UNIT I INTRODUCTION TO MANAGEMENT 10 Hrs

Definition – nature, process and significance of management – Role of managers –

Managerial Skills – Theories of Management: Classical Management Theories – F.W. Taylor’s
Theory of Scientific Management, Fayol’s 14 Principles of Management; Behavioural
Management Theory – Hawthorne Studies; Systems Theory, Contingency Theory - Functions
of Management

Definition – nature, process and significance of management

DEFINITIONS:
Management can be defined as a process of getting the work or the task done that is
required for achieving the goals of an organisation in an efficient and effective manner.
Process implies the functions of the management. That is, planning, organising, staffing,
directing and controlling.
1.) Frederick Winslow Taylor (1856-1915) – “Management is the art of knowing what you
want to do and then seeing that you do it in the best and the cheapest way.“
2.) George R. Terry (1909-1979) “Management is a distinct process consisting of planning,
organizing, actuating and controlling, performed to determine and accomplish the stated
objective by the use of human beings and other resources.”
3.) Harold Koontz (1909-1984) “Management is the art of getting things done through others
and with formally organized groups. It is the art of creating an environment in which people
can perform and individuals can cooperate on the attainment of group goals.”
4.) Peter Ferdinand Drucker (1909-2005) “Management may be defined as the process by
means of which the purpose and objectives of a particular human group are determined,
clarified, and effectuated. Management is a multipurpose organ that manages a business
and manages, and the manager manages workers and work.
5.) Mary Parker Follett (1868-1933). “Management is the art of getting things done through
people.”
6.) Henri Fayol (1841-1925): “Management is to forecast, to plan, to organize, to command,
to co-ordinate and control activities of others.”
7.) J. D. Moony and A. C. Railey :“Management is the art of directing and inspiring people”.
8.) Koontz O Donnel: “Management is the art of getting things done through and with
people in formally organized groups”.
9.) Harold Koontz & Heinz Weihrich: “Management is the process of designing and
maintaining an environment in which individuals, working together, in groups, efficiently
accomplish selected aims”.
10.) George R. Terry & Stephen G. 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”.

NATURE / CHARACTERISTICS OF MANAGEMENT:

Following are the nature and characteristics of Management:
1. Management is an activity. It is a process of organized activity concerned with efficient
utilization of resources of production like men, material, machine, money etc.
2. Management is a purposeful activity. It is concerned with the achievement of an
objective through its functions. Objectives may be explicit or implicit.
3. Management concerned with the efforts of a group. Management is concerned with
management of people and not the direction of things. It motivates the workers to
contribute their best.
4. Management is getting things done. A manager does not do any operating work himself
but gets it done through others.
5. Management applies economic principles. Management is the art of applying the
economic principles that underlie a control of men and materials in the enterprise under
consideration.
6. Management involves decision-making. It is a decision-making process and the decisions
are involved in all the functions of management.
7. Management coordinates all activities and resources. It is concerned with coordination of
all activities and resources to attain the specific objectives.
8. Management is a universal activity. The techniques and tools of management are
universally applicable.
9. Management is an integrating process. It integrates the men, materials and machines for
achieving stated objectives.
10. Management is concerned with direction and control. It is concerned with direction and
control of human efforts to attain the specific objectives
11. Management is intangible. It is abstract and cannot be seen. It is evidenced by the
quality of organization and through its results.
12. Management is both science and an art. Management has certain universally applicable
principles, laws etc. Hence, it is a science. It is also an art, because it is concerned with
application
of knowledge for the solution of organizational problems.
13. Management is a profession. It is becoming a profession because there is established
principles of management which being applied in practice.
14. Management is an inter-disciplinary approach. Management as a body of discipline
takes the help or other social science like psychology, sociology, engineering, economics,
mathematics etc.
15. Management is dynamic and not static. Management adopts itself to the social changes
and also introduces innovation in methodology.

PROCESS OF MANAGEMENT:

There is enough disagreement among management writers on the classification of

managerial functions. Some classify these functions into four types, some into six or seven.
The terminology is also not always alike, different authors offering different names for the
same functions of management. For managerial purpose, the following five functions are
very essential for managers. They are planning, organizing, staffing, directing and controlling.
(i) Planning. Planning is the function that determines in advance what should be done. It is
looking ahead and preparing for the future. It is a process of deciding the business objectives
and charting out the methods of attaining those objectives. In other words, it is the
determination of what is to be done, how and where it is to be done, who is to do it and
how results are to be evaluated. This is done not only for the organization as a whole but for
every division or department or sub-unit of the organization. It is a function, which is
performed by managers at all levels, like top, middle and supervisory levels of management.
Plans made by top management of the organizations whole may cover periods as long as five
or ten years. Also, plans made by middle- or first-line managers, cover such shorter periods.
Such plans may be for the next days or weeks, or months, etc. for example, for a two-hour
meeting to take place in a week. Following are the sub functions of planning: forecasting,
decision making, strategic formulation, policy-making, programming, scheduling, budgeting,
problem solving, innovation and research activities.
(ii) Organizing. It refers to coordinate human resources with other resources such as
material, machine, money etc. Once managers have established objectives and developed
plans to achieve them, they must design and develop a human organization that will be able
to carry out those plans successfully. According to Allen, this organization refers to the
“Structure which results from identifying and grouping work, defining and delegating
responsibility and authority, and establishing relationships.” According to Amitai Etzioni, “An
organization is a social unit or human grouping, deliberately structured for the purpose of
attaining specific goals”.
The process of organizing involves the followings:
• Identifying the activities necessary to achieve the objectives.
• Grouping activities into various departments.
• Assigning duties or tasks to appropriate individuals.
• Delegating necessary authority to individuals and fixing responsibilities for results.
• Defining authority and responsibility relationship among individuals.

