CHAPTER I

FUNDAMENTALS OF MANAGEMENT

1.1. Definition Of Management

There are several definitions of Management; but they all are fundamentally the same. Among the many, some are:
a) Management is the process of coordinating all resources through the five major functions of planning, organizing, staffing,
directing /leading and controlling to achieve organizational goals/desired objectives..

In the above definition there are three key concepts

i) Coordination of all resources – managers should coordinate the resources of an organization. These resources may be
human or non human.
ii) The five managerial functions – To coordinate the resources of an organization a manager should employ/use the five
managerial functions.
iii) Objectives – are the reason for the establishment of organizations and management is useful for achieving these goals.
Managing/management is concerned with productivity: effectiveness and efficiency. There are points to be meet, targets to
be shot or places to be reached. All organizations establish a variety of goals and direct their energies and resources to
achieve them.
- Profit oriented business → Return on Investment (ROI) goals
- Hospital → Patient care
- Educational institution → Teaching, research & community service.

All organizations also have resources that can be used to meet these objectives. Such resources can be classified into: human and non-
human, and management is the force that unifies these resources. It is the process of bringing them together and coordinating them to
help accomplish organizational goals.

b) Management is the art of getting things done through other people by making the atmosphere conducive for others. It is the process
of getting things done through others, and this process puts emphasis on both the objectives to be attained and the people who will
be pursuing them.
→ an effective manager focuses on both work and people.
→ the job of every manager is to achieve organizational goals through the combined efforts of people.

c) Management is the utilization of scientifically derived principles to examine and improve collective efforts or production.
- Management applies to any kind of organization, to managers at all organizational levels.
- Without management, virtually no business could survive.
- Management increases the values of our resources.

d) Management is the process of achieving organizational goals through engaging in the five major functions of planning, organizing,
leading, staffing and controlling. This definition recognizes that:
- Management is an ongoing activity
- Entails reaching important goals, and

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 - Involves knowing how to perform the five major functions of management.

Managers – are those persons in the position of authority who make decisions to commit (use) their resources and the resources of
others towards the achievement of organizational objectives.
* Everybody is the manager of his/her time, energy and talents.

Organization – is a group of two or more people brought together to achieve common stated objectives.
Organization – two or more persons engaged in a systematic effort to produce goods and/or services.
1.2. Significance Of Management
Why do we study management?
Management is one of the most important human activities. It is essential to ensure the coordination of individual efforts where people
are working in group to accomplish activities those could not be achieved by individual effort.
Ever since people began forming groups to accomplish aims they couldn’t achieve as individuals, managing has become essential to
ensure the coordination of individuals’ effort. As society has come to rely increasingly on group effort, and as many organized groups
have become large, the task of managers has been rising in importance. The basic purpose of management is to ensure that
organizational goals are achieved in an effective and efficient manner. Even it is important for personal life.
Management is responsible for the success or failure of an organization. That is, when an organization fails it is because of poor
management, and when an organization succeeds it is because of good management. Whenever and wherever there is a group work
having stated objectives, management is needed to direct and coordinate their efforts. Without management effort will be wasted.
1.3. Managerial Functions an Overview
Regardless of the type of firm and the organizational level, all managers perform certain basic functions. These managerial functions are
Planning, organizing, staffing, directing/leading/ and controlling.
i. Planning
Planning is deciding in advance what is to be done, when it is to be done, how it is to be done and why it is to be done. It emphasizes the
fact that if one knows where he is going; he is more likely to get there. Planning involves (i) problem-solving and (ii) decision-making.
Whenever there is a problem, the manager should know what alternatives are there to solve it. Out of the alternative courses of action he
has to choose the most suitable one. This process of making choice is known as decision making. Planning requires decisions to be made
on what should be done, how it should be done, who will do it, where it will be done, and why it is to be done. The essential part of the
planning consists of setting goals and programmers of activities.
Planning bridges the gap between where we are to where we want to be in a desired future. Planning identifies goals and alternatives. It
maps out courses of action that will commit individuals, departments and the entire organization for days, months and years to come.
Planning is the first managerial function that all managers engaged in because it lays the groundwork for other managerial functions.
Even other managerial functions have to be planned.
ii. ORGANIZING: is concerned with assembling the resources necessary to achieve organizations’ objectives and establishing the
activity authority relationship.
It is the management function that focuses on allocating and arranging human and non-human resources so that plans can be carried out
successfully. Resources are allocated on the basis of major company goals.
Planning has established the goals of the company and how they are to be achieved; organizing develops the structure to reach these
goals.

