Unit1

Concept
 Terminology used in synonym to Management
Management Administration is
implements/ concerned mainly with
executes the decision making, policy
policies laid down making and making
by necessary adjustments.
administration. Administration

Organisation is the
frame work of
management.
Organisation is the
Management function of putting
together the
Organization different parts of an
enterprise into
working order
 Terminology
 The task of administration is to determine the objectives, policies rules, regulations
and principles of the enterprise. Therefore, it is determinative in nature.
 Administration may be compared to the brain of the human body; because its
activities relate to thinking process like fixation of target, decision making etc.
 The activity of management is to get the various works done by the operative
employees to fulfill those objectives according to the policies determined by
administration.
 Management implements those rules, regulations and principles. So, it is an
executive function.
 Management may be regarded as the eyes as it observes if the work is being done
according to rules and regulations and policies to achieve targets
 The function of organisation is to set up a harmonious inter-relation between the
employees and their work by delegating authority and responsibility among them.
 Establishment of organisation is one of the basic functions of management.
 Organisation may be compared to the hands of a human body; because it helps
directly in performance of work.
 Administration, Management & Organisation –
Oliver Sheldon
 Administration- Determination of Policy and
Coordination
 Management- Execution of Policy and employment of
Organisation
 Organisation- the combination of the work of individuals
or groups with the faculties necessary for its
implementation or execution
 According to Brech,
Management in broad sense, comprises of Administrative
management and Operative Management.
BRECH’s Interpretation
Administrative Operative
Management Management Use of
Policy Making Resources
and Planning (men, machine,
materials,
money)

Determination
of standards Execution,
direction

Overall control
and Supervision Routine control
 Concept
 Management= Manage men tactfully
 Traditionally, management means “managing men tactfully to
get the things done through others”.
 The modern concept of management is goal oriented and it
creates an internal environment for attaining the goals
efficiently
 Management can be conceived as
 A process (comprises of functions such as planning, organising,
staffing, directing and controlling)
 a group of persons (who are managing the affairs of the business
enterprise)
 A discipline (The knowledge of management is being developed by
number of scholars and it is being formally taught to the students
of management)
 An activity (Management involves the activities for getting the
work done through others)
Definition
Management as a process
 Harold Koontz and Heinz Weihrich, “Management is
the process of designing and maintaining an
environment in which individuals, working together
in groups, efficiently accomplish selected aims.”
 Robert L. Trewelly and M. Gene Newport, “Management
is defined as the process of planning, organising,
actuating and controlling an organisation’s
operations in order to achieve coordination of the
human and material resources essential in the
effective and efficient attainment of objectives.”
Definition
Management as a group of Persons (noun)
 Management as a group refers to all those persons who
perform the task of managing an enterprise.
 Technically, management will include all managers from
chief executive to the first - line managers (lower-level
managers). But in common practice management
includes only top management i.e. Chief Executive,
Chairman, General Manager, Board of Directors etc. Or
we can say that, those who are concerned with making
important decisions, these persons enjoy the authorities
to use resources to accomplish organizational objectives &
also responsibility to, for their efficient utilization.
Definition
Management as an activity
 Van Fleet and Peterson define management, ‘as a set of
activities directed at the efficient and effective
utilization of resources in the pursuit of one or more
goals.’
 According to F.W. Taylor, ‘ Management is an art of
knowing what to do when to do and see that it is
done in the best and cheapest way ‘.
Definition
Management as an activity
 According to Allen, “Management is what a manager does”.
 Management as an activity includes –