Sub-functions of organizing functions are as follows: Functionalisation, divisionalisation,

departmentation, delegation, decentralization, activity analysis, task allocation.

(iii) Staffing. Staffing may also be considered an important function involved in building the
human organization. In staffing, the manager attempts to find the right person for each job.
Staffing fixes a manager’s responsibility to recruit and to make certain that there is enough
manpower available to fill the various positions needed in the organization. Staffing involves
the selection and training of future managers and a suitable system of compensation.
Staffing obviously cannot be done once and for all, since people are continually leaving,
getting fired, retiring and dying. Often too, the changes in the organization create new
positions, and these must be filled. According to Koontz and O’Donnell, “The managerial
function of staffing involves manning the organizational structure through proper and
effective selection, appraisal and development of personnel to fill the roles designed into the
structure”.
Staffing function has the following sub functions. They are manpower planning, recruitment,
selection, training and development, placement, compensation, promotion, appraisal etc.
(iv) Directing. After plans have been made and the organization has been established and
staffed, the next step is to move towards its defined objectives. This function can be called
by various names: ‘Leading’, ‘Directing’, ‘Motivating’, ‘Actuating’, and so on. But whatever
the name used to identify it, in carrying out this function the manager explains to his people
what they have to do and helps them do it to the best of their ability. Directing thus involves
three sub-functions.
They are as follows • Communication, • Leadership and • Motivation. • Communication is
the process of passing information and understanding from one person to another. •
Leadership is the process by which a manager guides and influences the work of his
subordinates. • Motivation means arousing desire in the minds of workers to give their best
to the enterprise. It is the act of stimulating or inspiring workers. If the workers of an
enterprise are properly motivated they will pull their weight effectively, give their loyalty to
the enterprise, and carry out their task effectively. Two broad categories of motivation are
financial and non-financial. Financial motivation takes the form of salary, bonus, profit
sharing, etc., while non-financial motivation takes the form of job security, opportunity of
advancement, recognition, praise, etc.
(v) Controlling. The manager must ensure that everything occurs in conformity with the
plans adopted, the instructions issued and the principles established. Three elements are
involved in the controlling function. • Establishing standards of performance. • Measuring
current performance and comparing it against the established standards. • Taking action to
correct any performance that does not meet those standards. In the absence of sound
control, there is no guarantee that the objectives, which have been set, will be realized. The
management may go on committing mistakes without knowing them. Control compels
events to conform to plans. Controlling function has the following sub functions. They are •
Fixation of standards, • Recording, • Measurement, • Reporting, • Corrective action.
SIGNIFICANCE / IMPORTANCE OF MANAGEMENT:
The management process is a series of continuous functions of arranging, organising,
directing, and assembling performed by managers. Management increases cooperation and
coordination among the workers in an organisation. Significance of management are:
Optimum utilisation of resources: Management arranges and utilises physical and manual
resource productivity by selecting the best alternative use in industry from various benefits,
leading to maximum utilisation of limited resources. Management uses skills, professions,
knowledge, and services at an adequate level to avoid the wastage of resources.
Management helps achieve goals: It provides direction to the individuals working in the
group by motivating team spirit to achieve goals. Management arranges production and
resources and organises them in a goal-oriented method to achieve the goals. So
management and leadership are managing and containing the factors that save cost, effort,
and time.
Reduces cost: Management helps get maximum profit with minimum input through
planning. It uses physical, financial, and manual resources efficiently that provides the best
results, and using this manner also helps in cost reduction.
Establishes equilibrium: Management helps the organisation survive in a changing
environment. The initial coordination of the organisation should keep changing with the
change in the external environment. Management helps the organisation adapt to changes
in both demands in the market and changes in the needs of society. Management
establishes equilibrium and is irresponsible for the growth and survival of the organisation.
Essential prosperity of society: Efficient management means better economical production,
which implies help in increasing the welfare of people. A difficult task can be completed
without any wastage of resources with the help of good management. Management
increases profit potential, ultimately leading to profitable business and society.

Role of managers
What is a managerial role?

Managerial roles are behaviours adopted to perform various management functions, like
leading and planning, organizing, strategizing, and solving problems. Within an organization,
managers of different levels have different responsibilities that may overlap.
Henry Mintzberg classified managerial roles based on their purpose. He developed 10
managerial roles and divided them in 3 categories, grouping the roles that share similar
features. Some of these features can be applied to two or more roles at the same time.
What are the 3 categories of managerial roles?
According to Mintzberg’s typology, managerial roles fall into three basic categories:
I- Interpersonal roles. This category includes the roles which concern interactions with
people working inside and outside the organization. Basically, the majority of managers’
time is spent on interpersonal communication through which things get done.
The managerial roles in this category are figurehead, leader, and liaison.
II- Informational roles. The informational category involves creating, receiving, or
sharing information with coworkers. The manager collects information from sources both
inside and outside the organization, processes it, and delivers it to those who need it.
The managerial roles in this category are monitor, disseminator, and spokesperson.
III- Decisional roles. Interpersonal roles are about dealing with people, and
informational ones are about dealing with knowledge. Decisional roles are about action. By
communicating with people and using information, managers make decisions that lead the
organization to its goals.
The managerial roles in this category are entrepreneur, disturbance-handler, resource-
allocator, and negotiator.
Let’s explain each of the managerial roles in the three categories in detail.

