Chapter 1: MANAGEMENT

1.1 Concepts of Management

Every organization, at every level, needs management, be it an organization as small as a family

or temple or a church or big organization such as school, colleges, Universities. It is important for
both profit and non-profit organization. In today‘s global world the challenges and opportunities
of business are enormous. Organization will be successful if they are effectively managed.
Management helps in doing and getting things done through others. Management is the process
that optimizes human, material and financial resource of organization for effective achievement of
its goals. The process involves a series of actions (functions) taken by managers, optimization
refers to getting maximum output (goods and service) out of minimum inputs (men, materials
money machine etc) and goals are the result or ends that managers and other stakeholders
(shareholders, consumers, suppliers workers etc) wish to achieve.

Definition of Management by some famous management thinkers:

Terry and Franklin: ―Management is a distinct process consisting of activities of planning,

organizing, actuating and controlling, performed to determine and accomplish stated objectives
with the use of human beings and other resources.

Jones et al (2000) see management as ―the planning, organizing, leading and controlling of
resources to achieve organizational goals effectively and efficiently.

Daft (2006) on his part define management as ―the attainment of organizational goals in an
effective and efficient manner through planning, organizing, leading, and controlling resources.

F.W. Taylor: Management is an art of knowing what is to be done and seeing that it is done in the
best possible manner.

Henri Fayol (1916) opines that management is to forecast, to plan, to organize, to command, to
co-ordinate and control activities of others.

K.M. Bartol and D.C. Martin (1996) say ―Management is the process of achieving
organizational goals by engaging in the four major functions of planning, organizing, leading, and
controlling.

S.P. Robbins and Mary Coulter: ―Management involves coordinating and overseeing the work
activities of others so that their activities are completed efficiently and effectively.

Efficiency: Refers to getting the most output from the least amount of inputs. Efficiency also is
the ability to make the best use of available resources in the process of achieving goals.
Drucker has stated that efficiency means ―doing things right”.........

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Effectiveness: The ability to make the best use of available resource in the process of achieving
goals. Drucker has also stated that effectiveness is “doing the right things “

1.2 Features of Management

Management is an activity concerned with guiding human and physical resources such that
organizational goals can be achieved. Nature of management can be highlighted as: -

1. Management is Goal-Oriented: The success of any management activity is assessed by

its achievement of the predetermined goals or objective. Management is a purposeful
activity. It is a tool which helps use of human & physical resources to fulfill the pre-
determined goals. For example, the goal of an enterprise is maximum consumer satisfaction
by producing quality goods and at reasonable prices. This can be achieved by employing
efficient persons and making better use of scarce resources.
2. Management integrates Human, Physical and Financial Resources: In an organization,
human beings work with non-human resources like machines. Materials, financial assets,
buildings etc. Management integrates human efforts to those resources. It brings harmony
among the human, physical and financial resources.
3. Management is Continuous: Management is an ongoing process. It involves continuous
handling of problems and issues. It is concerned with identifying the problem and taking
appropriate steps to solve it. E.g. the target of a company is maximum production. For
achieving this target various policies have to be framed but this is not the end. Marketing
and Advertising is also to be done. For this policies have to be again framed. Hence this is
an ongoing process.
4. Management is all Pervasive: Management is required in all types of organizations
whether it is political, social, cultural or business because it helps and directs various efforts
towards a definite purpose. Thus clubs, hospitals, political parties, colleges, hospitals,
business firms all require management. When ever more than one person is engaged in
working for a common goal, management is necessary. Whether it is a small business firm
which may be engaged in trading or a large firm like Tata Iron & Steel, management is
required everywhere irrespective of size or type of activity.
5. Management is a Group Activity: Management is very much less concerned with
individual’s efforts. It is more concerned with groups. It involves the use of group effort to
achieve predetermined goal of Enterprise.

1.3 Objectives of Management

The main objectives of management are:

a. Getting Maximum Results with Minimum Efforts - The main objective of management
is to secure maximum outputs with minimum efforts & resources. Management is basically
concerned with thinking & utilizing human, material & financial resources in such a
manner that would result in best combination. This combination results in reduction of
various costs.
b. Increasing the Efficiency of factors of Production - Through proper utilization of
various factors of production, their efficiency can be increased to a great extent which can

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 be obtained by reducing spoilage, wastages and breakage of all kinds, this in turn leads to
saving of time, effort and money which is essential for the growth & prosperity of the
enterprise.
c. Maximum Prosperity for Employer & Employees - Management ensures smooth and
coordinated functioning of the enterprise. This in turn helps in providing maximum benefits
to the employee in the shape of good working condition, suitable wage system, incentive
plans on the one hand and higher profits to the employer on the other hand.
d. Human betterment & Social Justice - Management serves as a tool for the upliftment as
well as betterment of the society. Through increased productivity & employment,
management ensures better standards of living for the society. It provides justice through
its uniform policies.

