Unit –I
Management
Modern economic units, today, cannot afford to take random decisions, as they did in the past. Each economic decision needs to be well-researched and well-balanced. One wrong decision can cause the business unit to suffer greatly. As a result more scientific and logical methods of handling business, evolved over a period of time. This is nothing other than the ‘science of management’.
MEANING OF MANAGEMENT
In other words, using scientifically proven methods and logical and systematic processes to start and run a business enterprise is called ‘Management’ (or business management).
Management is a philosophy of carrying on business operation such that the economic unit achieves its goals in a cost-effective way.
Management is “the force that runs a business and is responsible for its success or failure”.
Definition:-
According to George Terry, “Management is a distinct process consisting of planning, organizing, actuating and controlling, performed to determine and accomplish stated objectives by the use of human beings and other resources”.
According to Mary Parker Follet, “Management is an art of getting things done through others”.
According to Henry Fayol, “To manage is to forecast, to plan, to organize, to command, to coordinate, and to control”.
CHARACTERISTICS / FEATURES / NATURE OF MANAGEMENT
- Management is an activity or a process: Management is a function and should not be misunderstood to be a person. Often the people who perform this activity of management are referred to as “the management”. But in a strict sense of the word it denotes only the process of managing or the activity of managing. Being a process. it involves a set of activities / steps to be followed in a particular sequence. The management process consists of planning, organizing, actuating and controlling.
- Management is a distinct process: It means that management is a separate activity. It can be studied, understood and improved upon as a complete subject. People can obtain training in the field of management so that they can become better managers.
- Management is purposeful: Management as a philosophy believes in setting goals and achieving them in the most cost-effective manner. In other words, management helps to reach goals by making the best possible use of available resources. The goal of all management efforts is to create a surplus.
- Management uses the 6 Ms to reach its goals: Management uses the resources of men, money, methods, materials, machines and markets to achieve its goals. These resources are vital to every business. Information is one of the business resources that is as important as the others.
- Management makes things happen: Management is concerned with the productivity of people. It brings effectiveness and efficiency to the efforts of people. Management keeps things moving in the right direction till you reach the desired goal. In other words, management focuses on results and the best way to achieve them. Management means getting the work done through people.
- Management is invisible: Management is a hidden force. It is intangible. Only the results of work show the presence or absence of management. Well managed projects show smooth flow of work and obtain desired results within given time limits, in the absence of proper management there will be chaos and confusion and no results or delayed results.
- Management creates the right environment: Management works to create and maintain an environment where people will work willingly and efficiently towards achieving a given goal. Management creates / designs a structure and processes which encourage people to work sincerely. As a result of management, an appropriate internal environment is created wherein everyone performs to their best capacity.
- Management is dynamic: Management activities have evolved with passage of time. They have undergone change to adjust to the demands of the organisation. Managers have to be dynamic and innovative to allow suitable changes in the process of management.
- Management is group activity: Management is getting things done through others. Management giving importance on the need of the team work. The manager should create a feeling of belonging among the members of the group. Efforts and activities of different groups at different levels of the organisation must be directed towards achieving the common goals of the organisation.
- Management is goal-oriented: Every business enterprise aims to achieve pre-defined goals, Maximizations of profit, increased productivity; reduced costs are certain goals of an enterprise. As stated earlier management is coordination of all resources to attain such objectives. Thus management is a goal oriented activity.
(1) Management is all-pervasive: Management is used not only in businesses but also in nonprofit / non-business organizations. Non-profit organizations use the science of management to reach their objectives of social welfare. Not only organizations, but also individuals like us use management to achieve professional and personal goals. To some degree, management is used by most people in their everyday lives. The active force behind any successful activity - business, non-business, social or personal- is effective management. Thus, management is found in each and every area of work and life.
(2) There is no substitute for management: Management is something so basic and fundamental by nature that one cannot replace it with something else. Management philosophy when applied to any activity / task brings fantastic results. No other philosophy can (substitute) take the place of management in its ability to bring desired results in the most cost-effective way.
(3) Management brings order in chaos: Many activities need to be performed to achieve a given goal/target. If these are not properly planned and co-ordinated there will be only confusion and no results. For activities to flow smoothly without any clash, omission and repetition, management is required. Management streamlines or harmonises the efforts individual(s). Thus, when things move in a systematic (orderly) way, we can say that management is present. And when there is no order but chaos confusion, we can say that management is absent.