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It is through organizing function that managers determine which tasks are to be done, how tasks can best be combined into specific jobs,
and how jobs can be grouped into various units that make up the structure of the organization. It involves creating job positions with
assigned duties and responsibilities, arranging positions into hierarchy by establishing authority–reporting relationship, determining the
number of subordinates each manger should supervise, determining the number of hierarchical levels etc and thereby create an
organization. Organizing is not done once and then forgotten. As the objectives of the company change, they will influence the structure
of managerial and organizational relationship.
iii. STAFFING: As it has been pointed out, organizing involves creating job positions with assigned duties and responsibilities. Staffing
involves filling and keeping filled the positions in the organization structure. It is concerned with locating prospective employees to fill
the jobs created by the organizing process. It basically deals with inventorying the people available, announcing vacancies, accepting,
identifying the potential candidates for the job, recruiting, selecting, placing, orienting, training and promoting both candidates and
existing employees.
Staffing is concerned with human resource of the organization.
iv. DIRECTING/LEADING: has been termed as motivating, influencing, guiding, stimulating, actuating or directing. It is aimed at
getting the members of an organization move in the direction that will achieve its objectives.
The directing function of management includes guiding the subordinates, supervising their performance, communicating information
and motivating. A manager should be a good leader. Leading/leadership is the heart and soul of management. It involves influencing
others to engage in the work behavior necessary to reach organizational goals; i.e., it is influencing people so that they will contribute to
organization and group goals; it has to do predominantly with the human/interpersonal aspect of management.
Leading includes communicating with others, helping to outline a vision of what can be accomplished, providing direction, and
motivating organization members to put forth the substantial effort required.
v. CONTROLLING: is the measuring and correcting of activities of subordinates to ensure that events conform to plans. It deals with
establishing standards, measuring performances against established standards and dealing with deviations from established standards.
Controlling is the process through which mangers assure that actual activities conform to planned activities. It is checking current
performances against predetermined standards contained in the plan. Control activities generally relate to the measurement of
achievement.

1.4. Levels of Management and Types of Managers

Is management the same throughout an organization? Yes and No
Yes: because all managers perform the five managerial functions.
No: because despite the fact that they perform all managerial functions, they perform it with different emphasis and scope.
Managers all perform the same management functions but with different emphases because of their position in the organization.
Although all managers may perform the same basic duties and play similar roles, the nature and scope of their activities differ. These
differences are the base for the classification of managers.
Managers can be divided based on two criteria. These are:
1) Levels of management (vertical difference)
2) Scope of responsibilities (horizontal difference)

I. Types of Managers based on Levels of Management

An important determinant of a manager’s job is hierarchical level. Levels refer to hierarchical arrangement of managerial positions or
persons in an organization. The number of managerial levels in an organization depends on the size of the organization. In most

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organizations, however, there are three distinct levels. How these levels are distinguished? What functions are performed at each level?
And the reporting relationships are some of the issues to be addressed.
Based on levels of management or hierarchy we do have three types of managers. A manager’s assigned duties and the authority needed
to fulfill those duties are what determine management level.

