MBA I SEM PRINCIPLES & PRACTICE OF MANAGEMENT UNIT - I

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Concept and Characteristics Of Management

Management is an art of getting things done through others. Management is toplan, organize, direct and control the
resources of the organization for obtainingcommon objectives or goals. It is with resources like material,
money,machinery, methods, manufacturing and marketing.
Management principles are universal in nature. Management is necessary for all types of organizations, such as public
sector, private sector, govt. department, hotel, hospital, hostels, institutes, require management for several growth and
expansion.
Definitions-In the words of Henry Fayol, “To manage is to forecast and to plan, to organise, to command, to co-
ordinate and to control”.
In the words of Koontz and O’Donnel, “Management is defined as the creation and maintenance of an internal
environment in an enterprise where individuals working together in groups can perform efficiently and effectively
towards the attainment of group 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.
Characteristics or Nature of management can be highlighted as -
 Management is Goal-Oriented: The success of any management activity is accessed by its achievement of
the predetermined goals or objective. Management is a purposeful activity. It is a tool which helps use of human &
physical resources to fulfill the pre-determined goals.
 Management integrates Human, Physical and Financial Resources: In an organization, human beings
work with non-human resources like machines. Materials, financial assets, buildings etc. Management integrates
human efforts to those resources. It brings harmony among the human, physical and financial resources.
 Management is Continuous: Management is an ongoing process. It involves continuous handling of
problems and issues. It is concerned with identifying the problem and taking appropriate steps to solve it. For
achieving this target various policies have to be framed but this is not the end. Marketing and Advertising is also to be
done. For this policies have to be again framed. Hence this is an ongoing process.
 Management is all Pervasive: Management is required in all types of organizations whether it is political,
social, cultural or business because it helps and directs various efforts towards a definite purpose.Whether it is a small
business firm which may be engaged in trading or a large firm like Tata Iron & Steel, management is required
everywhere irrespective of size or type of activity.
 Management is a Group Activity: Management is very much less concerned with individual‘s efforts. It is
more concerned with groups. It involves the use of group effort to achieve predetermined goal of management of
ABC & Co. is good refers to a group of persons managing the enterprise
 Organized Activities: Management is a process of organized activities. Groups of people cannot be involved
in the performance of activities without organized activities. Management comes into existence where a group of
people are involved in achieving a common objective.
 Existence of Objectives: The existence of objectives is a basic criterion of every human organization. The
organizational objectives are the desired state of affairs which an organization attempts to realize. This realization of
objectives is sought through the coordinated efforts of the people constituting an organization.
 Decision-making: Management process involves decision making at all levels. Decision-making describes
the process by which a course of action is selected as the way to deal with a specific problem.

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 Relationship among resources: The essence of management is integration of various organizational

resources. Resources include money, machine, materials, and people. Management is concerned with the proper
utilization of human resources which, in turn, utilize other resources
 Multidisciplinary: Management is multidisciplinary because it includes knowledge/information from various
disciplines- economics, statistics, maths, psychology, sociology, ecology, operations research, history, etc.
 Management is dynamic: Management has framed certain principles, which are flexible in nature and
change with the changes in the environment in which an organization exits.
 Relative, Not Absolute Principles: Management principles are relative, not absolute, and they should be
applied according to the need of the organization. A particular management principle has different strengths in
different conditions. Therefore, principles should be applied according to the prevailing conditions.
 Management is Universal: Management is a universal phenomenon. However, management principles are
not universally applicable but are to be modified according to the needs of the situation.

Is Management a Science or an Art?Judging from thecharacteristics of science, it may be observed that:

1. Management is a systematized body of knowledge and its principles have evolved on the basis of observation.
2. The kind of experimentation (as in natural sciences) cannot be accompanied in the area of management since
management deals with the human element.
3. In management, it is not possible to define, analyse and measure phenomena by repeating the same conditions over
and over again to obtain a proof.
The above observation puts a limitation on management as a science. Management like other social sciences can be
called as “inexact science”.
Judging from the characteristics of art, it may be observed that:
1. Management while performing the activities of getting things done by others is required
to apply the knowledge of certain underlying principles which are necessary for every art.
2. Management gets perfection in the art of managing only through continuous practice.
3. Management implies capacity to apply accurately the knowledge to solve the problems,
to face the situation and to realise the objectives fully and timely.
The above observation makes management an art and that to a fine art.
Management is both a science as well as an art. The science of management provides certain general principles which
can guide the managers in their professional effort. The art of management consists in tackling every situation in an
effective manner. As a matter of fact, neither science should be over-emphasised nor should be the art discounted; the
science and the art of management go together and are both mutually interdependent and complimentary.
Management as Profession - Management has been regarded as a profession by many while many have suggested
that it has not achieved the status of a profession. Schein concluded that by some criteria management is indeed a
profession, but by other criteria it is not. Today we can see many signs that management is working towards increased
professionalism.
Functions of Management
Various management scholars studied different organizations at different times; they identified the functions of
management in their own ways. According to Koontz and O’ Donnell, ―The most useful method of classifying
managerial activities is to group them around the functions of planning, organizing, staffing, directing, and
controlling. ― They think that coordination is not a separate function but is the essence of management. Thus, for the
sake of analysis of there management process, we can classify the management functions into the following
categories:-
1. Planning- It is the basic function of management. It deals with chalking out a future course of action & deciding in
advance the most appropriate course of actions for achievement of pre-determined goals. According to KOONTZ,
―Planning is deciding in advance – what to do, when to do & how to do. It bridges the gap from where we are &
where we want to be. A plan is a future course of actions. It is an exercise in problem solving & decision making.
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Planning is determination of courses of action to achieve desired goals. Thus, planning is a systematic thinking about
ways & means for accomplishment of pre-determined goals. Planning is necessary to ensure proper utilization of
human & non-human resources. It is all pervasive, it is an intellectual activity and it also helps in avoiding confusion,
uncertainties, risks, wastages etc. Budgeting Planning involves the following steps-
(i) Determination of objectives; (ii) Forecasting; (iii) Formulation of policies and programmes
(iv) Preparation of schedules
Planning pervades at all the levels of organization. But the scope of planning is not the same at each level of
organization. Higher the level of organization, the broader the scope of planning. Planning may be long term and short
term.
2.Organizing - It is the process of bringing together physical, financial and human resources and developing
productive relationship amongst them for achievement of organizational goals. According to Henry Fayol, ―To
organize a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital and
personnel‘s‖. To organize a business involves determining & providing human and non-human resources to the
organizational structure. Organizing as a process involves:
1. Identification of activities.
2. Classification of grouping of activities.
3. Assignment of duties.
4. Delegation of authority and creation of responsibility.
5. Coordinating authority and responsibility relationships.
3.Staffing - It is the function of manning the organization structure and keeping it manned. Staffing has assumed
greater importance in the recent years due to advancement of technology, increase in size of business, complexity of
human behavior etc. The main purpose o staffing is to put right man on right job i.e. square pegs in square holes and
round pegs in round holes. According to Kootz&O‘Donell, ―Managerial function of staffing involves manning the
organization structure through proper and effective selection; appraisal & development of personnel to fill the roles
designed the structure‖. Staffing involves:
1. Manpower Planning (estimating man power in terms of searching, choose the person and giving the right place).
2. Recruitment, selection & placement.
3. Training & development.
4. Remuneration. 5. Performance appraisal. 6. Promotions & transfer.
4. Directing - It is that part of managerial function which actuates the organizational methods to work efficiently for
achievement of organizational purposes. It is considered lifespark of the enterprise which sets it in motion the action
of people because planning, organizing and staffing are the mere preparations for doing the work. Direction is that
inert-personnel aspect of management which deals directly with influencing, guiding, supervising, motivating sub-
ordinate for the achievement of organizational goals. Direction has following elements:
Supervision- implies overseeing the work of subordinates by their superiors. It is the act of watching & directing
work & workers.
Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive, negative,
monetary, non-monetary incentives may be used for this purpose.
Leadership- may be defined as a process by which manager guides and influences the work of subordinates in
desired direction.
Communication - is the process of passing information, experience, opinion etc from one person to another. It is a
bridge of understanding.
5. Controlling - It implies measurement of accomplishment against the standards and correction of deviation if any to
ensure achievement of organizational goals. The purpose of controlling is to ensure that everything occurs in
conformities with the standards. An efficient system of control helps to predict deviations before they actually occur.