(4) Management focuses on goals and thus adds to the effectiveness of our efforts: Management keeps its concentration on the final aim. All activities - big and small - must take us closer to the goal. In other words, management brings effectiveness to our efforts. If we do not keep the goal in sight we may stray away from the correct path and thus waste our efforts. Management believes in setting goals and the networking ceaselessly (continuously) to reach them. Such goal-oriented efforts are almost always successful. Thus, management brings effectiveness to our efforts.
(5) Management is needed for economic and social development: Today’s world is ridden by a shortage of resources, cut-throat competition and exploding population. At such critical times, economic and social development and progress can happen only when the available resources are used in an optimum way. The only way to do this is to use the resources wisely. Managing the use of resources intelligently can save the world from a crisis situation in the near future. This means that the science of management can be used at a ‘macro’ level, to handle the problems of an economy or a nation as a whole.
In other words, undeveloped nations are not necessarily poor in resources. They are only ‘under managed’ nations. Wise management of a country’s resources can result in adequate and sustainable economic development.
(6) Reduction in Wastages: Management ensures reduction of wastages in the organisation. Now-a-days, reduction in wastages is vital to any organisation. Reduction in wastages generates higher productivity in the organisation.
(7) Reduction in Absenteeism: Proper management facilitates reduction of absenteeism in the organisation. Absenteeism takes place when employees remain absent without prior permission. Absenteeism creates several problems in the organisation.
(8) Higher Efficiency: Management is required to generate higher efficiency in the organisation. Efficiency is the relation between returns and costs. The more the returns at the same costs or at a lower cost, then the organisation is said to be more efficient.
(9) Better Relations: Management enables better relations in the organisation. There is a need to have good relations throughout the organisation, i.e. between various people and departments in the organisation. Good relations generate team work, and bring success to the organisation.
(10) Facilitates Growth and Expansion: Successful managers are responsible for the growth and expansion of the enterprise. Without the active involvement and commitment on the part of the superiors and their subordinates, it is not possible for any organisation to grow and expand. Quite often, it is the inefficient management that retards the growth and expansion of the organisation.
NATURE OF MANAGEMENT PROCESS:
Management is a process which brings the scarce human and material resources together and motivates people for the achievement of objectives of the organization. Management isn't a onetime act but an on-going series of interrelated activities. The sum of these activities is called as management process. It consists of a group of interrelated operations or functions necessary to attain desired organizational goals. A process is a systematic way of doing things. it's 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:
Management process is characterized by the subsequent features:
1. Social Process:
The entire management process is considered a social process as the success of all organizational efforts depends upon the willing co-operation of individuals . Managers guide, direct, influence and control the actions of others to attain stated goals. Even people outside the organization are influenced by the actions of managers.
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 a 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. 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. There cannot be any sequence which may be strictly followed for performing various functions. 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.
MANAGEMENT AS A SCIENCE, ART & PROFESSION
The science of management:
Science refers to an organized body of facts and knowledge in a given field/area/subject, arrived at after systematic study, research and observation.
Some sciences are exact Verifiable and accurate viz, physics chemistry etc. But management is an ‘Inexact science’. This is due to the human element. Management is like psychology or economics which are social sciences. This is because in a given situation we cannot say with certainty how a person will think, feel or act. Thus, management is a science though it is categorized as an inexact / impure science.
There is a body of knowledge and facts which represent the objective truths in management. This knowledge represents what is believed to be the best thinking on the subject of management. Without this science of management, managers would take decisions based on intuition (hunch), past practice or just on trial and error basis. Due to the science of management, the actions and decisions of managers get guidance and direction. Managers use the knowledge and information provided by the science of management to handle the business.
The art of management:
Art means bringing about the desired result with the application or use of talent and skill.
Talents are basically inherent and inborn. They need to be natured to become skills. Management is also an art. Applying the science of management to actual situations needs creativity and imagination. All real life situations are not exactly the same as provided in the theory / science of management. The manager has to have the art! skill of using what he has learnt in theory and make it fruitful in practice. Using the general principles given in the theory of management to solve specific and unique problems is not an easy job. It requires a manager’s ability to modify the theoretical knowledge to suit real situations.