i. Top Level Managers

Top-level managers are managers who are at the top of the organizational hierarchy and are responsible for the entire organization. The
top level management includes the board of directors and the chief executives. They are usually few in number and include the
organization’s most important managers - the CEO or the president and his/her immediate subordinates usually called vice-presidents.
This level determines the objectives of the Business as a whole and lays down policies to achieve these objectives (making of policy
means providing guide lines for action and decision). The top management also exercises an overall control over the organization.
They are few in number because of the nature of the work they perform and economic problem. They deal with the big picture, not with
the nitty-gritty. They are responsible for the overall management of the organization. They establish company wide objectives or goals
& organizational policies. Furthermore, top management:
 Develop overall structure of the organization.
 Direct the organization in accordance with the environment.
 Are persons who are responsible for making decisions and formulating policies that affect all aspects of the firm’s operations.
 Provide overall leadership of the organization towards accomplishment of its objectives.
 They are responsible for the organization because objectives are established and policies are formulated at the top. Top-level
managers take the credit or blame for organizational success and failures respectively.
 Represent the organization in community affairs, business deals, and government negotiations.
 Spent much of their time in planning and dealing with middle level managers and other subordinates.
 Work long hours and spend much of their time in meetings and on telephone.
ii. Middle Level Managers

Middle level managers occupy a position in an organization that is above first-line management and below top management. They
interpret and implement top management directives and forward messages to and from first-line management.

Middle Level Managers:

 Receive broad/overall strategies from top managers and translate it into specific objectives and plans for First-Line
Mangers/operating managers.
 Are responsible for the proper implementation of policies and strategies defined by top level managers. They interpret and
implement top management directives and forward messages to and from first-line management.
 Middle level managers are particularly concerned with the activities of their respective departments.
 Regardless of their title, their subordinates are managers.
 Often coordinate and supervise the activities of lower level managers.
 Their principal responsibility is to direct the activity that implement the policies of the organization.
E.g. Academic deans, Division Head, Plant managers, Army captain
iii. First Level Managers/Supervisory Level managers

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  Are those at the operating level or at the last level of management.
 Their subordinates are non managers.
 Are in charge of carrying out the day-to-day activities within the various departments to ensure that short-term goals are met.
 They are responsible for overseeing and coordinating the work of operating employees.
 Assign operating employees to specific tasks.
 Are managers on which management depends for the execution of its plan since their job is to deal with employees who
actually produce the organization’s goods and services to fulfill the plan.
 Are directly responsible for the production of goods and services.
 Motivate subordinates to change or improve their performance.
 Serve as a bridge between managers and non-managers.
 Spent much of their time in leading and little in planning.
E.g. Section Heads, supervisory personnel, Sales managers, Loan officers, Foreman.
 - Are often neither fish nor fowl – neither management nor labor because they feel great deal of empathy for their subordinates
(which stems from close personal contact and the fact that most supervisors have come up from the ranks of labor) and they are
there to reflect the company’s point of view to their subordinates. And that is why First-Line Mangers are called “People in the
Middle”.
All managers carry out managerial functions. However, the time spent for each function varies according to their managerial hierarchy.
Top-level managers spend more time on planning and organizing than lower-level managers. Leading, on the other hand, takes a great
deal of time for first-line managers. The difference in time spent on staffing and controlling varies only slightly for managers at various
levels.
Planning

Organizing

Staffing

Controlling
Directing

Top

Middle

First-line

Organizational Hierarchy Time spent on carrying out managerial functions

Fig. 1.1 The relative importance of the managerial functions at different levels
II. Types of Managers based on scope of responsibility
Based on the scope of responsibility/activities they manage, managers are divided into two:
i. Functional Managers
Functional managers are managers who are responsible for a department that performs a single functional task and has employees with
similar training and skills. Supervise employees (managers + workers) with specialized skills in specific areas of operations such as
accounting, payroll, finance, marketing, production, or sales etc. They are responsible for only one organizational activity; i.e. their
responsibility is limited to their specialization/specification.
ii. General Managers

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General Managers are managers who are responsible for several departments that perform different functions. They are responsible for
the entire operations of the organization without being specific.
Oversee a complex unit, such as a company, a subsidiary, or an independent operating division. S/he will be responsible for all activities
of that unit, such as its production, marketing, sales and finance.

