UNIT 1

MANAGEMENT
MEANING & DEFINITION
By Harold Koontz, “Management is an art of
getting things done through and with the people in
formally organized groups. It is an art of creating
an environment in which people can perform and
individuals and can co-operate towards attainment
of group goals”

Administration is concerned with formulation of

broad objectives, plans & policies.
 NATURE OF MANAGEMENT
 Management is Goal-Oriented
 Management integrates Human, Physical and

Financial Resources
 Management is Continuous
 Management is all Pervasive
 Management is a Group Activity
OBJECTIVES OF MANAGEMENT
 Getting Maximum Results with Minimum
Efforts
 Increasing the Efficiency of factors of

Production
 Maximum Prosperity for Employer &
Employees
 Human betterment & Social Justice
IMPORTANCE OF MANAGEMENT
 Ithelps in Achieving Group Goals
 Optimum Utilization of Resources
 Reduces Costs
 Establishes Sound Organization
 Establishes Equilibrium
 Essentials for Prosperity of Society
 MANAGEMENT AS A SCIENCE

Science is characterized by following main features

 Universally acceptance principles
 Experimentation & Observation
 Cause & Effect Relationship
 Test of Validity & Predictability
 MANAGEMENT AS AN ART
Art implies application of knowledge & skill to
trying about desired results. Art has the following
characters
 Practical Knowledge
 Personal Skill
 Creativity
 Perfection through practice
 Goal-Oriented
 Management as a Profession

A profession may be defined as an occupation that

requires specialized knowledge and intensive
academic preparations to which entry is regulated by
a representative body.
 Specialized Knowledge
 Formal Education & Training
 Social Obligations/ Responsibility
 Code of Conduct
 Representative or Professional Association
 Professional Fee
 LEVELS OF MANAGEMENT

 Top management
 Upper-middle

management/
Intermediate management
 Middle management
 Lower level or first line

management
 FUNCTIONS OF MANAGEMENT

 Planning
 Organizing
 Staffing
 Directing
 Controlling
 Process of Output
Inputs Management Goods &
Men Planning Services
Money Organizing Productivity
Materials Staffing Growth
Directing Taxes
Methods
Controlling Employment

PROCESS OF MANAGEMENT
 ROLES OF MANAGER

I-INTERPERSONAL III-DECISIONAL
ROLES ROLES
1. Figurehead 1. Entrepreneur
2. Leader 2. Disturbance
3. Liaison handler
II-INFORMATIONAL 3. Resource
ROLES allocator
4. Monitor 4. Negotiator
5. Spokesman
6. Disseminator
 MANAGERIAL SKILLS
 Technical skills -It refers to the ability and
knowledge in using the equipments, techniques and
procedures involves in performing specific tasks.
 Human skills / Behavioral / Inter personal skills-
Human skills refer to the ability to work effectively
with other people both as individuals and as member
of a group.
 Conceptual skills -It comprises the ability to see the
whole organization and the inter-relationship between
its parts. These skills refer to the ability to visualize
the entire picture or to consider a situation in its
totality.
 MANAGERIAL SKILLS
 Decision making skills-Managers particularly at the
upper level must also have decision making skills.
These refer to abilities to break down a complex
problem or situation into its components , to clinically
examine its dimensions , to proceed in a logical &
step by step manner.

 Administrative skills-These involve abilities to act in

a pragmatic manner, to get things done by
implementing plans, to mobilize& organize resources,
to harmonize & coordinate diverse activities & to
regulate performance in an orderly manner.
 Conceptual
Skills

Human skills
(Middle level)

Technical skills
(Lower level)
SKILLS OF THE MANAGER
 CO-ORDINATION
Coordination is the management of interdependence in
work situations. It is the Orderly Synchronization or
fitting together of the independent efforts of individuals
in order to attain a common goal.
Features Of Coordination
 It is an essential managerial activity. It is needed at all

levels of management.
 It involves an orderly arrangement of group efforts.
 It is a continuous process carried on by the managers.
 Its purpose is to secure unity of action towards common

objectives.
 Significance of Coordination
 Better results
 Economy and Efficiency
 Better Utilization of Human Resources
 Meeting Environment Challenges
 High Morale
 PRINCIPLES OF EFFECTIVE
CO-ORDINATION

 Direct Contact
 Early Start
 Continuity
 Dynamism
 Clear cut Objective
 Clear Definition of Authority & Responsibility
 Effective Communication
 Precise and Comprehensive Programmes and Policies
 Cooperation
 Effective Leadership and Supervision
CO-ORDINATION AND CO-OPERATION
Co-ordination Co-operation
 It is an orderly  It means mutual help
arrangement of group willingly.
efforts in pursuit of
 It is termed as a part
common goals.
 It is broader than co- of co-ordination.
operation which
includes as well because
it harmonizes the group
efforts.
Basis Management Administration

Meaning Management is an It is concerned with

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

Nature Management is an Administration is a

executing function. decision-making
function.

