Chapter-1 Nature and Significance of Management DETAILED THEORY Concept of Management According to Harold Koontz and Heinz Weirich, “Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims.” In other words, “Management is the process of working with and through others to effectively achieve organisational objectives by efficiently using limited resources in the changing environment.” The definition of management contains certain terms which require elaboration, These are: Process: It means the primary functions or activities that management performs to get things done. These functions are planning, organising, staffing, directing and controlling. Effectively: Being effective or doing work effectively basically means finishing the given task. Effectiveness in management is concerned with doing the right task, completing activities and achieving goals, In other words, it is concerned with the end result. Efficiently: t means doing the task correctly and with minimum cost. If by using fewer resources more benefits are derived, then we say efficiency is increased, For example, a company’s target production is 6,000 units in a year and the budgeted expenses was % 30,00,000. If the firm is able to achieve the target of 6,000 units but spends & 32,00,000 then the firm is effective but not efficient. On the other hand, if the firm is able to achieve the target of 6,000 units within the budgeted expense of © 30,00,000 but takes an year and 3 months, then the firm will be considered efficient but not effective. Characteristics of Management 1. Management is a goal-oriented process: Management unites the efforts of different in iduals in the organisation towards achieving these goals. 2. Management is all pervasive: Management is required in all types of organisations, at all levels of ‘management and in all departments of the organization, 3. Management is multi-dimensional: Management is a complex activity with three main dimensions which are: (a) Management of work: Management helps an organisation to achieve its goals by accomplishing the work for which it is formed. This is done by solving problems, making decisions, establishing plans, preparing budgets, assigning responsibilities and delegating authority. (6) Management of people: Management make people work towards achieving the organisation's goals, by making their strengths effective and their weaknesses irrelevant. (c). Management of operations: Every organisation has a basic product or service that requires a production process, which involves flow of input material and technology for transforming this input into the desired output. This is interlinked with both the management of work and the management of people. 4. Management is a continuous process: Management is an ongoing series of composite, but separate 9g, directing, staffing and controlling functions. Managers perform the functions, such as, planning, organiz simultaneously all the time. 5. Management is a group activity: In a firm, there are individuals with different needs but they work towards fulfilling the common organizational goal.6. Management is a dynamic function: Management adapts itself to the changing environment in order to be successfl. 7. Management is an intangible force: The management is an invisible force which cannot be seen but its presence can be felt in the way the organisation functions. For example, the targets are met according to plans, employees are happy and satisfied, and there is orderliness instead of chaos. Objectives of Management Various objectives of management are: (a) Organisational/Economic objectives: © Survival: It is the basic objective of any business and an organisation must earn sufficient revenues to recover cost. © Profit: Mere survival is not enough. Management has to ensure that the organisation makes profit as it is an incentive for the continued successful operations of the business. © Growth: Every business needs to add to its prospects in the long run. For this, it is important for the business to grow. For this, management must fully exploit the growth potential of the organisation. (b) Social objectives: Customer satisfaction by providing quality products and good services. Human betterment and social justice through social and physical improvement of the community and to contribute to desirable civic activities. Providing economic wealth, needed employment and financial support to the community. © Preservation and protection of environment by selecting those techniques and methods of production which involves lesser pollution and are in national interest by making better and efficient utilisation of scarce resources and generating more employment opportunities. (c) Personal objectives: © Maximum prosperity for employees by providing competitive salary, personal growth and development, peer recognition and societal recognition. © Providing good working conditions, better standard of living and good human relations amongst the workers. © Integration of personnel objectives with corporate objectives. Importance of Management . Management helps in achieving group goals: A manager gives a common direction to the individual effort in achieving the overall goal of the organisation. . Management increases efficiency: A manager reduces costs and increases productivity through better planning, organising, directing, staffing and controlling the activities of the organisation. » . Management creates a dynamic organisation: Environment is constantly changing and individuals resist change. Management helps people adapt to these changes so that the organisation can maintain its competitive edge. tion and 4. Management helps in achieving personal objectives: A manager, through moti leadership,helps individuals to achieve their personal goals while contributing to the organisation goals. 