1.4 Levels of Management

The term “Levels of Management’ refers to a line of demarcation between various managerial
positions in an organization. The number of levels in management increases when the size of the
business and work force increases and vice versa. The level of management determines a chain of
command, the amount of authority & status enjoyed by any managerial position. The levels of
management can be classified in three broad categories:

a. Top level / Administrative level

b. Middle level / Executory
c. Low level / Supervisory / Operative / First-line managers

Managers at all these levels perform different functions. The role of managers at all the three levels
is discussed below:

a. Top Management
It consists of board of directors, chief executive or managing director. The top management is the
ultimate source of authority and it manages goals and policies for an enterprise. It devotes more
time on planning and coordinating functions.
The role of the top management can be summarized as follows -

a. Top management lays down the objectives and broad policies of the enterprise.

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 b. It issues necessary instructions for preparation of department budgets, procedures,
schedules etc.
c. It prepares strategic plans & policies for the enterprise.
d. It appoints the executive for middle level i.e. departmental managers.
e. It controls & coordinates the activities of all the departments.
f. It is also responsible for maintaining a contact with the outside world.
g. It provides guidance and direction.
h. The top management is also responsible towards the shareholders for the performance of
the enterprise.

a) Middle Management
The branch managers and departmental managers constitute middle level. They are responsible to
the top management for the functioning of their department. They devote more time to
organizational and directional functions. In small organization, there is only one layer of middle
level of management but in big enterprises, there may be senior and junior middle level
management. Their role can be emphasized as -

a. They execute the plans of the organization in accordance with the policies and directives
of the top management.
b. They make plans for the sub-units of the organization.
c. They participate in employment & training of lower level management.
d. They interpret and explain policies from top level management to lower level.
e. They are responsible for coordinating the activities within the division or department.
f. It also sends important reports and other important data to top level management.
g. They evaluate performance of junior managers.
h. They are also responsible for inspiring lower level managers towards better performance.

b) Lower/First-line Management

Lower level is also known as supervisory / operative level of management. It consists of

supervisors, foreman, section officers, superintendent etc. According to R.C. Davis, “Supervisory
management refers to those executives whose work has to be largely with personal oversight and
direction of operative employees”. In other words, they are concerned with direction and
controlling function of management. Their activities include -

a. Assigning of jobs and tasks to various workers.

b. They guide and instruct workers for day to day activities.
c. They are responsible for the quality as well as quantity of production.
d. They are also entrusted with the responsibility of maintaining good relation in the
organization.
e. They communicate workers problems, suggestions, and recommendatory appeals etc to the
higher level and higher level goals and objectives to the workers.
f. They help to solve the grievances of the workers.
g. They supervise & guide the sub-ordinates.
h. They are responsible for providing training to the workers.

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 i. They arrange necessary materials, machines, tools etc for getting the things done.
j. They prepare periodical reports about the performance of the workers.
k. They ensure discipline in the enterprise.
l. They motivate workers.
m. They are the image builders of the enterprise because they are in direct contact with the
workers.

It must be noted that the managerial process varies in emphasis within the managerial hierarchy.
For example the Top management performs more planning function than Middle management,
while middle management and Top management perform more organizing function than first line
management. In contrast, leading is substantially more important for first line managers. However
the management function that is common to all three hierarchical levels is controlling.

1.5 Managerial Skills

There are generally three managerial skills expected by every manager, but the skill level varies,
depending on the level in the hierarchy the manager is operating. Manager at all levels must
possess conceptual, human, and technical skills. As we move down the hierarchy, more technical
skills and less conceptual skill are required by mangers. The higher level managers need more
conceptual skill than technical skills. Human skill is important at all levels of the organization
because managers at all levels deal with work force and as such they must possess human skills to
interact with workers.

i. Conceptual skills; Refers to the mental ability of the managers to coordinate and
integrate the organization‘s internal environment with external environment. Managers
at the top level must have skills that will enable them analyze the environmental
opportunities, exploit them gainfully and correlate them with the organization‘s internal
system. Managers must be knowledgeable and imaginative to use this skill.
ii. Human skills; Must be possessed by all managers at all levels. It comprises of the ability
to work with and understand people in the organization.
iii. Technical Skills; These skills require the ability to use tools, procedures, techniques and
knowledge in one‘s area of specialization. It requires a specialized knowledge to perform
task that a manager is attempting to accomplish.

1.6 Management as both science and art

Management as a science - Science is a systematic body of knowledge pertaining to a specific

field of study that contains general facts which explains a phenomenon. It establishes cause and
effect relationship between two or more variables and underlines the principles governing their
relationship. These principles are developed through scientific method of observation and
verification through testing.

Management as an art - Art implies application of knowledge & skill to trying about desired
results. An art may be defined as personalized application of general theoretical principles for
achieving best possible results.

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Management is both an art and a science. The above mentioned points clearly reveal that
management combines features of both science as well as art. It is considered as a science because
it has an organized body of knowledge which contains certain universal truth. It is called an art
because managing requires certain skills which are personal possessions of managers. Science
provides the knowledge & art deals with the application of knowledge and skills.
A manager to be successful in his profession must acquire the knowledge of science & the art of
applying it. Therefore management is a judicious blend of science as well as an art because it
proves the principles and the way these principles are applied is a matter of art. Science teaches to
’know’ and art teaches to ’do’.

E.g. a person cannot become a good singer unless he has knowledge about various ragas & he also
applies his personal skill in the art of singing. Same way it is not sufficient for manager to first
know the principles but he must also apply them in solving various managerial problems that is
why, science and art are not mutually exclusive but they are complementary to each other (like tea
and biscuit, bread and butter etc.).