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According to Theo Haimann, ―Controlling is the process of checking whether or not proper progress is being made
towards the objectives and goals and acting if necessary, to correct any deviation‖.
According to Koontz &O‟Donell ―Controlling is the measurement & correction of performance activities of
subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as being
accomplished‖. Therefore controlling has following steps:
a. Establishment of standard performance.
b. Measurement of actual performance.
c. Comparison of actual performance with the standards and finding out deviation if any.

Roles of a Manager -

To meet the many demands of performing their functions, managers assume multiple roles. A role is an organized set
of behaviors. Henry Mintzberg has identified ten roles common to the work of all managers. The ten roles are divided
into three groups: interpersonal, informational, and decisional.
Interpersonal Roles -The three interpersonal roles are primarily concerned with interpersonal relationships.
Figurehead Role - the manager represents the organization in all matters of formality. The top level manager
represents the company legally and socially to those outside of the organization. The supervisor represents the work
group to higher management and higher management to the work group.

Liaison Role - the manger interacts with peers and people outside the organization. The top level manager uses the
liaison role to gain favors and information, while the supervisor uses it to maintain the routine flow of work.
Leader Role - defines the relationships between the manger and employees.
Informational Roles -Thus, the three informational roles are primarily concerned with the information aspects of
managerial work.

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Monitor role - the manager receives and collects information.

Disseminator Role - the manager transmits special information into the organization. The top level manager receives
and transmits more information from people outside the organization than the supervisor.
Spokesperson Role - the manager disseminates the organization's information into its environment. Thus, the top
level manager is seen as an industry expert, while the supervisor is seen as a unit or departmental expert.
Decisional Roles–
Entrepreneur role - the manager initiates change.
Disturbance handler role - the manger deals with threats to the organization.
Resource allocator role - the manager chooses where the organization will expend its efforts.
Negotiator role - the manager negotiates on behalf of the organization. The top level manager makes the decisions
about the organization as a whole, while the supervisor makes decisions about his or her particular work unit.

Taylor’s Scientific Management

According to 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‖. In Taylors view, if a work is analysed scientifically it will be possible to
find one best way to do it. Hence scientific management is a thoughtful, organized, dual approach towards the job of
management against hit or miss or Rule of Thumb.
1 -Separation of planning and doing:
a. Taylor suggests the separation of planning from actual doing.
b. Taylor says that sulrrvisor should done the planning.

c. The workers only concentrate on doing the work

2. Functional foremanship :
a. Taylor developed a theory called ftnctional foremanship based on specialization of
b. In this system eight foreman were involved to direct and control the activities of the
workers.

2. Scientific Selection, Training & Development of Workers

a. There should be scientifically designed procedure for the selection of workers.

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b. Physical, mental & other requirement should be specified for each and every job.
c. Workers should be selected & trained to make them fit for the job.
d. The management has to provide opportunities for development of workers having better capabilities.
e. According to Taylor efforts should be made to develop each employee to his greatest level and efficiency &
prosperity.
3. Job analysis:Every job that requires minimum movements and less cost and least time is the best

way of doing the job. This can be determined by motion, time and fatigue study
(a) Time study:
The movement, which takes minimum time, is the one. This helps in firms the fair work for a
(b) Motion study:
Taylor suggested that eliminating wasteful movements and performing only necessary movements.
(c)Fatigue study:
Employees are physical as well as mental fatigue easily. Fatigue study indicates
the amount and frequency of rest required in completing the job. Taylor suggests a fair day' s
work requiring certain movements and periods to complete it.
4. Financial incentives:
a. Financial incentives can motivate the workers to put in their maximum efforts.
b. According to this scheme a worker who completes the normal work gets wages at
higher rate.Who does not complete gets at a lower rate.
c. Taylor has suggested that wages should be based on individual performance and not
on the position which he occupies.
5. Economy:
a. Scientific management enhances profit and economy.
b. The economy and profit can achieved by making the resources more productive as
well as by eliminating the wastages.
Limitations of Scientific Management- Taylor’s scientific management was criticized not only by the workers and
managers but also by the psychologists and the general public. The main grounds of Limitations are given below:
1. The use of the word ‘Scientific’ before ‘Management’ was objected because what is actually meant by scientific
management is nothing but a scientific approach to management.
2. Taylor advocated the concept of functional foremanship to bring about specialization in the organisation. But this is
not feasible in practice as a worker can’t carry out instructions from eight foremen.

