Management Chapter 1 Contd..

MANAGEMENT : Art or science ??

SCIENCE: Science means a systematic body of knowledge pertaining to a specific field of study capable of general application.

Properties:

• Systematic body of knowledge:based on the cause and effect relationship between different variables.

• Scientific inquiry and observation: objective or unbiased assessment of the problem situation and the action chosen to solve it can be explained logically. Scientific principles do not reflect the opinion of an individual or of a religious guru.

For example:the principle that the earth revolves around the sun has been scientifically proved.

• Experiments:

• Universal truth: based on basic facts which can be applied in all situations and at all times.

Management as science• Systematic body of knowledge: consisting of general principles and techniques.(Henry Fayol

14 principles)These help to explain events and serve as guidelines for managers in different types of organisations.

• Universal principles: Scientific principles represent basic facts about a particular field enquiry. For example, the Law of Gravitation states that if you throw an object in the air it will fall on the ground due to the gravitational force of the earth. This law can be applied in all countries and at all points of time. It is as applicable to a football as it is to an apple falling from tree. For instance,(Management) the principle of unity of command states that at a time one employee should be answerable to only one boss.

• Scientific enquiry and experiments: Management principles are also based on scientific enquiry and investigation. These have been developed through experiments and practical experience of a large number of managers.For example, it has been observed that wherever one employee has two or more bosses simultaneously, confusion and indiscipline are likely to arise, with regard to following the instructions.

• Cause and effect relationship: For example, when water is heated up to 100ºC, it starts boiling and turns into vapour. Similarly, the principles of management establish cause and effect relationship between different variables.For instance lack of balance between authority and responsibility will cause management to become ineffective.

• Tests of validity and predictability: Validity of scientific principles can be tested at any time and any number of times. Every time the test will give the same result. For example, the Law of Gravitation can be tested by throwing various things in the air and every time the object will fall on the ground. Principles of management can also be tested for their validity. For example, the principle of unity of command can be tested by comparing two persons, one having a single boss and other having two bosses. The performance of the first person will be higher than that of the second.

ART

Art implies the application of knowledge and skills to bring about the desired results.

• Practical knowledge

• Personal skill

• Result oriented approach

• Creativity

• Improvement through continuous practice

Management as an art• Practical knowledge: For example, a person may have adequate technical knowledge of

painting but he cannot become a good painter unless he knows how to make use of the brush and colors. Similarly, a person cannot become a successful manager simply by reading the theory and getting a degree or diploma in management. He must also learn to apply his knowledge in solving managerial problems in practical life.

• Personal skill: Every artist has his own style and approach to his job.. For example, there are several qualified singers but Lata Mangeshkar has achieved the highest degree of success. Similarly, management is personalized. Every manager has his individual approach and style in solving managerial problems. The success of a manager depends on his personality in addition to his technical knowledge.

• Result-oriented approach: Arts seeks to achieve concrete results. The process of management is also directed towards the accomplishment of desirable goals. Every manager applies certain knowledge and skills to achieve the desired results. He uses men, money, materials and machinery to promote the growth of the organization.

• Creativity: Art is basically creative and an artist aims at producing something that had not existed before. Therefore, every piece of art requires imagination and intelligence to create. Like any other art, management is creative. A manager effectively combines and coordinates the factors of production to create goods and services. Moulding the attitudes and behavior of people at work, towards the achievement of the desired goals is an art of the highest order.

• Improvement through practice: Practice makes one perfect. Every artist become more and more efficient through constant practice. A dancer, for example, learns to perform better by continuously practicing a dance. Similarly, manager gains experience through regular practice and becomes more effective.

Management: science and art

• Management is a science because it is an organised body of knowledge consisting of certain universal facts.

• Management is known as an art because it involves creating results through practical application of knowledge and skills.

• Science teaches one to know and art to do. • Art without science has no guide and science without art is knowledge

wasted.For example, a person cannot be a good surgeon unless he has scientific knowledge of human anatomy and the practical skill of applying that knowledge in conducting an operation.A successful manager must know the principles of management and also acquire the skill of applying those principles for solving managerial problems in different situations. Knowledge of principles and theory is essential, but practical application is required to make this knowledge fruitful. One cannot become an effective manager simply by learning management principles by heart. Science (theory) and art (practice) are both essential for the success ofmanagement.

Management:profession

• A profession is an occupation that requires specialisedknowledge,training and skills.