Process Management decides Administration

who should as it & decides what is to be
how should he dot it. done & when it is to
be done.
Function Management is a Administration is a
doing function thinking function
because managers get because plans &
work done under their policies are
supervision. determined under it.

Skills Technical and Human Conceptual and

skills Human skills

Level Middle & lower level Top level function

function

Management Vs Administration
 DEVELOPMENT OF
MANAGEMENT THOUGHT
Management Theories
 Classical Approach
 Neo-classical Approach
 Systems Approach
 Contingency Approach
 Modern Management Thought
CLASSICAL APPROACH
CLASSICAL APPROACH
 Also known as Functional Approach, Empirical Approach
or Management Process Approach.
 Features

◦ Management viewed as systematic network of interrelated

functions.
◦ Management principles based on experiences of practicing
managers.
◦ Management Functions, Principles & Skills are universal.
◦ Formal education & training for developing managerial skills.
◦ Emphasis on economic efficiency & organisation structure.
◦ People motivated by economic gains.
CLASSICAL APPROACH contd…
 Uses & Limitations
◦ Uses
 Observational (case-study) method helpful in drawing common
principles out of past experiences with relevance for future application.
 Focus attention on what managers actually do.
 Highlights universal nature of mgt.
 Provides scientific basis for mgt practices. Also, provides starting point
for researchers to verify validity and improve applicability.
◦ Limitations
 Mechanistic approach. Human factor undermined.
 Environmental dynamics discounted.
 Danger in relying too much on past experiences.
 Totality of real situation can rarely be incorporated in Case-study.
 Based on over simplified assumptions.
PILLARS OF CLASSICAL APPROACH

 Bureaucracy.

 Scientific Management.

 Administrative Theory.
BUREAUCRACY
 By Max Weber (1864 – 1920), German Social Scientist.
Characteristics of Bureaucracy
◦ Division of work
◦ Rules & Regulations
◦ Hierarchy of authority
◦ Technical competence
◦ Record-keeping
◦ Impersonal relations
 Weber visualised Bureaucracy as ideal pattern of
organisation as it embodies advantages of precision,
efficiency, competence, objectivity, unity, conformity,
discipline and order.
BUREAUCRACY contd
Advantages
◦ Specialization
◦ Structure
◦ Rationality
◦ Predictability
◦ Democracy
Limitations
◦ Rigidity (Encourages status quo & resistance to change
◦ Goal displacement
◦ Impersonality (rules & regulations more important than
employee needs & emotion)
◦ Compartmentalization of activities (leads to preservation
of jobs even when they become redundant)
◦ Paper work
◦ Empire building (to perpetuate self interest or interests
of sub-unit)
◦ Red tape (cumbersome, time taking procedures)
 SCIENTIFIC MANAGEMENT
 F W TAYLOR (1856 – 1915), American Management
Scientist.
 Motivated to develop these principles on seeing
haphazard and wasteful ways of doing jobs in
organizations.
Principles of Scientific Management
◦ Develop a true science for each element of a worker’s job
to replace the old rule-of –thumb method
◦ Job specialization or division of labor
◦ Scientific selection, training and development of workers
◦ Close cooperation between management and workers
(Mental Revolution)
◦ Maximum output in place of restricted output (to increase
surplus profits which can be shared between mgt. &
workers)
SCIENTIFIC MANAGEMENT contd

Techniques of Scientific Management

◦ Time Study
◦ Motion Study
◦ Scientific task planning
◦ Standardization & simplification
◦ Differential piece rate system
◦ Functional Foremanship
 Route clerk
 Instruction card clerk
 Time & cost clerk
 Shop disciplinarian
 Gang boss
 Speed boss
 Repair boss
 Inspector
SCIENTIFIC MANAGEMENT contd
Critical Evaluation of Scientific Management
◦ Mechanistic approach (treats workers as a factor of
production)
◦ Unrealistic assumptions (that people are rational and
motivated by material gains)
◦ Narrow view (focus on efficiency at shop-floor level)
◦ Impracticable
◦ Exploitation of labor
 ADMINISTRATIVE THEORY
 Henri Fayol (1841 – 1925), French industrialist
 Increased concern for the management of organizations

than with improving efficiency of individual jobs.

