Introduction to Management Chapter 1

CHAPTER ONE

FUNDAMENTALS OF MANAGEMENT

Objectives:

After studying this chapter, you would be able to:

1) Know the basic concepts and definitions of management.

2) Be acquainted with the major management functions.

3) Understand managerial levels, roles and skills.

4) Be familiar with universality of management and management as

an art or science.

Managers create the systems, conditions, and environment that enable

organizations to survive and thrive beyond the tenure of any specific supervisor
or manager. A key aspect of managing is recognizing the role and importance of
other people.

1.1. Definition of Management

Early twentieth-century management scholar Mary Parker Follett defined

management as “the art of getting things done through people.” More recently,
noted management theorist Peter Drucker stated that the job of managers is to
give direction to their organizations, provide leadership, and decide how to
use organizational resources to accomplish goals. Getting things done
through people and other resources and providing leadership and
direction are what managers do. These activities apply not only to top
executives such as Bill Gates of Microsoft or Steve Jobs of Apple, but also to
the leader of an airport security team, a supervisor of an accounting
department, or a director of sales and marketing. Moreover, management often
is considered universal because it uses organizational resources to accomplish
goals and attain high performance in all types of (profit and nonprofit)
organizations. Thus, our definition of management is as follows:

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Management is the attainment of organizational goals in an effective and

efficient manner through planning, organizing, staffing, leading, and controlling
organizational resources.

This definition holds two important ideas: (1) the five functions of planning,
organizing, staffing, leading, and controlling, and (2) the attainment of
organizational goals in an effective and efficient manner. Managers use a
multitude of skills to perform these functions.

Based on our definition of management, the manager’s responsibility is to

coordinate resources in an effective and efficient manner to accomplish the
organization’s goals. Organizational effectiveness is the degree to which the
organization achieves a stated goal, or succeeds in accomplishing what it tries
to do. Organizational effectiveness means providing a product or services
that customer’s value. Organizational efficiency refers to the amount of
resources used to achieve an organizational goal. It is based on how much raw
materials, money, and people are necessary for producing a given volume of
output. Efficiency can be calculated as the amount of resources used to
produce a product or service. An activity effectively performed with least
possible resource reflects efficiency.

1.2. Managerial Functions Overview

1. Planning

Planning defines where the organization wants to be in the future and how to
get there. Planning means defining goals for future organizational performance
and deciding on the tasks and use of resources needed to attain them. A lack
of planning—or poor planning—can hurt an organization’s performance. For
example, despite a cult-like following, Krispy Kreme Doughnuts is struggling to
survive as a result of poor planning. Top managers’ lack of vision in perceiving
market direction and weak planning efforts regarding rapid expansion and
franchisee relationships has seriously damaged the once successful firm. It is a
decision making process which involves selection of missions and objectives
and choose the best course of action to achieve them from among alternatives.

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2. Organizing

Organizing typically follows planning and reflects how the organization tries to
accomplish the plan. Organizing involves assigning tasks, grouping tasks into
departments, delegating authority, and allocating resources across the
organization. Voyant Technologies, a maker of teleconferencing equipment,
revised its structure to meet goals of increased sales and faster product
development. By creating a new position specifically to bridge the gap between
product managers and engineers, Voyant realized a 25 percent increase in
sales, a 20 percent reduction in development costs, and a 40 percent
improvement in time to market.

3. Staffing

It is the process of filling and keeping filled the positions in the organization
structure. This is done by identifying work force requirements, inventorying the
people available, recruiting, selecting, placing, promoting, compensating,
training and developing both candidates and current job holders to accomplish
their tasks effectively and efficiently.

4. Leading

Leading is the use of influence to motivate employees to achieve organizational

goals. Leading means creating a shared culture and values, communicating
goals to employees throughout the organization, and infusing employees with
the desire to perform at a high level.

Leading involves motivating entire departments and divisions as well as those

individuals working immediately with the manager. In an era of uncertainty,
global competition, and a growing diversity of the workforce, the ability to
shape culture, communicate goals, and motivate employees is critical to
business success.

5. Controlling
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Controlling is the fourth function in the management process. Controlling

involves monitoring employees’ activities, determining whether the organization
is on target toward its goals, and making corrections as necessary. Managers
must ensure that the organization is moving toward its goals. Trends toward
empowerment and trust of employees have led many companies to place less
emphasis on top-down control and more emphasis on training employees to
monitor and correct themselves.

1.3. Significance of Management

According to Peter Drucker, "Management is what the modern world is all

about". This statement means that all the development that has taken place in
the world is due to efficient management.

