Unit - 1
Introduction
Management is a type of movement that fundamentally depends on complete things through others. All administrative capacities are general and all chiefs in any field of human endeavors play out that common place administrative capacities independent of what they are overseeing. One approach to dissect the management is to think as far as what a supervisor does. Utilizing this methodology, we can show up at the management cycle which depicts crafted by any director. A portion of the basic meaning of the management given by popular essayists and masterminds are: According to Harold Koontz and Heinz Weihrich, Management is the way toward planning and keeping up a climate in which people, cooperating in gatherings, proficiently achieve chosen points. As indicated by Kreitner, "The board is the way toward working with and through others to accomplish authoritative goals by proficiently utilizing restricted assets in the evolving climate.
The process of administering and controlling the affairs of the organization, irrespective of its nature, type, structure and size is defined as management. It helps in creating and maintaining a business environment, where the members of the organization can work together, and achieve its objectives efficiently and effectively.
Management acts as a guide to a group of people working in the organization and coordinating their efforts, towards the attainment of the common objective.
In other words, it is concerned with optimally using 5M’s, i.e., men, machine, material, money and methods and, this is possible only when their proper direction, coordination and integration of the processes and activities, to achieve the desired results.
Functions of Management
1. Planning: It is the topmost function of management, i.e., to decide what is to be done in future. It encompasses formulating policies, establishing targets, scheduling actions and so forth.
2. Organizing: Once the plans are formulated, the next step is to organize the activities and resources, as in identifying the tasks, classifying them, assigning duties to subordinates and allocating the resources.
3. Staffing: Hiring personnel for carrying out various activities of the organization involves in staffing. It is to ensure that the right person is appointed to the right job.
4. Directing: The task of the manager to guide, supervise, lead and motivate the subordinates, to ensure that they work in the right direction, so far as the objectives of the organization are concerned is known as directing.
5. Controlling: The controlling function of management involves a number of steps to be taken to make sure that the performance of the employees is as per the plans. It involves establishing performance standards and comparing them with the actual performance. Necessary steps are to be taken for correction, if there is any variations.
The important feature of management which means the integration of the activities, processes and operations of the organization and synchronization of efforts, to ensure that every element of the organization contributes to its success is coordination.
Key Takeaways:
1. Management can be defined as the process of administering and controlling the affairs of the organization, irrespective of its nature, type, structure and size.
2. Wherever there exists human pursuit, there exists management. The efficiency of management is necessary to achieve the objective or goal of an organization.
The Levels of Management are:
Top-Level Management: This is the highest level in the organizational hierarchy, which includes Board of Directors and Chief Executives. The objectives, formulating plans, strategies and policies are defined at the top level management.
Middle-Level Management: It is the second and most important level in the corporate ladder, as it is a channel between the top and lower-level management. It includes departmental and division heads and managers who are responsible for implementing and controlling plans and strategies which are formulated by the top executives.
Lower Level Management: It is called as functional or operational level management. It includes first-line managers, foreman, supervisors. It helps in reducing wastage and idle time of the workers, improving the quality and quantity of output as it faces to face interact with the workers.
Skills of a manager
To become a manager is a very tough job. The arrangement of knowledge and skills it takes to deal with a variety of people, tasks and business needs.
The skills that a manager has to acquire:
1. Building good working relationships with people at all levels.
The most important management skill, is the ability to build good relationships with people at all levels. For example, an approach to relationship building focuses on creating "high-quality connections" through respectful engagement.
2. Prioritizing tasks effectively for yourself and your team.
All of us have a huge number of things that we want to do or have to do. The demands can often seem overwhelming, to us and the members of our team. The second most important management skill is prioritization.
3. Considering many factors in decision-making.
We all have seen how bad decisions can be when they are rushed or when financial concerns are the only criteria used. This is why it pays to use a formal, structured process to think a problem through thoroughly, including analyzing risk and exploring ethical considerations. It plays important role in management. The ORAPAPA framework—which stands for Opportunities, Risks, Alternatives and Improvements, Past Experience, Analysis, People, and Alignment and Ethics—is a good example.
4. Knowing the key principles of good communication.
Management is about getting things done by working with people. It can be done only if it is communicated effectively. Clear, Concise, Concrete, Correct, Coherent, Complete, Courteous -these are the 7 C's of Communication which can help you to get the message more clearly.
5. Understanding the needs of different stakeholders and communicating with them appropriately.
As we lead bigger projects, it becomes increasingly important to manage many different groups of people who can support or undermine the work we do. This is where it is important to develop good stakeholder analysis and stakeholder management skills.
6. Bringing people together to solve problems.
It is good to solve problem on your own. But there are very many reasons why it pays to bring together a team of experienced people. Gathering people for brainstorming sessions is a good start, but it also pays to understand structured problem-solving processes, know how to facilitate meetings well and be skilled in managing group dynamics.
7. Developing new ideas to solve customers' problems.
A vast number of products and services are sold based on customer ratings and reviews. To get top reviews, you need to provide something that meets the needs of customers exceptionally well. Approaches like design thinking and ethnographic research can help you develop highly satisfying products, and customer experience mapping can help you deliver a satisfying customer journey.
8. Cultivating relationships with customers.
The way we do, this depends on whether we serve consumer or business markets. When we deal with consumers, we will get great insights into customer groups by segmenting your market and by developing customer personas representing these different segments.
9. Building trust within your team.
When people do not trust one another in a team, they waste a huge amount of time by involving themselves in political activities. By contrast, people in trusting teams work efficiently and well, and they can deliver wonderful results. To build trust, you need to lead by example, communicate honestly and openly, get to know individuals as people, avoid blame, and discourage behaviors that breach trust.
10. Using emotional intelligence.
All managers need emotional intelligence to be effective. This means having the self-awareness, self-control, motivation, empathy and social skills needed to behave in a mature, wise, empathetic way with the people around you. Emotionally intelligent managers are a joy to work with, which is why they attract and retain the best people.
Roles of a manager
Mintzberg published his Ten Management Roles in his book, "Mintzberg on Management: Inside our Strange World of Organizations," in 1990.
The ten roles are:
1. Figurehead.
2. Leader.
3. Liaison.
4. Monitor.
5. Disseminator.
6. Spokesperson.
7. Entrepreneur.
8. Disturbance Handler.
9. Resource Allocator.
10. Negotiator.
The 10 roles are then divided up into three categories, as follows:
Interpersonal Category:
Figurehead
Leader
Liaison
Informational Category:
Monitor
Disseminator
Spokesperson
Decisional Category:
Entrepreneur
Disturbance Handler
Resource Allocator
Negotiator
Interpersonal Category
The managerial roles in this category involve providing information and ideas.
Figurehead – As a manager, you must have social, ceremonial and legal responsibilities. You are expected to be a source of inspiration. People look up to you as a person with authority, and as a figurehead.
Leader – This is where you provide leadership for your team, your department or perhaps your entire organization; and it is where you manage the performance and responsibilities of everyone in the group.
Liaison – Managers must communicate with internal and external contacts. We must be able to network effectively on behalf of the organization.
Informational Category
The managerial roles in this category involve processing information.
Monitor – In this role, you regularly seek out information related to your organization and industry, looking for relevant changes in the environment. You also monitor your team, in terms of both their productivity, and their well-being.
Disseminator – This is where you communicate potentially useful information to your colleagues and your team.
Spokesperson – Managers represent and speak for their organization. In this role, you're responsible for transmitting information about your organization and its goals to the people outside it.
Decisional Category
The managerial roles in this category involve using information.
Entrepreneur – As a manager, you create and control change within the organization. This means solving problems, generating new ideas, and implementing them.
Disturbance Handler – When an organization or team hits an unexpected roadblock, it is the manager who must take charge. Manager also need to solve disputes within it.
Resource Allocator – You'll also need to determine where organizational resources are best applied. This involves allocating funding, as well as assigning staff and other organizational resources.
Negotiator – You may be needed to take part in, and direct, important negotiations within your team, department, or organization.