 Informational activities - In the functioning of business enterprise, the

manager constantly has to receive and give information orally or in written. A
communication link has to be maintained with subordinates as well as superiors
for effective functioning of an enterprise.
 Decisional activities - Practically all types of managerial activities are based on
one or the other types of decisions. Therefore, managers are continuously involved
in decisions of different kinds since the decision made by one manager becomes
the basis of action to be taken by other managers. (E.g. Sales Manager is deciding
the media & content of advertising).
 Inter-personal activities - Management involves achieving goals through
people. Therefore, managers have to interact with superiors as well as the sub-
ordinates. They must maintain good relations with them. The inter-personal
activities include with the sub-ordinates and taking care of the problem. (E.g.
Bonuses to be given to the sub-ordinates).
Definition
Management as a discipline
Any branch of knowledge that fulfils following two requirements
is known as discipline:
✓ There must be scholars & thinkers who communicate relevant
knowledge through research and publications.
✓ The knowledge should be formally imparted by education and
training programmes.
Since management satisfies both characteristics, therefore it
qualifies to be a discipline.
 the branch of knowledge which is connected to study of
principles & practices of basic administration. It specifies
certain code of conduct to be followed by the manager & also
various methods for managing resources efficiently.
 Management is a course of study which is now formally being
taught in the institutes and universities; after completing a
prescribed course or by obtaining degree or diploma in
management, a person can get employment as a manager.
Characteristics of Management
 Nature of Management
 Management experts and scholars have different views
on the nature of management. Some are of the opinion
that management is a science, some others hold the
view that it is an art and yet others say it is a
profession. Considering all these views, the nature of
management can be determined.
 Nature of Management
MANAGEMENT IS A SCIENCE
 Features of science are:-
✓ Science is systematically defined branch of knowledge
 Science is systematically defined branch of knowledge
 Its principles are evolved through experiments and
observations and they are combined and preserved in
different study materials.
This holds good with management also.
✓ Management principles are also evolved through
experiments and observations and they are also combined
and preserved.
 Nature of Management
✓ Principles are formed from continuous research:
• Scientists develop scientific principles after numerous
experiments carried out in different places and under
different circumstances.
This approach is true of management as well.
• Principles of Management are being developed after
numerous experiments in different companies at different
places.
Nature of Management
 Principles are universally applicable:
 Scientific principles are universally applicable. For
example, two parts of hydrogen mixed with one part of
oxygen gives water and this is true if done anywhere in
the world.
However, management principles cannot be applied
universally and in the same way.
 Since management is related to man, its principles are
related to human behaviour, his culture, education and
life style and human behaviour varies from person to
person. Therefore, universal applicability of science may
not be compatible with management principles.
Nature of Management
✓ Scientific principles are formulated on the basis of
observation and logic:
 Scientific principles are defined after logical
observation. Moreover, observation of scientists will be
hundred percent objective.
 But managers observe human beings and observation of
managers may not be cent percent objective.
 Therefore this principle of science is also not compatible
with management principles.
Nature of Management
• When scientific principles and
management principles are compared, we
can conclude that some of the features of
Science are not there, so management is
not an exact science. As management is
related to man, we can say, management is
a social science.
Nature of Management