The points below bring out the significance or importance of management.

1. Encourages Initiative

Management encourages initiative. Initiative means to do the right thing at the

right time without being told or influenced by the superior. The employees
should be encouraged to make their own plans and also to implement these
plans. Initiative gives satisfaction to employees and success to organization.

2. Encourages Innovation

Management also encourages innovation in the organization. Innovation brings

new ideas, new technology, new methods, new products, new services, etc. This
makes the organization more competitive and efficient.

3. Facilitates growth and expansion

Management makes optimum utilization of available resources. It reduces

wastage and increase efficiency. It encourages team work and motivates
employees. It also reduces absenteeism and labor turnover. All this results in
growth, expansion and diversification of the organization.

4. Improves life of workers

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Management shares some of its profits with the workers. It provides the
workers with good working environment and conditions. It also gives the
workers many financial and non-financial incentives. All this improves the
quality of life of the workers.

5. Improves corporate image

If the management is good, then the organization will produce good quality
goods and services. This will improve the goodwill and corporate image of the
organization. A good corporate image brings many added benefits to the
organization.

6. Motivates employees

Management motivates employees by providing financial and non-financial

incentives. These incentives increase the willingness and efficiency of the
employees. This results in boosting productivity and profitability of the
organization.

7. Optimum use of resources

Management brings together the available resources. It makes optimum (best)

use of these resources. This brings best results to the organization.

8. Reduces wastage

Management reduces the wastage of human, material and financial resources.

Wastage is reduced by proper production planning and control. If wastage is
reduced then productivity will increase.

9. Increases efficiency

Efficiency is the relationship between returns and cost. Management uses

many techniques to increase returns and to reduce costs. Higher efficiency
brings many benefits to the organization.

10. Improves relations

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Management improves relations between individuals, groups, departments and

between levels of management. Better relations lead to better team work. Better
team work brings success to the organization.

11. Reduces absenteeism and labor turnover

Absenteeism means the employee is absent without permission. Labor

Turnover means the employee leaves the organization. Labor absenteeism and
turnover increases the cost and causes many problems in the smooth
functioning of the organization. Management uses different techniques to
reduce absenteeism and labor turnover in the organization.

12. Encourages Team Work

Management encourages employees to work as a team. It develops a team spirit

in the organization. This unity brings success to the organization.

1.4. Levels of Management and Types of Managers

An important determinant of the manager’s job is hierarchical level.

Top managers are at the top of the hierarchy and are responsible for the entire
organization. They have such titles as president, chairperson, executive
director, chief executive officer (CEO), and executive vice president. Top
managers are responsible for setting organizational goals, defining strategies
for achieving them, monitoring and interpreting the external environment, and
making decisions that affect the entire organization.

They look to the long-term future and concern themselves with general
environmental trends and the organization’s overall success. Among the most
important responsibilities for top managers are communicating a shared vision
for the organization, shaping corporate culture, and nurturing an
entrepreneurial spirit that can help the company innovate and keep pace with
rapid change.

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Middle managers work at middle levels of the organization and are responsible
for business units and major departments. Examples of middle managers are
department head, division head, manager of quality control, and director of the
research lab. Middle managers typically have two or more management levels
beneath them. They are responsible for implementing the overall strategies and
policies defined by top managers. Middle managers generally are concerned
with the near future rather than with long-range planning.

First-line managers are directly responsible for the production of goods and
services. They are the first or second level of management and have such titles
as supervisor, line manager, section chief, and office manager. They are
responsible for groups of non-management employees. Their primary concern
is the application of rules and procedures to achieve efficient production,
provide technical assistance, and motivate subordinates. The time horizon at
this level is short, with the emphasis on accomplishing day-to-day goals.

Functional and General Managers

Functional managers are responsible for departments that perform a single

functional task and have employees with similar training and skills. Functional
departments include advertising, sales, finance, human resources,
manufacturing, and accounting. Line managers are responsible for the
manufacturing and marketing departments that make or sell the product or
service. Staff managers are in charge of departments such as finance and
human resources that support line departments.

General Managers are responsible for several departments that perform

different functions. Project managers also have general management
responsibility, because they coordinate people across several departments to
accomplish a specific project.

1.5. Managerial Roles and Skills

1.5.1. Managerial Skills

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A manager’s job is complex and multidimensional. Although some management

theorists propose a long list of skills, the necessary skills for managing a
department or an organization can be summarized in three categories:
conceptual, human, and technical. Although the degree of each skill necessary
at different levels of an organization may vary, all managers must possess
skills in each of these important areas to perform effectively.

