DIPLOMA IN ENGINEERING

NOWGONG POLYTECHNIC

6TH SEMESTER

INDUSTRIAL MANAGEMENT & ENTREPRENERUSHIP – Hu-601

UNIT 1 – INTRODUCTION TO MANAGEMENT

"Good management is the art of making problems so interesting and their solutions so constructive
that everyone wants to get to work and deal with them." - Paul Hawken

"Good management consists of showing average people how to do the work of superior people." John
- D. Rockefeller

"Management is, above all, a practice where art, science, and craft meet." Henry Mintzberg

Management is a universal phenomenon. It is a very popular and widely used term. All organisations-
business, political, cultural or social are towards a definite purpose because it is the management
which helps and directs the various efforts towards a definite purpose.

Harold Koontz defines management as, "Management is an art of getting things done through and
with the people in formally organized groups. It is an art of creating an environment in which people
can perform as individuals and can co-operate towards 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".

In the context of an industry or an organization, Management is something that directs group efforts
towards the attainment of certain pre- determined goals. It is the process of working with and through
others to effectively achieve the goals of the organization, by efficiently using limited resources in the
changing world. Of course, these goals may vary from one enterprise to another. e.g. for one
enterprise it may be launching of new products by conducting market surveys and for other it may be
profit maximization by minimizing cost.

Therefore, we can say that good management includes both being effective and efficient (two
elements of management). Being effective means fulfilling the predetermined task and target within
the least time or pre determined time frame. Being efficient means doing the task correctly, at least
possible cost with minimum wastage of resources.

OBJECTIVES OF MANAGEMENT

1. Getting Maximum Results with Minimum Efforts- The main objective of management is to secure
maximum outputs with minimum efforts & resources. Management is basically concerned with
thinking & utilizing human, material & financial resources in such a manner that would result in best
combination. This combination results in reduction of various costs.

2. Increasing the Efficiency of factors of Production-Through proper utilization of various factors of

production, their efficiency can be increased to a great extent which can be obtained by reducing
spoilage, wastages and breakage of all kinds, this in turn leads to saving of time, effort and money
which is essential for the growth & prosperity of the enterprise.
3. Maximum Prosperity for Employer & Employees- Management ensures smooth and coordinated
functioning of the enterprise. This in turn helps in providing maximum benefits to the employee in the
shape of good working condition, suitable wage system, incentive plans on the one hand and higher
profits to the employer on the other hand.

4. Human betterment & Social Justice - Management serves as a tool for the upliftment as well as
betterment of the society. Through increased productivity & employment, management ensures
better standards of living for the society. It provides justice through its uniform policies.

IMPORTANCE OF MANAGEMENT

1. It helps in Achieving Group Goals - It arranges the factors of production, assembles and organizes
the resources, integrates the resources in effective manner to achieve goals. It directs group efforts
towards achievement of pre-determined goals. By defining objective of organization clearly there
would be no wastage of time, money and effort. Management converts disorganized resources of
men, machines, money etc. into useful enterprise.

2. Optimum Utilization of Resources - Management utilizes all the physical & human resources
productively. This leads to efficacy in management. Management provides maximum utilization of
scarce resources by selecting its best possible alternate use in industry from out of various uses.

3. Reduces Costs - It gets maximum results through minimum input by proper planning and by using
minimum input & getting maximum output. Management uses physical, human and financial
resources in such a manner which results in best combination. This helps in cost reduction.

4. Establishes Sound Organization - No overlapping of efforts (smooth and coordinated functions). To

establish sound organizational structure is one of the objective of management which is in tune with
objective of organization and for fulfillment of this, it establishes effective authority & responsibility
relationship ie. who is accountable to whom, who can give instructions to whom, who are superiors
& who are subordinates. Management fills up various positions with right persons, having right skills,
training and qualification.

5. Establishes Equilibrium in changing environment - It enables the organization to survive in

changing environment. It keeps in touch with the changing environment. With the change is external
environment, the initial co-ordination of organization must be changed. So it adapts organization to
changing demand of market / changing needs of societies. It is responsible for growth and survival of
organization.

