Unit I

P R O F. S H A I L J A B H A K A R
 Definitions of Management

 Lawrence A. Appley: Management is the development of people not the

direction of things
 Peter Drucker: Management is what it does because management is an organ
and organs can be described and defined only through their function
 R C Davis: Management is the function of executive leadership anywhere
 General Definition: Management is an art of getting things done through and
with others
 Significance of Management

 Determination and attainment of goals

 Integration of human and physical resources
 Meeting challenges
 Maintain stability and growth
 Fulfillment of social obligation
 Other factors:
• Liberalization of the industrial environment
• Focus on research and development
• Expectation of society
 Significance of Management

• Consumer orientation
• Competition
• Entrance of new technologies
• Complexity of organization/ Specialization of jobs
• Growing interface between business and government
• Growth of trade union movement
 Evolution of Management Theory

The Scientific Management School

• Twentieth Century
• Shortage of labour
• Expansion of productivity
• Workers efficiency
• Frederick W. Taylor, Henry L. Gantt, Frank and Lillian Gilberth devised
body of principles known as scientific management theory
Frederick W. Taylor (1856-1915):Midvale and Bethlehem steel company
Pennsylvania)
 Rested his philosophy on four principles
1. The development of a true science of management
2. The scientific selection of workers
3. The scientific education and development of workers
4. Cooperate

Midvale Steel Company

 Evolution of Management Theory

• Taylor said success of these principles require “ A complete mental

revolution”. He thought management and labour had a common
interest
• Using time study he broke down each job into components and
designed quickest and best methods of performing each
components
• Ex: Pig Iron (12.5 tons to 47 tons)and Shovel Sizes (21 pounds
optimum weight)
• He also encouraged higher pay for more productive workers. He
called it differential rate system
• Contributions of scientific management theory:
1. Applied in the areas of fast food service, surgeons etc.
• Limitation of scientific management theory:
1. Unions and workers began to oppose his approach
2. His critics objected to the speed up conditions
3. Managers started exploiting worker therefore more and more
workers started joining unions
 Evolution of Management Theory

• Contributions of scientific management theory:

1. Applied in the areas of fast food service, surgeons etc.
• Limitation of scientific management theory:
1. Unions and workers began to oppose his approach
2. His critics objected to the speed up conditions
3. Managers started exploiting worker therefore more and more workers
started joining unions
 Evolution of Management Theory

 Henry L Gantt (1861-1919): Looking at the little impact of

differential rate system on motivation Gantt came up with
new idea.
1. Every worker who finished a days assigned work load would
win a 50 cent- bonus
2. Supervisors bonus because they will train workers to do
better jobs
3. Gantt chart (workers progress, production scheduling)
4. Formed basis for two charting devices (PERT and CPM)
5. Translated into 8 languages
6. Starting in 1920’s used in Japan, Spain and Soviet Union
 Evolution of Management Theory

 The Gilberth's: Frank B. and Lillian M. Gilberth (1868-1924 and 1878-1972)

1. Collaborated on fatigue and motion studies
2. Gilberth's devised basic hand motions such as search, find, select, grasp
3. Experimented in the design and use of proper tools and equipments for optimizing work performance.
Promoted individual worker welfare
4. Using motion picture cameras they tried to find the most economical motions for each task in order to
upgrade performance and reduce fatigue
5. They argued it will raise workers morale
 Evolution of Management Theory

General Administrative School General Administrative theory grew out of the need to find
guidelines for managing such complex organizations as factories
I. Henri Fayol (1841- 1925) Generally called as the founder of management
1. Fayol believed that sound management practice falls into certain patterns that can be identified
and analyzed
2. Fayol listed 14 principles
3. He believed that managers could be taught once its underlying principles were understood

 Principles of Management:
1. Division of labor
2. Authority and responsibility
3. Discipline
 Evolution of Management Theory

4. Unity of command
5. Unity of direction
6. Subordination of individual interest to common good
7. Remuneration
8. Centralization and Decentralization
9. Scalar Chain
10. Order
11. Equity
12. Stability of staff
13. Initiative
14. Esprit de corps
 Evolution of Management Theory