 MANAGEMENT IS AN ART
A group of management scholars are of the view
that management is an art. So, lets
examine the features of art and see whether
they are compatible with the characteristics of
management.
Nature of Management
 Theoretical knowledge is systematically arranged in
the field of Art
 The theoretical knowledge of art is systematically
arranged and documented in the books so that people
may get to know and learn various aspects of art. For
example, several books are a available which give about
different aspects of dance, music or cooking.
 In management also several books have been published
giving knowledge about different aspects of
management. Thus systematic arrangement of
theoretical knowledge is an aspect common to both art
and management.
Nature of Management
 Individual Differences are significant in Art
 An artist becomes perfect in his work of art by
combining the knowledge he has gained with his own
inherent talents. For example, even though different
actors are trained by the same trainer, some of them
excel by adding their natural talents.
 In management also all managers learn same theories
and principles, but their efficiency depends on how well
they use these principles under different situations by
applying their own personal creativity and skill. So this
feature of art is also present in management.
Nature of Management
 An artist gains perfection through constant practice:
 An artist gains perfection through constant practice
 The managers become more perfect from their
experience they have gained from the different
circumstances. That means art and management have
this characteristics in common.
Conclusion: As management has all the features of art in
common, we can say that management is an art.
Nature of Management
 MANAGEMENT IS BOTH SCIENCE AND ART
✓ Management is a systematically arranged collection of
knowledge.
✓ Management principles are gained through constant
research.
✓ Art is a collection of theoretical knowledge.
✓ Individual differences are important in art.
✓ An artist gains perfection through constant practice.
We can conclude that,
As management is systematically arranged body of
knowledge, it is a science. As this collection of
knowledge is practically applied, it is also an art.
 Management as a Profession
 Profession means a paid occupation, especially one that
involves prolonged training and a formal qualification.
 Occupation means engaging or occupying one’s time to
earn a livelihood.
 A profession has a certain basic set of knowledge that acts
as instruction and can be acquired by practice.
 Earlier there were only 3 occupations considered as
profession:-Bishop, lawyers and doctors but in the
present era of specialization many occupations are
covered under the term profession.
 Management as a Profession
Features of a Profession
 Well-defined Body of knowledge: A profession has a
certain basic set of knowledge that acts as instruction
and can be acquired by practice.
 Restricted Entry: One cannot simply just enter into a
profession. Instead, there are some eligibility criteria
like an examination which the person needs to pass in
order to enter into the professional domain.
 Management as a Profession
Features of a Profession
 Professional Association: Each profession is affiliated
to a body, council or association that carries out
function like regulating entries, maintaining the code
of conduct, grants certificates and so on. For example,
the Bar Council of India controls the activities of all
lawyers. MCI, Medical Council of India…
 Ethical Code of Conduct: There are certain ethics
which the torchbearer of every profession has to abide
by. These guide the behaviour of the members.
 Management as a Profession
Features of a Profession
 Service Motive: The purpose of every profession is to
serve the clients. So, a professional is required to
provide committed and dedicated services to fulfill or
satisfy client’s interests.
 Let us see whether Management contains features of
Profession
 Management as a Profession
 Substantial Body of accumulated Knowledge:
Management consists of well defined and systematic
knowledge, that is imparted to people aiming to be a
manager. This knowledge developed over time and is
ever changing and increasing.
 Compulsory acquisition of Management Knowledge to
pursue career as a manger: The knowledge of
management is taught at various institutes, colleges
and can also be acquired through books and journals.
For example, the IIM is an institute for acquiring
management knowledge.
 Management as a Profession
 Restricted entry – Entry to any management role is
possible only for candidates with certain set entry criteria.
These criteria include educational qualifications,
experience, efficiency, knowledge of specific software, etc.
 Code of conduct and associations – Management, like
any other profession, contains a code of conduct and ethics
that every manager has to abide by. The presence of various
management associations is there, which regulates and
certifies managers for specific skills.
 We can conclude that Management has features of
profession but it is not a profession in strict sense as medical
or legal profession rather its an evolving profession.
 Importance of Management
 Management is the essence of an organization. It is universal
and all pervasive.
 Management plays an important role in all around
development of organization may big or small, profitable and
non-profitable
 Every organization needs an effective management system
with a view to achieve its predetermined goals in the most
appropriate way.
 In the absence of an effective management system any
organization cannot able to achieve its preset goals in the
proper way.
 Similarly, a nation cannot develop by leaps and bounds in the
lack of effective management system.
 Hence, it is clear that management is a life-giving element for
organization and nation as well.
 Importance of Management
 Helps in achieving Pre-determined goals
 Maximum and Optimum use of available resources
 Facilitates in minimizing cost of Productions
 Helps in facing cut-throat Competition by making
appropriate strategies
 Plays important role in meeting the challenges of
change
 Helpful For development of people by increasing their
efficiency and productivity
 Significant to business in tackling business problems
 Importance of Management
 Helps in Effective utilization of 7 Ms : men, material,
money, machines, methods, markets and
management.
 Management directs the organisation to achieve its
goals
 It provides stability by changing and modifying the
resources in accordance with the changing
environment of the society
 Facilitates innovation
 Provides coordination and builds team spirit
Functions
Who is a Manager?
 A Manager is the person responsible for planning and
directing the work of a group of individuals, monitoring
their work, and taking corrective action wherever
necessary.
 A manager is a person responsible for supervising and
motivating employees and for directing the progress of
an organization.
 Functions
Functions of a manager:
 Planning: planning is the most fundamental function
from which other functions stem up.
A manager is ready to organize and staff
 Organizing
only after goals and plans to reach the goals
 Staffing are in place
 Leading /Directing: This function involves influencing
the behavior of people in the organization and depends
on the goals to be achieved.
 Controlling /Monitoring: In this function, the
determination of whether or not goals are being
accomplished and standards are being met is based on
the planning function. The planning function provides
the goals and standards that drive the controlling
function.
 Roles and Responsibilities of Managers
 Mintzberg's Set of Ten Roles