 Fayol’s theory may be analyzed under following:

◦ Classification of activities
◦ Managerial functions
◦ Management principles
◦ Universality of mgt functions & principles
◦ Managerial skills
◦ Formal education & training
 ADMINISTRATIVE THEORY contd

Classification of Activities (Business activities)

◦ Technical (manufacturing / production)
◦ Commercial (buying / selling)
◦ Financial (search for and optimum use of capital)
◦ Accounting (recording including statistics)
◦ Security (protection of personnel & property)
◦ Managerial
 ADMINISTRATIVE THEORY contd

Managerial Functions
◦ Planning (foresee and provide means for future)
◦ Organizing (provide tools, raw material, capital & personnel)
◦ Commanding (maintaining activity among personnel)
◦ Coordinating (unifying and harmonizing all activities & efforts)
◦ Controlling (ensure conformity with established rules &
expressed command)
 ADMINISTRATIVE THEORY contd
 Management Principles
◦ Division of work (one person – one leading function)
◦ Authority & Responsibility (coextensive)
◦ Discipline (must for smooth functioning)
◦ Unity of command
◦ Unity of direction
◦ Subordination of individual to general interest
◦ Remuneration of personnel
◦ Centralization (based on optimum utilization of all faculties of
personnel)
 ADMINISTRATIVE THEORY contd

 Management Principles contd.

◦ Scalar chain (including concept of Gang plank)
◦ Order (Material Order & Social Order)
◦ Equity (fairness & justice)
◦ Stability of tenure of personnel (job security)
◦ Initiative (opportunity for exercising judgment)
◦ Esprit de corps (through harmony of interests)
 ADMINISTRATIVE THEORY contd
 Universality – Principles are universal as all organizations
face the problem of making optimum utilization of scarce
resources.
 Managerial Skills / Qualities

◦ Physical
◦ Mental
◦ Moral
◦ General education
◦ Special knowledge
◦ Experience
ADMINISTRATIVE THEORY contd
Critical Evaluation
◦ Too Formal
◦ Vague
◦ Inconsistency (lack empirical evidence)
◦ Pro-management bias
◦ Historical value
TAYLOR & FAYOL : A COMPARISON
Basis of Taylor Fayol
Compariso
n
Perspectiv Shop Floor level – analysis Top management –
e of worker’s activities analysis of manager’s
activities
Focus Improving productivity Improving overall
through work administration through
simplification general principles
Personality Scientist Practitioner
Results Scientific observation and Universal truths developed
measurements from personal experiences
Major Science of industrial A systematic theory of
Contributi management management
NEO-CLASSICAL APPROACH
NEO-CLASSICAL APPROACH
 This approach developed to address the social and
psychological needs of workers at work place, same
having been overlooked by Classical Approach.
 Analysis in three parts

◦ Howthorne Experiments
◦ Human Relations Movement
◦ Behavioural Approach
HOWTHORNE EXPERIMENTS
◦ Conducted between 1924-1932 by George Elton Mayo
◦ At Western Electric Works, Hawthorne, Chicago, USA
◦ Series of experiments
 Illumination Experiment (1924 – 27)
 Relay Assembly Test Room Studies (1927 – 30)
 Mass Interview Programme (1928 – 30)
 Bank Wiring Observation Room Study (1931 – 32)
HAWTHORNE EXPERIMENTS contd
Conclusions of Hawthorne Experiments

◦ Work group is not merely a techno-economic unit. It is also a

social system with a culture of its own.
◦ Workers not merely rational economic beings motivated simply
by money. They are socio-psychological being and respond to
total work situation (both, inside & outside work place).
◦ Social & psychological factors exercise greater influence on
employee behavior (productivity) than physical conditions of
work.
◦ Workers act and react as members of groups. Groups & leader
exercise overriding influence on attitude and behavior of
individual employee.
◦ Complaints and criticism by employees are symptoms of deeper
dissatisfaction.
HUMAN RELATIONS MOVEMENT
◦ Socio – Psychological approach to management.
◦ Business enterprise is a social system in which group norms exercise
significant influence on behaviour and performance of individuals.
◦ Human Relations School is based on following ideas:
 The Individual – Each person is unique (attitudes, beliefs, values, skills
etc.).
 The Work Group – Work is a social experience. Most workers find
satisfaction in social / informal groups.
 The Leader – Manager/ supervisor must provide pleasant work climate
with workers say in decision making.
 Work Environment – Positive work environment consists of clearly
defined goals, performance linked rewards, feedback on performance,
participative decision making, open communication and interesting work.
HUMAN RELATIONS MOVEMENT contd