6. Essentials for Prosperity of Society - Efficient management leads to better economical production
which helps in turn to increase the welfare of people. Good management makes a difficult task easier
by avoiding wastage of scarce resource. It improves standard of living. It increases the profit which is
beneficial to business and society will get maximum output at minimum cost by creating employment
opportunities which generate income in hands.
Management is the process of efficiently achieving organization objectives with and through people.
There are several vital functions of management that are essentially required to achieve the desired
goals.

FUNCTIONS OF MANAGEMENT
Different experts have classified functions of management. According to George & Jerry, There are
four fundamental functions of management Le. planning, organizing, actuating and controlling".
According to Henry Fayol, "To manage is to forecast and plan, to organize, to command, & to control".
Whereas Luther Gullick has given a keyword 'POSDCORB' where P stands for Planning, O for
Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for reporting & B for Budgeting.

But the most widely accepted are functions of management given by KOONTZ and O'DONNEL i.e.
Planning, Organizing, Staffing, Directing and Controlling.

I. PLANNING – It means chalking out a future course of action & deciding in advance the
most appropriate course of action 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 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.

II. ORGANISING - Organizing, meaning thereby, listing out and finalizing the activities
required to achieve the set goals; 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 ie. raw material, tools, capital and
personnel".

To organize a business involves determining & providing human and non-human resources to the
organizational structure. Organizing as a process involves:

i. Identification of activities.
ii. Classification of grouping of activities.
iii. Assignment of duties.
iv. Delegation of authority and creation of responsibility.
v. Coordinating authority and responsibility relationships.
III. STAFFING - Staffing, meaning thereby managing human resources effectively; it is the
function of earning 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 behaviour 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 in the structure".

Staffing involves:
i. Manpower planning (estimating man power in terms of searching, choosing the person and
giving him the right place).
ii. Recruitment, Selection & Placement.
iii. Training & Development.
iv. Remuneration.
 v. Performance Appraisal.
vi. Promotions & Transfer.
IV. DIRECTING - Directing, meaning thereby, that people with right type of skill are put on
jobs and are motivated to work efficiently to achieve high productivity; It is that part of
managerial function which actuates the organizational methods to work efficiently for
achievement of organizational purposes. It is considered life-spark 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:

i. Supervision
ii. Motivation
iii. Leadership
iv. Communications
 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.
 Communications- is the process of passing information, experience, opinion etc from one
person to another. It is a bridge of understanding.
V. CONTROLLING - Controlling, meaning monitoring various activities to ensure that
whatever has been planned is achieved i.e. all set goals are met; 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.

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:

i. Establishment of standard performance.

ii. Measurement of actual performance.
iii. Comparison of actual performance with the standards and finding out deviation if any.
iv. Corrective action
PRINCIPLES OF MANAGEMENT (HENRI FAYOL, FW TAYLOR)

1. PRINCIPLES OF SCIENTIFIC MANAGEMENT BY TAYLOR:

Historical Perspective

F.W. Taylor or Fredrick Winslow Taylor is also known as the 'father of scientific management proved
with his practical theories that a scientific method can be implemented to management. Taylor gave
much concentration on the supervisory level of management and performance of managers and
workers at an operational level.

In 1909, Taylor published "The Principles of Scientific Management." In this, he proposed that by
optimizing and simplifying jobs, productivity would increase. He also advanced the idea that workers
and managers needed to cooperate with one another. This was very different from the way work was
typically done in businesses beforehand. A factory manager at that time had very little contact with
the workers, and he left them on their own to produce the necessary product. There was no
standardization, and a worker's main motivation was often continued employment, so there was no
incentive to work as quickly or as efficiently as possible. Taylor believed that all workers were
motivated by money, so he promoted the idea of "a fair day's pay for a fair day's work." In other words,
if a worker didn't achieve enough in a day, he didn't deserve to be paid as much as another worker
who was highly productive.

Taking what he learned from the workplace experiments he conducted, Taylor developed four
principles of scientific management. These principles are also known simply as "Taylorism".

1. SCIENCE, NOT THE RULE OF THUMB

This rule focuses on increasing the efficiency of an organization 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 judgment.

2. HARMONY, NOT DISCORD

Taylor indicated and believed that the relationship between the workers and management should be
cordial and complete harmony. 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.

3. 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 & confidence and a sense of
goodwill. The main purpose is to substitute internal competition with cooperation.

4. 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.
A fifth principle can also be deduced from the four main principles expounded by Taylor i.e.