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3. Scientific management is production-centered as it concentrates too much on the technical aspects of work and
undermines the human factor in industry.
4. Scientific Management ignores social and psychological needs of workers as it treats them as extension of
machines devoid of any feelings and emotions. 5. Trade unionists regarded the principles of scientific management as
the means to exploit labour because the wages of the workers were not increased in direct proportion to productivity
increases.

Fayol’s Principle of Management

Concept of Management: Henry Fayol is considered the father of modern theory of general and industrial
management. He divided general and industrial management into six groups:
1. Technical activities: Production, manufacture, adaptation.
2. Commercial activities: Buying, selling and exchange.
3. Financial activities: Search for and optimum use of capital.
4. Security activities: Protection of property and persons.
5. Accounting activities: Stock-taking, balance sheet, cost, and statistics.
6. Managerial activities: Planning, organisation, command, co- ordination and control.
These six functions had to be performed to operate successfully any kind of business. He, however, pointed out that
the last function i.e., ability to manage, was the most important for upper levels of managers.
Fayol’s Principles of Management: The principles of management are given below:
1. Division of work: Division of work or specialization alone can give maximum productivity and efficiency. Both
technical and managerial activities can be performed in the best manner only through division of labour and
specialization.
2. Authority and Responsibility: The right to give order is called authority. The obligation to accomplish is called
responsibility. Authority and Responsibility are the two sides of the management coin. They exist together. They are
complementary and mutually interdependent.
3. Discipline: The objectives, rules and regulations, the policies and procedures must be honoured by each member of
an organisation. There must be clear and fair agreement on the rules and objectives, on the policies and procedures.
There must be penalties (punishment) for non-obedience or indiscipline. No organisation can work smoothly without
discipline - preferably voluntary discipline.
4. Unity of Command: In order to avoid any possible confusion and conflict, each member of an organisation must
received orders and instructions only from one superior (boss).
5. Unity of Direction: All members of an organisation must work together to accomplish common objectives.
6. Emphasis on Subordination of Personal Interest to General or Common Interest: This is also called principle
of co-operation. Each shall work for all and all for each. General or common interest must be supreme in any joint
enterprise.

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7. Renumeration: Fair pay with non-financial rewards can act as the best incentive or motivator for good
performance. Exploitation of employees in any manner must be eliminated. Sound scheme of remuneration includes
adequate financial and non-financial incentives.
8. Centralization: There must be a good balance between centralization and decentralization of authority and power.
Extreme centralization and decentralization must be avoided.
9. Scalar Chain: The unity of command brings about a chain or hierarchy of command linking all members of the
organisation from the top to the bottom. Scalar denotes steps.
10. Order: Fayol suggested that there is a place for everything. Order or system alone can create a sound organisation
and efficient management.
11. Equity: An organisation consists of a group of people involved in joint effort. Hence, equity (i.e., justice) must be
there. Without equity, we cannot have sustained and adequate joint collaboration.
12. Stability of Tenure: A person needs time to adjust himself with the new work and demonstrate efficiency in due
course. Hence, employees and managers must have job security. Security of income and employment is a pre-
requisite of sound organisation and management.
13. Esprit of Co-operation: Esprit de corps is the foundation of a sound organisation. Union is strength. But unity
demands co-operation. Pride, loyalty and sense of belonging are responsible for good performance.
14. Initiative: Creative thinking and capacity to take initiative can give us sound managerial planning and execution
of predetermined plans.
Limitations of Process of Fayol’s Theory -
1. There is no single classification of managerial functions acceptable to all the functional theorists. There is also lack
of unanimity about the various terms such as management and administration, commanding and directing, etc.
2. The functionalists considered their principles to be universal in nature. But many of the Notes principles have failed
to deliver the desired results in certain situations.
3. The functional theorists did not consider the external environment of business.
4. Fayol overemphasized the intellectual side of management. He felt that management should be formally taught, but
he did not elaborate the nature and contents of management education.
Max Weber’s Bureaucratic Theory
Max Weber (1864-1920), a German sociologist contributed his views on bureaucracy to the management thought. His
primary contribution includes his theory of authority structure and his description of organisations based on the nature
of authority relations within them. Essentially, it was Weber’s contention that there are three types of legitimate
authority which are as follows:
1. Rational-legal authority: Obedience is owed to a legally established position or rank within the hierarchy of a
business, military unit, government, and so on.
2. Traditional authority: People obey a person because he belongs to certain class or occupies a position
traditionally recognized as possessing authority, such as a real family.
3. Charismatic authority: Obedience is based on the followers belief that a person has some special power or appeal.