Source:https://www.tutorialspoint.com/management_principles/management_principles_managers_role.htm
Interpersonal Role
 Figurehead − Has social, ceremonial and legal responsibilities.
 Leader − Provides leadership and direction.
 Liaison − Networks and communicates with internal and external contacts.
Informational Role
 Monitor − Seeks out information related to your organization and industry,
and monitors internal teams in terms of both their productivity and well-
being.
 Disseminator − Communicates potentially useful information internally.
 Spokesperson − Represents and speaks for the organization and transmits
information about the organization and its goals to the people outside it.
Decisional Role
 Entrepreneur − Creates and controls change within the organization -
solving problems, generating new ideas, and implementing them.
 Disturbance Handler − Resolves and manages unexpected roadblocks.
 Resource Allocator − Allocates funds, assigning staff and other
organizational resources.
 Negotiator − Involved in direct important negotiations within the team,
department, or organization.
 Managerial Skills
 Technical Skill: e.g. skills possessed by Accountants, engineers,
surgeons. Managers, especially at the lower and middle levels, need
technical skills for effective task performance.
 Human Skill: Ability to work with, understand, and motivate other
people as individuals or in groups.
 Conceptual Skill: Creativity, broad knowledge and ability to
conceive abstract ideas. Ability to visualize the enterprise as a whole,
and anticipate how a change in any of its parts will affect the whole.
 Diagnostic Skill: Diagnose a problem in the organization by
studying its symptoms.
 Analytical Skill: Ability to identify the vital or basic elements in a
given situation, evaluate their interdependence, and decide which
ones should receive the most attention.
Pre-Scientific Management Era
(before 1880)
 Early Management thoughts prevailed during 1700-1800 when the factory system
emerged due to industrial revolution and the importance of direction as a managerial
function was highlighted.

 Adam Smith brought about the revolution in financial thought and

 James Watt's steam engine provided cheaper power that revolutionized English
commerce and industry. Both provided the base for modern concepts of business
management theory and practice.

 Charles Babbage (1792–1871) is recognized as the supporter of operations research

and management science. Babbage's scientific innovations are mechanical calculator, a
versatile computer, and a punch-card machine.

 Other theorists who contributed in quantitative approach of early management thought

were Robert Owen, Andrew Ure and Charles Dupin, Henry Robinson Towne.
Scientific
Management
Era
Scientific Management
Frederick Winslow Taylor (1856-1915) is considered to be the
father of ‘Scientific Management’.
 He Worked as a chief engineer in a steel company around
1884, in Philadelphia.