MENTAL REVOLUTION

This technique involves a shift of attitude of management and workers towards each other. Both
should understand the value of each other and work with full participation and cooperation. The aim
of both should be to improve and boost the profits of the organization. Mental Revolution demands a
complete change in the outlook of both the workers and management; both should have a sense of
togetherness.

TECHNIQUES OF SCIENTIF MANAGEMENT

Let us now discuss techniques as specified by him. These are based on the various experiments he
conducted during his career.

 FUNCTIONAL FOREMAN In the factory system, the foreman represents the managerial figure
with whom the workers are in face-to-face contact on a daily basis. Foreman is the pivot
around whom revolves the entire production planning, implementation and control. Thus,
Taylor concentrated on improving the performance of this role in the factory set-up. In fact,
he identified a list of qualities of a good foreman/supervisor and found that no single person
could fit them all. This prompted him to suggest functional foremanship through eight
persons. Taylor advocated separation of planning and execution functions. This concept was
extended to the lowest level of the shop floor. It was known as functional foremanship.
Under the factory manager there was a Planning Incharge and a Production Incharge.
Under Planning Incharge four personnel namely instruction card clerk, route clerk, time and
cost clerk and a disciplinarian worked. These four personnel would draft instructions for the
workers, specify the route of production, prepare time and cost sheet and ensure discipline
respectively. Under Production Incharge, personnel who would work were speed boss, gang
boss, repair boss, and inspector. These respectively were responsible for timely and accurate
completion of job, keeping machines and tools etc., ready for operation by workers, ensure
proper working condition of machines and tools and check the quality of work. floor.

Each worker will have to take orders from these eight foremen in the related process or function of
production

 STANDARDISATION & SIMPLIFICATION- Standardisation refers to the process of setting

standards for every business activity; it can be standardisation of process, raw material, time,
 product, machinery, methods or working conditions. These standards are the benchmarks,
which must be adhered to during production. The objectives of standardisation are:
(i) To reduce a given line or product to fixed types, sizes and characteristics.
(ii) To establish interchange ability of manufactured parts and products.
(iii) To establish standards of excellence and quality in materials.
(iv) To establish standards of performance of men and machines.

Simplification aims at eliminating superfluous varieties, sizes and dimensions while

standardisation implies devising new varieties instead of the existing ones. Simplification aims at
eliminating unnecessary diversity of products. It results in savings of cost of labour, machines and
tools

 WORK STUDY – Work study was made to find out the insights to various dimensions involved
in the work which are as follows:
a. Method study - The objective of method study is to find out one best way of doing the job.
There are various methods of doing the job. To determine the best way there are several
parameters. Right from procurement of raw materials till the final product is delivered to the
customer every activity is part of method study. Taylor devised the concept of assembly line
by using method study.
b. Motion study - Taylor demonstrated that productivity increased to about four times by this
process. On close examination of body motions, for example, it is possible to find out:
(i) Motions which are productive
(ii) Motions which are incidental (e.g., going to stores)
(iii) Motions which are unproductive.

Taylor used stopwatches and various symbols and colours to identify different motions.
Through motion studies, Taylor was able to design suitable equipment and tools to educate
workers on their use..

c. Time study - The standard time is fixed for the whole of the task by taking several readings.
The method of time study will depend upon volume and frequency of the task, the cycle time
of the operation and time measurement costs. The objective of time study is to determine the
number of workers to be employed; frame suitable incentive schemes and determine labour
costs. For example, on the basis of several observations it is determined that standard time
taken by the worker to make one cardboard box is 20 minutes. So in one hour she/he will
make 3 boxes. Assuming that a worker has to put in 8 hours of work in a shift and deducting
one hour for rest and lunch, it is determined that in 7 hours a worker makes 21 boxes @ 3
boxes per hour. Now this is the standard task a worker has to do.
d. Fatigue study - A person is bound to feel tired physically and mentally if she/he does not rest
while working. The rest intervals will help one to regain stamina and work again with the same
capacity. This will result in increased productivity. Fatigue study seeks to determine the
amount and frequency of rest intervals in completing a task
 DIFFERENTIAL PIECE WAGE SYSTEM - Taylor was a strong advocate of piece wage system. He
wanted to differentiate between efficient and inefficient workers. The standard time and
other parameters should be determined on the basis of the workstudy discussed above. The
workers can then be classified as efficient or inefficient on the basis of these standards. He
wanted to reward efficient workers. So he introduced different rate of wage payment for
those who performed above standard and for those who performed below standard. HENRY
 2. FAYOL’S 14 PRINCIPLES OF MANAGEMENT