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Weber’s theory ‘bureaucracy’ recognizes rational-legal authority as the most important type in organisations. Under
traditional authority, leaders are not chosen for their competence, an charismatic authority is too emotional and
irrational. A bureaucratic organisation which is based on rational-legal authority display the following features:
1. Division of Work: There is a high degree of division of work at both the operative and administrative levels. This
leads to specialization of work.
2. Hierarchy of Positions: There is a hierarchy of authority in the organisation. Each lower position is under the
control of a higher one. Thus, there is unity of command. The bureaucratic structure is hierarchical in nature. It is like
a pyramid in which quantity of authority increases as one moves up the ladder in the organisation.
3. Rules and Regulations: The rules, regulations and procedures are clearly laid down by the top administration.
Their benefits are as under: (a) They standardize operations and decisions. (b) They serve as receptacles of past
learning. (c) They protect incumbents and ensure equality of treatment.
4. Impersonal Conduct: There is impersonality of relationships among the organisational members. The decisions
are entirely guided by rules and regulations and are totally impersonal. There is no room for emotions and sentiments
in this type of structure.
5. Staffing: The personnel are employed by a contractual relationship between the employee and employer. The
tenure of service is governed by the rules and regulations of the organisation. The employees get a salary every
months which is based on the job they handle and also the length of service.
6. Technical Competence: The bureaucrats are neither elected not inherited, but they are appointed through selection
and the basis of selection is their technical competence. Promotions in bureaucracies are also based on technical
qualifications and performance.
7. Official Records: The administration of a bureaucratic organisation is supported by an efficient system of record-
keeping. The decisions and activities of the organisation are formally recorded and preserved safely for future
reference This is made possible by extensive filing system. The filing system makes the organisation independent of
individuals. The official records serve as the memory of the organisation.
Limitationsof Max Weber’s Bureaucracy Theory - It is not free of flaws. It may lead to many undesirable
consequences such as:
1. The rules may be followed in letter and not in spirit. Thus, instead of providing guidelines, the rules may become
source of inefficiency. The rules may be misused or misinterpreted by the persons concerned with the implementation
of rules. Red tapism and technicalism may follow as a result.
2. Bureaucracy does not consider informal organisation and inter-personal difficulties.
3. Bureaucracy discourages innovation because every employee is supposed to act as per rules and regulations or to
the secondary goals.
4. Goal displacement may take place in a bureaucratic organisation. The bureaucrats may give priority to rules and
regulations or to the secondary goals.
5. The bureaucratic structure is tall consisting of several layers of executives. Thus, communication from the top level
to the lowest level will take a very long time.