The old saying that “Manager are Born” has been rejected in favor of “Managers are Made”. It has
been aptly remarked that management is the oldest of art and youngest of science. To conclude,
we can say that science is the root and art is the fruit.

2.0 MANAGEMENT THOUGHT

Management is defined as the art of getting things done by making the best use of available
resources. Over the passing centuries, organisational structure has undergone radical changes, and
simultaneously the process of management as well. Hence, several theories were propounded over
centuries which were considered crucial for understanding business operations. These, when
clubbed together, are called Management Thought.

Management Thought may be defined the acquiring knowledge, Thinking and concepts of
different authors about the basic theory of management is called management thought.

Management Thought is the gathering knowledge about the origin of management, Thinking
proper and foundation of management research of different anthers about the basic concepts of
management.
Management thought has evolved over the centuries and can be classified as follows:

2.1 Pre-scientific or Pre- Classical Management Theories

2.2 Classical Theory: Taylor‘s Scientific, Fayol‘s Administrative, & Weber‘s Bureaucracy
Theories
2.3 Behavioural Theory: Human Relations or Neo-classical, Behavioural theories
2.4 Modern Management Theory: Quantitative, System, Contingency, and Operational theories.

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2.1 Pre-scientific or Pre- Classical Management Theories

A number of individuals in the pre-classical period of the middle and late 1800s offered ideas that
laid the groundwork for subsequent, broader inquiries into the nature of management. Among the
principal pre-classical contributors are Robert Owen, Charles Babbage and Henry R Towne.

ROBERT OWEN (1771-1858): A successful British entrepreneur was well ahead of his time in
recognizing the importance of human resources. He became particularly interested in the working
and living conditions of his employees while running a cotton mill in New Lanark, Scotland. As
was common, the mill employed 400 to 500 young children, who worked 13-hour days that
included 1 hour off for meals. Owen tried to improve the living condition of the employees by
upgrading streets, houses, sanitation and the educational system in New Lanark. At the time, Owen
was considered to be radical, but today his views are widely accepted. His ideas laid the
groundwork for the human relations movement.

CHARLES BABAGE (1792-1871): An English mathematician is widely known as the father of

modern computing. His projects produced the world‘s first practical mechanical calculator and an
analytical engine that had the basic element of a modern day computer. Difficulties in directing
his various projects, however, helped him to explore new ways of doing things. In the process, he
made direct contributions to management theory.

Babbage was enthralled with the idea of work specialization, the decree to which work was divided
into various jobs. He recognized that not only physical work but mental work as well could be
specialized.

Babbage also devised a profit- sharing plan that had two parts, a bonus that was awarded for useful
suggestions and a portion of wages that was depended on factory profit.

Henry Robinson Towne (1844-1924):

Henry R. Towne, President of the Yale Lock Manufacturing Company and a mechanical engineer.
He emphasized the need to consider management as a separate field of systematic study on the
same as engineering. In a paper, “The Engineer as an Economist”, presented in 1886, Towne
suggested that management be studied as a science and that principles be developed that could be
used across various management situations. Frederick W. Taylor, who attended the presentation,
was influenced by Towne’s ideas. Subsequently, Taylor developed the principles of scientific
management.

Towne’s most significant contribution to management was the leading part he played in
persuading his fellow engineers to extend the traditional scope of their professional interest to
include management subjects.

Major Features of Pre-classical Contributors

i. Robert Owen: Advocated concerns for the working and living conditions of workers
ii. Charles Babbage: Built the first practical mechanical calculator and a prototype of modern
computers: predicted the specialization of mental work: suggested profit sharing.

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iii. Henry R. Towne: Outlined the importance of management as a science and called for the
development of management principles.

2.2 Classical Theory of Management

One of the first schools of management thought, the classical management theory, developed
during the Industrial Revolution when new problems related to the factory system began to appear.
Managers were unsure of how to train employees (many of them non-English speaking
immigrants) or deal with increased labor dissatisfaction, so they began to test solutions. As a result,
the classical management theory developed from efforts to find the ―one best way to perform and
manage tasks. This school of thought is made up of two branches:
a) Classical scientific theory and
b) Classical administrative theory

a) Classical scientific theory; This arose because of the need to increase productivity and
efficiency. The emphasis was on trying to find the best way to get the most work done by
examining how the work process was actually accomplished and by scrutinizing the skills of
the workforce. The classical scientific school owes its roots to several major contributors,
including Frederick Taylor, Henry Gantt, and Frank and Lillian Gilbreth.

i. Frederick Taylor is often called the ―father of scientific management. Taylor believed that
organizations should study tasks and develop precise procedures. As an example, in 1898,
Taylor calculated how much iron from rail cars Bethlehem Steel plant workers could be
unloading if they were using the correct movements, tools, and steps. The result was an amazing
47.5 tons per day instead of the mere 12.5 tons each worker had been averaging. In addition,
by redesigning the shovels the workers used, Taylor was able to increase the length of work
time and therefore decrease the number of people shoveling from 500 to 140. Lastly, he
developed an incentive system that paid workers more money for meeting the new standard.
Productivity at Bethlehem Steel shot up overnight. As a result, many theorists followed Taylor‘s
philosophy when developing their own principles of management.