Henry Fayol, also known as the 'father of modern management theory' gave a new perception of the
concept of management. He introduced a general theory that can be applied to all levels of
management and every department. The Fayol theory is practiced by the managers to organize and
regulate the internal activities of an organization. He concentrated on accomplishing managerial
efficiency.

Henri Fayol's management theory is a simple model of how management interacts with personnel.
Fayol's management theory covers concepts in a broad way, so almost any business can apply his
theory of management. Today the business community considers Fayol's classical management theory
as a relevant guide to productively managing staff.

The fourteen principles of management created by Henri Fayol are explained below.

1. Division of Work- Henri believed that segregating work in the workforce amongst the worker will
enhance the quality of the product. Similarly, he also concluded that the division of work improves
the productivity, efficiency, accuracy and speed of the workers. This principle is appropriate for both
the managerial as well as a technical work level.
2. Authority and Responsibility-These are the two key aspects of management. Authority facilitates
the management to work efficiently, and responsibility makes them responsible for the work done
under their guidance or leadership.

3. Discipline-Without discipline, nothing can be accomplished. It is the core value for any project or
any management. Good performance and sensible interrelation make the management job easy and
comprehensive. Employees good behaviour also helps them smoothly build and progress in their
professional careers.

4. Unity of Command- This means an employee should have only one boss and follow his command.
If an employee has to follow more than one boss, there begins a conflict of interest and can create
confusion.

5. Unity of Direction-Whoever is engaged in the same activity should have a unified goal This means
all the person working in a company should have one goal and motive which will make the work easier
and achieve the set goal easily.

6. Subordination of Individual Interest- This indicates a company should work unitedly towards the
interest of a company rather than personal interest. Be subordinate to the purposes of an
organization. This refers to the whole chain of command in a company.
7. Remuneration- This plays an important role in motivating the workers of a company. Remuneration
can be monetary or non-monetary. However, it should be according to an individual's efforts they
have made.

8. Centralization- In any company, the management or any authority responsible for the decision-
making process should be neutral. However, this depends on the size of an organization. Henri Fayol
stressed on the point that there should be a balance between the hierarchy and division of power.

9. Scalar Chain-Fayol on this principle highlights that the hierarchy steps should be from the top to
the lowest. This is necessary so that every employee knows their immediate senior also they should
be able to contact any, if needed.

GANG PLANK - According to Fayol, this chain should

not be violated in the normal course of formal
communication. However, if there is an emergency
then ‘E’ can directly contact ‘O’ through ‘Gang Plank’
as shown in the diagram. This is a shorter route and
has been provided so that communication is not
delayed.

10. Order- A company should maintain a well-defined work order to have a favorable work culture.
The positive atmosphere in the workplace will boost more positive productivity.

11. Equity- All employees should be treated equally and respectfully. It's the responsibility of a
manager that no employees face discrimination.

12. Stability- An employee delivers the best if they feel secure in their job. It is the duty of the
management to offer job security to their employees.

13. Initiative - The management should support and encourage the employees to take initiatives in an
organization. It will help them to increase their interest and make then worth.

14. Esprit de Corps- It is the responsibility of the management to motivate their employees and be
supportive of each other regularly. Developing trust and mutual understanding will lead to a positive
outcome and work environment.

These 14 principles of management are used to manage an organization and are beneficial for
prediction, planning, decision-making, organization and process management, control and
coordination.

The Principles of Taylor's Scientific Management Theory became widely practiced, and the resulting
cooperation between workers and managers eventually developed into the teamwork we enjoy
today. While Taylorism in a pure sense isn't practiced much today, scientific management did provide
many significant contributions to the advancement of management practice. It introduced systematic
selection and training procedures, it provided a way to study workplace efficiency, and it encouraged
the idea of systematic organizational design.
COMPARISON OF F.W. TAYLOR'S AND HENRY FAYOL'S THEORIES OF MANAGEMENT