• Elements:

1. Well defined body of knowledge

2. Restricted entry

3. Service motive

4. Code of Conduct

5. Representative professional association

Contd..• Specialised body of knowledge: In order to practice a profession, a person requires

specialised knowledge of its principles and techniques.• Restricted entry: There exists institutions and universities to impart education and training

for a profession. No one can enter a profession without going through the prescribed course of learning. For example one must pass the Chartered Accountancy examination to practice accountancy profession.

• Service motive: A profession is a source of livelihood but professionals are primarily motivated by the desire to serve the community.eg doctors. A manager of a factory is responsible not only to its owners, but he is also expected to produce quality goods at a reasonable cost and to contribute to the well-being of the community.

• Representative association: In every profession there is a statutory association or institution which regulates that profession. For example, the Institute of the Chartered Accountants of India establishes and administers standards of competence for the auditors. In Management , Managers have formed associations for the regular exchange of knowledge and experience. In India, there is the All India Management Association for this purpose.

• Code of conduct: Members of one profession have to abide by a code of conduct which contains rules and regulations providing the norms of honesty, integrity and professional ethics. For example, the Institute of the Chartered Accountants of India establishes and administers standards of code of conduct for the auditors. In Management , Managers have formed associations for the regular exchange of knowledge and experience. In India, there is the All India Management Association.

Functions of Management(Henry fayol)

• Planning,

• Organizing,

• Staffing,

• Leading,

• Controlling

Functions of Management(Planning)

• Planning is a process of • Defining goals and objectives• Developing course of actions and determining the resources needed to

achieve the organization’s goals & objectives. i.e.Formulation of Objectives, Policies, Procedure, Rules, Programmes and Budgets

Determining organizational goals and a means for achieving them

Functions of Management(Organizing)• Organizing is a process of

• Determining what tasks are to be done, how the tasks are to be done, who is to do them i.e. assignment of authority for action, who will make decision, who reports to whom.

Development of proper organizational structure.

Functions of Management(Staffing)

• Staffing is a process of • Getting right people, for right job, at right time.

• People are asset for an organisation.• Attracting people to the organization(Recruitment).

• Creating good working conditions.

(retention, promotion, job rotation))

• Specifying job responsibilities and development.

(Job Description and training)

Functions of Management(directing)• Directing is an act of:

• guiding, supervising and leading people.

• Motivation, leadership, decision making.

Directing is telling people what to do and seeing that they do it to the best of their ability.

- Dale

Functions of Management(Controlling)

• Controlling is a process of• Setting standards of performance.

• Measuring actual performance.

• Comparing actual performance with planned/set goals.

• Taking corrective actions to ensure goal accomplishment.

Functions of Management

• All managers carry out managerial functions. However, time spent for each function may differ.

• Top Level Mgt (Planning & Organizing)

• Middle Level Mgt (Controlling)

• First line Mgt (Leading)

Schools of thought

• Classical theory: Emphasised the need for a structure with well defined rules,regulations and lines of authority.

• Behavioural approach: Shifted focus to human and social needs.

• Systems approach: Organisation is a series of inputs, transformation processes and outputs.

• Situational approach:Application of theories depending upon the situations.

Traditional Viewpoint

Behavioral Viewpoint

Systems Viewpoint

Contingency Viewpoint

Quality Viewpoint

1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000

Goals:

Efficiency

Consistency

Administrative

Management

Bureaucratic

Management

Scientific

Management

Bureaucratic Management(1920)

Max Weber

Bureaucratic Management

Use of rules, interpersonal relationships,

hierarchy, a clear division of labor, and detailed

procedures to guide employees’ behaviors

Seven characteristics

Rules and procedures—formal guidelines for

the behavior of employees on the job

Interpersonal relationships—employees are

evaluated according to rules and objective

data.

Division of Labor—splitting work into simple

routine and well defined tasks. Employees

work under boundaries.

Caliper Technologies Corporation

CEO

Director ofQualityControl

ChiefFinancialOfficer

VP ofOperations

VP ofSales &

Marketing

VP ofResearch

VP ofProduct

Development

VP ofCorporate

Development

PlantManager

USA

Controller

PlantManagerGermany

Manager ofChemical

Engineering

Manager ofChip

Manufacturing

Manager ofEngineering& Software

Directorof

Manufacturing

Directorof

Manufacturing

Employees Employees

Hierarchical Structure—ranks jobs according

to the amount of authority in each job

Authority—who has the right to make

decisions of varying importance at different

organizational levels. Authority is given on the

basis of their skills and competence.