Conceptual Skills

Conceptual skill is the cognitive ability to see the organization as a whole and
the relationships among its parts. Conceptual skill involves the manager’s
thinking, information processing, and planning abilities. It involves knowing
where one’s department fits into the total organization and how the
organization fits into the industry, the community, and the broader business
and social environment. It means the ability to think strategically—to take the
broad, long-term view.

Conceptual skills are needed by all managers but are especially important for
managers at the top. They must perceive significant elements in a situation
and broad, conceptual patterns. For example, recent strategic changes at
General Electric reflect the conceptual skills of CEO Jeffrey Immelt. Immelt is
remaking GE by thinking on a broad, long-term scale about the types of
products and services people around the world are going to need in the future.
Immelt is pushing for growth by investing heavily in basic scientific and
technological research, looking toward the needs of developing countries, and

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making structural and cultural changes that focus GE toward creating

innovative products and services to meet shifting customer needs.

 As managers move up the hierarchy, they must develop conceptual skills

or their promotability will be limited.

Human Skills

Human skill is the manager’s ability to work with and through other people
and to work effectively as a group member. This skill is demonstrated in the
way a manager relates to other people, including the ability to motivate,
facilitate, coordinate, lead, communicate, and resolve conflicts. A manager with
human skills allows subordinates to express themselves without fear of ridicule
and encourages participation.

A manager with human skills likes other people and is liked by them.
Organizations frequently lose good employees because of front-line bosses who
fail to show respect and concern for workers

 Human skills are important for managers at all levels, and particularly
for those who work with employees directly on a daily basis.

Technical Skills

Technical skill is the understanding of and proficiency in the performance of

specific tasks. Technical skill includes mastery of the methods, techniques,
and equipment involved in specific functions such as engineering,
manufacturing, or finance. Technical skill also includes specialized knowledge,
analytical ability, and the competent use of tools and techniques to solve
problems in that specific discipline. Many managers get promoted to their first
management jobs by having excellent technical skills. However, technical skills
become less important than human and conceptual skills as managers move
up the hierarchy.

 Technical skills are particularly important at lower organizational levels.

1.5.2. Managerial Roles

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Mintzberg’s observations and subsequent research indicate that diverse

manager activities can be organized into 10 roles. A role is a set of expectations
for a manager’s behavior. These roles are divided into three conceptual
categories: informational (managing by information); interpersonal (managing
through people); and decisional (managing through action).

A. Informational Roles

Informational roles describe the activities used to maintain and develop an

information network. The monitor role involves seeking current information
from many sources. The manager acquires information from others and scans
written materials to stay well informed. The disseminator and spokesperson
roles are just the opposite: The manager transmits current information to
others, both inside and outside the organization, who can use it. ¨
Disseminator role: - the information a manager gathers as a monitor must be
gleaned and transmitted to appropriate members of the organization. As a
disseminator, a manager sends out side information into the organization and
internal information from one subordinate to another/Transmitting selected
information to subordinates.
Spokes person role: - it is the role of a manager in transmitting selected
information to outsiders. It is played by a manager whenever he/she represents
the organization or its position to other groups, government agencies,
customer, and trade organizations.
B. Interpersonal Roles

Interpersonal roles pertain to relationships with others and are related to the
human skills described earlier. The figurehead role involves handling
ceremonial and symbolic activities for the department or organization. The
manager represents the organization in his or her formal managerial capacity
as the head of the unit. The leader role encompasses relationships with
subordinates, including motivation, communication, and influence. The

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liaison role pertains to the development of information sources both inside

and outside the organization.

C. Decisional Roles

Decisional roles pertain to those events about which the manager must make a
choice and take action. These roles often require conceptual as well as human
skills. The entrepreneur role involves the initiation of change. Managers are
constantly thinking about the future and how to get there.

The disturbance handler role involves resolving conflicts among subordinates

or between the manager’s department and other departments. The resource
allocator role pertains to decisions about how to allocate people, time,
equipment, budget, and other resources to attain desired outcomes. The
manager must decide which projects receive budget allocations, which of
several customer complaints receive priority, and even how to spend his or her
own time. The negotiator role involves formal negotiations and bargaining to
attain outcomes for the manager’s unit of responsibility. The manager meets
and formally negotiates with others—a supplier about a late delivery, the
controller about the need for additional budget resources, or the union about a
worker grievance.

1.6. Universality of Management

Universal Application: - Management is applied in any organization (large,

small in size, or service or manufacturing or for-profit or not-for-profit) and its
functions are practiced in any level of management.