Mintzberg's 10 managerial roles explained

1. Figurehead
This role requires performing social, ceremonial, and legal responsibilities. The Figurehead
represents the organization, as well as motivates the team to achieve goals. For people, this
managerial role is a source of power and authority.
Examples: Managers in the figurehead role attend social event where they promote their
company. Greeting a potential business client and giving a tour.
2. Leader
The leader role is the most pivotal as it shows to which extent a manager’s potential is
realized. Managers are in charge of their people's performance, which may mean leading a
team, a department, or an entire organization.
The responsibilities include hiring and training (direct leadership) and encouragement of
employees (indirect leadership). Leaders influence and motivate people, giving them a sense
of purpose to reach organizational goals.
Example: A manager sets a goal for the team and communicates his expectations, making
sure that people understand them. He monitors their progress and provides feedback and
resources if needed.
3. Liaison
Managers in the liaison role develop and maintain internal and external relationships. They
are a connection link that bridges the gap between employees of different levels to ensure
work is done smoothly. Liaisons transfer knowledge through different members of the
organization, up and down the chain of command, and can also involve their business
contacts from outside the company.
Examples: A manager coordinates with people inside the company, as well as coordinating
work between the company’s units.
A manager coordinates with people outside the organization, such as buyers, suppliers, and
strategic partners.
Manager-client-employee interaction. A manager communicates with a client to see what
the client's needs are, providing this information to the employees after the fact.
4. Monitor
In the monitor role, managers are expected to look for information necessary for their
organization, as well as for information that can concern potential industry changes. They
gather internal and external sources, trying to identify problems and opportunities for
growth. In other words, they scan the environment to assess the current state of things in a
company and see if corrective action is needed.
Examples: Seeking customer feedback to see how exactly you can improve your products or
services.
Monitoring industry trends, like products made by competitors or government regulatory
changes, in order to meet standards and stay on track.
 5. Disseminator
Receiving information from various sources, a manager in the disseminator role is
responsible for sharing it with those who may need it. This can be done in both verbal and
written forms.
A manager can pass on information directly to the appropriate person, or pass it on between
subordinates if they lack contact. The information can concern the organization's direction
or strategy, as well as specific technical issues.
Examples: A one-on-one conversation between a manager and an employee where a certain
issue is discussed.
Developing a proposal for a new product design, submitting it to upper management for
approval, and providing it to the employees so that they can get familiarized with it.
6. Spokesperson
Managers in a spokesperson role speak for their organization, defending the company's
interests. Their responsibility is to make the organization look good in the eyes of potential
or new clients and the general public.
Examples: A manager attends the annual shareholders’ meeting, informing the attendees
about the results her team has achieved this year and presenting statistics.
A manager speaks on behalf of the company at a conference.
Division leaders talk to other division leaders, informing them about strategies and resource
requirements.
CEOs meet with investors or government officials to give them information about the
company which they may find useful. This way, they can persuade investors that their
company is pursuing a good strategy, and raise some capital.
7. Entrepreneur
In the entrepreneur role, a manager organizes and runs business processes. This role
develops and implements new ideas or strategies, which often means coming up with
innovative solutions. Entrepreneurs create conditions for change since innovation and
change are needed for a company to stay competitive. Besides, they make sure a company
adopts new products and processes pioneered by others or change the organizational
structure.
Examples: A manager decides to use social media to increase sales.
A manager reorganizes a weak department, or uses mergers or acquisitions.

8. Disturbance handler
A manager solves issues as they arise – like sales that grow too slowly, a client breaking a
contract, or valuable employees leaving. The task of the manager in the disturbance handler
role is to fix the problem, maintaining productivity.
Example: When two members of a team have a conflict, it’s the manager’s responsibility to
help them resolve it.
9. Resource Allocator
The resource allocator role requires a manager to determine how and where to apply
organizational resources. By resources we mean equipment, staff, funding, facilities, and
time. Typically, the resources an organization has are limited, so it takes some effort to
decide how to best allocate them.
Example: A manager divides funding between the departments of his organization, based on
their current and future needs.
A marketing manager divides funding between media advertizing and promotions.
A resource manager distributes project workload across people.
10. Negotiator
Managers participate in negotiations, trying to reach their goals. This managerial role
includes negotiating with external parties, where they represent the interests of their
organizations, as well as negotiating with internal parties, such as other departments or
team members.
The better negotiation skills managers have, the higher their chances to come to an
agreement with customers, better organize the work process, and gain access to more
resources.
Examples: A manager negotiates pricing, delivery, and design with customers.
A manager negotiates over access to capital and personnel with seniors.