All the science Of management will be useless if one does not have the ability to use it at the tight time, at the right place, for the right purpose and in the right manner. This ability to apply knowledge to actual situations is the art of management.
Management is both — a science and an art :
The science and art of management are like two sides of the same coin. Both have to be mastered if one wants to become a good manager.
E.g. A doctor acquires a lot of knowledge about biology, anatomy and physiological processes. But that alone does not make him a good doctor. He needs to use this knowledge to understand the problem of the patient, diagnose his illness and use his skill and judgment to advise him the right medicines and diet to get well. Unless he develops the skill of applying his knowledge he cannot be called a good doctor.
Thus, a manager needs both, the science and art of management in order to be effective and efficient.
The profession of management:
Today’s modem businesses need a pet-suit to the properly trained in the field of management before they appoint him/her as a manager. This means that today, management is a complete course of’ study by itself. This course of management study is offered by many Indian and foreign institutions. A person completing the needed course and passing the necessary exams gets a certificate of’ completion. Often these courses also include some sort of on-the-job training which will help him/her to get a good job.
As a profession the job of a manager is one of lofty (heavy) responsibilities and round the clock duties. A manager has through rigorous performance appraisals (test for employees). The increments and promotions of a manager are attached to his performance results. This also implies (means) that clever and hardworking managers can climb up the professional ladder of success really fast.
This profession is an attractive one for young students all over the world as most managerial level jobs are well paid. Besides, management is needed in every area of business, be it finance, purchase, production, personnel, marketing or research.
To be a good manager one needs a certain set or skills. The most important ones are as follows:
1) Technical skill: It is the knowledge of processes and procedures and use of tools and techniques. The accounts manager must know the techniques used by the accountants in maintaining the financial records.
2) Human skill: It is the ability to handle people. A manager has to work with subordinates and colleagues like a team and at the same time be a leader (teacher) to his subordinates. He must have the skill and tact of getting the work done from others (delegation).
3) Conceptual skill: It is the ability to understand the entire organization and its mission. The manager must be able to see the entire business as one whole and also see it as different level of work (departments) and how they are Interdependent.
4) Design skill: It is the ability of a manager to understand problems and threats and find solutions to the same. It refers to the problem-solving skills of a manager. Designing/ creating unique solutions to unique problems faced by the organization are a challenge for every manager.
5) Visualization skill: It refers to the ability of a manager to imagine and dream about the future of his organization. A manager who does not have a ‘vision’ for his organization does not grow and also creates problems for his organization in the long run. This is because when one does not dream about better things one does not try to reach upto them in business it leads to confusion and deterioration. Besides, an ambitious and hopeful manager automatically inspires others to work better and reach higher.
Management exists everywhere. It is universal. Management is required in every organization. However the size of every organization is not same. Some are small scale organizations. Some are medium scale and some are large scale organizations. The style of management for different scales is different. The management of small organization is simple. E.g. Management of a grocery shop is simple than management of a Bank or a Car manufacturing company.
In a large scale organization management is complicated. Therefore it is done by making different parts or levels in the organization. The levels in organization. The levels are made according to the size and requirement of the organization. Usually there are three levels of management.
Top Level Management:
Top level management is the ultimate authority in the organization. No one works above the top level management. Top level management frames the objectives and decides the policies to achieve the objectives. Board of Directors, Managing Directors or CEO’s (Chief Executive Officer) of the organization is in the top level management.
The functions of Top Level Management are as follows:
- To decide the objectives of the organization.
- To frame the plans and policies to achieve the objectives.
- To see that the policies are properly implemented.
- To create various positions to do different activities.
- To appoint leaders at middle level management and give them directions to carry out different activities.
- To evaluate (check) the performance of various department.
Middle Level Management:
Middle level management works under top level management. It is a level between the top level and lower level of management. It is mainly concerned with the implementation of plans and policies in the organization. It consists of the heads of various departments. E.g. Finance, Production, Sales, Marketing, etc.
The functions of Middle Level Management are as follows:
- To link top and lower level management.
- To understand the policies framed by top level management.
- To decide the plan of action in the department to achieve the targets given.
- To assign specific duties to the staff in the department.
- To help top management to co-ordinate the activities of various department.