Subsequently, he was supported by Henry Gantt, George

Berth, Edward Felen, Lillian Gilberth and Harrington Emerson.
Taylor’s Scientific Management
 Formal management ideas can be traced since 1700s.
But the most significant developments in management
theory emerged in the 20th century.
 Frederick Winslow Taylor was one of the earliest of
these theorists who started the Scientific
Management movement.
 In his book, “The Principles of Scientific Management
(1911), he proposed that by optimizing and simplifying
jobs, productivity would increase.
Scientific Management
 Scientific Management is defined as the application of
science for each and every element of management.
 In the words of Taylor, “Scientific Management is an
art of knowing exactly what you want your men to do
and seeing that they do it in the best and cheapest
way”.
 The principles of Scientific Management helps in
preventing the wastage of time and labour in industry,
reduce cost of production, increase efficiency of the
workers and improve the relationship between the
managers and workers.
Principles of Scientific Management
a. Science, not rule of thumb
 This rule focuses on increasing the efficiency of an
organisation through scientific analysis of work and
not with the ‘Rule of Thumb’ method. Taylor believed
that even a small activity like loading paper sheets
into boxcars can be planned scientifically. This will
save time and also human energy. This decision
should be based on scientific analysis and cause and
effect relationships rather than ‘Rule of Thumb’
where the decision is taken according to the
manager’s personal judgement.
b. Harmony, Not Discord-
Taylor indicated and believed that the relationship
between the workers and management should be
cordial and completely harmonious. Difference
between the two will never be beneficial to either side.
Management and workers should acknowledge and
understand each other’s importance. Taylor also
suggested the mental revolution for both management
and workers to achieve total harmony.
c. Cooperation, not Individualism-
 It is similar to ‘Harmony, not discord’ and believes in
mutual collaboration between workers and the
management. Managers and workers should have
mutual cooperation and confidence and a sense of
goodwill. The main purpose is to substitute internal
competition with cooperation.
d. Development of Every Person to
his Greatest Efficiency-
The effectiveness of a company also relies on the
abilities and skills of its employees. Thus, implementing
training, learning best practices and technology, is the
scientific approach to brush up the employee skill. To
assure that the training is given to the right employee,
the right steps should be taken at the time of selection
and recruiting candidates based on a scientific
selection.
Techniques of Scientific Management
 Functional Foremanship
 Work Study
 Time
 Motion
 Method
 Fatigue
 Standardisation and Simplification of work
 Differential Piece rate system
 Techniques of Scientific Management

Source: https://www.slideshare.net/Rashmikavya/fwtaylorfather-of-scientific-management
 Techniques of Scientific Management
 Functional Foremanship: Taylor emphasized the
separation of planning aspects from actual doing of
the work. The planning should be left to the
supervisor and the workers should emphasize on
operational work. Separation of ‘planning from
doing’ resulted into development of supervision
system that could take planning work adequately
besides keeping supervision on workers. Thus,
Taylor evolved the concept of functional
foremanship based on specialization of functions.
Functional Foremanship
 He recommended the employment of eight expert leaders or foremen:
I. For Operational Department:
➢ Gang boss: arranges all machines, tools and other resources for
performance of job to prevent any delay
➢ Speed boss: assures timely completion of job
➢ Repair boss: ensures that machines and tools are kept in working
conditions
➢ Inspector: keeps a check on quality control
II. For Planning Department:
➢ Route clerk: fixes up the sequence of steps for performing mechanical
or manual job.
➢ Instruction card clerk: gives general instructions for performing a job in
a specific manner.
➢ Time and cost clerk: fixes u the time for starting and completion of job.
➢ Shop disciplinarian: ensures the performance of job in orderly and
systematic way
 Techniques of Scientific Management

Source: https://www.slideshare.net/Rashmikavya/fwtaylorfather-of-scientific-management
Techniques of Scientific Management
 Work study: It is undertaken to find out the best way of
doing things. The best way of doing a job is one which
requires the least movement consequently less time and
cost. It involves work measurement and work improvement
through scientifically conducted time, motion, method and
fatigue studies.
➢ Time Study: The basic purpose of time study is to determine the
proper time for performing the operation.
➢ Motion Study: It is study of the movements of an operator (or
even of a machine) in performing an operation for eliminating
useless motions.
➢ Method Study: It involves the determination of the standard task
to be performed by the workers.
➢ Fatigue Study: The purpose of such study is to regulate the
working hours and provide for rest to the workers at scientifically
determined intervals.
Techniques of Scientific Management
Standardisation and Simplification of
Work:

What is Standardisation?
 Standardisation implies to the method of
establishing standards for every industry activity; it
can be standardisation of manner, time, raw material,
machinery, product, processes or operating
situations. These examples are the benchmarks,
which must be adhered to throughout the
production.
Standardisation and Simplification of
Work:
What is Simplification?
 Simplification points at erasing unnecessary types,
sizes and dimensions while standardisation intends
devising new types rather than the existing ones.
Simplification points at eliminating a redundant
variety of products. It results in savings of the cost of
machines, tools and labour. It means controlled
inventories, complete utilisation of supplies and
boosting turnover.
Imagine a company that manufactures different types of screws. Initially, they produce screws in 50
different sizes and shapes. This variety requires a large inventory of raw materials, different machines
for each type, and specialized training for workers to handle each variation.