The Human Relations School And System Theory

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The human relations approach is concerned with recognition of the importance of human element in organisations. It
revealed the importance of social and psychological factors in determining workers’ productivity and satisfaction. It
was instrumental in creating a new image of man and the work place The neo-classical or human relations approach
put stress on inter-personal relations and informal groups at the work-place. The human relationists argued that
achievement of organisational objectives is impossible without the willing cooperation of people and such cooperation
cannot be automatically secured or ordered. It has to be consciously achieved. The neo-classical approach advocated
peopleorientedorganisation structure which will integrate both informal and formal organisations. The basic tenets of
neo-classical theory or human relations approach are as under:
1. The business organisation is a social system.
2. The behaviour of an individual is dominated by the informal group of which he is a member.
3. An individual employee cannot be motivated by economic incentives alone. His social and psychological needs
must be satisfied to improve the level of motivation.
4. In an organisation, it is ultimately cooperative attitude and not the more command which yields result.
5. Management must aim at developing social and leadership skills in addition to technical skills. It must take interest
in the welfare of workers.
6. Morale and productivity go hand in hand in an organisation.
Hawthrone Studies In 1927, a group of researchers led by George Elton Mayo and Fritz J. Roethlisberger at the
Harvard Business School were invited to join in the studies at the Hawthorne Works of Western Electric Company,
Chicago. The experiment lasted upto 1932. Earlier, from 1924 to 1927, the National Research Council made a study
in collaboration with the Western Electric Company to determine the effect of illumination and other conditions upon
workers and their productivity.
1. Illumination Experiment: This experiment was conducted to establish relationship between output and
illumination. The output tended to increase every time as the intensity of light was improved. But the output again
showed an upward trend when the illumination was brought down gradually from the normal level. Thus, it was found
that there is no consistent relationship between output of workers and illumination in the factory. There were some
other factors which influenced the productivity of workers when the intensity of light was increased or decreased.
2. Relay Assembly Room Experiment: In this experiment, a small homogeneous work-group of girls was
constituted. Several new elements were introduced in the work atmosphere of this group. These included shorter
working hours, rest pauses, improved physical conditions, friendly and informal supervision, free social interaction
among group members, etc. Productivity and morale increased considerably during the period of the experiment.
Morale and productivity were maintained even if improvements in working conditions were withdrawn. The
researches concluded that socio-psychological factors such as feeling of being important, recognition, attention,
participation, cohesive workgroup, and non-directive supervision held the key for higher productivity.
3. Bank Wiring Observation Room Experiment: This experiment was conducted to study a group of workers under
conditions which were as close as possible to normal. This group comprised of 14 workers. After the experiment, the
production records of this group were compared with their earlier production records. There were no significant
changes in the two because of the maintenance of ‘normal conditions’. However, existence of informal cliques in the
group and informal production norms were observed by the researchers. The Bank Wiring Experiment led to the
following observations: (a) Each individual was restricting output. (b) The group had its own “unofficial” standards of
performance. (c) Individual output remained fairly constant over a period of time. (d) Departmental records were
distorted due to differences between actual and reported output or between standard and reported working time.

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4. Mass Interview Programme: The researchers interviewed a large number of workers with regard to their opinions
on work, working conditions and supervision. Initially, a direct approach was used whereby interviewers asked
questions considered important by managers and researchers. Later, this approach was replaced by an indirect
technique where the interviewer simply listed to what the employees had to say. The findings confirmed the
importance of social factors at work in the total work environment.
Contributions of Human Relations Approach or Hawthorne Studies- The human relationists proposed the
following points as a result of their findings of the Hawthorne experiments:
1. Social System: The organisation in general is a social system composed of numerous interacting parts. The social
system defines individual roles and establishes norms that may differ from those of the formal organisation.
2. Social Environment: The social environment on the job affects the workers and is also affected by them.
Management is not the only variable. Social and psychological factors exercise a great influence on the behaviour of
workers. Therefore, every manager should adopt a sound human approach to all organisational problems.
3. Informal Organisation: The informal organisation does also exist within the frame work of formal organisation
and it affects and is affected by the formal organisation.
4. Group Dynamics: At the workplace, the workers often do not act or react as individuals but as members of
groups. The group determines the norms of behaviour for the group members and thus exercises a powerful influence
on the attitudes and performance of individual workers. The management should deal with workers as members of
work group rather than as individuals.
5. Informal Leader: The informal leader sets and enforces group norms. He helps the workers to function as a social
group and the formal leader is rendered ineffective unless he conforms to the norms of the group.
6. Communication: Two-way communication is necessary because it carries necessary information downward for the
proper functioning of the organisation and transmits upward the feelings and sentiments of people who work in the
organisation. It will help in securing workers’ cooperation and participation in the decision-making process. Workers
tend to be more productive when they are given the opportunity to express their feelings, opinions and grievances.
This also give them psychological satisfaction.
7. Non-economic Rewards: Money is only one of the motivators, but not the sole motivator of human behaviour. The
social and psychological needs of the workers are very strong. So non-economic rewards such as praise, status,
interpersonal relations, etc. play an important role in motivating the employees. Such rewards must be integrated with
the wages and fringe benefits of the employees.
8. Conflicts: There may arise conflicts between the organisational goals and group goals. Conflicts will harm the
interest of workers if they are not handled properly. Conflicts can be resolved through improvement of human
relations in the organisation.
Criticism of Human Relations Approach -The human relations approach has been criticized on the following
grounds:
1. Lack of Scientific Validity: The human relationists drew conclusions from Hawthorne studies. These conclusions
are based on clinical insight rather than on scientific evidence.
2. Over-emphasis on Group: The human relations approach over-emphasises the group and group decision-making.
3. Over-stretching of Human Relations: It is assumed that all organisational problems are amenable to solutions
through human relations.