5. Management helps in the development of society: It helps to provide good quality products and services, creates employment opportunities, adopts new technology for the greater good of the people which leads to development of society.Nature of Management I. Management as an Art: Basic features of Art are: 1, Existence of theoretical knowledge: Art assumes that there exists certain theoretical knowledge. In Management, there is existence of theoretical knowledge. Lots of literature is available for marketing, finance and human resources, ete. 2. Personalised application: Artis a personalised concept as application of knowledge varies from person to person. A manager applies the acquired knowledge in personalised manner according to a given situation. 3. Based on practice and creativity: Art involves the creative practice of theoretical knowledge. Managers also apply the principles differently depending on how creative, imaginative and innovative they are. Comparison of Management as an Art: © There are various theories of management which prescribe some universal principles. © Managers apply management theories in their own way. © Managers apply acquired knowledge in a personalized and skillful manner on the base of their practice, creativity, imagination etc. Alll the features of art are present in management and are broadly fulfilled, so management can be called as an art. II, Management as a Science: Basic features of Science are: 1, Management has a systematised body of knowledge. It has its own theory and principles that have developed over a period of time, but it also draws on other disciplines such as Economics, Sociology, Psychology and Mathematics. Like all other organised activity, management has its own vocabulary of terms and concepts. For example, all of us discuss sports like ericket and soccer using a common vocabulary. The players also use these terms to communicate with each other, Similarly managers need to communicate with one another with the help of a common vocabulary for a better understanding of their work situation. . The principles of management have evolved over a period of time based on repeated experimentation and observation in different types of organisations. However, since management deals with human beings and human behaviour, the outcomes of these experiments are not capable of being accurately predicted or replicated. Therefore, management can be called an inexact science. Despite these limitations, management scholars have been able to identify general principles of management. For example, scientific management principles by F.W. Taylor and Functional Management principles by Henri Fayol which you will study in the next chapter. » |. Since the principles of management are not as exact as the principles of science, their application and use is not universal. They have to be modified according to a given situation. However, they provide managers with certain standardised techniques that can be used in different situations. These principles are also used for training and development of managers. Comparison of Management as a Science: ‘© Management has a systematised body of knowledge which have been developed over a period of time. * Principles of management are based on repeated experiments and observations. © Principles of management are not as exact as Science so are not universal. They have to be modified according to situations.It can be seen that management satisfies only some of the features of Science. Thus, it cannot be called a pure science but an inexact/social/sofUbehavioral science, as it is concerned with human behavior which cannot be predicted with absolute accuracy. Management as a Profession Basic features of Profession are: . Systematised body of knowledge: Like profession, management is also a systematic body of knowledge comprising of well defined principles and theory formulated by various management experts. Today, different colleges and professional institutes are providing education on management. So, this criterion is met. Pp . Restricted entry: Every profession has restricted entry, that is to say, to practice a particular profession, one has to clear an examination or acquire an educational degree. This feature is not present in management. It is not mandatory for a manager to possess valid degrees. So, this criterion is not met. 3. Professional association: All the professions have their professional associations which lay down the code of conduct for their members. Management has All India Management Association (AIMA) as its professional association, but neither is it mandatory for every manager to be a member of such associations nor does it have any statutory backing. Like CA's in India need to be a member of Institute of Chartered Accountants of India. So, this criterion is not met. 4. Code of conduct: Every profession has some kind of code of conduct for its members which are formulated and enforced by the concerned professional associ: ions. Management is also guided by business ethics, though profit maximisation is its ultimate aim. Also, it is not mandatory for managers to follow the code prescribed by All India Management Association (AIMA). 