The Bureaucratic Theory School: Max Weber (1864-1920): He was a

German sociologist. He thought that any goal-oriented organization
consisting of thousands of individuals would require carefully
controlled regulations of its activities
 He developed a theory of bureaucratic management that stressed the
need for a strictly defined hierarchy governed by clearly defined
regulations and line of authority
1. Division of labor
2. Authority hierarchy
3. Formal selection
4. Administration through well defined rules and regulation
5. Impersonality
6. Career orientation
7. Remuneration
 Evolution of Management Theory

 He also believed that technical competence should be emphasized and that

performance evaluations should be made entirely on the basis of merit
 Advantage of Bureaucracy is that, “ precision, speed, unambiguity,
knowledge of the files, continuity, discretion, unity, strict subordination etc.
 Disadvantage: Neglect of human factor and rigidity
 Bureaucracy has been successful for many companies in the competitive
global market of the 1990’s. General Electric and Xerox have become “
bureaucracy busters”
 Evolution of Management Theory

Human Relations School: Robert Owen: Scottish businessman who brought out
his first factory in 1789when he was just 18.
 Repulsed the harsh practices he saw in factories such as:
1. Employment of young children
2. Thirteen hour workdays
3. Miserable working conditions
 He proposed an idealistic workplace where:
1. Work hours would be regulated
2. Child labor would be outlawed
3. Public education would be provided
4. Meals at work would be furnished
5. Businesses would be involved in community projects
 Evolution of Management Theory

Marry Parker Follett (1868-1933): Follett was convinced that no one could
become a whole person except as a member of a group
 Human beings grow relationship in an organization with others.
 In fact she called “ Management the art of getting things done through
people”
 She believed that the artificial distinction between managers (order givers)
and subordinates (order takers) obscured their natural partnership
 She was a great believer of power of the group, where individuals can
combine their diverse talents into something bigger
 In Follett’s holistic model of control she not only accounted individuals and
groups but also environmental factors such as political, economical and
biological

She paved the way for management theory to include a broader set of
relationships, some inside the organizations and some across the borders
 Evolution of Management Theory

Chester I Bernard (1886-1961): According to him people come in an

organization to achieve ends that they can not achieve working alone,
but as they pursue organization goal they must also satisfy their
individual needs.
 An enterprise can operate efficiently and survive only when the
organizations goals are kept in balance with the aims and needs of
individuals working for it
 Understand employees zone of difference i.e. what the employee will
do without questioning the managers authority
 He also focused on the role of individual workers as basic strategic
factors in organization
 Emphasizing organization as the cooperative enterprise of
individuals working together as groups, he set the stage for the
development of a great deal of current management thinking.
 Evolution of Management Theory

 The major contribution to human relations school grew out of a series of studies
conducted at the western electric company from 1924 to 1933. These were known as
“Hawthorne Studies”. “Western Electric Hawthorne Plant Near Chicago”
I. Hawthorne Effect: Elton Mayo and Colleagues
1. The Illumination Studies: experimental group and control group (Lighting Conditions)
2. The relay room experiment: rest breaks, length of workday and method of payment
3. The Bank wiring experiment: natural work situation
 Implication of Hawthorne Studies
1. Small Group
2. Type of supervision
3. Earnings
4. Novelty of the situation
5. Interest in the experiment
6. Attention received in the test room
 Evolution of Management Theory
 Mayo and his colleagues pioneered the use of the scientific method in their studies of
people in the work environment.
 Human relations approach is a social psychological approach and suggests
business enterprise is a social system in which group norm plays a significant role
 Elton Mayo, Marry Parker Follet, Chester Bernard etc. were main contributors that
led to the development of human relations movement.

 The human relations movement marked by the following factors:

1. This movement viewed organization as a social system composed of numerous
interacting parts in which group norms exercise a significant influence on the
behavior and performance of individual.
2. Apart from economic need the employees have other social and psychological
needs like recognition, self respect etc.
 Evolution of Management Theory

3. The group determines the norms of behavior for the group members and thus exercise a
great influence on the attitude and performance of workers
4. This approach focused on teaching people management skills (as opposed to technical
skills)
5. Conflicts should be removed by improving human relations in the organization
6. Informal organizations also exist in formal organizations it effects and is effected by
formal organization.
7. According to this approach managers should understand human relations.