Taylors Principles of Management

i) Scientifically study each part of a task and develop the best method for developing the task.
ii) Carefully select workers and train them to perform the task by using the scientifically
developed method.
iii) Cooperate fully with workers to ensure that they use the proper method.
iv) Divide work and responsibilities so that management is responsible for planning work
methods using scientific principles and workers are responsible for executing the work
accordingly.

ii. Henry Gantt, an associate of Taylor, developed the Gantt chart, a bar graph that measures
planned and completed work along each stage of production. Based on time instead of quantity,
volume, or weight, this visual display chart has been a widely used as a planning and control
tool since its development in 1910.

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iii. Frank and Lillian Gilbreth, a husband-and-wife team, studied job motions. In Frank‘s early
career as an apprentice bricklayer, he was interested in standardization and method study. He
watched bricklayers and saw that some workers were slow and inefficient, while others were
very productive. He discovered that each bricklayer used a different set of motions to lay bricks.
From his observations, Frank isolated the basic movements necessary to do the job and
eliminated unnecessary motions. Workers using these movements raised their output from
1,000 to 2,700 bricks per day. This was the first motion study designed to isolate the best
possible method of performing a given job. Later, Frank and his wife Lillian studied job motions
using a motion picture camera and a split-second clock.

The basic ideas regarding scientific management developed include the following:

a) Developing new standard methods for doing each job

b) Selecting, training, and developing workers instead of allowing them to choose their own tasks
and train themselves
c) Developing a spirit of cooperation between workers and management to ensure that work is
carried out in accordance with devised procedures
d) Dividing work between workers and management in almost equal shares, with each group taking
over the work for which it is best fitted

b) Classical administrative theory; Whereas scientific management focused on the productivity

of individuals, the classical administrative approach concentrates on the total organization. The
emphasis is on the development of managerial principles rather than work methods.
Contributors to this school of thought include Max Weber, Henri Fayol, Mary Parker Follett,
and Chester I. Barnard. These theorists studied the flow of information within an organization
and emphasized the importance of understanding how an organization operated.
i. In the late 1800s, Max Weber disliked the idea that many European organizations were
managed on a ―personal (family-like) basis and that employees were loyal to individual
supervisors rather than to the organization. He believed that organizations should be managed
impersonally and that a formal organizational structure, where specific rules were followed,
was important. In other words, he didn‘t think that authority should be based on a person‘s
personality. He thought authority should be something that was part of a person‘s job and passed
from individual to individual as one person left and another took over. This non-personal
objective from organization was called a bureaucracy.

Weber believed that all bureaucracies have the following characteristics:

a) A well-defined hierarchy. All positions within a bureaucracy are structured in a way that
permits the higher positions to supervise and control the lower positions. This clear chain of
command facilitates control and order throughout the organization.
b) Division of labour and specialization. All responsibilities in an organization are specialized
so that each employee has the necessary expertise to do a particular task.
c) Rules and regulations. Standard operating procedures govern all organizational activities to
provide certainty and facilitate coordination
d) Impersonal relationships between managers and employees. Managers should maintain an
impersonal relationship with employees so that favoritism and personal prejudice do not influence
decisions.

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e) Competence. Competence and not ―whom you know, should be the basis for all decisions
made in hiring, job assignments, and promotions in order to foster ability and merit as the primary
characteristics of a bureaucratic organization.
f) Records. A bureaucracy needs to maintain complete files regarding all its activities.

ii. Henri Fayol, a French mining engineer, developed 14 principles of management based on his
management experiences. These principles provide modern-day managers with general guidelines
on how a supervisor should organize his department and manage his staff.

1. Division of work: Division of work and specialization produces more and better work with the
same effort.
2. Authority and responsibility: Authority is the right to give orders and the power to exact
obedience. A manager has official authority because of her position, as well as personal authority
based on individual personality, intelligence, and experience. Authority creates responsibility.
3. Discipline: Obedience and respect within an organization are absolutely essential. Good
discipline requires managers to apply sanctions whenever violations become apparent.
4. Unity of command: An employee should receive orders from only one superior.
5. Unity of direction: Organizational activities must have one central authority and one plan of
action.
6. Subordination of individual interest to general interest: The interests of one employee or group
of employees are subordinate to the interests and goals of the organization.
7. Remuneration of personnel: Salaries (the price of services rendered by employees) should be
fair and provide satisfaction both to the employee and employer.
8. Centralization: The objective of centralization is the best utilization of personnel. The degree
of centralization varies according to the dynamics of each organization.
9. Scalar chain: A chain of authority exists from the highest organizational authority to the lowest
ranks.
10. Order: Organizational order for materials and personnel is essential. The right materials and
the right employees are necessary for each organizational function and activity.
11. Equity: In organizations, equity is a combination of kindliness and justice. Both equity and
equality of treatment should be considered when dealing with employees.
12. Stability of tenure of personnel: To attain the maximum productivity of personnel, a stable
work force is needed.
13. Initiative: Thinking out a plan and ensuring its success is an extremely strong motivator. Zeal,
energy, and initiatives are desired at all levels of the organizational ladder.
14. Esprit de corps: Teamwork is fundamentally important to an organization. Work teams and
extensive face-to-face verbal communication encourages teamwork.

iii. Mary Parker Follett stressed the importance of an organization establishing common goals
for its employees. However, she also began to think somewhat differently than the other theorists
of her day, discarding command-style hierarchical organizations where employees were treated
like robots. She began to talk about such things as ethics, power, and leadership. She encouraged
managers to allow employees to participate in decision making. She stressed the importance of
people rather than techniques - a concept very much before her time.