- To train people from the department for carrying out different activities in future.
- To appoint lower or supervisory level staff.
Lower Level Management:
Lower level management works under middle level management. It is also called as operational or supervisory level of management. Lower level of management consists of supervisors, foremen, superintendents and other junior executives.
The functions of Lower Level Management are as follows:
- To get the instruction from middle level management.
- To assign work to the subordinates.
- To give instructions and direct the subordinates to complete the task.
- To guide the subordinates where ever necessary.
- To look after the maintenance of the machinery, equipments, tools, etc.
- To solve the problems and settle the disputes of the subordinates.
- To conduct quality check of the product or service from time to time.
Different authors have given different managerial functions. Henry Fayol was the first to define specific functions of management. In his words, “To manage is to forecast and plan, to organize, to command, to co-ordinate and to control.”
He has given the subsequent functions:
(i) Forecasting and planning
(ii) Organizing
(iii) Commanding
(iv) Co-ordination
(v) Control
Luther Gulick used the word POSDCORB to explain various functions.
This initial describes the subsequent functions: Planning (P). Organizing (O), Staffing (S), Directing (D), Controlling (CO), Reporting (R) and Budgeting (B).
Ralph Davis gave three functions of management: Planning, Organizing and Control. He was of the view that command and co-ordination facilitate control so these should be a part of it.
Koontz and O’ Donnell have adopted the subsequent functions:
(i) Planning
(ii) Organizing
(iii) Staffing
(iv) Directing and
(v) Controlling.
MANAGERIAL SKILLS
Simply, managerial skills are the knowledge and skill of the individuals during a managerial position to satisfy some specific management activities or tasks. this knowledge and skill are often learned and practiced. However, they can also be acquired through practical implementation of required activities and tasks. Therefore, you'll develop each skill through learning and practical experience as a manager.
There are many definitions of skills that talk about talent. Talent is something personal associated with an individual and shows a natural gift from nature about something inside that talented person. All persons can't be artists. Usually, artists are born with the gift of art, but despite their talent, they still develop their talent to improve their art skills.
When we mention managerial skills, we mention the talents of a manager to take care of high efficiency within the way how his or her employees complete their everyday working tasks. due to that, managers will need skills which will help them to manage people and technology to make sure an efficient and efficient realization of their working duties.
Three sorts of Managerial Skills
Robert Katz identifies three sorts of skills that are essential for a successful management process:
- Technical skills,
- Conceptual skills and
- Human or interpersonal management skills
Managerial Skills according to Robert Katz
Technical Skills as one a part of Management Skills
As the name of those skills tells us, they provide the manager’s knowledge and ability to use different techniques to attain what they need to attain. Technical skills aren't related just for machines, production tools or other equipment, but also they're skills which will be required to increase sales, design differing types of products and services, market the products and services, etc.
For example, let’s take an individual who works in the sales division and has highly developed sales skills achieved through education and experience in his department or the same departments in different organizations. because of these skills that he possesses, this person is a perfect solution to become a sales manager. this is the best solution because he has excellent technical skills associated with the sales division .
On the opposite hand, the person who becomes sales manager will start to build his next kind of required skills. it's because if his task until now was only to work with the customers as a sales representative, now he will got to work with employees in the sales division in addition to the work with customers.
Technical skills are most vital for first-level managers. Whet it comes to the top managers, these skills aren't something with high significance level. As we undergo a hierarchy from the bottom to higher levels, the technical skills lose their importance.
Conceptual Skills
Conceptual skills present knowledge or ability of a manager for more abstract thinking. that means he can easily see the entire through analysis and diagnosis of various states. In such a way they will predict the future of the business or department as a whole.
Why managers need these skills?
As a first, a company includes more business elements or functions as selling, marketing, finance, production, etc. of these business elements have different goals even completely opposed goals. think about marketing and production as a business function and their specific goals. You’ll see the essential difference. The conceptual skills will help managers to seem outside their department’s goals. So, they're going to make decisions which will satisfy overall business goals.
Conceptual skills are vital for top managers, less critical for mid-level managers, and not required for first-level managers. As we go from the bottom of the managerial hierarchy to the top, the importance of those skills will rise.
Human or Interpersonal Managerial Skills
Human or interpersonal management skills present a manager’s knowledge and ability to work with people. One among the most critical management tasks is to work with people. Without people, there'll not be a need for the existence of management and managers.