 Criticism of human relations approach:

1. Lack of scientific validity
2. Over emphasis on group
3. Over-stretching of human relations
4. Limited focus on work
5. Over stress on socio psychological factors
6. Negative view of conflict between organizational and individual goals
 Nature of Management

 Management as a Science:
1. Management is developed as systematized body of knowledge which can be
learnt, taught and researched
2. It uses scientific method of observation, experimentation and laboratory research
3. Management is a social science because it deals with behavior
 Management as an Art
1. Application of management is an art
2. Principles of management are used as guide for solving problems
 Nature of Management

 Management as a Profession
1. According to Mc Farland a profession has following characteristics:
i. A body of principles, techniques, skills and specialized knowledge
ii. Formalized method of acquiring, training and experience
iii. The establishment of representative organization with professionalization as its
goal
iv. The formalization of ethical code for the guidance of conduct
v. The charging of fees based on the nature of services
 Functions of Management

 Management is social process as it takes its inputs from and exports its outputs to the society
 Management is a process also because management functions are performed in continuity with each other
 Management process comprises of following six fundamental functions:

1. Planning: Planning is deciding in the present about the future objectives and the courses of action for
their achievement. It thus involves:
a. Determination of long and short term objectives
b. Development of strategies and courses of actions
c. Formulation of policies, procedures, rules etc.

2. Organizing: Determining how best to group activities and resources. It thus involves
a. Identification of activities required for the achievement of objectives and implementation of plans.
b. Grouping of activities
c. Assignment of jobs to employees
d. Delegation of authority
e. Establishment of a network of coordinating relationship.
 Functions of Management

 Staffing: After the organizing step the next step is to procure suitable personnel for carrying out
the jobs
1. Determining the number and kind of personnel required
2. Recruitment
3. Selection
4. Placement, induction and orientation
5. Transfer, Promotion, termination and layoff
6. Training and development

 Directing: Directing is the function of leading the employees to perform efficiently and
effectively and contributing at optimum level for the achievement of organizational objectives
1. Communication
2. Motivation
3. Leadership
 Functions of Management

 Coordinating: Establishing such relationships among various parts of the organization

that they all together pull in the direction of organizational objectives
1. Clear definition of authority-responsibility relationship
2. Unity of direction
3. Unity of command
4. Effective communication
5. Effective leadership

 Controlling: Ensuring that the divisional, departmental, sectional and individual

performance are consistent with the predetermined objectives and goals
1. Measurement of performance against predetermined goals
2. Identification of deviation from these goals
3. Corrective actions to rectify deviations
 Levels of Management

 Top Management: Top managers manage the overall organization titles found
in this group include President, Vice President, Chief Executive Officers,
Managing Directors etc. Functions performed by top management are as follows:
1. Lays down the objectives of the enterprise
2. Prepares strategic plans and policies for the organization
3. Issues necessary instructions for preparation of departmental budgets,
schedules, procedures etc
4. Appoints executives at middle level
5. Coordinates activities of all departments
6. Controls activities of all departments
7. Builds and maintains relations with the outside public
8. Officially represents organizations to outside environment
 Levels of Management

 Upper Middle or Intermediate Management: It consists of heads of

various department, production director, director finance, director
marketing etc. These are in constant touch with the upper management.
They are responsible fro smooth functioning of their functional department
1. It lays down plans and policies for middle management
2. Put top management plans into practice
3. Coordinate the functioning of their department
4. Appraise and control the functioning of middle management
5. Give directions and guidance to middle level managers
6. Prepare reports about the progress of their department
 Levels of Management

 Middle Level Management: These include heads of various functional

department, branch managers, superintendents etc. Devote more time in
organizing and directing. Perform following functions:
1. Implement plans and policies developed by top management/ upper
middle management
2. Develop leaders for the future
3. Build team spirit
4. Reward efficient staff
5. Handle plant management
 Levels of Management

 Supervisory, Lower or Front Line Managers: Common titles under

this category are supervisors, coordinator, office manager etc. these are
more concerned with direction and control function. Perform the following
function:
1. Solve problems of workers
2. Hire operating employees
3. Plan and organize activities of the group
4. Arrange necessary materials
5. Provide training to workers
6. Communicate workers problems to the higher level management
 Management V/S Administration

