social conditioning, group norms, and interpersonal dynamics. It believed that human

behaviour in organizations is complex.

Douglas McGregor developed Theory X and Theory Y to explain how employees behave in work

place. [Developed in 1960s]

Theory X

Here manager thinks that employees behave like this, they are negative, and scientific

management can be applied. Manager thinks that employees dislike work, employees are

irresponsible, employees lack ambition, employees resist change.

Theory Y

Here manager thinks that employees behave like this, they are positive, and human relations

should be improved to get more productivity. He thinks that employees are willing to work,

employees are self directed, they accept responsibility, employees are creative, and they are

self-controlled.


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Douglas suggested to managers that they should treat employees as Theory Y approach.

Limitations of Neo Classical Approach:

It focused on group behavior. And as human behavior is unpredictable and complex in nature,

one cant predict the results.

Modern Approaches

Quantitative Approach or Management Science Approach or Operations Research Approach

A quantitative approach to management involves a systematic and scientific approach to

decision making and problem solving in complex situations and environments that may involve

uncertainty and conflict.

During World War II, military people took some mathematical approaches to deploy itsresources efficiently and effectively

After war, Companies like DuPont, General Electric began to use some techniques fordeploying employees, choosing plant location, planning warehouse etc.

Concerned with applying quantitative techniques, such as statistics, information models,computer simulations to improve decision making.

Features

Organizational efficiency depends upon quality of managerial decisions


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A problem can be expressed in the form of a quantitative/ mathematical model containingmathematical symbol and relationships

Different variables in management can be quantified, expressed in the form of an equation.Quantitative Approach & Its Application

Managers can use computer models to figure out the best way to do something saving

both money and time. Managers use several science applications.

Mathematical forecasting helps make projections that are useful in the planning process. Inventory modeling helps control inventories by mathematically establishing how and when

to order a product.

Queuing theory helps allocate service personnel or workstations to minimize customerwaiting and service cost

Operations Management focuses on managing the process of transforming materials, labor,and capital into useful goods and/or services. Operations management today pays close

attention to the demands of quality, customer service, and competition. The process begins

with attention to the needs of customers: What do they want? Where do they want it?

When do they want it? Based on the answers to these questions, managers line up

resources and take any action necessary to meet customer expectations.

A management information system organizes past, present, and projected data from bothinternal and external sources and processes it into usable information, which it then makes

available to managers at all organizational levels.

Contributions

Provided precise tools for decision making in areas like production, finance, costing,transportation and storage

It has been widely used in planning and controlLimitations

Fails wherever human element is involved Most decisions involves human judgment, Q A can provide only data for such decision

making


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This approach can suggest best possible alternatives; hence quantitative techniques can be

valuable supplements

Systems Approach

Developed during early 1960s Contributors: Kenneth Boulding, Johnson and Bernard etc System: An interrelated set of elements functioning as a whole Organizations are viewed as a systemBasic types of system:

Open System: organization that interacts with its environment Closed System: that doesnt interact with its environmentOrganization must be an open system.

The Organization as an Open System:

Inputs: human, financial, materials, information resources from its environment Through technological and managerial processes inputs are transferred into outputs Outputs to environment: products, services Environment reacts to these outputs and provides feedback to the system


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Sub systems

Approach also focuses on sub systems: systems within a broader system Change in one subsystem can affect other subsystem E.g.: if purchase department does not acquire right quality of inputs [ raw material],

production department will not be able to do its job efficiently

Synergy: suggests that organizational units or sub units may become more successful working

together than working alone.

Example for synergy

Walt Disney Companys movies, theme parks, television programs, other licensed programs all

benefit one another

Children who enjoy Walt Disney movie like Mickey Mouse, want to go to Disney World, see the

movie there, buy Mickey Mouse toys, buy theme printed lunchbox, cloths etc, and film music

generates additional revenue.

Entropy

Is a normal process that leads to system decline When an organization does not monitor feedback from its environment and make

appropriate adjustments, it may fail

Implications

As per systems approach management should continuously re-energize the organization toavoid entropy

Coordination of the organizations parts is essential for proper functioning of the entireorganization.

Decisions and actions taken in one area of the organization will have an effect in other areasof the organization.

Organizations are not self-contained and, therefore, must adapt to changes in their externalenvironment


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Contingency Approach/Situational Approach

Classical, neo classical and quantitative approaches considered universal perspectives,because they tried to indentify the one best way to manage organizations.

Contingency Approach suggests there is no one best way of doing things under allconditions

Evolved during 1960s Various researchers concentrated on different contextual factors. Joan Woodward

(1958) studied the production technology, Blau and Schoenherr (1971) the size of the

organizations, Burns and Stalker (1961) as well as Lawrence and Lorsch (1967) into the

economic environment, in particular market competition and technological change. A

broader approach was developed by a British team of researchers at the University of

Aston.

A conceptual model of the contingency approach was developed by Kieser and Kubicek.According to the model, the formal structure of an organization defines the roles of its

members in a specific way and thereby directs their behaviour 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.

Features

Stresses that there is no best way of doing a thing. Conditions of contingency/situation willdetermine which technique would be most suitable

Managers should prepare objectives, policies, procedures, rules and regulations accordingto situation of business

Success in management depends upon the ability to cope with environmental demands Managers should sharpen their diagnostic skills to anticipate and comprehend environment

changes

Limitations

This approach lacks theoretical base Manager is required to think through all possible alternatives, as there is no clear cut

principle to act upon.


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Recent Trends in Management

1. Outside In Thinking: Organizations should view their business from customersperspective. Which means looking at their processes from the outside-in. By

understanding customers needs, processes organizations can discover what customers

are seeing and feeling. With this knowledge, organizations can add significant value in

their transactions.

2. Knowledge Management: In a knowledge driven era of highly specialized experts,businesses that can share and multiply that expertise the fastest will win the race. As

the world becomes ever more complex, more and more of what we do is knowledge

work, the application of highly specialized knowledge and expertise. An organizations

competitive advantage revolves around its most advanced talent - those leading edge

knowledge workers who solve challenging problems, develop new products and take

the business in novel directions. Naturally, competitive businesses want to protect this

asset.

3. Being World Class Competitor: It means being successful in your chosen market againstany competitionregardless of size, country of origin or resources. It means matching

or exceeding any competitor on quality, lead time, flexibility, cost/price, customer

service and innovation.

4. Learning Organization: A learning organization is the one that actively creates, captures,transfers and mobilizes knowledge to enable it to adapt and respond to change. It is a

term given to a company that facilitates the learning of its members and continuously

transforms itself and its content. Garvin defined a learning organization as an

organization skilled at created, acquiring and transferring knowledge, and at modifying

its behaviour to reflect new knowledge and insights.

Benefits of being a learning organization:

Maintaining levels of innovation and remaining competitive Being better placed to respond to external pressures Having the knowledge to better link resources to customer needs


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Improving quality of outputs at all levels Improving corporate image by becoming more people oriented Increasing the pace of change within the organization

Documents

MO1-Introduction to Management