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iv. Chester Barnard, who was president of New Jersey Bell Telephone Company, introduced the
idea of the informal organization (exclusive groups of people) that naturally form within a
company. He felt that these informal organizations provided necessary and vital communication
functions for the overall organization and that they could help the organization accomplish its
goals. Barnard felt that it was particularly important for managers to develop a sense of common
purpose where a willingness to cooperate is strongly encouraged. He is credited with developing
the acceptance theory of management, which emphasizes the willingness of employees to
accept that managers have legitimate authority to act.

Barnard felt that four factors affected the willingness of employees to accept authority:
a) The employees must understand the communication.
b) The employees accept the communication as being consistent with the organization‘s purposes.
c) The employees feel that their actions will be consistent with the needs and desires of the other
employees.
d) The employees feel that they are mentally and physically able to carry out the order.

Barnard‘s sympathy for and understanding of employee needs positioned him as a bridge to the
behavioral school of management, the next school of thought to emerge.

George R. Terry
After Fayol, many theorists have looked at the functions and crafter their own ideas, deviating only
slightly from Fayol’s core functions. George R. Terry wrote a book Principles of Management in
1968 and outlined his view on the principles. Terry believed there to be four core functions, each
function posing and responding to a specific question the management must solve. The question,
the fundamental function and the resulting action are outlined in the below graph:

The Question The Function The Result

What is the need? Planning Objectives, policies,
procedures and methods
Where should actions take Organizing Work division, work
place and who should do what assignment, and authority
work? utilization
Why and how should group Actuating Leadership, communication,
members perform their tasks? development, and incentives
Are the actions being Controlling Reports, comparisons, costs
performed according to plan? and budgets

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2.3 Behavioral Management Theory / Human Relations Movement

As management research continued in the 20th century, questions began to come up regarding the
interactions and motivations of the individual within organizations. Management principles which
were developed during the classical period were simply not useful in dealing with many
management situations and could not explain the behavior of individual employees. In short,
classical theory ignored employee motivation and behavior. As a result, the behavioral school was
a natural outgrowth of this revolutionary management experiment. The behavioral management
theory is often called the human relations movement because it addresses the human dimension
of work. Behavioral theorists believed that a better understanding of human behavior at work, such
as motivation, conflict, expectations, and group dynamics, improved productivity. The theorists
who contributed to this school viewed employees as individuals, resources, and assets to be
developed and worked with - not as machines, as in the past. Several individuals and experiments
contributed to this theory.

Elton Mayo’s contributions came as part of the Hawthorne studies, a series of experiments that
rigorously applied classical management theory only to reveal its shortcomings. The Hawthorne
experiments consisted of two studies conducted at the Hawthorne Works of the Western Electric
Company in Chicago from 1924 to 1932. The first study was conducted by a group of engineers
seeking to determine the relationship of lighting levels to worker productivity. Surprisingly
enough, they discovered that worker productivity increased as the lighting levels decreased- that
is, until the employees were unable to see what they were doing, after which performance naturally
declined. A few years later, a second group of experiments began. Harvard researchers Mayo and
F. J. Roethlisberger supervised a group of five women in a bank wiring room. They gave the
women special privileges, such as the right to leave their workstations without permission, take
rest periods, enjoy free lunches, and have variations in pay levels and workdays. This experiment
also resulted in significantly increased rates of productivity. In this case, Mayo and Roethlisberger
concluded that the increase in productivity resulted from the supervisory arrangement rather than
the changes in lighting or other associated worker benefits. Because the experimenters became the
primary supervisors of the employees, the intense interest they displayed for the workers was the
basis for the increased motivation and resulting productivity. Essentially, the experimenters
became a part of the study and influenced its outcome. The general conclusion from the Hawthorne
studies was that human relations and the social needs of workers are crucial aspects of business
management. This principle of human motivation helped revolutionize theories and practices of
management.

Abraham Maslow, a practicing psychologist, developed one of the most widely recognized needs
theories, a theory of motivation based upon a consideration of human needs. His theory of human
needs had three assumptions: a) Human needs are never completely satisfied. b) Human behavior
is purposeful and is motivated by the need for satisfaction. c) Needs can be classified according to
a hierarchical structure of importance, from the lowest to highest.