For the achievement of objectives of the organization, management motivates people. It is a process which brings the scarce human and material resources together for the growth of the organisation. Management isn't a onetime act but an on-going series of interrelated activities. Together these activities are called as management process. It consists of a group of interrelated operations or functions necessary to attain desired organizational goals. A systematic way of doing things is called process. Management is concerned with conversion of inputs into outputs. An analysis of management process will enable us to understand the functions which managers perform.
Features of Management Process
1. Social Process:
The entire management process is considered a social process. The success of all organizational efforts depends upon the willing co-operation of individuals. Manager’s guide, direct, influence and control the actions of others to attain stated goals. It includes the actions of managers that influence the people outside the organisation.
2. Continuous Process:
The process of management is on-going and continuous. Managers continuously take up one or the opposite function. Management cycle is repeated over and once again, each managerial function is viewed as a sub-process of total management process.
3. Universal:
Management functions are universal in the sense that a manager has to perform them regardless of the size and nature of the organization. Each manager performs similar functions no matter his rank or position in the organization. Even during a non-business organization managerial functions are the same.
4. Iterative:
Managerial functions are contained within each other the performance of the next function doesn't start only when the earlier function is finished. In this function, various functions are taken together. For instance, planning, organizing, directing and controlling may occur within staffing function. Similarly, organizing may require planning, directing and controlling. So, all functions are often thought of as sub-functions of each other.
5. Composite:
All managerial functions are composite and integrated. For performing various functions no sequence should be followed. The sequential concept could also be true in a newly started business where functions may follow a specific sequence but the same won't apply to a going concern. Any function may be taken up first or many functions may be taken up at the same time.
Pre-Scientific
If we look at recorded history, a number of monumental examples of management can be traced. The Sumerian civilization, Egyptian, Chinese, Greek and Roman civilizations represent significant practices in management.
The representation of management concepts that helped in smooth administration of the civilizations. Though famous even today, no significant information is provided about the way how these civilizations were managed.
These concepts did not provide important insight into management of business (or economic) institutions. No important techniques were available to solve organizational problems until the end of 15th century. It was in 1494 that the technique of double entry book-keeping was introduced to maintain financial records of the business. In 1800s, management theories developed as a systematic field of knowledge. Until formal management theories developed, pre-scientific management theories contributed to the management thought.
Contribution made by some of the management thinkers is as follows:
1. Charles Babbage:
One of the early British thinkers on management, Babbage, was the forerunner of scientific management. His work was closely related to that of Adam Smith (an economist), as he emphasized on work measurement, cost determination, bonus plans and profit-sharing specialization (dividing the work into various jobs) to increase managerial efficiency. His findings are also reflected in Taylor’s scientific management. To improve industrial productivity, he introduced methods like work measurement, cost determination, bonus plans and profit sharing.
2. James Montgomery:
James Montgomery was a textile owner-manager in Scotland. He focused on planning, organizing and controlling of business and wrote management texts for their efficient working.
3. Robert Owens:
Robert Owen is known as the father of Personnel Management, he was a textile entrepreneur. His emphasis was not on the process of industrialization or division of labour but on development of people. He advocated that worker should be treated as human beings and their values and beliefs should be respected. If working conditions and needs of the workers are satisfied, they work to achieve the organizational goals.
He advocated improving living conditions (both factory and domestic conditions) of employees by upgrading the streets, houses, sanitation facilities etc. The social and educational reforms for the employees are brought by him.
He believed that higher wages for workers, participation in managerial decision-making and positive motivation can increase productivity. His ideas on management to coordinate economic performance with human relations are found in Hawthorne experiments also.
4. Andrew Ure:
Andrew Ure was an English industrialist and focused on educating managers through training and moral education to make them contribute to organizational goals.
5. Charles Dupin:
Charles Dupin was an industrial educator in France. According to him, besides technical knowledge for contributing to organizational output, managers also needed broader management skills to maximize industrial output. He emphasized more on management education than technical education.
Evaluation of Pre-Scientific Management Theories:
The organizational environments were primarily related to the theories. They focused on specific organizational problems in specific ways. As each manager had his own way of viewing the organization, some emphasized on production and others on human relations.
There was no single universally accepted management theory that could apply to all organizations at all times. The management became a systematic field of study by the end of 19th century. The contributions made by Taylor in the early 20th century are regarded as scientific management.
Classical
Classical management theory is based on the belief that workers only have physical and economic needs. Classical management theory does not take into account social needs or job satisfaction, but instead advocates a specialization of labor, centralized leadership and decision-making, and profit maximization.
Designed solely to streamline operations, increase productivity and enhance the bottom line, this idea arose in the late 19th century and gained prominence through the first half of the 20th century. While not widely subscribed to in modern times, this theory offers some principles that remain valid, to an extent, in small business settings in regards to manufacturing.
Concepts of the Ideal Workplace
Three main concepts that outline the theory as an ideal workplace
Hierarchical structure – Workplaces are divided under three distinct layers of management, under classical management theory. At the very top are the owners, board of directors and executives that set the long-range objectives for a firm. Middle management takes on the responsibility of overseeing supervisors while setting goals at the department level to fit within the confines of the managers’ budget. At the lowest level of the chain are supervisors, who manage day-to-day activities, address employee problems and provide training.
Specialization – The classical management theory involves an assembly line view of the workplace in which large tasks are broken down into smaller ones that are easy to accomplish. Workers understand their roles and typically specialize in a single area. Specialization helps increase productivity and efficiency while eliminating the need for employees to multi-task.
Incentives – The employees are motivated by financial rewards under this theory. It proposes that employees will work harder and be more productive if they are awarded incentives based on their work. Employers who can motivate their employees using this tactic may be able to achieve increased production, efficiency and profit.
The central part of classical management theory is autocratic leadership model. No large groups of people are needed for decisions to be made. A single leader makes a final decision and it is communicated downward for all to follow. This leadership approach can be beneficial when decisions need to be made quickly by one leader, rather than a group of company officials.
Strengths of the Classical management Theory
While not typically used in today’s workplaces, the classical management theory does have some strong points. They include:
Functions, operations and a clear structure for management,
The division of labor that can make tasks easier and more efficient to accomplish, which can enhance productivity
Clear definition of employee roles and tasks with little left to guesswork
Flaws in the classical management theory
Companies can see their production numbers increase, when they put theory into action. There are, however, some flaws that make this particular management model less than attractive in workplaces. These pitfalls include:
By attempting to predict and control human behavior, this theory overlooks the importance of human relations and creativity.
In essence, this theory views workers almost as machines, but fails to take into account what job satisfaction, employee input and morale can bring to the workplace.
The reliance on prior experience and the ability to apply it almost solely to manufacturing settings is another drawback of this theory.
To get high productivity, it is must that the classical management theory can help streamline manufacturing operations. However, it fell out of favor after the rise of the human relations movement, which sought to gain a better understanding of the human motivation for productivity. Although some of its facets are viable for certain circumstances, this theory generally does not translate well to workplaces today.
Behavioral
The Neo-Classical approach was evolved over many years because it was found that classical approach did not achieve complete production efficiency and workplace harmony. Managers still encountered difficulties and frustrations because people did not always follow predicted or rational patterns of behavior.
Thus, there was increased interest in helping managers deal more effectively with the ‘people side’ of their organization. The neo-classical theory reflects a modification over classical theories.
The neo-classical approach recognizes the primacy of psychological and social aspects of the workers as an individual and his relations within and among groups and the organization. It gained importance after the World War I, particularly in the wake of the “Hawthorne experiments” at Western Electric Company by Elton Mayo 10 during 1924 to 1932. Elton Mayo is considered as the father of the Human Relations Movement.
The basic features of neoclassical approach are:
(i) The business organization is a social system.
(ii) The most important element in the social system is human factor.
(iii) It revealed the importance of social and psychological factors in determining worker productivity and satisfaction.
(iv) The behavior of an individual is dominated by the informal group of being a member.
(v) The aim of the management is to develop social and leadership skills in addition to technical skills. It must be done for the welfare of the workers.
(vi) In an organization, morale and productivity go together.
Hawthorne Experiment:
A famous series of studies of human behavior in work situations was conducted at the Western Electric Company from 1924 to 1933. In 1927 a group of researchers led by Elton Mayo and Fritz J. Roethlisberger and Dickson at the Harvard Business School were invited to join at Western Electric’s Hawthorne plant near Chicago. The studies began as an attempt to investigate the relationship between the level of lighting in the workplace and the productivity of workers.