Managerial Skills
What are the key skills for the role of managers?
Regardless of a manager's position and scope within an organisation, there are some
essential skills you need as a manager. Often, these are transferable skills, otherwise known
as soft skills, meaning you can acquire them in a variety of roles and apply them to a new
management role. If you're new to management, reflect on your recent experiences to find
examples of these key skills for your CV and applications:
Organisation
With so much responsibility to take care of, managers need to have a strong sense of
organisation. A keen eye for detail ensures that everything runs smoothly for managers and
their teams. This could take the form of a colour-coded calendar system or carefully filled
meeting minutes.
Time management
Managers often have a lot on their plates, so knowing how to prioritise tasks and create
agendas is essential. Learning how to maximise your available time is vital to your role as a
manager. This allows you to engage with your team and let them know when to engage with
you.
Decisiveness
From the small decisions to the large-scale changes, a manager is responsible for leading a
team in new directions. This aspect of a manager's role makes decisiveness an essential skill,
demonstrating conviction in your actions and confidence when problem-solving. While
having a strong resolution is vital in steering your team's direction, remember that it's also
important to recognise when you need to change direction.
Responsibility
As a leader, employees need to know they can rely on their managers to help. So, part of any
management role is being responsible and having accountability for everyone in your team,
including you. To help employees feel at ease under your leadership and remain calm when
facing stress, you need to convey a level-headed, responsible attitude.
Communication
From delegating tasks to giving constructive feedback, communication is a vital part of any
manager's role. Alongside communicating your intentions as a manager, remember that
active listening is essential for any communication in the workplace. Show empathy and seek
to understand a problem before fixing it, ensuring you understand the situation fully.
Critical thinking
Critical thinking refers to the skill of analysing and evaluating a situation or problem before
reaching a decision. For managers who have responsibility for a part of a business,
developing these critical thinking skills is vital in making informed and considered decisions.
Good managers use critical thinking in working project scenarios and in team leadership
scenarios.
Experience
While management is often about leadership and steering the team's direction towards
success, managers need the knowledge to fulfil this role. Many managers have experience
before becoming a manager, offering them the expertise and commercial awareness they
need to provide effective leadership.
Theories of Management:
Classical Management Theories
Classical management theory views organisations as a machine, and the employees as the
parts that help that machine function. As such, it prioritises a hierarchy, employees working
in single areas, and the use of incentives to increase productivity and drive profits.
Under the classical model, workplaces are divided into three levels of authority: business
leaders or top-level management, middle management, and supervisors. As for employees,
their physical and economical requirements are prioritised over job satisfaction and social
needs. With the right financial rewards, it posits that employees will work to their full
potential and increase organisational efficiency as a result.
The classic management theory covers the scientific, administrative, and bureaucratic
theories that we’ve detailed above.
Classical management theory advantages
– Provides a clear structure for management, along with its functions and operations
– The division of labour makes tasks easier and more efficient to complete, which in turn has
the potential to enhance productivity
– The clear definitions and expectations of employee roles and tasks reduces confusion and
miscommunication
Classical management theory disadvantages
– Often overlooks the importance and nuance of human relations by favouring control over
human behaviour
– Downplays the role that job satisfaction, employee input and morale can play in the
workplace
– By focusing on the individual, it eschews teamwork. If a business is to function at its best,
then teamwork is essential. A lack of it can hurt the bottom line, as well as limit creativity
and communication in the workplace
– Generally only ever applicable to manufacturing settings
F.W. Taylor’s Theory of Scientific Management
Taylor’s theory of scientific management aimed at improving
economic efficiency and labour productivity. Taylor had a simple
view that money motivated people at work. He felt that workers
should get a fair day's pay for a fair day's work, and that pay should
be linked to the amount produced. He introduced the differential
piece rate system, of paying wages to the workers.
The industrial revolution provided the impetus for developing
various new approaches to increase the productivity and efficiency
of the workers. Taylor during 1856 and 1915 propounded that
there is a need for developing a scientific way of performing each
job and workers should be trained to perform that particular job in
a scientific way. Harmonious relations should be developed between management and
workers to ensure that the job is performed in the desired way. This led to the management
theory known as principles of scientific management.
This theory is a Classical management theory that is based on the belief that workers only
have physical and economic needs and prescribes specialization of labour. Classical theories
recommend centralized leadership and decision-making and focus on profit maximization.
Three streams of classical management theory are - Bureaucracy (Weber), Administrative
Theory (Fayol), and Scientific Management (Taylor).
Principles of Scientific Management
Four Principles of Scientific Management are:
a. Time and motion study: Develop a science for each element of the job to replace the
old rule of the methods. Study the way jobs are performed and find new ways to do them.
b. Training: Scientifically select employees and then train them to do the job as
described in step-1. Teach, train, and develop the workman with improved methods of doing
work. Codify the new methods into rules.
c. Supervision: Interest of employer & employees should be fully harmonized so as to
secure mutually understanding relations between them. Supervise employees to make sure
they follow the prescribed methods for performing their jobs. Continue to plan the work but
use workers to actually get the work done.
d. Differential Rewards: Establish fair levels of performance and pay a premium for
higher performance.
Taylor's scientific approach resulted in a piece-rate incentive system, and the time-and-
motion study.