1.5. Managerial Roles and Skills

Role is an organized set of behaviors that is associated with a particular position or office. It is a pattern of behavior expected by others
from a person occupying a certain position in an organizational hierarchy. A role is any one of several behaviors a manager displays as
s/he functions in the organization.

When a manager tries to carryout the management functions, s/he must behave in a certain way – to fill certain role . Managerial roles
represent specific tasks that managers undertake to ultimately accomplish the five managerial functions. Factors which affect managerial
roles are: manager’s formal job description, and the values & expectations of other managers, subordinates and peers.

Henry Mintzberg identified 10 managerial roles which are in turn grouped into three categories: Interpersonal, Informational and
Decisional Roles.
I. Interpersonal Roles involve developing and maintaining positive relationships with significant others in the organization. It is
communication oriented. It includes:
i. Figurehead Role: managers perform symbolic duties of a legal or social nature. The manager is the head of his work unit, be it
division, section or department. Because of this “lead person” position the manager represents his work unit at ceremonial or
symbolic functions.
The top level managers represent the company legally and socially to those outside of the organization. The superior represents the
work group to higher management and higher management to the work group.
E.g. Signing documents, presiding at a ceremonial event, greeting visitors, attending a subordinate’s weeding, taking a customer to
lunch, university president hands out a diploma for graduates – in all these cases the manager is representing his/her organization.
ii. Leadership Role: is directing and coordinating the activities of subordinates to accomplish objectives. It includes some aspects
like creating a vision that employees can identify with.
The manager is the environment creator – s/he makes the environment conducive for work by improving working conditions,
reducing conflicts, providing feedback for performance and encouraging growth. The leader builds relationship and communicates
with employees, motivates & coaches them. As a leader, the manager is responsible for hiring, training, motivating and encouraging
employees/ subordinates. The leadership role is evident in the interpersonal relationship between manager and his/her subordinates.
iii. Liaison Role: The liaison maintains a network of contacts outside the work unit to obtain information. It refers to dealing
with the member of the organization superiors, subordinates, peer level managers in other departments, staff specialists and outside
contacts such as clients. It helps to seek support from people who can affect the organization’s success.

The top management uses this role to gain favors and information, while the superiors use it to maintain the routine flow of work.
The manager serves as a link between the organization and the informants who provide favors and information. S/he fulfills this role
through community service, conferences, social events, etc, participation is meetings with representatives of other divisions.

II. Informational Roles: focuses on the transmission of important information to and from internal and external sources. It involves the
following activities:

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 i. Monitor role: is also called information gathering role. This role refers to seeking, receiving, screening and getting information.
The manager is constantly monitoring the environment to determine what is going on. The monitor seeks internal and external
information about issues that can affect the organization. S/he seeks and receives wide variety of special information to develop
through understanding of the organization and the environment. Information is gathered from news reports, trade publications,
magazines, clients, associates, and a host of similar sources, attending seminars & exhibitions.
ii. Disseminator Role: What does the manager do with the information collected? As the disseminator, the manager passes on to
subordinates some of the information that would not ordinarily be accessible to them. After the information has been gathered (by
monitor role), it has to be disseminated to superiors, subordinates, peers and other concerned clients. The types of information to be
forwarded to members could be facts, opinions, interpretations, and influences.
iii. Spokesperson/representative Role: the spokesperson transmits information about the organization to outsiders. The manger
is the person who speaks for her/his work unit to people outside the work unit.
One aspect of this role is to keep superiors well informed and a second aspect is to communicate outside the organization like press,
government agencies, customers and labor unions. Although the roles of spokesperson and figurehead are similar, there is one basic
difference between them. When a manager acts as a figurehead, the manager’s presence is as a symbol of the organization, whereas,
in the spokesman role, the manager carries information and communicates it to others in a formal sense.
Thus, the manager seeks information in the monitor role, communicates it internally in the disseminator role and transmits it
externally in the spokesperson role. The three informational roles, then, combine to provide important information required in the
decisional roles.
III. Decisional Roles: involve making significant decisions that affect the organization.
i. Entrepreneur Role: (initiator of change) the manager acting as an entrepreneur recognizes problems and opportunities and
initiates actions that will move the organization in the desired direction. The entrepreneur acts as an initiator, designer, and
encourager of change and innovation.
In the role of entrepreneur, the manager tries to improve the unit. Often s/he creates new projects, change organizational
structure, and institutes other important programs for improving the company’s performance.
ii. Disturbance Handler Role: solution seeking role. In the role of disturbance handler, the manager responds to situations over
which s/he has little control, i.e. that are beyond his/her control and expectation such as conflict between people or groups,
strikes, breach of contract or unexpected events outside the organization that may affect the firm’s performance.
The disturbance handler is responsible for taking corrective action when the organization faces important, unexpected
difficulties.
iii. Resource Allocator Role: deciding on the allocation of the organization’s physical, financial and human resources. As a
resource allocator, the manager is responsible for deciding how and to whom the resources of the organization and the
manager’s own time will be allocated.
This involves assigning work to subordinates, scheduling meetings, approving budgets, deciding on pay increases, making
purchasing decisions and other matters related to the firm’s human, financial, and material resources. The resource allocator
distributes resources of all types, including time, funding (finance), equipment and human resources.
iv. The Negotiator Role: representing the organization in all important/major negotiations. Managers spend a great deal of their
time as negotiators, because only they have the information and authority that negotiators require.

E.g. negotiations to buy firms, to get credit, with government, with suppliers, etc.
The Ten Managerial Roles

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 Category Role Activity
Interpersonal Figurehead Perform ceremonial and symbolic duties such as greeting
visitors, signing legal documents
Leader Direct and motivate subordinates; training, counseling, and
communicating with subordinates.
Liaison Maintain information links both inside and outside
organization; use mail, phone calls, meetings.
Informational Monitor Seek and receive information, scan periodicals and reports,
maintain personal contacts.
Disseminator Forward information to other organization members; send
memos and reports, make phone calls.
Spokesperson Transmit information to outsiders through speeches, reports,
memos.
Decisional Entrepreneur Initiate improvement projects; identify new ideas, delegate
ideas, delegate responsibility to others.
Disturbance handler Take corrective action during disputes or crises; resolve
conflicts among subordinates; adapt to environmental crises.
Resource allocator Decide who gets resources; scheduling, budgeting, setting
priorities
Negotiator Represent department during negotiation of union contracts,
sales, purchases, budgets; represent departmental interests.

Managerial Skills and Their Relative Importance

A manager’s job is diverse and complex and it requires a range of skills. Skills are specific abilities that result from knowledge,
information, practice, and aptitude. Management success depends both on: a fundamental understanding of the principles of
management and the application of skills. Consequently, managers must be highly skilled to succeed. The skills managers need to
possess can be classified as:
1. Technical skill
2. Human Relations skill
3. Conceptual skill
1. Technical Skills – involve process or technique, knowledge and proficiency. It is the ability to use the tools, procedures, or
techniques of a specialized field. It includes mastery of the methods, techniques, and equipment involved in specific functions, such
as engineering, manufacturing, or finance. Technical skill also includes specialized knowledge, analytical ability, and the competent
use of tools and techniques to solve problems in that specific discipline. Technical skills are most important at the lower levels of
management. It becomes less important as we move up the chain of command because when they supervise the others (workers),
they have to show how to do the work. E.g. A surgeon, an engineer, a musician, a quality controller or an accountant all have
technical skill in their respective areas.
2. Human Relations /Interpersonal Skill – the ability to interact effectively with people. It is the ability to work with, understand and
motivate other people, either as individuals or as groups. Managers need enough of human relationships skill to be able to

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 participate effectively and lead groups. These skills are demonstrated in the way a manager relates to other people, including the
way s/he motivates, facilitates, coordinates, leads, communicates, and resolves conflicts. A manager with human skills allows
subordinates to express themselves without fear of ridicule and encourages participation. A manager with human skills likes other
people and is liked by them. This skill is a reflection of the manager’s leadership ability.