To determine the effects of different levels of illumination on worker’s productivity an initial experiment was carried out over a period of three years. The results of the experiments were questionable. When the test group’s lighting conditions were improved, productivity tended to increase just as expected, although the increase was unpredictable.
But there was a tendency for productivity to continue to increase when the lighting conditions were made worse, besides lighting was influencing the worker’s performance, as the work group was not able to maintain relationship between illumination and productivity.
In the second set of experiments, a smaller group of six female telephone operators was put under close observation and control. The frequent changes that were made in working conditions such as hours of work, lunch break, rest periods, etc.
Again, the results were questionable, as performance tended to increase even when the improvements in working conditions were withdrawn. The socio-psychological factors give a greater influence on productivity and working conditions.
The third set of experiment attempted to understand how group norms affect group effort and output. It was noted that the informal organization of workers controlled the norms established by the groups in respect of each member’s output. The researcher concluded that informal work groups have a great influence and productivity.
In the subsequent experiments, Mayo and his associates decided that financial incentives, when these were offered, were not causing the productivity improvements. The researchers concluded that employees would work harder if they believed management was concerned about their welfare, and supervisors paid special attention to them. This phenomenon was subsequently labeled as the Hawthorne Effect.
These findings concerning human behaviors at work focused on the worker as an individual and considered the importance of caring for his feelings and understanding the dynamics of informal organization of workers. The view point of Hawthorne Effect thus gave birth to human relations movement and provided the thrust toward democratization of organizational power structures and participative management. Hawthorne experiment is stepped in an era of organizational humanism.
Human Relations Approach:
The development of human relations approach was led by Hawthorne experiment. It revealed the importance of social and psychological factors in determining workers, productivity and satisfaction. This movement is marked by informal grouping, informal relationship and leadership Pattern of communication and philosophy of industrial humanism.
The values of human relation are exemplified in the work of Douglas McGregor and A. H. Maslow. Human relation approach is a social psychological approach and suggests business enterprise is a social system in which group norms play a significant role.
Financial incentive was less of a determining factor on a workers output than were group pressure and acceptance and the concomitant security. It ushered an era of organizational humanism. Managers would no longer consider the issue of organization design without including effects on work groups, employees’ attitudes, and manager-employee relationships.
The main contributors that led to the development of Human Relations Movement were Elton Mayo, Mary Parker Follett and Douglas McGregor, Roethlisberger, Dickson, Dewey and Lewin, etc.,
The following are the factors marked by human relations movement:
This movement viewed organization as a social system composed of numerous interacting parts in which groups norms exercise a significant influence on the behaviour and performance of individuals. The movement emphasized that apart from economic needs, the employees have other social and psychological needs such as recognition, affiliation, appreciation, self-respect, etc.
The groups determine the norms of behaviour for the group member and thus exercise a great influence on the attitudes and performance of workers. Group Dynamics is the major force at the workplace. The human relations approach was focused on teaching people-management skills, as opposed to technical skills.
This approach strongly believed that there should be no conflicts or clashes in the organization; and if it arises, it must be removed through improvement of human relations in the organization. They consider that informal organization does also exist within the framework of formal organization and it affects and is affected by the formal organization.
Contributions of Human Relations Approach or Hawthorne Studies:
The human relations proposed the following points as a result of their findings of the Hawthorne experiments:
1. Social System:
The organization 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 organization.
The workers follow a social norm determined by their co-workers, which defines the proper amount of work, rather than try to achieve the targets management thinks they can achieve, even though this would have helped them to earn as much as they physically can.
2. Social Environment:
The social environment on the job affects the workers and is also affected by them. Management is not the only variable. The behavior of workers gets influenced by social and psychological factors. Therefore, every manager should adopt a sound human approach to all organizational problems.
3. Informal Organization:
The informal organization does also exist within the framework of formal organization and it affects and is affected by the formal organization.
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 behavior for the group members and thus exercises a powerful influence on the attitudes and performance of individual workers. In group dynamics, the management should deal with workers as members of work groups rather than as individuals.
5. Informal Leader:
There is an emergence of informal leadership as against formal leadership and the informal leader sets and enforces group norms. Informal leader 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 of which he is supposed to be in-charge.
6. Communication:
Two-way communication is necessary because it carries necessary information downward for the proper functioning of the organization and transmits upward the feelings and sentiments of people who work in the organization.
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. Communication provides them psychological satisfaction.
7. Non-Economic Rewards:
Non economic rewards mean money is only one of the motivators, but not the sole motivator of human behavior. The social and psychological needs of the workers are very strong. So, non-economic rewards such as praise, status, inter-personal 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 organizational goals and group goals. The interest of workers can be harmed by conflict if they are not handled properly. Conflicts can be resolved through improvement of human relations in the organization.
Criticism of Human Relations Approach:
The human relations approach has been criticized on the following grounds:
1. Lack of Scientific Validity:
The human relation drew conclusions from Hawthorne studies. These conclusions are based on clinical insight rather than on scientific evidence. The groups chosen for study were not representative in character. The findings based upon temporary groups do not apply to groups that have continuing relationship with one another. The operative employees are only focused on this experiment.
2. Over-Emphasis on Group:
The human relations approach over-emphasizes the group and group decision-making. But, in practice, groups may create problems for the management and collective decision-making may not be possible.
3. Over-Stretching of Human Relations:
All organizational problems are amenable to solutions through human relations is Over-Stretching of Human Relations. This assumption does not hold good in practice. The satisfied workers may not be more productive workers.
4. Limited Focus on Work:
The human relations approach lacks adequate focus on work. It gives importance on interpersonal relations and on the informal group. It tends to overemphasize the psychological aspects at the cost of the structural and technical aspects.
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. If the wages are too low, the employees will feel dissatisfied despite good interpersonal relations at the work place. Thus, it may be said that the human relations approach seeks to exploit the sentiments of employees for the benefit of the organization.
6. Negative View of Conflict between Organizational and Individual Goals:
It views conflict between the goals of the organization and those of individuals as destructive. The positive aspects of conflicts such as overcoming weaknesses and generation of innovative ideas are ignored.
Managers began thinking in terms of group processes and group rewards to supplement their former concentration on the individual worker. The study of human behaviour and human interactions has assumed much significance as a result of this approach.
No doubt, this approach has provided many new ideas in managing the organization, but this is not free from certain limitations – Human relations approach cannot be treated as complete package to deal with human being effectively, because no attempt had been made for studying and analyzing human behaviour systematically and scientifically.
The human relations approach undermines the role of economic incentives in motivation and gives excessive stress on social and psychological factors. In actual practice, financial incentive plays a crucial rule to motivate employers. The human relations approach presented a negative view of conflict between organizational and individual goals.
It depicts the conflicts as destructive. The positive aspects of conflicts such as overcoming weaknesses and generation of innovative ideas are ignored. The human relation drew conclusions from Hawthorne experiments which were clinical based, rather than scientific.
The experiments focused on a particular group chosen for study which did not represent the entire work force. The human relations approach did not give much focus on work. It gives importance on interpersonal relations and on the informal group. It tends to overemphasize the socio-psychological aspects at the cost of structural and technical aspects.
The human relations approach over emphasized on group Dynamics. But in actual practice, group and group norms, in formal process exercise a light influence in organization functioning.
Modern
Peter Drucker’s Dimensions of Management
Many past management theorists coined terms and concepts that oppose contemporary management styles. But Peter Drucker, hailed as the father of modern management, formulated a theory that is still used today.
Drucker believed that managers should, above all else, be leaders. Rather than setting strict hours and discouraging innovation, he opted for a more flexible, collaborative approach. He placed high importance on decentralization, knowledge work, management by objectives (MBO) and a process called SMART.
Drucker's approach helps to lead your team to success while supporting and encouraging each individual.
The steps how to implement his management theory.
1. Delegate equal power across the board.
While it's important that employees respect you as their manager, they shouldn't feel that they're below you. Every worker should have the opportunity to speak up and share ideas with their team, whether it's during staff meetings or one-on-one conferences.