Simplification Process:

 Analysis: The company analyzes the market demand and realizes that only 20 of the 50 types of
screws are frequently used by customers.
 Reduction: They decide to eliminate the production of the 30 less popular types of screws.
 Standardization: The company standardizes the production process for the remaining 20 types,
using fewer machines and tools.
 Training: Workers are trained to efficiently produce these standardized screws, reducing the
complexity of their tasks.

Benefits:

 Cost Savings: By reducing the variety of screws, the company saves on raw materials, machine
maintenance, and labor costs.
 Efficiency: Production becomes more streamlined, leading to faster manufacturing times and
reduced errors.
 Inventory Management: Simplified inventory management with fewer types of screws to store and
track.

Outcome:

 The company can now produce screws more efficiently and at a lower cost, while still meeting
customer demand. This simplification leads to increased productivity and profitability.
Techniques of Scientific Management
Differential Piece Rate System
 Taylor proceeded on the assumption that through
time and motion study it is possible to fix a standard
time for doing a particular task. To encourage the
workers to complete the work within the standard
time, Taylor advocated two piece rates, so that if a
worker performs the work within or less than the
standard time, he is pad a higher piece rate, and if he
does not complete the work within the standard
time, he is given a lower piece rate.
Administrative
Management
 Fayol’s Contribution
 Henry Fayol (1841-1925) started his career as a junior
engineer in a coal mine company in France and became
its general manager in 1880.
 His ideas on management have been summed up as the
Administrative Management Theory, which later evolved
into the Management Process School.
 A contemporary of Taylor, Fayol for the first time
attempted a systematic analysis of the overall
management process.
 He published his book titled General and Industrial
Management in 1929.
Fayol’s Contribution
Fayol’s contribution to management can be discussed under
the following four heads:
 Division of Industrial Activities
 Qualities of an Effective Manager
 Functions of Management
 Principles of Management
 Division of Industrial Activities
All activities of the industrial enterprise which exist in
every enterprise can be divided into six groups:
(i) Technical (relating to production);
(ii) Commercial (buying, selling and exchange);
(iii) Financial (search for capital and its optimum use);
(iv) Security (protection of property and persons);
(v) Accounting (Preparation of various statements,
accounts, returns etc.) and
(vi) Managerial (planning, organisation, command, co-
ordination and control)
 Qualities of an Effective Manager
Henry Fayol was the first person to recognise the different
qualities for manager.
(i) Physical (health, vigour, and address);
(ii) Mental (ability to understand and learn, judgement,
mental vigour, and adaptability) ;
(iii) Moral (energy, firmness, willingness to accept
responsibility, initiative, loyalty, tact and dignity);
(iv) Educational (acquaintance with matters related to
general functioning) ;
(v) Technical (peculiar to the functions being performed);
and
(vi) Experience (arising from the work).
 Functions of Management
 Fayol identified following functions of the management:
(i) Planning:
Deciding in advance what to do. It involves thought and decision relating to a
future course of action.
(ii) Organizing:
Providing everything that is useful to a business enterprise for its operation
i.e., men, materials, machines and money etc.
(iii) Commanding:
Maintaining activity among personnel (lead the personnel in a better way).
(iv) Co-ordinating:
The channelisation of group efforts in the direction of achieving the desired
objective of the enterprise (binding together-unifying and harmonizing all
activity).
(v) Controlling:
Seeing that everything is being carried out according to the plan which has
been adopted, the orders which have been given, and the principles which
have been laid down. Its object is to point out mistakes in order that they
may be rectified and prevented from occurring again.
Principles of Management
Henry Fayol evolved 14 principles that can be applied in
all management situations irrespective of the types of
organization:
 Fayol’s Principles of Management
 Division of Work: Dividing work among the workforce
helps improve the quality of the overall product. Henri
Fayol said that specialization in work increases the
productivity and improves efficiency. Division of labour
also leads to the specialization, accuracy, and speed of the
workers. This principle is applicable both in managerial as
well as technical work.
 Authority and Responsibility: In this principle, Fayol
conceives authority as a combination of official authority
deriving from a manager’s official position and personal
authority, which is compounded of intelligence,
experience, moral worth, past services, etc.
 Fayol’s Principles of Management
 Discipline: Holding the notion that discipline is ‘respect
for agreements which are directed as achieving obedience,
application, energy and the outward marks of respect’,
Fayol declares that discipline requires good superiors at all
levels, clear and fair agreements and judicious application
of penalties.