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4. Limited Focus on Work: The human relations approach lacks adequate focus on work.
5. Over-stress on Socio-psychological Factors: The human relations approach undermines the role of economic
incentives in motivation and gives excessive stress on social and psychological factors.
6. Conflict between Organisational and Individual Goals: It view conflict between the goal of the organisation and
those of individuals as destructive.
Systems Approach - The systems approach is based on the generalization that an organisation is a system and its
components are inter-related and inter-dependent. “A system is composed of related and dependent elements which,
when in interactions, form a unitary whole. It is simply an assemblage or combination of things or parts, forming a
complex whole. Its important feature is that it is composed of hierarchy of sub-systems. The world as a whole can be
considered to be a systems in which various national economies are sub-system. In turn, each national economy is
composed of its various industries, each industry is composed of firms, and of course, a firm can be considered a
system composed of sub-systems such as production, marketing, finance, accounting and so on”. Thus, each system
may comprise several sub-systems and in turn, each sub-system be further composed of sub-systems.
An organisation as a system has the following characteristics:
1. A system is goal-oriented.
2. A system consists of several sub-systems which are interdependent and inter-related.
3. A system is engaged in processing or transformation of inputs into outputs.
4. An organisation is an open and dynamic system. It has continuous interface with the external environment as it gets
inputs from the environment and also supplies its output to the environment. It is sensitive to its environment such as
government policies, competition in the market, technological advancement, tastes of people, etc.
5. A system has a boundary which separates it from other systems.
Open System Concept A system may be closed or open. A closed system is self-dependent and does not have any
interaction with the external environment. Physical and mechanical systems are closed systems. A closed system
concentrates completely on internal relationships, i.e. interaction between subsystems only. Because of lack of
interaction with environment, it is unable to monitor changes occurring in the external environment. On the other
hand, an open system has active interface with the environment through the input-output process as shown in figure. It
can respond to the changes in the environment through the feedback mechanism. That is why modern authors consider
organisation as an open system.
An open system obtains inputs, such as raw materials, layout, capital, technology and information, from the
environment. Operations are performed upon the inputs and combined with the managerial process to produce
desirable outputs which are supplied to the environment (i.e., customers). Through a feedback process, the
environment’s evaluation of the output becomes part of the inputs for further organisational activity. If the
environment is satisfied with the output, business operations continue. If it is not, changes are initiated within the
business systems so that requirements of the customers are fully met. This is how an open system responds to the
forces of change in the environment.

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Contingency Approach
The contingency theory stresses that there is no one best style of leadership which will suit every situation. The
effectiveness of a particular leadership style will vary from situation to situation. For instance, participative leadership
may be more effective in an organisation employing professional personnel in a high technology operation in an
atmosphere of nonmaterialistic orientation and free expression. On the other hand, authoritarian leadership would be
more effective in an organisation which employs unskilled personnel on routine tasks in social values oriented
towards materialism and obedience to authority.

 Contingency approach guides the managers to be adaptive to environmental variables. In other words, the
managers should develop situational sensitivity and practical selectivity.
 Contingency approach suggests the managers to condone environmental contingencies while choosing their
style and techniques.
 Contingency approach is an improvement over systems approach. It not only examines the relationships of
sub-systems of the organisation, but also the relationship between the organisation and its environment.
 It identifies the nature of inter-dependencies and the impact of environment of organisational design and
managerial style
 Each organisation is to be studied as a unique entity.
 It follows an action-oriented approach and so is pragmatic. It is based on empirical studies.
 It rejects the blind application of the classical principles of management.
 The impact of environment on the organisation structure and managerial style is the major concern of
contingency approach.