Maslow broke down the needs hierarchy into five specific areas:

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a) Physiological needs. Maslow grouped all physical needs necessary for maintaining basic human
well-being, such as food and drink, into this category. After the need is satisfied, however, it is no
longer a motivator.

b) Safety needs. These needs include the need for basic security, stability, protection, and freedom
from fear. A normal state exists for an individual to have all these needs generally satisfied.
Otherwise, they become primary motivators.

c) Belonging and love needs. After the physical and safety needs are satisfied and are no longer
motivators, the need for belonging and love emerges as a primary motivator. The individual strives
to establish meaningful relationships with significant others.

d) Esteem needs. An individual must develop self-confidence and wants to achieve status,
reputation, fame, and glory.

e) Self-actualization needs. Assuming that all the previous needs in the hierarchy are satisfied, an
individual feels a need to find himself. Maslow‘s hierarchy of needs theory helped managers
visualize employee motivation.

Douglas McGregor was heavily influenced by both the Hawthorne studies and Maslow. He
believed that two basic kinds of managers exist. One type, the Theory X manager, has a negative
view of employees and assumes that they are lazy, untrustworthy, and incapable of assuming
responsibility. On the other hand, the Theory Y manager assumes that employees are not only
trustworthy and capable of assuming responsibility, but also have high levels of motivation. An
important aspect of McGregor‘s idea was his belief that managers who hold either set of
assumptions can create self-fulfilling prophecies - that through their behavior, these managers
create situations where subordinates act in ways that confirm the manager‘s original expectations.

As a group, these theorists (contributors) discovered that people worked for inner satisfaction and
not materialistic rewards, shifting the focus to the role of individuals in an organization‘s
performance.

2.4 Modern Management Theory

a. Quantitative School of Management

During World War II, mathematicians, physicists, and other scientists joined together to solve
military problems. The quantitative school of management is a result of the research conducted
during World War II. The quantitative approach to management involves the use of quantitative
techniques, such as statistics, information models, and computer simulations, to improve decision
making.

This school consists of several branches, described in the following sections.

i. Management science: The management science school emerged to treat the problems
associated with global warfare. Today, this view encourages managers to use mathematics,
statistics, and other quantitative techniques to make management decisions. Managers can

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 use computer models to figure out the best way to do something - saving both money and
time. Managers use several science applications a) Mathematical forecasting helps make
projections that are useful in the planning process. b) Inventory modeling helps control
inventories by mathematically establishing how and when to order a product. c) Queuing
theory helps allocate service personnel or workstations to minimize customer waiting and
service cost.

ii. Operations management: Operations management is a narrow branch of the quantitative

approach to management. It focuses on managing the process of transforming materials,
labor, and capital into useful goods and/or services. The product outputs can be either goods
or services; effective operations management is a concern for both manufacturing and
service organizations. The resource inputs, or factors of production, include the wide variety
of raw materials, technologies, capital information, and people needed to create finished
products. The transformation process, in turn, is the actual set of operations or activities
through which various resources are utilized to produce finished goods or services of value
to customers or clients. 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.

iii. Management information systems (MIS): It is the most recent subfield of the quantitative
school. MIS organizes past, present, and projected data from both internal and external
sources and processes it into usable information, which it then makes available to managers
at all organizational levels. The information systems are also able to organize data into usable
and accessible formats. As a result, managers can identify alternatives quickly, evaluate
alternatives by using a spreadsheet program, pose a series of ―what-if questions, and finally,
select the best alternatives based on the answers to these questions.

iv. Systems management theory: The systems management theory has had a significant effect
on management science. A system is an interrelated set of elements functioning as a whole.
An organization as a system is composed of four elements:
a) Inputs- material or human resources
b) Transformation processes- technological and managerial processes
c) Outputs- products or services
d) Feedback- reactions from the environment

In relationship to an organization, inputs include resources such as raw materials, money,

technologies, and people. These inputs go through a transformation process where they‘re
planned, organized, motivated, and controlled to ultimately meet the organization‘s goals.
The outputs are the products or services designed to enhance the quality of life or
productivity for customers/clients. Feedback includes comments from customers or clients
using the products. This overall systems framework applies to any department or program in
the overall organization. Systems theory may seem quite basic.

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 The systems theory encourages managers to look at the organization from a broader
perspective. Managers are beginning to recognize the various parts of the organization, and,
in particular, the interrelations of the parts.

The following terminology is important to your understanding of the systems approach:

a) An organization that interacts little with its external environment (outside environment)
and therefore receives little feedback from it is called a closed system.
b) An open system, in contrast, interacts continually with its environment. Therefore, it is
well informed about changes within its surroundings and its position relative to these
changes.
c) A subsystem is any system that is part of a larger one.
d) Entropy is the tendency of systems to deteriorate or break down over time.
e) Synergy is the ability of the whole system to equal more than the sum of its parts.

b. Contingency School of Management

The appropriate management actions and approaches depend on the situation. Managers with a
contingency view use a flexible approach, draw on a variety of theories and experiences, and
evaluate many options as they solve problems. Contingency management recognizes that there is
no one best way to manage. In the contingency perspective, managers are faced with the task of
determining which managerial approach is likely to be most effective in a given situation. For
example, the approach used to manage a group of teenagers working in a fast-food restaurant
would be very different from the approach used to manage a medical research team trying to find
a cure for a disease. Contingency thinking avoids the classical ―one best way arguments and
recognizes the need to understand situational differences and respond appropriately to them. It
does not apply certain management principles to any situation. Contingency theory recognizes the
extreme importance of individual manager‘s performance in any given situation. The contingency
approach is highly dependent on the experience and judgment of the manager in a given
organizational environment.

c. Quality School of Management

The quality school of management is a comprehensive concept for leading and operating an
organization, aimed at continually improving performance by focusing on customers while
addressing the needs of all stakeholders. In other words, this concept focuses on managing the total
organization to deliver high quality to customers.