 Unity of Command: This is the principle, which states
that an employee should receive orders from one superior
only.
 Fayol’s Principles of Management
 Unity of Direction: According to Fayol, the unity of
direction principle implies that each group of activities
having same objectives must have one head and one plan.
As distinguished from the principle of unity of command,
Fayol perceives unity of direction as related to the
functioning of personnel.
 Subordination of Individual Interest to General
Interest: In any group, the interest of the group should
supersede that of the individual. When the interests
differ, it is the function of the management to reconcile
them.
 Fayol’s Principles of Management
 Remuneration of Personnel: Fayol perceives that
remuneration and methods of payment should be fair and
also should be able to provide the maximum satisfaction
to employee and employer.
 Centralization: Depending on the size of the
organization, it is important that the power is centralized
to an extent that the decision making is judicious at all
levels and not arbitrary. This will also depend on the size
of the organization. Henri Fayol said that there must be a
balance in the hierarchy and division of power.
 Fayol’s Principles of Management
 Scalar Chain: Fayol thinks of the scalar chain as a line of
authority, a chain of superiors from the highest to the
lowest ranks. So that every employee knows who is their
immediate senior in the times of conflict or crisis. But also
the employee must be able to contact any person in the
hierarchy without hesitation during a time of crisis.
 Order: There must be a proper defined order maintained
at the work premises so that it makes for a conducive
work environment. The right environment in the place of
work will boost productivity.
 Fayol’s Principles of Management
 Equity: Fayol perceives this principle as one of eliciting loyalty
and devotion from personnel with a combination of kindliness
and justice in managers while dealing with subordinates.
Employees should be treated with equality and respect. This is
among the core values of management. It will fall on the
manager to ensure that there is no discrimination of any kind
happening in the workplace.
 Stability of Tenure of Personnel: Finding that instability is
both the cause and effect of bad management. An employee is
able to deliver better when he is secure in his job. It is the duty
of the management to offer job security to their employees
along with a promise of growth. Minimizing employee turn
over is important and beneficial to the management as well.
 Fayol’s Principles of Management
 Initiative: Initiative is conceived as the process of
thinking out and executing a plan. The management must
encourage its employees to take initiatives in the
organization. It will make them feel valued and develop
their interest.
 Esprit de corps: This principle implies that union is
strength and an extension of the principle of unity of
command. Fayol, here, emphasizes the need for
teamwork and the importance of communication in
obtaining it.
Bureaucratic
Management
Weber’s Bureaucratic Management
Theory
 The German sociologist, Max Weber recognized as father of modern
Sociology who appraised bureaucracy as the most logical and
structure for big organization.
 Weber observed that earlier business firms were unproductively
managed, with decisions based on personal relationships and
faithfulness.
 He proposed a form of organization, called as bureaucracy,
characterized by division of labour, hierarchy, formalized rules,
impersonality, and the selection and promotion of employees based
on ability, would lead to more well-organized management.
 Weber also argued that authoritative position of managers in an
organization should be based not on tradition or personality but on
the position held by managers in the organizational hierarchy.
Bureaucracy
 Bureaucracy is an organisational structure that is
characterised by many rules, standardised processes,
procedures and requirements, number of desks, meticulous
division of labour and responsibility, clear hierarchies and
professional, almost impersonal interactions between
employees.
 Suitable for large organizations that helps in structurally
performing all tasks by a great number of employees.
 in a bureaucratic organisation, selection and promotion
only occur on the basis of technical qualifications.
Features of Bureaucracy
 Specialisation- Labor is divided with a clear indication of
authority and responsibility;
 Hierarchy of Authority - The principle of hierarchy exits;
 Formal selection- Personnel are selected and promoted based
on qualifications;
 Impersonal- Rules are written down and applied uniformly and
impersonally. Regulations and clear requirements create distant
and impersonal relationships between employees, with the
additional advantage of preventing nepotism or involvement
from outsiders or politics. These impersonal relationship are a
prominent feature of bureaucracies.
 Merit based Career orientation- Promotion into management
is only through demonstrated technical competence; and
 Rules - Rules and procedures ensure reliable and predictable
beahviour.
Advantages of Bureaucracy
The Neoclassical Management Era
 The Neoclassical Management Era, also known as the
Human Relations Movement, emerged in the 1920s
and 1930s as a response to the limitations of classical
management theory.