Developing Excellent Managers

An effective manager must possess certain skills in the areas of planning, organising, leading, controlling and
decision-making in order to process activities that are presented to him from time to time.
1. Technical skill: It is the ability to use the tools, procedures or techniques of a specialised field. Technical skill is
considered to be very crucial to the effectiveness of lower level managers because they are in direct contact with
employees performing work activities within the firm. For instance, the success of a drilling supervisor of an oil rig
depends a great deal on his technical knowledge of drilling. However, as one moves to higher levels of management

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within the organisation, the importance of technical skill diminishes because the manager has less direct contact with
day-to-day problems and activities. Thus, the president of an oil company does not need to know much of the
technical details of drilling for oil or how to refine it.
2. Human skill: It is the ability to work with, understand and motivate other people. This skill is essential at every
level of management within the organisation, but it is particularly important at lower levels of management where the
supervisor has frequent contact with operating personnel.
3. Conceptual skill: It is the mental ability to coordinate and integrate the organisation’s interests and activities. It
refers to the ability to see the ‘big picture’, to understand how a change in any given part can affect the whole
organisation.
4. Design skill: Koontz and Weihrich added one more skill to the above list. Design skill is the ability to solve
problems in ways that will help the organisation. At higher levels, managers should be able to do more than see a
problem, to design a workable solution to a problem in the light of realities they face. If managers merely see a
problem and become problem watchers they will fail.
5. Institution building skills: According to Prof. Pareek (1981), top level executives perform eight key roles while
building institutions of lasting value, as indicated below:
(a) Identity creating role: Top level executives must create an identity for their organisations in the market place. Such
an impact can be created by serving employees through excellent welfare measures, developing enviable marketing
skills or fostering technological innovations. In short, they must ‘carve out a niche’ for themselves in the market
place.
(b) Enabling role: Top level executives must develop their resources (men, materials, equipment and other facilities)
in the service of an organisation. A good work atmosphere must be created where employees would feel like
contributing their best to the organisation.
(c) Synergising role: Synergy means that the whole is greater than the sum of the parts. In organisational terms,
synergy means that as separate departments within an organisation cooperate and interact, they become more
productive than if each had acted in isolation.
The qualities of an excellent manager are-
1. Demonstrates integrity - A manager should walk the talk. The old saying, "Lead by example" is the first quality
that makes a manager a stand out.
2. Deals honestly and diplomatically - A manager, who owns their mistakes, deals openly, and honestly with others,
earns the respect of those they are trying to lead.
3. Demonstrates flexibility - A manager who is responsive to the needs of the business AND the needs of
employees, is able to keep his team on target and yet achieve the goals of the business.
4. Shows commitment and reliability - A manager who delivers their promises shows their team that they are
reliable and promotes trust.
5. Listens effectively - A manager who 'seeks first to understand, then to be understood' (Dr Steven Covey) is a
manager who will always have their finger on the pulse of the business.
6. A good negotiator - A manager who comes to the table prepared to give a little that the outcome is a positive one
for everyone, will not only earn the respect of his employees but be guaranteed of the opportunity for further
negotiations in the future.
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7. A thorough planner - 'If you fail to plan, you plan to fail.' This saying is especially true for managing. A manager
is a coach to their team and the team are looking to them for the game plan
8. Is fair - A manager who doesn't take sides, show favoritism or victimize those they are supervising, will earn their
trust and in turn, will have more personal power to influence their team for good.
9. Knows how to have fun and has a good sense of humor - A manager who is able to promote a safe and happy
work environment where appropriate fun is embraced, will ensure the retention of staff.
10. Seeks to understand their workers - A manager who is able to accurately assess the skills, abilities and
personalities of their work team, will be able to develop individual managers to maximize their effectiveness and help
them reach their potential, whilst focusing their efforts on the goal.

Important Questions

Define Management. Discuss the Characteristics or Nature of Management.

Explain how Management is a combination of Science and Art.
Explain the various functions and Responsibilities of a Manager.
Explain The Taylor’s Scientific Management Theory.
Write a short note on Fayol’s Principles of Management with suitable examples.
What is the Bureaucratic theory given by Max Weber. Discuss advantages and disadvantages.
Discuss Human Relations School of Management Thought and Hawthorne Studies.
Discuss the Contingency Theory Of Management.
What are the Skills and Qualities of an excellent Manager.

Case Studies
1)You are working as a manager in a steam company xyz ltd. Due to the financial problem in the organization ,
company is unable to pay the salary from last two month .Due to this crises employees are in major grievance, leaving
the job because of insecurity . This type of suitation is facing by the company first time so there is no historic data
available to solve the major problem. Employees are the asset for any organization , if grievance is not going to
handle properly then is will going to harm the organization . As manager s work is also to solve the grievance in the
organization answer the following
1. What steps should the manager take in this situation .
2. “Here a manager becomes leader”. Comment on this statement.
3. What are the qualities of a manager?

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