These skills will enable managers to become leaders and motivate employees for better accomplishments. Also, they will help them to make more effective use of human potential in the company. Simply, they're the essential skills for managers.
CHALLENGES FACED BY MANAGEMENT
The changing economic world is throwing new challenges to the managers. The management concepts and practices are shaping ‘tomorrow’s history’. variety of changes are happening which are influencing the work of managers. a number of these changes are globalisation, total quality management, work force diversity, innovation and alter , empowerment and teams, downsizing, contingent workers etc.
Globalisation:
Most of the countries are opening their borders to foreign products also as foreign producers. the companies of developed countries are entering foreign countries by opening manufacturing facilities there. the companies like Siemens, Remington, Singer, as an example , were selling their products in foreign markets during nineteenth century. the companies like Fiat, Unilever and Royal Dutch had become multinationals by 1920. Since 1960 multinational companies became a common sight.
These companies first move to foreign countries just by exporting their products. The orders are fulfilled when received. in the second stage, companies make commitment to sell these products in foreign countries or have them made in foreign factories. It involves an active international involvement. the next stage is of pursuing international markets aggressively. Management can license or franchise to another firm the proper to use its brand name, technology or product specifications.
Managements of global companies are adjusting their organisational structures as per the wants of situations. The managers are being taught to be global in approach. Generally, the executives from concerned countries are given the responsibilities for running the subsidiaries.
Work Force Diversity:
The composition of work force is fast changing. Earlier work force consisted mainly of male persons who had to support a non-working wife and children. at the present , women have joined almost every kind of job. In some professions their number is exceeding that of men folk. In India women are entering education and medical professions in large number and also are cornering most of the office jobs. this is already there in America and other developed countries. Workers are now more heterogeneous in terms of gender, race, ethnicity, age and other characteristics that reflect differences.
Some managers feel that diversity can be asset because it brings a broad range of viewpoints and problem solving skills to the company. It also gives a strong competitive advantage. The managers will need to use diversity to their advantage. the range brings in several cultural values, different lifestyles, ethics etc. it had been assumed earlier that persons coming from different backgrounds will assimilate themselves in the organisational culture. this is not happening at the present .
The challenge for management is to form their organisations more accommodating to diverse groups of people addressing different lifestyles, family needs and work styles. Managers will need to shift their philosophy from treating everyone alike to recognizing difference and responding to those differences in ways that will ensure employee retention and greater productivity. Many companies like Eastman, Kodak, Reebok, Ryder Systems, Baxter Healthcare have developed on-going diversity management programs.
Stimulating Innovation and Change:
The times are changing fast. Earlier the change was slow and managers were working in stable environment. The organisational world which existed in those companies who set up manufacturing facilities in foreign countries had to send technical experts at initial times. Normally, only a couple of persons come from the parent company and other managerial personnel are employed from the host country. The managements of multinational and transnational companies need to study the legal-political and cultural environment of the host country and device managerial practices and policies accordingly.
Total Quality Management:
There is a new awareness about quality in industry. The developed countries gave proper emphasis to the standard of gods produced. Underdeveloped and developing countries concentrated more on quantum of production than on quality of products. the products produced by under-developed countries couldn't find a place in world markets because of their lower quality standards. India has suffered on this account because of its own policies.
Since independence the industrial policy statements are restricting the scope for private entrepreneurs and major areas of growth were earmarked for public sector. the lack of competition from outside world brought a way of complacency both in public and private sectors. the buyer has been buying whatever was offered to him since demand always exceeded supply.
Total quality management is the mobilisation of the entire organisation to attain quality continuously, economically and in entirety. Quality can't be improved through production process only. it's possible through an improvement in purchasing, marketing, after sale service and many other factors. Total quality are often achieved with the co-ordination of varied aspects associated with purchase, production, sales etc.
In Atkinson’s views, total quality may be a strategic approach to producing the best product and service possible through constant innovation. Total quality control is an attempt in which everyone and every function of the organisation participates.