When workers are treated as equals, they're more confident and motivated in their work, which benefits the company as much as it benefits them. Talk to each employee as though their role is as necessary as yours (because it is), and remind them that they have a say in the organization.
2. Encourage collaboration.
Collaboration plays a crucial role of every organization. Rather than pitting employees against each other, or fostering an environment where employees keep to themselves, urge them to work together by sharing ideas, tips and guidance.
This doesn't mean your employees shouldn't work individually, but they shouldn't feel like they can't ask for help or inspiration from others. Your staff should feel like a team, and you should serve as their coach.
3. Increase efficiency.
To ensure you're continuing to prioritize productivity, utilize the concept of MBO, a process that calls for workers of all levels to work together to reach a common goal. There are five steps to MBO:
Review goals
Set objectives
Monitor progress
Evaluate performance
Reward employees
These goals should be SMART, or specific, measurable, achievable, relevant and time-oriented. Call your team together and discuss your SMART goals to ensure everyone is on the same page and understands their part in the overall objectives of the organization.
4. Boost innovation.
Workers must be confident and willing to take risks. Create an innovative atmosphere and lead by example, showing your employees that mistakes are not shortcomings.
If your team sees that you're human, that effort does not always lead to success, they'll feel more comfortable risking failure. Be transparent with them, support their ideas and never punish creativity.
Drucker's management theory embodies many modern concepts, including the following:
1. Decentralization: Drucker was focused on decentralizing – or democratizing – management in the workplace said by Rosenstein. He wanted all employees to feel valued and empowered, as if their contributions and voices mattered. He believed in assigning tasks that inspire workers, rewarding front-line workers with responsibility and accountability, and uniting supervisors and their subordinates to achieve shared organizational goals.
2. Knowledge work: Knowledge workers are white-collar employees whose jobs require handling or using information, such as engineers and analysts. Drucker – who foresaw the knowledge-based economy years before the rise of computing and the internet – placed high value on workers who solved problems and thought creatively, according to Rosenstein. He wanted to foster a culture of employees who could provide not just labor, but also insight and ideas.
3. Workforce development: Drucker felt strongly that managers should improve and develop both themselves and their team members, according to Rosenstein, who said that ongoing training and education are hallmarks of Drucker's philosophy. He believed external development – via participation in industry trade groups and conferences, for example – to be especially valuable.
4. Corporate social responsibility: Rosenstein said Drucker was a holistic thinker. Instead of looking at businesses as discrete entities, he looked at them as components of a larger social system. In that context, he argued that businesses should see themselves as part of a community and make decisions in that regard – with as much respect for their external as for their internal impact Profits are viewed through a social lens by Drucker: A company has a responsibility to be profitable, he argued, so that it can create jobs and wealth for society at large is defined as CSR.
5. Organizational culture: Be they positive or negative, helpful or harmful, companies have always had cultures. But Drucker was among the first to suggest that managers could – and should – shape them. "The spirit of an organization is created from the top," he said in his book Management: Tasks, Responsibilities, Practices. "If an organization is great in spirit, it is because the spirit of its top people is great. If it decays, it does so because the top rots … No one should ever be appointed to a senior position unless top management is willing to have his or her character serve as a model for subordinates."
6. Customer experience: According to the Drucker Society of Austria, steward of Drucker's philosophy in his native country, Drucker insisted that businesses have only one real purpose: to create customers. By viewing business operations and opportunities through that lens – the customer, not the business, decides what's important – he established a predicate for customer-focused companies like Apple, Zappos and countless others.
Key Takeaways:
1. Classical management theory is based on the belief that workers only have physical and economic needs.
2. The Neo-Classical approach was evolved over many years because it was found that classical approach did not achieve complete production efficiency and workplace harmony.
3. Elton Mayo, Mary Parker Follett and Douglas McGregor, Roethlisberger, Dickson, Dewey and Lewin, etc., were the main contributors that led to the development of Human Relations Movement.
The Four main types of business organization: sole proprietorship, partnership, corporation, and Limited Liability Company, or LLC.
Sole Proprietorship
This is a simplest and most common form of business ownership. A business which is owned and run by someone for their own benefit is called sole proprietorship. The business’ existence is entirely dependent on the owner’s decisions, so when the owner dies, so does the business.
Advantages of sole proprietorship:
1. All profits are subject to the owner
2. There is very little regulation for proprietorships
3. Owners have total flexibility when running the business
4. Very few requirements for starting—often only a business license
Disadvantages:
1. Owner is 100% liable for business debts
2. Equity is limited to the owner’s personal resources
3. Ownership of proprietorship is difficult to transfer
4. No distinction between personal and business income
Partnership
Partnership is of two types: general and limited. In general partnerships, both owners invest their money, property, labor, etc. to the business and are both 100% liable for business debts. In other words, even if you invest a little into a general partnership, you are still potentially responsible for all its debt. The partnerships that do not require a formal agreement, that can be verbal or even implied between the two business owners is called general partnership.
The partnership that requires a formal agreement between the partners is called Limited partnerships. They must also file a certificate of partnership with the state. Limited partnerships allow partners to limit their own liability for business debts according to their portion of ownership or investment.
Advantages of partnerships:
1. Shared resources provide more capital for the business
2. Each partner shares the total profits of the company
3. Similar flexibility and simple design of a proprietorship
4. Inexpensive to establish a business partnership, formal or informal
Disadvantages:
1. Each partner is 100% responsible for debts and losses
2. Selling the business is difficult—requires finding new partner
3. Partnership ends when any partner decides to end it
Corporation
Corporations are, for tax purposes, separate entities and are considered a legal person. This means, among other things, that the profits generated by a corporation are taxed as the “personal income” of the company. Then, any income distributed to the shareholders as dividends or profits are taxed again as the personal income of the owners.
Advantages of a corporation:
1. Limits liability of the owner to debts or losses
2. Profits and losses belong to the corporation
3. Can be transferred to new owners fairly easily
4. Personal assets cannot be seized to pay for business debts
Disadvantages:
1. Corporate operations are costly
2. Establishing a corporation is costly
3. Start a corporate business requires complex paperwork
4. With some exceptions, corporate income is taxed twice
Limited Liability Company (LLC)
Similar to a limited partnership, an LLC provides owners with limited liability while providing some of the income advantages of a partnership. Essentially, the advantages of partnerships and corporations are combined in an LLC, mitigating some of the disadvantages of each.
Advantages of an LLC:
1. Limits liability to the company owners for debts or losses
2. The profits of the LLC are shared by the owners without double-taxation
Disadvantages:
1. Ownership is limited by certain state laws
2. Agreements must be comprehensive and complex
3. Beginning an LLC has high costs due to legal and filing fees
Key Takeaways:
1. There are 4 main types of business organization: sole proprietorship, partnership, corporation, and Limited Liability Company, or LLC.
The public sector (also called the state sector) is the part of the economy composed of both public services and public enterprises.
Public sectors include public goods and governmental services such as the military, law enforcement, infrastructure, public transit, public education, along with health care and those working for the government itself, such as elected officials. The public sector might provide services that a non-payer cannot be excluded from (such as street lighting), services which benefit all of society rather than just the individual who uses the service. Public enterprises, or state-owned enterprises, are self-financing commercial enterprises that are under public ownership which provide various private goods and services for sale and usually operate on a commercial basis.
Organizations that are not included in public sector are either included in private sector or voluntary sector. The private sector is composed of the economic sectors that are intended to earn a profit for the owners of the enterprise. The voluntary, civic or social sector concerns a diverse array of non-profit organizations emphasizing civil society.
The organization of the public sector can take several forms, including:
Direct administration funded through taxation; the delivering organization generally has no specific requirement to meet commercial success criteria, and production decisions are determined by government.
State-owned enterprises; which differ from direct administration in that they have greater management autonomy and operate according to commercial criteria, and production decisions are not generally taken by a government (although goals may be set for them by the government).
Levels of Public sector are organized at three levels: Federal or National, Regional (State or Provincial), and Local (Municipal or County).
Partial outsourcing (of the scale many businesses do, e.g., for IT services) is considered a public sector model.