◦ Human Relations Model:

The The Work

Individual Group

The The Work

Leader Environme
nt
 HUMAN RELATIONS MOVEMENT contd
Comparison: Human Relations & Scientific Management:
Human Relations School Scientific Management

Principles for universal

No universal principles
application

Focus on people Focus on machines

No one best way One best way of doing things

Man is a social animal Man is an economic animal

Time & Motion studies,

Group dynamics, Motivation, Job
Functional foremanship, wage
satisfaction
incentives
Application of knowledge derived Application of knowledge of
from behavioural sciences physical sciences
HUMAN RELATIONS MOVEMENT contd

Criticism of Human Relations approach:

◦ Unscientific (based on Hawthorne Studies).
◦ Anti-individualistic (replaces control by boss with control
by the group).
◦ Shortsighted (emphasis on social and psychological
aspects, neglecting the technical and economical aspects
of work).
◦ Over-concern with Happiness (as per research no strong
relationship between morale and productivity).
◦ Over emphasis on Group Decision Making.
◦ Negative view of Conflict.
BEHAVIOURAL APPROACH
◦ Also known as Behavioral Science Approach or Human Resource
Approach as it stresses development of human beings for the benefit
of both, individual and organisation.
◦ Includes issues of Organizational Behavior.
◦ Multi dimensional and inter-disciplinary in nature.
◦ It is an extension of and improvement over Human Relations
Movement.
BEHAVIOURAL APPROACH contd
Main prepositions are:
◦ Organisation is socio- technical system (interaction between
individuals and organizational structures & processes).
◦ Individuals are unique (attitudes, perceptions, value systems).
◦ Employee needs & goals may differ from those of organisation.
Management must bring about fusion between the two.
◦ Wide range of factors influence interpersonal relations.
◦ Individual’s behavior may change when part of a group.
◦ Employees in an organisation form informal groups. Such groups
have their own norms and they exercise significant influence on the
attitudes, behavior and performance of group members.
◦ Conflict in organizations is inevitable and even desirable in certain
conditions.
 BEHAVIOURAL APPROACH contd
Comparison: Human Relations & Behavioral Approach
Human Relations Behavioral Approach
Focus on individual’s needs & Focus on group & group behavior
behavior
Highlights interpersonal relations Highlights group relations
Based on Hawthorne Experiments – Based on Human Relations
Narrow scope movement – wide scope
Emphasis on motivation, morale & Emphasis on group dynamics,
job satisfaction informal organisation & motivation
through job enrichment

Conflict in organizations is always Conflict is inevitable and may even

destructive and must be minimized be beneficial

Concerned with improving working Multi concept such as impact of

conditions, inter-personal relations, technology on jobs, job redesign,
supervisory styles for increasing job group dynamics, motivation,
 SYSTEMS APPROACH
◦ Since 1950 researchers began looking at organizations from a
systems view point.
◦ Weiner’s (American mathematician) pioneering work on
Cybernetics (systems control by information feedback).
◦ Daniel Katz, Robert Kahn contributed significantly.
SYSTEMS APPROACH contd
Main elements of System’s Approach:
◦ Organisation – Unified and purposeful system of several
interconnected, interacting and interdependent parts (sub-
systems).
◦ Sub-systems tied together into organic whole through goals and
authority, resource & information flows.
◦ Whole organisation or its sub-systems can be understood or
analysed only in relation to each other.
◦ Sub-system derives strength from its association with other sub-
systems, ultimately leading to synergy.
◦ Every system has a boundary that separates it from its
environment (employees within boundary; creditors outside
boundary).
SYSTEMS APPROACH contd

Main elements of System’s Approach contd.:

◦ Systems are of two types: Open and Closed.
◦ Business enterprise is an Open System. Takes inputs from
environment, converts them into outputs (products & services) and
supplies them to environment.
◦ The reaction of the environment to the output is known as
Feedback. Feedback used to evaluate and improve the system.
 Organization must be in Steady State (through maintenance) and in
Dynamic Equilibrium (through adaptation)in relation to the external
environment.
 SYSTEMS APPROACH contd
 Main elements of System’s Approach contd.:
◦ Some systems disintegrate to dissipate their energy to become
inactive (Entropy), like Projects . Other systems have tendency
towards order, activity, perpetuation (Negative Entropy) like
ongoing business entities.
◦ Organisations operate on the principles of Equi-finality. They have
several alternative ways of doing the same thing.
 SYSTEMS APPROACH contd
 Evaluation of Systems Approach:
◦ Calls attention to the dynamic and interrelated nature of business
organizations.
◦ Provides frame work to analyze and understand organizations and
their management.
◦ Exhorts managers to avoid analyzing problems in isolation and to
develop holistic approach.
◦ Often criticized for being too abstract and vague. Cannot directly and
easily be applied to practical problems.
◦ Does not offer specific tools and techniques to practicing managers.
 CONTINGENCY APPROACH
 Also known as Situational Approach
 Rejects universality of management principles.
 Main features:
◦ Management is entirely situational. Conditions and complexity of situation determine

which technique will be applicable and effective.