Quality consciousness has now become an international phenomenon. all kinds of companies are adopting latest quality standards. the quality gurus namely Dr. W. Edwards Deming, Joseph M. Juran, Dr. Genichi Jaguchi, Philip B. Crosby created quality consciousness among manufacturers and suggested better and improved ways for improving it. Total quality management has now become a wave and it's receiving due attention of producers also as consumers. Every management has got to take care of total quality management otherwise its products won't find place in present competitive world.
Empowerment and Teams:
The earlier thinking of Frederick Taylor where division of work was done in such a way that thinking process was assigned to managers while doing part was left for workers. The workers were alleged to do the repetitive work again and again this division of work could also be valid during Taylor’s times but this is often not valid at the present . The workers at the present are considered more knowledgeable and are relied to finish their add a better way. Sometimes workers are considered to be performing better than even their managers.
Managers now recognise that they will often improve quality, productivity and employee commitment by redesigning jobs and letting individual workers and work teams make job- related decisions. this is often called empowering employees. Many organisations have achieved better results by empowering employees and allowing them to plan and execute their work. Human resource theorists are criticising over specialising of employees and stifling their capabilities. Hallmark, AT & T, Motorola have successfully tried this method.
Downsizing:
The downsizing or reduction in force has been happening within the last some years. Every company is restructuring its organisation and shedding those employees who are not any more required. About 85 per cent of Fortune 1000 companies have downsized their white collar force in recent years. Not only white collar jobs, blue collar jobs also are been reduced. Most of the commercial banks in India have offered VRS (Voluntary Retirement Scheme) to their employees and employees in large number have accepted this offer.
Maruti Udyog has recently repeated its VRS and many employees have vacated their jobs voluntarily. Downsizing doesn't mean that work has been reduced in the organisation. indeed work has increased and reduced number of labor force is doing up this work. Managerial layoffs create problems for the organisation.
Those who leave don't feel good and have resentment against the management, those that remain in service also become a worried lot. they're uncertain about their future and don't involve themselves whole heartedly within the work. The work productivity and quality may suffer until employees again feel secure about their jobs.
Contingent Workers:
Another trend in management practices is that the use of contingent workers. These are part-time, temporary or freelance employees. Some labour experts contend that contingent workers structure 13 percent of the work force, while others say that the figure is as high as 30 per cent. the share of contingent workers is increasing every day. the companies have started downsizing their work force, a number of these employees attempt to get part-time jobs to earn their living.
The corporations also are of the view that the employment of a contingent employee doesn't bring much of financial liabilities as compared to regular permanent employees. Managers have a further responsibility to ascertain that contingent workers are treated properly at work place. The managers need to keep the entire manpower motivated and creatively involved in work.
PRINCIPLES OF MANAGEMENT
Principles of management are basic truths that explain relationships between two or more sets of variables. They predict as to what will happen the other variable changes. The principles of management are descriptive, predictive and suggestive. They only suggest the way of action.
The principles of management provide guidelines for managers. They warn the managers that if they are not followed, the managers must be aware of its possible outcomes and dangers. Managers must use these principles judiciously in combination with the knowledge of activities and specific conditions under which they are applied.
Management is universal. It is applicable everywhere. However the mangers cannot function unless there is some base for their decisions or action. In this case the principles of management help them in managing the business.
(1) Some of the management scholars believe that management is entirely dependant on situations. Hence there can be no universally accepted principles of management.
(2) Many studies have however shown that management fundamentals are almost the same throughout the world. Their application may be different due to varying geographical, financial, cultural factors etc.
Features of Principles Management:
- Basic Guidelines: The principles provide basic guidelines to the managers to manage the subordinates effectively. If a manager follows the well established principles of management, then he/she would be in a better position to get the work done effectively and efficiently from the subordinates.
- Applicable to Business and Non-Business Organizations: The principles of management are applicable to business Organizations as well as to non-business Organizations. For instance, the principles of management must be followed by managers in a non-business Organization such as hospitals, educational institutions, charitable trusts, etc.
- Applicable to all Levels: The principles of management must be followed by managers at all level. This is because; managers at all levels have to deal with their subordinates to get the work done. Therefore, Managers at the top level, and also at the middle and lower level must follow the principles of management in order to get the work done efficiently and effectively from the subordinates.
- Ensures Smooth Working of an Organization: The principles of management ensure smooth working of an Organization. For instance, the principles of division of work, team spirit, order, etc. enable the Organization to conduct its activities in a systematic and successful manner.