Taylor's Differential Piece Rate Plan:

Taylor felt that the wage system was one of the major reasons for soldiering. To resolve this
problem, he advocated the use of a piece-rate incentive system. The aim of this system was
to reward the workers who produced the maximum out-put. The system proposed:
If Efficiency is greater than the defined Standard then workers should be paid 120 % of the
Normal Piece Rate.
If Efficiency is less than standard then workers should be paid 80% of the Normal Piece Rate.
Time and Motion Study:
Taylor also tried to determine the best way to perform each and every job. To achieve this
objective, he introduced a method called time-and-Motion study. In this method, a large
production job was broken down into various small tasks or motions and unnecessary
motions were removed to find out the best way of doing a job. A motion study involves
finding out the best sequence and the minimum number of motions needed to complete a
task.
After Taylor, Frank and Lillian Gilbreth made numerous contributions to the concepts of
scientific management. Frank and Lillian were mainly involved in exploring new ways of
eliminating unnecessary motions and reducing worker fatigue.
Frank Gilbreth (1868-1924) is considered the "father of motion study"
Lillian Gilbreth (1878-1972) contributed to studies pertaining to motion.
Limitations of Scientific Management:
Although Scientific Management Theory has been instrumental in providing various valuable
insights into the development of management thought. In spite of the numerous
contributions made by scientific theory, given below are the few limitations:
The principles of scientific management focus on solutions from an engineering point of
view rather than a managerial point of view
The entire theory is based on the assumption that humans are rational and motivated
primarily by the desire for material gain. It overlooks the social and emotional needs of
workers and overstressed their economic and physical needs
The human desire for self-actualization and job-satisfaction (working conditions, job content,
etc.) is ignored by the theory
Fayol’s 14 Principles of Management

Henri Fayol (1849-1925), a French industrialist and a

prominent European management theorist,
developed a general theory of management. Fayol
outlined the fourteen principles of management.
Fayol outlined the following fourteen principles of
management.
1. Division of work:
Work specialization results in improving the
efficiency of operations. The concept of division of
work can be applied to both managerial and
technical functions. Division of Work improves
productivity, efficiency, accuracy, and speed. It
applies to organizations that have many employees
as well as those that have few. The principle states that work should be divided amongst
people that are capable of doing the job and not be overloaded with a concentrated few.
This principle also denotes that, work should not be diluted by giving the same work to too
many people. It helps ensure proper utilization of labor, keeps them focused, and
industrious.
2. Authority and responsibility:
Authority is defined as "the right to give orders and the power to exact obedience."
Authority can be formal or personal. Formal Authority is derived from factors like
intelligence and experience. Authority and responsibility go hand-in-hand. When a manager
exercises authority, he should be held responsible for getting the work done in the desired
manner. Authority and responsibility result in the efficient delivery of work with defined
responsibility. Fayol suggests that only a few people should have the power and
responsibility to give orders. One of the common errors of large companies is that
management encompasses too many people, thereby giving rise to conflict. When few
selected people have the power to vote, the authority is carried down the chain and the
process gets implemented. With such authority comes responsibility. Fayol believed that
since a manager must be responsible for his duties, he should as well have authority backing
him up to accomplish his duties. This is vital for any organizational success.
3. Discipline:
Discipline is vital for running an organization smoothly. It involves obedience to authority,
adherence to rules, respect for superiors, and dedication to one's job. Discipline makes the
management job easy and managers can make progress towards achieving business
objectives. Fayol observed that there exist natural human tendencies to lawlessness and that
can result in the level of organizational disorder. These tendencies can erupt if employees
are not strictly guided by rules, norms, and regulations from management
4. Unity of command:
Each employee should receive orders of instructions from one superior only. Fayol believes
that subordinates/employees should have only one boss. If an employee gets orders from
two superiors at the same time, then the principle of unity of command is breached. It
simply puts that employees should receive orders from and report directly to one boss only.
Fayol found this principle to be very important. “He felt that if it was violated, then authority