References:
1. Principles & Practices of Management: L. M. Prasad
2. Principles of Management: P. C. Tripathy & P.N. Reddy
Unit - 1
Introduction
Management is a type of movement that fundamentally depends on complete things through others. All administrative capacities are general and all chiefs in any field of human endeavors play out that common place administrative capacities independent of what they are overseeing. One approach to dissect the management is to think as far as what a supervisor does. Utilizing this methodology, we can show up at the management cycle which depicts crafted by any director. A portion of the basic meaning of the management given by popular essayists and masterminds are: According to Harold Koontz and Heinz Weihrich, Management is the way toward planning and keeping up a climate in which people, cooperating in gatherings, proficiently achieve chosen points. As indicated by Kreitner, "The board is the way toward working with and through others to accomplish authoritative goals by proficiently utilizing restricted assets in the evolving climate.
The process of administering and controlling the affairs of the organization, irrespective of its nature, type, structure and size is defined as management. It helps in creating and maintaining a business environment, where the members of the organization can work together, and achieve its objectives efficiently and effectively.
Management acts as a guide to a group of people working in the organization and coordinating their efforts, towards the attainment of the common objective.
In other words, it is concerned with optimally using 5M’s, i.e., men, machine, material, money and methods and, this is possible only when their proper direction, coordination and integration of the processes and activities, to achieve the desired results.
Functions of Management
1. Planning: It is the topmost function of management, i.e., to decide what is to be done in future. It encompasses formulating policies, establishing targets, scheduling actions and so forth.
2. Organizing: Once the plans are formulated, the next step is to organize the activities and resources, as in identifying the tasks, classifying them, assigning duties to subordinates and allocating the resources.
3. Staffing: Hiring personnel for carrying out various activities of the organization involves in staffing. It is to ensure that the right person is appointed to the right job.
4. Directing: The task of the manager to guide, supervise, lead and motivate the subordinates, to ensure that they work in the right direction, so far as the objectives of the organization are concerned is known as directing.
5. Controlling: The controlling function of management involves a number of steps to be taken to make sure that the performance of the employees is as per the plans. It involves establishing performance standards and comparing them with the actual performance. Necessary steps are to be taken for correction, if there is any variations.
The important feature of management which means the integration of the activities, processes and operations of the organization and synchronization of efforts, to ensure that every element of the organization contributes to its success is coordination.
Key Takeaways:
1. Management can be defined as the process of administering and controlling the affairs of the organization, irrespective of its nature, type, structure and size.
2. Wherever there exists human pursuit, there exists management. The efficiency of management is necessary to achieve the objective or goal of an organization.
The Levels of Management are:
Top-Level Management: This is the highest level in the organizational hierarchy, which includes Board of Directors and Chief Executives. The objectives, formulating plans, strategies and policies are defined at the top level management.
Middle-Level Management: It is the second and most important level in the corporate ladder, as it is a channel between the top and lower-level management. It includes departmental and division heads and managers who are responsible for implementing and controlling plans and strategies which are formulated by the top executives.
Lower Level Management: It is called as functional or operational level management. It includes first-line managers, foreman, supervisors. It helps in reducing wastage and idle time of the workers, improving the quality and quantity of output as it faces to face interact with the workers.
Skills of a manager
To become a manager is a very tough job. The arrangement of knowledge and skills it takes to deal with a variety of people, tasks and business needs.
The skills that a manager has to acquire:
1. Building good working relationships with people at all levels.
The most important management skill, is the ability to build good relationships with people at all levels. For example, an approach to relationship building focuses on creating "high-quality connections" through respectful engagement.
2. Prioritizing tasks effectively for yourself and your team.
All of us have a huge number of things that we want to do or have to do. The demands can often seem overwhelming, to us and the members of our team. The second most important management skill is prioritization.
3. Considering many factors in decision-making.
We all have seen how bad decisions can be when they are rushed or when financial concerns are the only criteria used. This is why it pays to use a formal, structured process to think a problem through thoroughly, including analyzing risk and exploring ethical considerations. It plays important role in management. The ORAPAPA framework—which stands for Opportunities, Risks, Alternatives and Improvements, Past Experience, Analysis, People, and Alignment and Ethics—is a good example.
4. Knowing the key principles of good communication.
Management is about getting things done by working with people. It can be done only if it is communicated effectively. Clear, Concise, Concrete, Correct, Coherent, Complete, Courteous -these are the 7 C's of Communication which can help you to get the message more clearly.
5. Understanding the needs of different stakeholders and communicating with them appropriately.
As we lead bigger projects, it becomes increasingly important to manage many different groups of people who can support or undermine the work we do. This is where it is important to develop good stakeholder analysis and stakeholder management skills.
6. Bringing people together to solve problems.
It is good to solve problem on your own. But there are very many reasons why it pays to bring together a team of experienced people. Gathering people for brainstorming sessions is a good start, but it also pays to understand structured problem-solving processes, know how to facilitate meetings well and be skilled in managing group dynamics.
7. Developing new ideas to solve customers' problems.
A vast number of products and services are sold based on customer ratings and reviews. To get top reviews, you need to provide something that meets the needs of customers exceptionally well. Approaches like design thinking and ethnographic research can help you develop highly satisfying products, and customer experience mapping can help you deliver a satisfying customer journey.
8. Cultivating relationships with customers.
The way we do, this depends on whether we serve consumer or business markets. When we deal with consumers, we will get great insights into customer groups by segmenting your market and by developing customer personas representing these different segments.
9. Building trust within your team.
When people do not trust one another in a team, they waste a huge amount of time by involving themselves in political activities. By contrast, people in trusting teams work efficiently and well, and they can deliver wonderful results. To build trust, you need to lead by example, communicate honestly and openly, get to know individuals as people, avoid blame, and discourage behaviors that breach trust.
10. Using emotional intelligence.
All managers need emotional intelligence to be effective. This means having the self-awareness, self-control, motivation, empathy and social skills needed to behave in a mature, wise, empathetic way with the people around you. Emotionally intelligent managers are a joy to work with, which is why they attract and retain the best people.
Roles of a manager
Mintzberg published his Ten Management Roles in his book, "Mintzberg on Management: Inside our Strange World of Organizations," in 1990.
The ten roles are:
1. Figurehead.
2. Leader.
3. Liaison.
4. Monitor.
5. Disseminator.
6. Spokesperson.
7. Entrepreneur.
8. Disturbance Handler.
9. Resource Allocator.
10. Negotiator.
The 10 roles are then divided up into three categories, as follows:
Interpersonal Category:
Figurehead
Leader
Liaison
Informational Category:
Monitor
Disseminator
Spokesperson
Decisional Category:
Entrepreneur
Disturbance Handler
Resource Allocator
Negotiator
Interpersonal Category
The managerial roles in this category involve providing information and ideas.
Figurehead – As a manager, you must have social, ceremonial and legal responsibilities. You are expected to be a source of inspiration. People look up to you as a person with authority, and as a figurehead.
Leader – This is where you provide leadership for your team, your department or perhaps your entire organization; and it is where you manage the performance and responsibilities of everyone in the group.
Liaison – Managers must communicate with internal and external contacts. We must be able to network effectively on behalf of the organization.
Informational Category
The managerial roles in this category involve processing information.
Monitor – In this role, you regularly seek out information related to your organization and industry, looking for relevant changes in the environment. You also monitor your team, in terms of both their productivity, and their well-being.
Disseminator – This is where you communicate potentially useful information to your colleagues and your team.
Spokesperson – Managers represent and speak for their organization. In this role, you're responsible for transmitting information about your organization and its goals to the people outside it.
Decisional Category
The managerial roles in this category involve using information.
Entrepreneur – As a manager, you create and control change within the organization. This means solving problems, generating new ideas, and implementing them.
Disturbance Handler – When an organization or team hits an unexpected roadblock, it is the manager who must take charge. Manager also need to solve disputes within it.
Resource Allocator – You'll also need to determine where organizational resources are best applied. This involves allocating funding, as well as assigning staff and other organizational resources.
Negotiator – You may be needed to take part in, and direct, important negotiations within your team, department, or organization.