- Global Application: The principles of management have global application. The principles of management are not restricted to a few countries. Effective managers in all Organizations across all continents of the globe do follow the principles.
- Time Tested: The principles of management are time tested. The basic principles of management have remained the same for a number of centuries. The kings and religious leaders have followed the principles of management since the day of civilizations have used the principles of management since ages.
- Situational in Nature: Certain principles of management may be applied depending upon the situation. For instance, a manager may not delegate authority to subordinates, if subordinates have no knowledge of a certain type of work. In such a situation, the manager must first train the subordinates, and then delegate the authority.
- Intangible: The principles of management are directly visible. The effect of principles can be felt by the results. If the managers follow the principles, then there can be higher results in the Organization in the form of: Reduction of wastages, Optimum use of resources, Motivated and dedicated workforce, Higher efficiency.
Needs & Importance of Principles Management:
- Higher Efficiency: If managers follow principles of management, then there can be higher efficiency in the Organization. The returns can be higher at lower cost than before. Principles of management lead to better management, which in turn leads to optimum use of resources. Therefore, optimum use resources can generate higher efficiency.
- Less burden on Superiors: The principles of management can reduce burden on the superior. For instance, the principles of delegation of authority reduce the burden on superiors, as certain authority to make decisions is passed on the subordinates. Therefore, the superiors can concentrate on important and challenging tasks.
- Application and Dedication: The principles of management lead to application and dedication on the part of the management as well as the employees. For instance, when managers follow the principle of discipline, they set a good example to the subordinates, and therefore, there can be application (use of mind) and dedication throughout the Organization.
- Proper Direction: The principles of management enable the managers to give proper direction to the employees. For instance, principles of management enable proper division of work in the Organization, which in turn can facilitate proper direction to the employees in respect of the work allotted to the employees. Also the principles of unity of directions, if followed properly would result in effective direction to the employees.
- Motivation to Employees: The principles of management motivate the employees to perform effectively and efficiently. For instance, the principles of remuneration make the management to pay the right salaries and other incentives to the employees. Therefore, the employees would put in their best efforts to perform the organizational activities.
- Team work: The principles of management develop team work in the Organization. For instance, the principles of team spirit makes the managers to avoid divide and rule practices in the Organization. The managers also avoid the abuse of written communications. Therefore, there can be excellent team work between the management and the employees, which in turn helps to generate higher results.
- Smooth flow of Activities: The principles of management facilitate the smooth flow of organizational activities. For instance, the principles of division of work, order, delegation of authority, etc., enable the Organization to undertake the activities in a systematic manner.
- Corporate Image: The principles of management can enhance the corporate image (goodwill) of the Organization. This is because; the principles enable better performance of the Organization. The better performance in turn generates corporate image of the Organization.
- Reduced Absenteeism and Labour Turnover: The principles of management help to reduced absenteeism and labour turnover in the Organization. This is because; the principles make the employees motivated and loyal to the Organization.
1.5 Contribution of F.W. Taylor, Henry Fayol, Peter Drucker, Mintzberg and Michel Porter in development of management thoughts
HENRI FAYOL’S PRINCIPLES OF MANAGEMENT:
In 1916, Henri Fayol provided a list of 14 principles in his book titled “Industrial and General Administration”. Fayol was of the opinion that all managers in all organizations, whether large or small, need to follow the principals or guidelines in managing business affairs. The 14 principles are as follows:
(1) Division of Work: The work in an organization must be divided among individuals and departments. Division of work leads to specialization. It results in accuracy, speed and neatness in work. Specialisation also leads to innovation. However, division of work has its own limits which should not be exceeded.
(2) Authority and Responsibility: Fayol stressed that authority should be equal to responsibility. If authority is in excess of responsibility, then the manager may be tempted to misuse it. On the other hand, if a person is held responsible without giving him adequate authority, then he may feel frustrated. In other words, authority should not be more or less than responsibility.
(3) Discipline: Fayol stressed the need for discipline in an organization. Discipline involves not only obedience to rules and regulations of the organization but more importantly it involves application and dedication on the part of the employees. ‘Fayol wrote that the best means of maintaining discipline is to have disciplined superiors at all levels and judicious use of penalties.