is dented, discipline is in peril, directive disturbed and stability threatened”.
5. Unity of Direction:
Activities should be organized in such a way that they all come under one plan and are
supervised by one person. Fayol observed that an organization will naturally have central
objectives that need to be followed and as well departmental and unit goals which also need
to be reached to meet the unified objective.
6. Subordination of the individual interest to the general interest:
Individual interests should not take precedence over the goals of the organization. Company
interests should be considered first before personal interest and employees should respect
the chain of command. This means there is a need for employees to sacrifice their interests
for the organization’s good. In other words, if any staff goes against the objectives of the
organization and fails to establish a positive civic virtue of the organization, such staff should
not be tolerated
7. Remuneration:
The compensation paid to employees should be fair and based on factors like business
conditions, cost of living, the productivity of employees, and the ability of the firm to pay.
Fayol insists that there is nothing like a perfect system, employees always have a motivator
when involved in work wages is one vital motivator. Fayol suggests that the significant
process of remuneration paid to employees should be fair, reasonable, satisfactory to both
employer & employees, and rewarding their efforts
8. Centralization:
Depending on the situation, an organization should adopt a centralized or decentralized
approach to make optimum use of its personnel. Most large companies always have several
Business Units or departments and functions which in a way form some sought of
decentralization. Therefore, there is a need to strike a balance between centralization and
decentralization because these units are given their decision-making power
9. Scalar chain:
This refers to the chain of authority that extends from the top to the bottom of an
organization. The scalar chain defines the communication path in an organization.
Organizations should have a chain of authority and communication that runs from top to
bottom and should be followed by managers and the subordinates. Scalar chain depicts
there should be a clear line of authority in an organization so that when one sees the need
to “Escalate things” then you know the line of authority.
10. Order:
This refers to both material and social order in organizations. Material order indicated that
everything is kept in the right place to facilitate the smooth coordination of work activities.
Similarly, social order implies that the right person is placed in the right job (this is achieved
by having a proper selection procedure in the organization). According to Fayol, “People and
materials must be in suitable places at the appropriate time for maximum efficiency.” This
principle however states that every material in an organization should be put in its right
position in the organization and the right job be assigned to the right employee.
11. Equity:
The principle of equity demands all should be treated equally and respectfully. All employees
should be treated fairly. A manager should treat all employees in the same manner without
prejudice. According to (Mtegenzo, 2009), Equity means a combination of fairness, kindness
& justice towards employees. It simply means for commitment and loyalty to be expected
from employees, they should be treated fairly and similarly to people of their level of
position and authority, most importantly, their Managers should be less impartial.
Fayol believed that managers should be fair to their staff but at times exhibiting power and
harshness might come in handy for the sake of equity.
12. Stability of tenure of personnel:
A high labor turnover should be prevented and managers should motivate their employees
to do a better job. This principle is established based on the belief that a staff with a secured
long-term tenure will use his experience and knowledge gotten from working in the
organization to initiate innovation, productivity, help with the organization's growth, and
further increase the organization's profit.
13. Initiative:
Employees should be encouraged to give suggestions and develop new and better work
practices. Managers must support and encourage employees to take initiatives. It is
practiced in modern-day organizations especially those rendering services, they urge
employees to apply their initiatives in rendering quality services to their customers.
However, there are always processes, procedures, and policies in place to guide the
employees to ensure successful implementation and prevent abuse of the privilege (Okpara,
2015).
14. Esprit de corps:
This means "a sense of unity". Management must inculcate a team spirit in its employees.
Managers should develop trust and mutual understanding. Fayol suggested that for an
organization to be successful there should be team spirit amongst employees of the
organization of which all of them must consider themselves as members of the organization
further maintaining high morale and unity amongst themselves.