For the achievement of objectives of the organization, management motivates people. It is a process which brings the scarce human and material resources together for the growth of the organisation. Management isn't a onetime act but an on-going series of interrelated activities. Together these activities are called as management process. It consists of a group of interrelated operations or functions necessary to attain desired organizational goals. A systematic way of doing things is called process. Management is concerned with conversion of inputs into outputs. An analysis of management process will enable us to understand the functions which managers perform.
Features of Management Process
1. Social Process:
The entire management process is considered a social process. The success of all organizational efforts depends upon the willing co-operation of individuals. Manager’s guide, direct, influence and control the actions of others to attain stated goals. It includes the actions of managers that influence the people outside the organisation.
2. Continuous Process:
The process of management is on-going and continuous. Managers continuously take up one or the opposite function. Management cycle is repeated over and once again, each managerial function is viewed as a sub-process of total management process.
3. Universal:
Management functions are universal in the sense that a manager has to perform them regardless of the size and nature of the organization. Each manager performs similar functions no matter his rank or position in the organization. Even during a non-business organization managerial functions are the same.
4. Iterative:
Managerial functions are contained within each other the performance of the next function doesn't start only when the earlier function is finished. In this function, various functions are taken together. For instance, planning, organizing, directing and controlling may occur within staffing function. Similarly, organizing may require planning, directing and controlling. So, all functions are often thought of as sub-functions of each other.
5. Composite:
All managerial functions are composite and integrated. For performing various functions no sequence should be followed. The sequential concept could also be true in a newly started business where functions may follow a specific sequence but the same won't apply to a going concern. Any function may be taken up first or many functions may be taken up at the same time.
Pre-Scientific
If we look at recorded history, a number of monumental examples of management can be traced. The Sumerian civilization, Egyptian, Chinese, Greek and Roman civilizations represent significant practices in management.
The representation of management concepts that helped in smooth administration of the civilizations. Though famous even today, no significant information is provided about the way how these civilizations were managed.
These concepts did not provide important insight into management of business (or economic) institutions. No important techniques were available to solve organizational problems until the end of 15th century. It was in 1494 that the technique of double entry book-keeping was introduced to maintain financial records of the business. In 1800s, management theories developed as a systematic field of knowledge. Until formal management theories developed, pre-scientific management theories contributed to the management thought.
Contribution made by some of the management thinkers is as follows:
1. Charles Babbage:
One of the early British thinkers on management, Babbage, was the forerunner of scientific management. His work was closely related to that of Adam Smith (an economist), as he emphasized on work measurement, cost determination, bonus plans and profit-sharing specialization (dividing the work into various jobs) to increase managerial efficiency. His findings are also reflected in Taylor’s scientific management. To improve industrial productivity, he introduced methods like work measurement, cost determination, bonus plans and profit sharing.
2. James Montgomery:
James Montgomery was a textile owner-manager in Scotland. He focused on planning, organizing and controlling of business and wrote management texts for their efficient working.
3. Robert Owens:
Robert Owen is known as the father of Personnel Management, he was a textile entrepreneur. His emphasis was not on the process of industrialization or division of labour but on development of people. He advocated that worker should be treated as human beings and their values and beliefs should be respected. If working conditions and needs of the workers are satisfied, they work to achieve the organizational goals.
He advocated improving living conditions (both factory and domestic conditions) of employees by upgrading the streets, houses, sanitation facilities etc. The social and educational reforms for the employees are brought by him.
He believed that higher wages for workers, participation in managerial decision-making and positive motivation can increase productivity. His ideas on management to coordinate economic performance with human relations are found in Hawthorne experiments also.
4. Andrew Ure:
Andrew Ure was an English industrialist and focused on educating managers through training and moral education to make them contribute to organizational goals.
5. Charles Dupin:
Charles Dupin was an industrial educator in France. According to him, besides technical knowledge for contributing to organizational output, managers also needed broader management skills to maximize industrial output. He emphasized more on management education than technical education.
Evaluation of Pre-Scientific Management Theories:
The organizational environments were primarily related to the theories. They focused on specific organizational problems in specific ways. As each manager had his own way of viewing the organization, some emphasized on production and others on human relations.
There was no single universally accepted management theory that could apply to all organizations at all times. The management became a systematic field of study by the end of 19th century. The contributions made by Taylor in the early 20th century are regarded as scientific management.
Classical
Classical management theory is based on the belief that workers only have physical and economic needs. Classical management theory does not take into account social needs or job satisfaction, but instead advocates a specialization of labor, centralized leadership and decision-making, and profit maximization.
Designed solely to streamline operations, increase productivity and enhance the bottom line, this idea arose in the late 19th century and gained prominence through the first half of the 20th century. While not widely subscribed to in modern times, this theory offers some principles that remain valid, to an extent, in small business settings in regards to manufacturing.
Concepts of the Ideal Workplace
Three main concepts that outline the theory as an ideal workplace
Hierarchical structure – Workplaces are divided under three distinct layers of management, under classical management theory. At the very top are the owners, board of directors and executives that set the long-range objectives for a firm. Middle management takes on the responsibility of overseeing supervisors while setting goals at the department level to fit within the confines of the managers’ budget. At the lowest level of the chain are supervisors, who manage day-to-day activities, address employee problems and provide training.
Specialization – The classical management theory involves an assembly line view of the workplace in which large tasks are broken down into smaller ones that are easy to accomplish. Workers understand their roles and typically specialize in a single area. Specialization helps increase productivity and efficiency while eliminating the need for employees to multi-task.
Incentives – The employees are motivated by financial rewards under this theory. It proposes that employees will work harder and be more productive if they are awarded incentives based on their work. Employers who can motivate their employees using this tactic may be able to achieve increased production, efficiency and profit.
The central part of classical management theory is autocratic leadership model. No large groups of people are needed for decisions to be made. A single leader makes a final decision and it is communicated downward for all to follow. This leadership approach can be beneficial when decisions need to be made quickly by one leader, rather than a group of company officials.
Strengths of the Classical management Theory
While not typically used in today’s workplaces, the classical management theory does have some strong points. They include:
Functions, operations and a clear structure for management,
The division of labor that can make tasks easier and more efficient to accomplish, which can enhance productivity
Clear definition of employee roles and tasks with little left to guesswork
Flaws in the classical management theory
Companies can see their production numbers increase, when they put theory into action. There are, however, some flaws that make this particular management model less than attractive in workplaces. These pitfalls include:
By attempting to predict and control human behavior, this theory overlooks the importance of human relations and creativity.
In essence, this theory views workers almost as machines, but fails to take into account what job satisfaction, employee input and morale can bring to the workplace.
The reliance on prior experience and the ability to apply it almost solely to manufacturing settings is another drawback of this theory.
To get high productivity, it is must that the classical management theory can help streamline manufacturing operations. However, it fell out of favor after the rise of the human relations movement, which sought to gain a better understanding of the human motivation for productivity. Although some of its facets are viable for certain circumstances, this theory generally does not translate well to workplaces today.
Behavioral
The Neo-Classical approach was evolved over many years because it was found that classical approach did not achieve complete production efficiency and workplace harmony. Managers still encountered difficulties and frustrations because people did not always follow predicted or rational patterns of behavior.
Thus, there was increased interest in helping managers deal more effectively with the ‘people side’ of their organization. The neo-classical theory reflects a modification over classical theories.
The neo-classical approach recognizes the primacy of psychological and social aspects of the workers as an individual and his relations within and among groups and the organization. It gained importance after the World War I, particularly in the wake of the “Hawthorne experiments” at Western Electric Company by Elton Mayo 10 during 1924 to 1932. Elton Mayo is considered as the father of the Human Relations Movement.
The basic features of neoclassical approach are:
(i) The business organization is a social system.
(ii) The most important element in the social system is human factor.
(iii) It revealed the importance of social and psychological factors in determining worker productivity and satisfaction.
(iv) The behavior of an individual is dominated by the informal group of being a member.
(v) The aim of the management is to develop social and leadership skills in addition to technical skills. It must be done for the welfare of the workers.
(vi) In an organization, morale and productivity go together.
Hawthorne Experiment:
A famous series of studies of human behavior in work situations was conducted at the Western Electric Company from 1924 to 1933. In 1927 a group of researchers led by Elton Mayo and Fritz J. Roethlisberger and Dickson at the Harvard Business School were invited to join at Western Electric’s Hawthorne plant near Chicago. The studies began as an attempt to investigate the relationship between the level of lighting in the workplace and the productivity of workers.