5. Service motive: The basic motive of a profession is to serve their clients interests by rendering dedicated and sincere services. Therefore, if the management of an organisation is good, it will automatically fulfill the needs of the owners, workers, customers and society at large. (any four) Comparison of Management as a Profession: ‘© Management is based on a systematic body of knowledge that can be acquired. © There is no restriction on appointment of managers on the base of degree but professional knowledge and training is considered desirable. © There are associations of practicing managers in India, such as, AIMA that lay down a code of conduct for its members but membership is not compulsory. The goal of management is profit maximization but due to effective and efficient management a firm can also serve society by providing quality goods at very reasonable prices. Management satisfies some of the features of profession but not all. So, management cannot be regarded as a full fledged profession like medicine/law, ete. but it is fast moving towards this direction. Levels of Management The three levels of management are: ‘Top Management: They consist of the senior-most executives of the organization. CEO, Board of Directors, MD, President and Chairman are parts of it, Their role in an organization can be summed up from the following points: 1. They integrate diverse elements and coordinate activities of different departments in one direction. 2. They are responsible for welfare and survival of the organization.3. They determine overall objectives and strategies for their achievements. 4. They organise activities to be performed by persons working at the middle level. Middle Management: They are a link between top and lower level managers. Departmental and divisional heads are parts of it. Their roles in the organization are: 1. They interpret and implement the policies made by top level management. 2. They ensure that their department has necessary personnel. 3. They assign duties and responsibilities to the personnel in their departments. 4. They motivate employees in their departments to achieve desired objectives. 5. They co-operate with other departments for smooth functioning. 6. They are responsible for all the activities of first line managers. Supervisory / Operational / Lower Management: They are at the lowest level of management. Foremen, Inspectors, Supervisors, ete. are parts of it. Their role is summed up as under: 1, They interact with actual workforce and develop healthy relations with them, 2. They pass on instructions of middle level management to them. 3. They maintain standards of quality, minimize wastage and ensure steady flow of output. 4. They maintain safety standards. 5. They motivate the employees. 6. They represent problems/grievances of workers before middle level management. Functions of Management Following are the functions of management: . Planning: It implies setting goals and objectives in advance and developing a way of achieving them. It prepares the organization for all contingencies by predicting them and preparing contingency plans to deal with them. . Organising: It is the function of assigning duties, grouping tasks, establishing authority and allocating resources required to carry out a specific plan. » |. Staffing: It is the function of finding the right people for the right job by following a series of steps. This is also known as the human resource function. & Directing: It involves leading, influencing and motivating employees to perform the tasks assigned to them. It includes four acti Supervision,Communication, Leadership and Motivation. - Controlling: It involves establishing standard performance, measuring actual performance, comparing the two and taking corrective action where a deviation is found. Coordination It is the process by which a manager synchronises the activities of different departments. It is called the essence of management. Following are its characteristics: 1. Integrates group efforts: It unifies unrelated or diverse interests into purposeful work activity and gives a common focus to group efforts. 2. Ensures unity of action: It is a binding force between departments and ensures that all action is aimed at achieving the goals of the organisation. 3. Continuous process: It is an ongoing process beginning from the planning stage and continuing till controlling.4. Pervasive function: It is required at all levels of management and in all departments. 5. Responsibility of all managers: Top level managers need to coordinate with their subordinates to ensure that the overall policies for the organisation are duly carried out. Middle level managers coordinate with both the top level and first line managers. Operational level management coordinates the activities of its workers to ensure that work proceeds according to plans. - Deliberate function: Coordination is a conscious and deliberate effort. Cooperation in the absence of coordination may lead to wasted effort and coordination without cooperation may lead to dissatisfaction among employees. Importance of Coordination: 1. Growth in size: The need of coordination increases with the increase in size of the organization because cach individual has his own needs, objectives, beliefs and style of working and it becomes difficult to integrate their efforts. Coordination therefore brings harmony among them. nv . Functional differentiation: The functions of an organization are divided into different departments and cach department has its own objectives, policies and style of working. All departments and individuals have to depend on each other for information to perform their activities. The process of linking the activities of various departments is accomplished by coordination. » . Specialization: High degree of specialization is the need of the hour. Specialists tend to focus on their area of specialization and may tend to overlook the overall goals of the organization. Therefore coordination is required among efforts of various specialists as also between specialists and others in the organization. This will help reconcile the differences in approaches, interests or opinions of experts.