The quality school of management considers the following in its theory:

a) Organization makeup. Organizations are made up of complex systems of customers and
suppliers. Every individual, executive, manager, and worker functions as both a supplier and a
customer.
b) Quality of goods and services. Meeting the customers‘ requirements is a priority goal and
presumed to be a key to organizational survival and growth.
c) Continuous improvement in goods and services. Recognizing the need to pinpoint internal
and external requirements and continuously strive to improve. It is an idea that says, ―the
company is good, but it can always become better.

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d) Employees working in teams. These groups are primary vehicles for planning and problem
solving.
e) Developing openness and trust. Confidence among members of the organization at all levels
is an important condition for success.

Quality management involves employees in decision making as a way to prevent quality problems.

i. The Kaizen approach uses incremental, continuous improvement for people, products, and
processes. The very notion of continuous improvement suggests that managers‘ teams and
individuals learn from both their accomplishments and their mistakes. Quality managers help
their employees gain insights from personal work experiences, and they encourage everyone to
share with others what they have learned. In this way, everyone reflects upon his or her own
work experiences, including failures, and passes their newfound knowledge to others. Sharing
experiences in this manner helps to create an organization that is continuously discovering new
ways to improve. Kaizen is the commitment to work toward steady, continual improvement.
The best support for continuous improvement is an organization of people who give a high
priority to learning. In this process, everyone in the organization participates by identifying
opportunities for improvement, testing new approaches, recording the results, and
recommending changes.

ii. Reengineering: It is the radical redesign of business processes to achieve dramatic

improvements in cost, quality, service, and speed. It requires that every employee and manager
look at all aspects of the company‘s operation and find ways to rebuild the organizational
systems to improve efficiency, identify redundancies, and eliminate waste in every possible
way. Reengineering is neither easy nor cheap, but companies that adopt this plan have reaped
remarkable results. Reengineering efforts look at how jobs are designed, and raise critical
questions about how much work and work processes can be optimally configured.

iii. Management in the Future Modern management approaches respect the classical, human
resource, and quantitative approaches to management. However, successful managers
recognize that although each theoretical school has limitations in its applications, each approach
also offers valuable insights that can broaden a manager‘s options in solving problems and
achieving organizational goals. Successful managers work to extend these approaches to meet
the demands of a dynamic environment. Modern management approaches recognize that people
are complex and variable. Employee needs change over time; people possess a range of talents
and capabilities that can be developed. Organizations and managers, therefore, should respond
to individuals with a wide variety of managerial strategies and job opportunities.

Key themes to be considered, as the twenty-first century progresses, include the following:
a) The commitment to meet customer needs 100 percent of the time guides organizations toward
quality management and continuous improvement of operations.
b) Today‘s global economy is a dramatic influence on organizations, and opportunities abound to
learn new ways of managing from practices in other countries.
c) Organizations must reinvest in their most important asset, their people. If organizations cannot
make the commitment to lifelong employment, they must commit to using attrition to reduce head

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count. They will not receive cooperation unless they make it clear that their people will not be
working themselves out of a job.
d) Managers must excel in their leadership responsibilities to perform numerous different roles.

3. MANAGEMENT AND ADMINISTRATION

According to Theo Haimann, “Administration means overall determination of policies, setting of

major objectives, the identification of general purposes and laying down of broad programmes and
projects”. It refers to the activities of higher level. It lays down basic principles of the enterprise.
According to Newman, “Administration means guidance, leadership & control of the efforts of the
groups towards some common goals”.

Whereas, management involves conceiving, initiating and bringing together the various elements;
coordinating, actuating, integrating the diverse organizational components while sustaining the
viability of the organization towards some pre-determined goals. In other words, it is an art of
getting things done through & with the people in formally organized groups.

The difference between Management and Administration can be summarized under 2 categories:

On the Basis of Functions: -

Basis Management Administration

Meaning Management is an art of getting things done It is concerned with formulation of

through others by directing their efforts broad objectives, plans & policies.
towards achievement of pre-determined
goals.

Nature Management is an executing function. Administration is a decision-

making function.

Process Management decides who should as it & Administration decides what is to

how should he dot it. be done & when it is to be done.

Function Management is a doing function because Administration is a thinking

managers get work done under their function because plans & policies
supervision. are determined under it.

Skills Technical and Human skills Conceptual and Human skills

Level Middle & lower level function Top level function

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On the Basis of Usage: -

Basis Management Administration

Applicability It is applicable to business concerns It is applicable to non-business

i.e. profit-making organization. concerns i.e. clubs, schools, hospitals
etc.

Influence The management decisions are The administration is influenced by

influenced by the values, opinions, public opinion, govt. policies, religious
beliefs & decisions of the managers. organizations, customs etc.

Status Management constitutes the Administration represents owners of

employees of the organization who the enterprise who earn return on their
are paid remuneration (in the form capital invested & profits in the form of
of salaries & wages). dividend.