 This approach emphasized the importance of human

factors in organizational performance and
productivity.
Origin
 The various theories of neo classical management era
developed as a critique of scientific management and
bureaucratic approaches.

 It majorly got influenced by the Hawthorne Studies

conducted by Elton Mayo and colleagues.
Key Principles
 Focus on human relationships and social needs in the
workplace.
 Recognition of informal organizations within formal
structures.
 Emphasis on employee motivation and job
satisfaction.
 Importance of communication and participative
management
Major Contributors
1. Elton Mayo:
 Conducted the Hawthorne Studies
 Highlighted the importance of social factors in productivity

2. Mary Parker Follett:

 Emphasized the importance of group dynamics
 Introduced the concept of "power with" rather than "power over“

3. Abraham Maslow:
 Developed the Hierarchy of Needs theory
 Linked employee motivation to the satisfaction of various needs

4. Douglas McGregor:
 Proposed Theory X and Theory Y of management
 Contrasted authoritarian and participative management styles
The Hawthorne Studies
 It was a series of influential experiments conducted between
1924 and 1932 at the Western Electric Company's Hawthorne
Works in Cicero, Illinois.

 These studies significantly impacted management theory and

practice, marking a shift from the classical scientific
management approach to a more human-centered approach.

 Initially designed to study the effects of physical working

conditions on productivity.

 Led by researchers from Harvard Business School, including

Elton Mayo
Experiments
a. Illumination Experiments (1924-1927):
• Studied the effect of lighting on worker productivity.
• Unexpectedly found that productivity increased regardless of lighting
changes

b. Relay Assembly Test Room Experiments (1927-1932):

 Observed a small group of women assembling telephone relays
• Varied working conditions (rest breaks, work hours, incentives)
• Productivity increased despite changes, even when conditions worsened

c. Bank Wiring Observation Room Study (1931-1932):

• Observed men assembling wire connections for switchboards
• Discovered informal social groups and norms affecting productivity

d. Mass Interviewing Program (1928-1930)

 Demonstrated powerful influence of upward communication.
 Workers were asked for opinions, told they mattered, and positive attitude
toward organization increased.
 Taken together these experiments and the results
helped in documenting the powerful nature of social
relations in the workplace and moved managers more
towards the interpersonal aspect of organizing.
Key Concepts of neoclassical theories:
• a. Hawthorne Effect: Observation revealed that workers'
productivity increases when they feel observed or special
attention is given to them

• b. Informal Organizations: Recognition of unofficial

social structures within formal organizations

• c. Group Dynamics: Study of how people interact in

groups and how it affects organizational behavior

• d. Participative Management: Involving employees in

decision-making processes
Impact

 Laid the foundation for modern organizational

behavior studies
 Influenced the development of motivation theories
 Contributed to the humanization of management
practices
 Paved the way for contingency theories and systems
approaches
 Influenced the development of organizational
development practices
Impact on Management Practices
 Increased focus on employee welfare and working
conditions.

 Development of human resource management

practices.

 Implementation of team-based structures and

participative decision-making.

 Greater emphasis on leadership skills and

interpersonal communication
Criticism
 Overemphasis on social factors at the expense of
economic and technical aspects.

 Limited empirical evidence for some theories.

 Potential manipulation of workers through "soft"

management techniques
 The Neoclassical Management Era significantly shifted
the focus of management theory from treating workers
as mere components of production to recognizing
them as complex individuals with social and
psychological needs.

 This perspective has had a lasting impact on modern

management practices and continues to influence
organizational behavior studies today.