 Administration is above management

 Administration is part of management
 Administration and Management are one: Administrative Management and
Operational Management
 Management V/S Administration

Points of Administration Management

Distinction

Nature It is a determinative or thinking function It is an executive or doing function

Scope It is concerned with the determination of major It is concerned with the implementation of
objectives and policies policies
Level It is mainly a top level function It is largely a middle and lower level function
Influence Administrative decisions are influenced mainly Managerial decisions are influenced mainly by
by public opinion and other outside forces objectives and policies of the organization
Direction of It is not directly concerned with direction of It is actively concerned with direction of human
human efforts human efforts efforts in the execution of plans
Main functions Planning and control are the main functions Directing and organizing are the main functions
involved in it involved in it
Skills required Conceptual and human skills Technical and human skills
Usage Used largely in government and public sector Used mainly in business organizations
Illustration Minister, Commander, Commissioner, Managing Director, General Manager, Sales
Registrar, Vice Chancellor, Governor etc Manager, Branch Manager etc
 Social Responsibility of Managers

 Social Responsibility definitions

1. Koontz O’ Donnell: The personal responsibility of everyone, as they act in
their own interest to assure that the rights and legitimate interest of all
others are not infringed.
2. Peter Drucker: Social responsibility requires managers to consider
whether their actions is likely to promote public good, to advance the
basic beliefs of our society, to contribute its stability, strength and
harmony.
 Social Responsibility of Managers
 Social Responsibilities of managers for different groups:
1. Responsibilities to shareholders and investors
a) To ensure safety of investment
b) To provide fair and regular dividend
c) To offer reasonable appreciation of capital through optimum use of resources
d) To provide regular, accurate and complete information about the working of the company
e) To give equal treatment to all shareholders

2. Responsibilities towards employees

a) To pay a regular wage/ salary
b) To provide a proper and safe working conditions
c) To provide opportunities for training and self development
d) To create sense of belonging and dignity of labor
e) To provide welfare measures to employees
f) To facilitate their participation in decision making at their respective levels
 Social Responsibility of Managers

3. Responsibilities towards consumers

a) To supply socially useful products to meet the needs of consumers
b) To ensure regular and adequate supply of goods
c) To provide standard quality products
d) To charge reasonable prices
e) To handle consumer’s complaints and grievances quickly
f) To provide after sales service
g) To educate consumer’s about the new products and new uses of existing
products
h) To provide benefits of cost reduction in the form of lowering prices
i) To avoid unfair trade practices
 Social Responsibility of Managers

4. Responsibilities towards government

a) To abide by the laws of the country
b) To pay taxes honestly and regularly
c) To cooperate with the government in solving problems like unemployment,
poverty, price rise and import substitution
d) To assist the government in achieving their objectives in the economic and
social front

5. Responsibilities towards society

a) Public good should become the private good of the company
b) By producing goods and services efficiently and by fair means
 Social Responsibility of Managers

c) Contribute to the economic wellbeing of the country and social upliftment

d) They may assist the society by providing financial assistance to local bodies
e) They may also encourage development of education and research
f) They may take the ideals of social justice

6. Responsibility towards suppliers

a) It is the duty of business firms to maintain healthy relations with suppliers with
the objective of ensuring proper supply of material at the right price
b) Dealing with suppliers should be based on integrity, impartiality and courtesy.
c) Terms and conditions regarding the supply of goods must be reasonably be fair
 Social Responsibility of Managers

 Measures for enforcing social responsibilities:

1. Legislative Measures
a) The compliance of legal provisions is to be tightened and it should be
made obligatory and more strict
b) Various enactments should be modified to incorporate concepts like
Trusteeship, social reporting and social audit.
2. Voluntary Measures
a) Boycott of product/ services
b) Media Campaigns
 Management Skills

 Technical Skills
 Interpersonal Skills
 Conceptual Skills
 Diagnostic Skills
 Decision Making Skills
 Communication Skills
 Time Management Skills
 Team Building Skills
 Leadership Skills