Lifelong Career Commitment—both the employee

and the organization view themselves committed to

each other over the working life of the employee

Rationality—the use of the most efficient

means available to accomplish a goal

Potential Benefits of Bureaucracy

Efficiency due to division of work.

Consistency

Functions best when routine tasks are performed

Performance based on objective criteria

Most effective when

Large amounts of standard information have to be processed

The needs of the customer are known and are unlikely to

change

The technology is routine and stable (e.g., mass production)

The organization has to coordinate the activities of employees

in order to deliver a standardized service/product to the

customer

Potential Costs of Bureaucracy

Rigid rules

and

red tape

Protection of authority:

focus on their goals

rather than having

broad perspective

Slow decision making

i.e delays in working

Incompatible with

changing

technology

Incompatible with

21st century workers’

values for freedom

and participative

management

Scientific Management

Frederick W. Taylor

The father of Scientific Management – the 1st Efficiency Expert.

A philosophy and set of management

practices that are based on fact and

observation, not on guesswork

Scientific Management

Believed in scientific task planning and standardization i.e.

standards are to be set in advance for the task, materials,

work methods, quality,time,cost etc.

Used time-and-motion studies to analyze work flows,

supervisory techniques, and worker fatigue to eliminate

wasteful resources.

Used functional foremanship, where work is assigned to eight

foremen namely route clerk, instruction card clerk, cost and

time clerk, gang boss, inspector, repair boss and shop

disciplinarian to each work area. Thereby providing expert

advice to the workers to achieve better production results.

Assumed workers motivated by money $$ i.e incentives

money as per their work.

• He was interested in machines --

apprenticeship in industry: Midvale Steel

• Shocked by how inefficient his fellow

workers were

• timed workers with stopwatches

• break down job into parts, make parts

efficient

• figure out how to hire the right worker for

the job

• give the worker appropriate training

Taylor’s Work?

• introduced incentive pay plans

(workers were assumed to be motivated

only by money).

• Believed would lead to cooperation--

management and worker

• Studied design of shovels and introduced

a better design at Bethlehem Steel Works,

reducing the number of people shoveling

from 500 to 140

Taylor’s Work? Contd.

Insights from Scientific Management

Many companies have used scientific management

principles to improve efficiency, employee selection

and training

Scientific management failed to recognize the

social needs of workers as it considered humans as

tools and the importance of working conditions

and job satisfaction which cannot be quantified.

Administrative Management: Overview

Henry Fayol

Focuses on the manager and basic managerial functions of planning, organizing, staffing,

controlling and leading.

An approach that focuses on the

principles that can be used by

managers to coordinate the internal

activities of organizations.

Fayol’s 14 UNIVERSAL Principles of Effective Management• Division of Work: allows for job specialization.

• Work should be divided among individuals and groups.

• Authority and Responsibility

• Authority right to give orders

• Responsibility involves being answerable

Whoever assumes authority assumes responsibility

• Discipline

• Common efforts of workers to follow rules that govern

the enterprise. Penalties in case of violation.

• Unity of Command

• Employees should have only one boss.

• Unity of Direction

• A single plan of action to guide the organization.eg. Single HR policy.

• Subordination of individual interests to the general interests of organization: honesty,integrity,fair dealings.

• Remuneration

• Fair and equitable uniform payment system that motivates employees to contribute to organizational success.

• Centralization

• The degree to which authority rests at the top of the organization. Fayol felt that proper balance needs to be maintained between centralization and decentralization.

• Scalar Chain

• Chainlike authority scale from top to bottom through which all communications flow.

• If communication delays, then gangplank principle(cross communication) can also be permitted.

• Order

• The arrangement of employees and materials where

they will be of the most value to the organization and

to provide career opportunities.

• Equity

• The provision of justice and the fair and impartial

treatment of all employees.to get loyalty and devotion

of the employees.

• Stability of Tenure of Personnel

• Long-term employment is important for the

development of skills that improve the organization’s

performance. Therefore, Management must implement

practices which encourages long term commitment of

employees.

• Initiative

• The fostering of creativity and innovation by

encouraging employees to act on their own.

• Esprit de corps (Union is Strength)

• Harmony, team spirit, general good feeling among

employees, shared enthusiasm, foster devotion to the

common cause (organization).

Insights from Administrative Theory

Fayols 5 functions of Management as well as 14

principles are applied universally to improve

efficiency, employee selection and training

Scientific management failed to offer guidelines as

to when, where and how the principles have to be

applied.

Not applicable in the present volatile market

scenario.