To determine the effects of different levels of illumination on worker’s productivity an initial experiment was carried out over a period of three years. The results of the experiments were questionable. When the test group’s lighting conditions were improved, productivity tended to increase just as expected, although the increase was unpredictable.
But there was a tendency for productivity to continue to increase when the lighting conditions were made worse, besides lighting was influencing the worker’s performance, as the work group was not able to maintain relationship between illumination and productivity.
In the second set of experiments, a smaller group of six female telephone operators was put under close observation and control. The frequent changes that were made in working conditions such as hours of work, lunch break, rest periods, etc.
Again, the results were questionable, as performance tended to increase even when the improvements in working conditions were withdrawn. The socio-psychological factors give a greater influence on productivity and working conditions.
The third set of experiment attempted to understand how group norms affect group effort and output. It was noted that the informal organization of workers controlled the norms established by the groups in respect of each member’s output. The researcher concluded that informal work groups have a great influence and productivity.
In the subsequent experiments, Mayo and his associates decided that financial incentives, when these were offered, were not causing the productivity improvements. The researchers concluded that employees would work harder if they believed management was concerned about their welfare, and supervisors paid special attention to them. This phenomenon was subsequently labeled as the Hawthorne Effect.
These findings concerning human behaviors at work focused on the worker as an individual and considered the importance of caring for his feelings and understanding the dynamics of informal organization of workers. The view point of Hawthorne Effect thus gave birth to human relations movement and provided the thrust toward democratization of organizational power structures and participative management. Hawthorne experiment is stepped in an era of organizational humanism.
Human Relations Approach:
The development of human relations approach was led by Hawthorne experiment. It revealed the importance of social and psychological factors in determining workers, productivity and satisfaction. This movement is marked by informal grouping, informal relationship and leadership Pattern of communication and philosophy of industrial humanism.
The values of human relation are exemplified in the work of Douglas McGregor and A. H. Maslow. Human relation approach is a social psychological approach and suggests business enterprise is a social system in which group norms play a significant role.
Financial incentive was less of a determining factor on a workers output than were group pressure and acceptance and the concomitant security. It ushered an era of organizational humanism. Managers would no longer consider the issue of organization design without including effects on work groups, employees’ attitudes, and manager-employee relationships.
The main contributors that led to the development of Human Relations Movement were Elton Mayo, Mary Parker Follett and Douglas McGregor, Roethlisberger, Dickson, Dewey and Lewin, etc.,
The following are the factors marked by human relations movement:
This movement viewed organization as a social system composed of numerous interacting parts in which groups norms exercise a significant influence on the behaviour and performance of individuals. The movement emphasized that apart from economic needs, the employees have other social and psychological needs such as recognition, affiliation, appreciation, self-respect, etc.
The groups determine the norms of behaviour for the group member and thus exercise a great influence on the attitudes and performance of workers. Group Dynamics is the major force at the workplace. The human relations approach was focused on teaching people-management skills, as opposed to technical skills.
This approach strongly believed that there should be no conflicts or clashes in the organization; and if it arises, it must be removed through improvement of human relations in the organization. They consider that informal organization does also exist within the framework of formal organization and it affects and is affected by the formal organization.
Contributions of Human Relations Approach or Hawthorne Studies:
The human relations proposed the following points as a result of their findings of the Hawthorne experiments:
1. Social System:
The organization 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 organization.
The workers follow a social norm determined by their co-workers, which defines the proper amount of work, rather than try to achieve the targets management thinks they can achieve, even though this would have helped them to earn as much as they physically can.
2. Social Environment:
The social environment on the job affects the workers and is also affected by them. Management is not the only variable. The behavior of workers gets influenced by social and psychological factors. Therefore, every manager should adopt a sound human approach to all organizational problems.
3. Informal Organization:
The informal organization does also exist within the framework of formal organization and it affects and is affected by the formal organization.
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 behavior for the group members and thus exercises a powerful influence on the attitudes and performance of individual workers. In group dynamics, the management should deal with workers as members of work groups rather than as individuals.
5. Informal Leader:
There is an emergence of informal leadership as against formal leadership and the informal leader sets and enforces group norms. Informal leader 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 of which he is supposed to be in-charge.
6. Communication:
Two-way communication is necessary because it carries necessary information downward for the proper functioning of the organization and transmits upward the feelings and sentiments of people who work in the organization.
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. Communication provides them psychological satisfaction.
7. Non-Economic Rewards:
Non economic rewards mean money is only one of the motivators, but not the sole motivator of human behavior. The social and psychological needs of the workers are very strong. So, non-economic rewards such as praise, status, inter-personal 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 organizational goals and group goals. The interest of workers can be harmed by conflict if they are not handled properly. Conflicts can be resolved through improvement of human relations in the organization.
Criticism of Human Relations Approach:
The human relations approach has been criticized on the following grounds:
1. Lack of Scientific Validity:
The human relation drew conclusions from Hawthorne studies. These conclusions are based on clinical insight rather than on scientific evidence. The groups chosen for study were not representative in character. The findings based upon temporary groups do not apply to groups that have continuing relationship with one another. The operative employees are only focused on this experiment.
2. Over-Emphasis on Group:
The human relations approach over-emphasizes the group and group decision-making. But, in practice, groups may create problems for the management and collective decision-making may not be possible.
3. Over-Stretching of Human Relations:
All organizational problems are amenable to solutions through human relations is Over-Stretching of Human Relations. This assumption does not hold good in practice. The satisfied workers may not be more productive workers.
4. Limited Focus on Work:
The human relations approach lacks adequate focus on work. It gives importance on interpersonal relations and on the informal group. It tends to overemphasize the psychological aspects at the cost of the structural and technical aspects.
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. If the wages are too low, the employees will feel dissatisfied despite good interpersonal relations at the work place. Thus, it may be said that the human relations approach seeks to exploit the sentiments of employees for the benefit of the organization.
6. Negative View of Conflict between Organizational and Individual Goals:
It views conflict between the goals of the organization and those of individuals as destructive. The positive aspects of conflicts such as overcoming weaknesses and generation of innovative ideas are ignored.
Managers began thinking in terms of group processes and group rewards to supplement their former concentration on the individual worker. The study of human behaviour and human interactions has assumed much significance as a result of this approach.
No doubt, this approach has provided many new ideas in managing the organization, but this is not free from certain limitations – Human relations approach cannot be treated as complete package to deal with human being effectively, because no attempt had been made for studying and analyzing human behaviour systematically and scientifically.
The human relations approach undermines the role of economic incentives in motivation and gives excessive stress on social and psychological factors. In actual practice, financial incentive plays a crucial rule to motivate employers. The human relations approach presented a negative view of conflict between organizational and individual goals.
It depicts the conflicts as destructive. The positive aspects of conflicts such as overcoming weaknesses and generation of innovative ideas are ignored. The human relation drew conclusions from Hawthorne experiments which were clinical based, rather than scientific.
The experiments focused on a particular group chosen for study which did not represent the entire work force. The human relations approach did not give much focus on work. It gives importance on interpersonal relations and on the informal group. It tends to overemphasize the socio-psychological aspects at the cost of structural and technical aspects.
The human relations approach over emphasized on group Dynamics. But in actual practice, group and group norms, in formal process exercise a light influence in organization functioning.
Modern
Peter Drucker’s Dimensions of Management
Many past management theorists coined terms and concepts that oppose contemporary management styles. But Peter Drucker, hailed as the father of modern management, formulated a theory that is still used today.
Drucker believed that managers should, above all else, be leaders. Rather than setting strict hours and discouraging innovation, he opted for a more flexible, collaborative approach. He placed high importance on decentralization, knowledge work, management by objectives (MBO) and a process called SMART.
Drucker's approach helps to lead your team to success while supporting and encouraging each individual.
The steps how to implement his management theory.
1. Delegate equal power across the board.
While it's important that employees respect you as their manager, they shouldn't feel that they're below you. Every worker should have the opportunity to speak up and share ideas with their team, whether it's during staff meetings or one-on-one conferences.