◦ To be effective, management policies & practices (organisational structure, leadership

styles, control system etc.) must respond to environmental changes. (If & Then approach.

If are environmental / situational variables; Then are management concepts / techniques)

◦ Management must sharpen its diagnostic skills to be able to anticipate and comprehend

environmental changes.

◦ No one best way to manage.

CONTINGENCY APPROACH contd

Steps in operationalising Contingency approach:

◦ Step I: Understand & analyse situation.

◦ Step II: Examine validity of various concepts, principles &

techniques to the situation at hand.

◦ Step III: Match technique to the situation.

◦ Step IV: Implement the choice.

 MANAGEMENT THEORY JUNGLE
 Harold Koontz – “From the orderly analysis of
management at shoproom level by F.W.Taylor are
reflective distillation of experience from the general
management point of view by Henri Fayol, we now see
these and other early beginnings over-grown and
entangled by a jungle of approaches and approachers to
management theory”.
 Differences due to semantics and varying definitions.

◦ Semantics: Different scholars interpret words like ‘organization’,

‘management’, ‘decision making’ etc. differently.
◦ Varying definitions: Operationalists define management as a
series of functions whereas decision theorists define it as decision
making.
 CONTRIBUTION OF PETER F DRUCKER
 Nature & Role of Management:
◦ Stressed innovative management. Decried bureaucratic management.
◦ Management is practice. Its essence is not in knowing, but in doing.
 Manager’s Job:
◦ Economic performance.
◦ Making work productive and worker achieving.
◦ Managing social impacts and social responsibilities.
 Business objectives & social responsibilities:
◦ Profit is essential for survival and growth of business.
◦ Management is responsible for impact of business activities on people &
environment, however, to a limited extent.
 Entrepreneurial Functions: Marketing and innovation are most
important functions of an entrepreneur.
 Management by Objectives & Self Control: MBO is necessary as
there are powerful forces of misdirection in modern business
( specialisation, hierarchical structure and differences in vision of
various levels of management).
 CONTRIBUTION OF PETER F DRUCKER contd
 Federal Decentralization: Federal organization
preferred over Functional organization. In federal
organizations, activities are organized around autonomous
product divisions, each with its own responsibility,
product & market.
 Organization Structure:

◦ Should contain least number of authority levels. Should facilitate

testing & training of future managers.
◦ Three ways to determine structure:
 Activity Analysis.
 Decision Analysis.
 Relations Analysis.
 CONTRIBUTION OF PETER F DRUCKER contd
 Decision-making: Management is always a decision-making
process. Decision-making is five phase process:
◦ Defining problem.
◦ Analyzing problem
◦ Developing alternative solutions
◦ Selecting the best solution, based on four criteria:
 Risk, Economy of effort, Time availability & Limitation of resources.
◦ Converting decision into effective action.
 Management Development:
◦ Prosperity of business depends upon future managers.
◦ Principles of Management Development:
 Development of entire group.
 Development must be dynamic (focus on need of tomorrow).
 Futurity: Manager must be prepared for challenges of future
(rapid changes in technology and its impact on society).
 MODERN MANAGEMENT THOUGHT
 The Systems Approach
 Dynamic: Business environment changes continuously.

Survival & growth depend upon organisation’s ability to

adapt and respond to changing environmental demands
and constraints.
 Multi-dimensional: Three levels of management (Top,

Middle & Operative).

 Multi-motivated: Managers required to strike judicious

balance between interests of share holders, consumers,

employees, government & community. Thus multiple
sources of motivating managers.
 Multi-disciplinary
 MODERN MANAGEMENT THOUGHT contd
 Multi-variable: An event/situation may be result of
several controllable and uncontrollable factors
(variables).
 Adaptive: Organization is an open system, adapting itself

to its environment through the process of feedback.

 Probabilistic: Management actions / decision s based on

future events. Absolute prediction not possible due to

numerous variables. Intelligent forecasting and planning
can reduce uncertainty.
Thank you