The focus was more on control and discipline

rather than morale.

Behavioral Viewpoint: Overview

Focuses on dealing effectively with the

human aspects of organizations

Started in the 1930’s

Applied knowledge of behavior sciences

such as psychology, sociology and

anthropology to develop to manage

people.

Concluded that with increase in

social interactions job performance

increases.

Mary Parker Follett’s Contributions

Managers need to establish

good working relationships

with employees

Goal:

Improve

Coordination

“Managers need to have a common

touch and to be a team leader and not a

drill sergeant. When their people shine,

they shine.”

Vickie Yoke, Senior Vice President, Alcatel

Snapshot

The Hawthorne Studies

• Studies how characteristics of the work setting

affected worker fatigue and performance at the

Hawthorne of the Western Electric Company

from 1924-1932.• Worker productivity was measured at various levels of light

illumination.

• Two groups: in one group the intensity of light was systematically

varied, In other group light was constant.

• Researchers found that regardless of whether the light levels

were raised or lowered, worker productivity increased.

The Hawthorne StudiesThe Hawthorne Studies

•The Relay Assembly Test Room Experiments

Working conditions, wages, rest periods, financial incentives were increased leading to rise in productivity

•The Bank Wiring Observation Room Experiment

Analyze the social relationships in a work group

14 male workers were formed into a small working group and incentives were paid according to their effort and output. work of individual affected the output of the group. therefore highly efficient workers put pressure on the less efficient ones leading to erroneous reports.

Thus work group norms, beliefs, sentiments have great influence on individual behavior.

Employees are

motivated by social

needs and association

with others

Employees’ performance

is more a result of peer

pressure than

management’s incentives

and rules

Managers need to

involve subordinates

in coordinating their

work to improve

efficiency

If treated well, human

beings can expand

their energies and

show good results

Lessons from the Hawthrone Studies Behavioral Viewpoint

Snapshot

“Teamwork is one of the most beautiful

experiences in life. Teamwork is our

core value and a primary way that the

Container Store enriches the quality

of employees’ work life.”

Kip Tindell, President, The Container Store

System approach considers organisation

as an association of interrelated and

interdependent parts

Systems viewpoint: an approach to solving

problems by diagnosing them within a

framework of transformation processes,

outputs, and feedback

Systems Viewpoint: Systems Concepts

InputsHuman, physical,

financial, and

information

resources

Transformation

Process

OutputsProducts

and

services

Feedback Loops

Basic Systems View of Organizations

All departments are interrelated. Efficiency of one

department affects efficiency of other department.

Closed system: limits its interactions with

the environment (e.g., stamping department

in GM assembly plant)

Open system: interacts with the external

environment (e.g., marketing department)

System Types

An organisation which is not adaptive and

responsive to its environment would not

survive or grow over a period of time.

Flow: In an open system, inputs are

received from its environment and are

transformed into output. Thus all the

information, materials and energy flows

within the organization

Feedback: warning signals regarding

impending dangers. e.g. customer

complaints.

System Types

The Contingency Approach

What managers do in practice depends on a

given set of circumstances – a situation.

Management practices should be consistent

with the requirements of the external

environment, the technology used to make a

product or provide a service, and capabilities

of the people who work for the organization

Uses concepts of the traditional, behavioral

and system viewpoints

External environment—stable or

changing

Technology—simple or complex

People—ways they are similar and

different from each other

Contingency Variables

Behavioral ViewpointHow managers influence others;

Informal group

Cooperation among employees

Employee’s social needs

Systems Viewpoint

How the parts fit together.

Inputs

Transformations

Outputs

Traditional Viewpoint

What managers do:

Plan

Organize

Lead

Control

Contingency ViewpointManagers’ use of other viewpoints

to solve problems involving: External environment

Technology

Individuals

Contingency Viewpoint: Draws onOther Viewpoints, As Necessary

Quality: how well a product or service

does what it is supposed to do—how closely

and reliably it satisfies the specifications to

which it is built or provided

Total Quality Management (TQM): a

philosophy that makes quality values the

driving force behind leadership, design,

planning, and improvement initiatives

Inputs or raw materials

Operations

Outputs

Measuring by variable or a product’s characteristics

Measuring by attribute or a product’s acceptable/

unacceptable characteristics

Statistical process control

Quality of a process (e.g., sigma)

Quality Control Process

Lower Costs

and Higher

Market Share

Decreased

Product

Liability Quality

Positive

Company

Image

Learning from the Quality Viewpoint