Management is universal in the sense that:-

 Basic applications of management in any organizations are the same

whether it is small or complex, business or non-business. The
managerial functions exist in every organization regardless of the size
and the type of the organization. This is because any organization has an
objective to be achieved and goal achievement requires planning,
organizing, staffing leading and controlling. (The armies general, the

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bishop of the church, the financial manager use the same management
principles to achieve objectives.)
 The concept of universality of management is also applicable to all levels
of management within an organization; it is not confined to a particular
level. Although the scope of authority held, responsibility assigned and
the types of problems dealt vary from one level to another, as managers
all obtain results by establishing an environment for effective group
endeavor.
 Managers can be transferred from one organization to another and the
higher the management level the less will be the operating non-
managerial job components and the more "pure" will be the managerial
jobs and the easier the transferability of managers.
1.7. Management as an Art, Science or Both

A lot of controversy arises whether management is an art or science or both. It

is said that the management is the oldest of arts and youngest of science. This
explains the changing nature of management. But to have an exact answer to
this question, it is necessary to understand both these aspects separately and
combined, as given below:

Management as a Science:

Science may be described as a systematized body of knowledge based on

proper findings and exact principles and is capable of verification. It is a
reservoir of fundamental truths and its findings apply safely in all the
situations. In this sense, management is a science as it has also developed
some systematized knowledge. Like other sciences, management has also
developed certain principles, laws, generalizations, which are universal in
nature and are applicable wherever the efforts of the people are to be
coordinated. But management is not as exact science as other physical
sciences like physic, chemistry, biology, astronomy etc. The main reason for
the inexactness of science of management is that it deals with the people and it

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is very difficult to predict their behavior accurately. In this way, management

falls in the area of 'social sciences'. Thus, it is a social science.

Management as an Art:

Art refers to the way of doing specific things; it indicates how an object can be
achieved. In the words of George R. Terry, "Art is bringing about of a desired
result through the application of skill." Art is, thus, skilful application of
knowledge which entirely depends on the inherent capacity of a person which
comes from within a person and is learned from practice and experience. In
this sense, management is certainly an art as a manager uses his skill,
knowledge and experience in solving various problems; both complicated and
non-complicated that arises in the working of his enterprise successful. In the
words of Ernest Dale, "Management is considered as an art rather than science
mainly because managerial skill is a personnel possession and is intuitive."

Conclusion- Management is an Art and Science Both

From the above study, we conclude that management is an art and science
both. According to American Society of Mechanical Engineers, "Management is
the art and science of preparing, organizing and directing human efforts to
control the forces and utilize the material of nature for the benefit of
men.”Thus, it has now been accepted that management is an art as well as
science.

N.B. If science teaches one to know, art teaches one to do. So managers have to
know and do things to perform their activities efficiently and effectively to be
successful.

Management as a Profession

A profession is an occupation requiring,

 body of specialized knowledge and Technical proficiency

 formal training / standardized education and training
 social Responsibility
 code of conduct/professional Ethics

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1) Body of specialized knowledge and Technical proficiency

If an organization needs to have rational and scientific decision making ability,

managers have to be specialized on a systematic body of management. And
also management requires technical proficiency is special fields such as
production, marketing, finance, human resource management, etc. To ensure
all these, management requires intellectual preparation or graduate study.

2) Formal/standardized Education and Training:

A certain field of study to be a profession, it requires formal training and

education. This holds true for management. There are universities, colleges,
and educational institutions specialized that provide formal teaching of
management concepts, theories and principles.

3) Social Responsibility:

Any organization has an objective whether to make surplus, or provide efficient

services to the society, and the like. And also a manager of an organization is
responsible to lead the organization and its members. Besides, managers have
to take into account the obligation to serve the society (mission) and strict
adherence to the prescribed moral, social, and legal conduct; because their
existence depend on the service they give to the society in general.

4) Code of Conduct:

Any discipline to be a profession, it is subjected to the fulfillment of strict

standards, rules and regulations providing the norm of honesty, integrity, and
professional morality to be adhered by the members.

Review and Discussion Questions

1. Define “management".
2. What are the major categories of organizational resources?

3. Is Management applied universally? Explain

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4. Define the following terms:

a) Planning b) Organizing c) Staffing

d) Leading e) Controlling

5. Explain levels of management; Top level management, Middle level

management, and first line management in relation with skills of
management; Technical skills, Conceptual skills and Human skills

6. Describe the major roles of management.

7. Explain management as an art, science and profession

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