Because all work is done when people work together, human relation skills are equally important at all levels of management.

3. Conceptual skills – involve the formulation of ideas. It refers to the ability to see the big picture – to view the organization from a
broad perspective and to see the interrelations among its components. It includes recognizing how the various jobs in an
organization depend on one another and how a change in any one part affects all the others. It also involves the manager’s ability to
understand how a change in any given part can affect the whole organization, ability to understand abstract relationships, solve
problems creatively, and develop ideas.
Conceptual skills are more important in strategic (long range) planning; therefore, they are more important to top-executives than
middle managers and supervisors.
Although all three of these skills are essential to effective management, their relative importance to specific manager depends on his/her
rank in the organization. Technical skill is of greatest importance at supervisory level; it becomes less important as we move up the
chain of command. Even though human skill is equally important at every level of the organization, it is probably most important at the
lower level, where the greatest number of management–subordinate interactions is likely to take place.

On the Other hand, the importance of conceptual skill increases as we rise in the rank of management. The higher the manager is in the
hierarchy, the more s/he will be involved in the broad, long term decisions that affect large parts of the organization. For top
management, which is responsible for the entire organization, conceptual skill is probably the most important skill of all.

 Technical skill deals with things, human skill concerns people and conceptual skill has to do with ideas.
Technical Skills

Conceptual Skills

Top
Human Skills

Middle

First-line

Managerial Levels Managerial Skills

Fig. 1.2 Variation of skills necessary at different management levels

1.6. Is Management an art, Science, or profession?

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Science is characterized by making conclusions based on actual facts and verifies knowledge through cause-effect relationship. It can be
generally learnt, thought, and researched to know the universal truth. Managers can work better by using the organized knowledge about
management, and it is this knowledge that constitutes a science.
Art is characterized by using common sense, personal feeling, beliefs, impulses, etc. Management/Managing, like all other practices-
music composition, engineering, accountancy or baseball- is an art. It is know-how, skill or how to accomplish the desired objectives
with insufficient data and information or when there is limited use of secondary sources of information. It is doing things in the light of
realities of a situation. Thus, management as a practice is an art; the organized knowledge underlying the practice may be referred to as a
science. In this sense/context science and art are not mutually exclusive but are complementary.
Therefore, management in actual sense is neither an art nor science, but it requires both to be successful, i.e., it is not pure art because it
uses scientific methods e.g. computer and it is not pure science because it uses intuition, judgment, and creativity. Management is one of
the most creative arts as it requires a vast knowledge and the innovative skills to apply. Managers should develop new ideas, techniques
and strategies and be able to communicate them effectively in the work environment. They should be able to make decisions even when
there is shortage of data. This leads us to the conclusion that ‘the art of management begins where the science of management stops’.
This underlines the importance of making managerial decisions in the absence of sufficient data and information by using the decision
maker’s common sense.

1.7. Universality of Management

Regardless of title, position, or management level, all managers do the same job. They execute the five managerial functions and work
through and with others to set and achieve organizational goals. Managers are the same whether the organization is private or public,
profit making or non-profit making, manufacturing or service giving, and industrial or small firms. Hence, management is universal for
the following reasons.

1. All managers perform the five managerial functions even if with different emphasis.
2. It is applicable for all human efforts; be it business, non-business, governmental, private. It is useful from individual to
institutional efforts.
3. Management utilizes scientifically derived operational principles.
4. All managers operate in organizations with specific objectives.
5. Management, in all organizations, helps to achieve organizational objectives.

In sum, management theories and principles have universal application in all kinds of organized and purposeful activity and at all levels
of management.

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