Behavioural Management Theory

Who created human relations theory? Australian-born
psychologist Elton Mayo.
What is the human relations theory?
Tasked with improving productivity among dissatisfied
employees, Mayo attempted to improve worker satisfaction
by changing certain conditions such as lighting,
temperature, and break duration, all of which had a
positive effect.
Businessman working on a laptop computer in the office.
He is happy and smiling and there is a window behind him.
He is casually dressed
He then altered variables which would have a negative effect on satisfaction, like increasing
the length of the workday and making quotas larger. Regardless of these good or bad
changes, Mayo observed that worker satisfaction always increased.
He thus concluded that performance was a result of how much attention was paid to
workers; the more attention they received, the more valued they felt.
Human relations theory advantages
– Improves productivity
– Considers the wellbeing of employees
– Stronger relationships between workers and manager
– Improves employee retention
Human relations theory disadvantages
– Oversimplifies human behaviour
– Makes it difficult to predict workplace behaviour
– Favours personality over accomplishments

Hawthorne Studies
The Hawthorne studies were conducted on workers at the Hawthorne plant of the Western
Electric Company by Elton Mayo and Fritz Roethlisberger in the 1920s. This study established
the behavioural change that happened due to an awareness of being observed, resulting in
active compliance with the supposed wishes of researchers, because of special attention
received, or positive response to the stimulus being introduced.
What is Hawthorne Studies?
A series of experiments were conducted by Mayo and Roethlisberger in an electricity factory
called the Western Electric company at their Hawthorne plant known as Hawthorne Works,
at Illinois, in USA, on factory workers between 1924 and 1932. These studies are known as
Hawthorne Studies. Initially, the study focused on effect of lighting on productivity and later
was enhanced to study the social effects.
First Experiment on Lighting:
In the first experiment, the effect was observed for minute increases in illumination. In these
lighting studies, light intensity was altered to examine its effect on worker productivity. One
phase of these studies aimed at finding out if changes in illumination, rest period and lunch
breaks can affect the productivity of the workers. It was found to the surprise of the
researchers that less light, shorter and fewer rest periods and shorter lunch breaks resulted
in increased productivity.
Once all these changes; were eliminated and the normal working conditions were resumed,
it was also seen that the workers' productivity and the feeling of being together went up.
Two things emerged from the initial studies: (1) the experimenter effect, and (2) a social
effect. The experimenter effect was that making changes was interpreted by workers as a
sign that management cared, and more generally, it was just provided some mental
stimulation that was good for morale and productivity. The social effect was that it seemed
that by being separated from the rest and being given special treatment, the workers
developed a certain bond that also increased productivity. Hence the increase in productivity
was attributed to the attitude of workers towards each other, their feeling of togetherness
and to the attention paid to the workers by the researches that made them feel important
which resulted in improvement in their work performance. This is known as Hawthorne
effect.
Second Experiment - Bank Wiring Room:
The second phase of the study, the Bank Wiring Room, helped in studying the social effects.
The purpose of the next study was also to find out how payment incentives would affect
productivity. The study was conducted by Elton Mayo and W. Lloyd Warner between 1931
and 1932 on a group of fourteen men who put together telephone switching equipment.
During this study some workers were put in a special room, and placed an observer full time
in the room to record everything that happened. The kind of work done was assembling
telephone switching equipment. The process was broken down into three tasks: wiring,
soldering and inspection. Besides looking at the social organization of the group, they kept
track of performance variables, like quality of work and amount of work.
The researchers found that although the workers were paid according to individual
productivity, productivity decreased, even though they were paid by the amount they did
each day, they did not raise outputs. If somebody tried, he faced opposition from others as
the team became afraid that if some started producing more, the company would change
the base rate. The surprising result was that productivity actually decreased. Workers
apparently had become suspicious that their productivity may have been boosted to justify
firing some of the workers later on.
Detailed observation between the men revealed the existence of informal groups or
"cliques" within the formal groups. These cliques developed informal rules of behavior as
well as mechanisms to enforce them. The results show that workers were more responsive
to the social force of their peer groups than to the control and incentives of management.
Just as management tried to control worker behavior by adjusting piece rates, hours of work,
etc., the workers responded by adjusting management toward goals that were not
necessarily economically rational.
Leadership Lessons from Studies:
Researchers concluded that the workers worked harder because they thought that they
were being monitored individually. Researchers hypothesized that choosing one's own
coworkers, working as a group, being treated as special and having a sympathetic supervisor
were the real reasons for the productivity increase. One interpretation was that "the six
individuals became a team and the team gave itself wholeheartedly and spontaneously to
cooperation in the experiment. This study established the behavioral change that happened
due to an awareness of being observed, resulting in active compliance with the supposed
wishes of researchers, because of special attention received, or positive response to the
stimulus being introduced.
These findings made Mayo and Roethlisberger conclude that a leader has not only to plan,
decide, organize, lead and control but also consider the human element. This includes social
needs of being together and being recognized for the work interaction of the group
members with each other and their wellbeing. A good leader ought to keep the above
aspects in his style of working with people and supervising their work.

Systems Theory
Who created systems theory? Austrian biologist Ludwig Von
Bertalanffy.
What is the systems theory?
Bertalanffy’s background in biology explains a lot of thinking and
verbiage around systems theory. Essentially, it proposes that each
business is a system (much like a living organism), composed of
interacting elements that are affected by their environment.
In much the same way that a person isn’t simply a brain; a
business is more than just the person in the highest position. Put
simply, everything needs to work together for a business to succeed.
And since it’s a way of looking at the business holistically as opposed to it just being a
management theory, it can be readily combined with other theories too.
Systems theory advantages
– Stronger focus on teamwork and the interrelationships of processes
– Identifies the weak points in systems, not people
– Emphasises planning throughout an organisation
Systems theory disadvantages
– Difficult to successfully implement as companies grow
– Not the best tool to use when in a crisis

Contingency Theory
Who created contingency management theory? Leading
psychologist in the field of industrial and organisational
psychology Fred Fiedler.
What is the contingency management theory?
Fiedler based his theory on the idea that effective leadership
is directly linked to the traits a leader displays in particular
situations. From here, Fiedler extrapolated that a set of traits
that are affective for every situation exists, and thus, different
situations demand different leadership.
Put simply, leaders must be flexible and adapt to market
changes, business developments, and team demands. To Fiedler, there is no one
management style that suits every situation and every business.
Contingency management advantages
– It allows businesses to stay flexible and adaptive
– Businesses can choose different leaders based on their abilities in different contexts
– Makes it easier for leaders to create personalised guidance based on individuals’ differing
needs
– It allows for thorough analysis before reaching the appropriate decision
Contingency management disadvantages
– That same thorough analysis can be time, resource and cost-intensive
– Lacks scientific research to support its effectiveness in project management
– Difficult to measure its performance
Functions of Management
What Are Functions of Management?
Functions of management are the general categories of responsibilities professionals in
oversight roles perform. They condense many specific tasks and duties into simplified groups
so organisations can efficiently delegate responsibilities and analyse distinct issues
separately. For instance, a company might recognise that it needs to improve how it
manages hiring and training. Rather than review all of its managers' performances, it would
assess those who perform the management function of staffing.
5 Management Functions
Many organisations divide management into five key functions that cover a wide range of
duties. Although distinct from one another, each function interacts with the others and
affects a company's overall success. These five functions are:

1. Planning
In the planning stage, managers establish organisational goals and create a course of action
to achieve them. During the planning phase, management makes strategic decisions to set a
direction for the organisation. Managers can brainstorm different alternatives to achieve the
objective before choosing the best course of action. While planning, managers typically
conduct an in-depth analysis of the organisation's current state of affairs, taking into
consideration its vision and mission and evaluating what resources are available to meet its
objectives.
While planning, managers usually evaluate internal and external factors that may affect the
execution of the plan, such as economic growth, customers and competitors. They also
establish a realistic timeline for achieving goals based on the organisation's available
finances, personnel and resources. Managers may have to take additional steps, such as
seeking approval from other departments, executives or their board of directors before
proceeding with the plan. Approaches to planning include:
Strategic planning: Strategic planning usually creates goals for the entire organisation. It
analyses threats to the organisation, evaluates the organisation's strengths and weaknesses
and creates a plan of how the organisation can best compete in its environment. Strategic
planning usually has a long timeframe of three years or more.
Tactical planning: Tactical planning is the shorter-term planning of an objective that takes a
year or less to achieve. Organisations usually use tactical planning to improve a department
or area such as its facilities, production, finance, marketing or personnel.
Operational planning: Operational planning links strategic and tactical goals, specifying the
daily actions that can achieve them. Operational planning also creates a timeframe for
putting each portion of the strategic goal into practice.
2. Staffing
Management determines the staffing needs of the organisation, deciding how large of a
team is necessary to maximise productivity and work quality. Aside from calculating how
many employees to hire, managers build candidate profiles for each position, specifying the
qualifications they would like an applicant to have. Staffing is critical when beginning a
business, but it remains an equally important function throughout a company's lifecycle. As
employees change roles or leave, staffing needs evolve, requiring constant attention. The key
staffing functions are:
Recruiting: Managers use various channels to advertise openings and find suitable
candidates. They might post online, rely on professional networks for referrals or use a
recruitment service to locate the best talent.
Interviewing: Managers use the interview process to learn more about compelling
applicants. Interviews enable organisations to confirm someone would work well with their
team and contribute positively.
Hiring: Managers ensure employees join the organisation legally, collecting required
documents and completing necessary paperwork.
Training: Managers develop onboarding routines that introduce new hires to the company
and provide them with the training they need. They also train established employees to
further develop their skills or teach them new ones.
Evaluating: Managers monitor individual employees' performance to evaluate their future
potential. They typically decide whether to promote or reassign employees who offer value
and determine which employees do not fit with the company.

3. Organising
Organising is the process of structuring an enterprise and dividing its resources to
accomplish goals efficiently. Managers need to have a comprehensive knowledge of the
materials, personnel and budgets available to them so they can create optimally productive
systems and relationships. For instance, managers decide how to structure departments or
pair employees who work well together on assignments. Organising often focuses on
preserving accountability, ensuring each member of a team understands their duties and
reports their progress correctly.
When companies are well-organised, employees can collaborate productively and access all
the information and resources they need to complete their jobs. When problems occur or
questions arise, team members know who to seek help from and can do so quickly. Here are
the major responsibilities that fall under the organising function:
Delegation: Management defines roles in an organisation, specifying responsibilities for
each position. It also establishes individual employees' day-to-day priorities, which regularly
change.
Department structuring: Management decides which departments their organisation would
benefit from having or makes adjustments to existing ones. Sometimes, managers combine
or break up departments to meet better focus on specific objectives.
Distributing authority: Management establishes the reporting structures that organisations
depend on for accurate communication and efficient oversight. It also grants different
degrees of authority for each level of management, enabling employees in some positions to
make key decisions or enforce standards.

4. Leading
Leading consists of motivating employees and influencing their behaviour to achieve
organisational objectives. Usually, leading focuses on managing people, such as individuals
and teams, rather than tasks. Though managers direct team members by giving orders and
assigning duties, successful leaders connect with their employees by using interpersonal
skills to encourage, inspire and motivate team members.
Managers can foster a positive working environment by identifying moments when
employees need support or direction and using positive reinforcement when employees
have done their jobs well. They usually incorporate different leadership and management
styles to adapt to different situations. Examples of situational leadership styles include:
Directing: The manager leads by making decisions with little input from the employee. This
is an effective leadership style for new employees who need a lot of initial direction and
training.
Coaching: The manager is more receptive to input from employees, sharing ideas with them
to receive feedback and build trust. This style of leadership is effective for individuals who
need managerial support to further develop their skills.
Supporting: The manager makes decisions in collaboration with employees but primarily
focuses on building relationships within the team. This style of leadership is effective for
employees who have fully developed skills but are sometimes inconsistent in their
performance.
Delegating: The leader provides a minimum level of guidance to employees and is more
concerned with the long-term vision of the project than day-to-day operations. This style of
leadership is effective with employees able to work and perform tasks independently,
enabling the leader to focus on overarching goals instead of individual tasks.

5. Controlling
Controlling is how managers respond to feedback, analysing the outcomes of their initial
plans to determine necessary adjustments. Since plans rarely unfold exactly as intended,
controlling is a critical function that ensures an organisation can adapt as circumstances
change and new challenges appear. Managers control all aspects of operations, including
employee performance, policies, task delegation and marketing. Since each of these
activities produces feedback, managers receive a constant flow of information they can
assess. Managers act on feedback by:
Conducting performance reviews: Managers consider key performance indicators that
summarise how well an employee is completing their job. They meet with team members to
identify where they need to improve and offer advice on how to do so.
Reducing inefficiencies: Managers review production processes and workflows to locate
inefficiencies. They revise procedures and systems to reduce or eliminate them wherever
possible, saving time and money.
Adjusting budgets: Managers confirm budgets are in line with initial spending estimates.
Where they find significant differences, they make adjustments by cutting spending or
raising more capital.
Developing improved products: Managers collect feedback from consumers to determine
how their products could better meet customers' needs. The improvements they make help
them remain competitive in their market and earn their audience's loyalty.

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