When workers are treated as equals, they're more confident and motivated in their work, which benefits the company as much as it benefits them. Talk to each employee as though their role is as necessary as yours (because it is), and remind them that they have a say in the organization.
2. Encourage collaboration.
Collaboration plays a crucial role of every organization. Rather than pitting employees against each other, or fostering an environment where employees keep to themselves, urge them to work together by sharing ideas, tips and guidance.
This doesn't mean your employees shouldn't work individually, but they shouldn't feel like they can't ask for help or inspiration from others. Your staff should feel like a team, and you should serve as their coach.
3. Increase efficiency.
To ensure you're continuing to prioritize productivity, utilize the concept of MBO, a process that calls for workers of all levels to work together to reach a common goal. There are five steps to MBO:
Review goals
Set objectives
Monitor progress
Evaluate performance
Reward employees
These goals should be SMART, or specific, measurable, achievable, relevant and time-oriented. Call your team together and discuss your SMART goals to ensure everyone is on the same page and understands their part in the overall objectives of the organization.
4. Boost innovation.
Workers must be confident and willing to take risks. Create an innovative atmosphere and lead by example, showing your employees that mistakes are not shortcomings.
If your team sees that you're human, that effort does not always lead to success, they'll feel more comfortable risking failure. Be transparent with them, support their ideas and never punish creativity.
Drucker's management theory embodies many modern concepts, including the following:
1. Decentralization: Drucker was focused on decentralizing – or democratizing – management in the workplace said by Rosenstein. He wanted all employees to feel valued and empowered, as if their contributions and voices mattered. He believed in assigning tasks that inspire workers, rewarding front-line workers with responsibility and accountability, and uniting supervisors and their subordinates to achieve shared organizational goals.
2. Knowledge work: Knowledge workers are white-collar employees whose jobs require handling or using information, such as engineers and analysts. Drucker – who foresaw the knowledge-based economy years before the rise of computing and the internet – placed high value on workers who solved problems and thought creatively, according to Rosenstein. He wanted to foster a culture of employees who could provide not just labor, but also insight and ideas.
3. Workforce development: Drucker felt strongly that managers should improve and develop both themselves and their team members, according to Rosenstein, who said that ongoing training and education are hallmarks of Drucker's philosophy. He believed external development – via participation in industry trade groups and conferences, for example – to be especially valuable.
4. Corporate social responsibility: Rosenstein said Drucker was a holistic thinker. Instead of looking at businesses as discrete entities, he looked at them as components of a larger social system. In that context, he argued that businesses should see themselves as part of a community and make decisions in that regard – with as much respect for their external as for their internal impact Profits are viewed through a social lens by Drucker: A company has a responsibility to be profitable, he argued, so that it can create jobs and wealth for society at large is defined as CSR.
5. Organizational culture: Be they positive or negative, helpful or harmful, companies have always had cultures. But Drucker was among the first to suggest that managers could – and should – shape them. "The spirit of an organization is created from the top," he said in his book Management: Tasks, Responsibilities, Practices. "If an organization is great in spirit, it is because the spirit of its top people is great. If it decays, it does so because the top rots … No one should ever be appointed to a senior position unless top management is willing to have his or her character serve as a model for subordinates."
6. Customer experience: According to the Drucker Society of Austria, steward of Drucker's philosophy in his native country, Drucker insisted that businesses have only one real purpose: to create customers. By viewing business operations and opportunities through that lens – the customer, not the business, decides what's important – he established a predicate for customer-focused companies like Apple, Zappos and countless others.
Key Takeaways:
1. Classical management theory is based on the belief that workers only have physical and economic needs.
2. The Neo-Classical approach was evolved over many years because it was found that classical approach did not achieve complete production efficiency and workplace harmony.
3. Elton Mayo, Mary Parker Follett and Douglas McGregor, Roethlisberger, Dickson, Dewey and Lewin, etc., were the main contributors that led to the development of Human Relations Movement.
The Four main types of business organization: sole proprietorship, partnership, corporation, and Limited Liability Company, or LLC.
Sole Proprietorship
This is a simplest and most common form of business ownership. A business which is owned and run by someone for their own benefit is called sole proprietorship. The business’ existence is entirely dependent on the owner’s decisions, so when the owner dies, so does the business.
Advantages of sole proprietorship:
1. All profits are subject to the owner
2. There is very little regulation for proprietorships
3. Owners have total flexibility when running the business
4. Very few requirements for starting—often only a business license
Disadvantages:
1. Owner is 100% liable for business debts
2. Equity is limited to the owner’s personal resources
3. Ownership of proprietorship is difficult to transfer
4. No distinction between personal and business income
Partnership
Partnership is of two types: general and limited. In general partnerships, both owners invest their money, property, labor, etc. to the business and are both 100% liable for business debts. In other words, even if you invest a little into a general partnership, you are still potentially responsible for all its debt. The partnerships that do not require a formal agreement, that can be verbal or even implied between the two business owners is called general partnership.
The partnership that requires a formal agreement between the partners is called Limited partnerships. They must also file a certificate of partnership with the state. Limited partnerships allow partners to limit their own liability for business debts according to their portion of ownership or investment.
Advantages of partnerships:
1. Shared resources provide more capital for the business
2. Each partner shares the total profits of the company
3. Similar flexibility and simple design of a proprietorship
4. Inexpensive to establish a business partnership, formal or informal
Disadvantages:
1. Each partner is 100% responsible for debts and losses
2. Selling the business is difficult—requires finding new partner
3. Partnership ends when any partner decides to end it
Corporation
Corporations are, for tax purposes, separate entities and are considered a legal person. This means, among other things, that the profits generated by a corporation are taxed as the “personal income” of the company. Then, any income distributed to the shareholders as dividends or profits are taxed again as the personal income of the owners.
Advantages of a corporation:
1. Limits liability of the owner to debts or losses
2. Profits and losses belong to the corporation
3. Can be transferred to new owners fairly easily
4. Personal assets cannot be seized to pay for business debts
Disadvantages:
1. Corporate operations are costly
2. Establishing a corporation is costly
3. Start a corporate business requires complex paperwork
4. With some exceptions, corporate income is taxed twice
Limited Liability Company (LLC)
Similar to a limited partnership, an LLC provides owners with limited liability while providing some of the income advantages of a partnership. Essentially, the advantages of partnerships and corporations are combined in an LLC, mitigating some of the disadvantages of each.
Advantages of an LLC:
1. Limits liability to the company owners for debts or losses
2. The profits of the LLC are shared by the owners without double-taxation
Disadvantages:
1. Ownership is limited by certain state laws
2. Agreements must be comprehensive and complex
3. Beginning an LLC has high costs due to legal and filing fees
Key Takeaways:
1. There are 4 main types of business organization: sole proprietorship, partnership, corporation, and Limited Liability Company, or LLC.
The public sector (also called the state sector) is the part of the economy composed of both public services and public enterprises.
Public sectors include public goods and governmental services such as the military, law enforcement, infrastructure, public transit, public education, along with health care and those working for the government itself, such as elected officials. The public sector might provide services that a non-payer cannot be excluded from (such as street lighting), services which benefit all of society rather than just the individual who uses the service. Public enterprises, or state-owned enterprises, are self-financing commercial enterprises that are under public ownership which provide various private goods and services for sale and usually operate on a commercial basis.
Organizations that are not included in public sector are either included in private sector or voluntary sector. The private sector is composed of the economic sectors that are intended to earn a profit for the owners of the enterprise. The voluntary, civic or social sector concerns a diverse array of non-profit organizations emphasizing civil society.
The organization of the public sector can take several forms, including:
Direct administration funded through taxation; the delivering organization generally has no specific requirement to meet commercial success criteria, and production decisions are determined by government.
State-owned enterprises; which differ from direct administration in that they have greater management autonomy and operate according to commercial criteria, and production decisions are not generally taken by a government (although goals may be set for them by the government).
Levels of Public sector are organized at three levels: Federal or National, Regional (State or Provincial), and Local (Municipal or County).
Partial outsourcing (of the scale many businesses do, e.g., for IT services) is considered a public sector model.
References:
1. Principles & Practices of Management: L. M. Prasad
2. Principles of Management: P. C. Tripathy & P.N. Reddy