4. THE FIVE FUNCTIONS OF MANAGEMENT

Management is essential for an organized life and necessary to run all types of organizations.
Managing life means getting things done to achieve life’s objectives and managing an organization
means getting things done with and through other people to achieve its objectives.

Functions of management given by KOONTZ and O’DONNEL, there are basically five primary
functions of management that are performed by managers to achieve the desired goals.

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 Management Function # 1. Planning:

The first managerial function involves planning. The function is about creating a detailed plan
towards achieving a specific organizational objective. Planning involves the formulation of what
is to be done, how, when, where it is to be done, who is to do it and how results are to be evaluated.
It is the first essential which is to be performed by a manager to determine what must be done by
the member in order to accomplish the work.

It is the most important step in the process of getting results. It enables the management to be a
step ahead of each activity, retain initiative to make use of any opportunity and anticipate problems
before they actually arise.

The process of planning involves:

i. Crystallization of determination of the corporate objectives:- It means that first of all, the
targets to be achieved should be well defined. The top management must lay down the
objectives of the company as far as possible in quantified terms.
ii. Collection and classification of information:- It means that relevant information relating to the
objectives should be properly collected and classified.
iii. Development of the alternative courses of action:- Comparison of the alternatives in terms of
objectives, feasibility and consequences.
iv. Selection of the optimum course of action:- The manager is often faced with alternative courses
of action. He must adopt the one which has the highest probability of yielding the maximum
benefit or gain for himself and the company, This selection from alternative courses of action
is sometimes referred to as the principle of alternative planning.
v. Establishment of policies, procedures, methods, schedules, systems, standard and budgets:- It
means that the plans must be detailed and flexible so that they are capable of being readjusted
in case there is a change in the working conditions and/or objectives.

An example of planning would be a situation where you have an objective, such as increasing the
sales by 20% in the following month. You will need to look at the different ways you and the team
could achieve this goal. This might include things like creating a new advertisement campaign,
reducing prices or speaking to customers about their shopping plans. Your role is to pick the
processes that you find the most appropriate and to organize them into a logical pattern. You must
also identify the timeline for these processes.

Management Function # 2. Organizing:

After the objectives and course and make up of action have been determined, the next step is to
distribute or allocate the necessary component activities among the members of the group. The
work of task allocation, authority delegation and relationship establishing by the manager is known
as organizing.

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The process of organizing involves:
i. Division of the work in to component activities;
ii. Assigning people to tasks;
iii. Defining responsibilities;
iv. Delegation of authority; and
v. Establishment of structural relationships to secure coordination.

Management Function # 3. Staffing:

Success of any organisation depends upon the ability, qualification & experience of its employees.
So, in managing the affairs smoothly, the role of recruitment & selection is very important. For
doing this work, the superior has to do man power planning i.e., the planning for how many persons
are required and what should be the qualities they possess. On this basis, persons are selected and
after that they are trained.

Staffing function involves the following activities:

i. Forecasting of the number of personnel required.
ii. Decide their qualification which is required.
iii. Recruitment & selection.
iv. Training & development of employees.
v. Performance evaluation of employees.
vi. Take the decision relating to the issues like promotion, transfer, demotion etc.
vii. Prepare a compensation package plan.
viii. Maintaining personnel accounts.

Management Function # 4. Directing:

To carry out physically the activities resulting from the planning & organizing steps, it is necessary
for the manager to take measures that will start and continue action as long as they are needed in
order to accomplish the tasks by the members of the group.

The process of directing involves:

i. Providing effective leadership.
ii. Integrating people and tasks and convincing them to assist in the achievement of the overall
objectives.
iii. Effective communication, and
iv. Providing climate for subordinates’ development.

Management Function # 5. Controlling:

Controlling involves checking the performance by comparing it with the desired results to see how
much has been achieved or whether we are going in right direction or not. Controlling is an exercise
of intro-inspection.

Controlling involves the following activities:

i. Continuous observation and study of periodic results of performance in order to identify
potential problems;
ii. Selection of the best of the mode of control;
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iii. Comparison of the performance with the range of standards established before hand;
iv. Pinpointing significant deviations;
v. Assertion their exact causes; and
vi. Initiation and implementation of the corrective action.

QUESTION BANK
1. Write the various definitions of management.
2. What are the features of management? Explain in details.
3. What are the objectives of management.
4. Explain the “Levels of management”.
5. What are the role of the top management?
6. What are the role of the middle level management?
7. What are the role of the lower level management?
8. What are the three managerial skills expected by every manager ?
9. Give an outline of management thought during the 20th century.
10. Explain “Taylors Principles of Management”.
11. What are the basic ideas regarding scientific management developed?
12. Explain the characteristics of all bureaucracies according to Weber.
13. Distinguish between management and administration.
14. What are the major Features of Pre-classical Contributors ?
15. What is scientific management? Explain its basic elements.
16. Give the 14 principles of management propagated by Henry Fayol.
17. Explain the Human Relation Management in detail.
18. Explain the Modern Management in detail.
19. Explain Management As an Art, Science or Profession
20. Explain Evolution Of Management.
21. Define different thoughts of Management.
22. Explain the various functions of management.

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