(4) Unity of Command: It means a subordinate should receive orders from only one superior. There should not be multiple bosses. The subordinate should hot be made to report to several bosses. Fayol observed that if one subordinate receives orders from more than one superior, then everything will be in disorder. Lack of unity of command is like “Too many cooks spoil the soup”.
(5) Unity of Direction: The activities which have the same objective should be directed by only one manager using one plan. In other words, there should be “one head and one plan”, for activities having the same objective.
(6) Subordination of Individual Interest to General Interest: The interest of one employee or a group of employees should not prevail over that of the entire organization. Every employee or a group should work in the interest of the organization and not for their own self interest. In other words, the interest of the organization should come first and then individual or group interest.
(7) Remuneration: Wages and salaries should be fair it should be depend on circumstances such as cost of living, ability of the company to pay, prevailing wage rate in the industry etc. Also, the value of the employee must be taken into consideration. Fayol stressed that apart from financial benefits, non-financial benefits be provided such as good working conditions, canteen facilities, recreation facilities etc.
(8) Centralization: Fayol stated that certain matters are to be centralized and others to be decentralized. There is a need to have a proper balance between centralization and decentralization. He advised that extreme centralization or decentralization is to be avoided, especially in large companies.
(9) Scalar Chain (Gang Plank): It refers to the line of command which runs from top level to the lowest level in the organization. Fayol stressed that the subordinates at the lower level should follow the chain of command and not by-pass the chain. He felt that scalar chain needs to be followed, but not at all times. He stressed that the scalar chain can be short - circuited or broken if the situation so demands in the interest of the organization.
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(10) Order: Fayol stated that there should be order in the organization. He stressed that there should be a place for everything, and everything must be in its place. Again, there must be a place for everyone and everyone must be in his place. Thus, this principle requires the orderly organization and placement of men, machines and other resources. Mis - placement would lead to misuse and disorder.
(11) Equity: All members of the organization should be treated equally, depending upon the performance and circumstances. In other words, there must not be any partiality in transfers, promotions etc. Fayol stressed that managers must exercise justice and kindness while dealing with their subordinates.
(12) Stability of Tenure: Fayol pointed out the managers as well as non - managers need time to learn and understand their jobs. If they leave or are removed within a short period of time, the learning time will be wasted. In other words, employees should not be kept temporary for a long period of lime. Employees should be made permanent so that they do not leave the organization. However, incompetent persons need to be removed or replaced and those who perform well must be rewarded.
(13) Initiative: The superior must sacrifice his own and inspire those under him to show initiative. Subordinates should be given freedom to come up with suggestions and ideas. This will not only add to the success of the organization but will also boost the morale of the subordinates.
(14) Esprit De Corps: The superior must encourage esprit de corps (team spirit) among his subordinates. It is the team spirits that results in loyalty, dedication and commitment of the employees. According to Fayol, even small matters help in developing team spirit. The superior should not criticize or discourage subordinates for making mistakes, but encourage them not to make mistakes. Again, verbal communication needs to be used instead of formal, written communication whenever possible. Fayol warned of the consequences of divide and rule and abuse of written communication. It is the team spirit that often brings success to the organization.
F. W. TAYLOR’S SCIENTIFIC MANAGEMENT:
F. W. Taylor is known as the Father of scientific Management. Fredrick Winslow Taylor was an American, he worked for American steel. He was an engineer by profession and most of his work was concerned with experiments to find the best method of doing jobs.
Definition:
According to F. W. Taylor, “Scientific Management is an art of knowing exactly what is to be done and the best way of doing it.”
Taylor advocated the ideas of scientific management by publishing in 1911 his famous book entitled. “The principles of scientific management.” According to Taylor management problems should be solved by experiments and scientific techniques rather than thumb rules or trial and error methods. Taylor’s principles were based on the following four areas:
- Each worker should have a clearly defined daily task.
- Certain standards must be determined to ensure that the task is easily accomplished
- Proper persons should be selected and trained for the jobs.
- The work should be done efficiently.
Principles of Scientific Management:
1.] Development of Science for each part of men’s job: According to this principle the manager should be The Scientific method to determine every activity by the employee in the organization. For this he should consider the following points.
- To calculate the time required for each job by observing the employee.
- To determine how much work can an employee perform in a day.
- To find out the best way to do a particular job.
Instead of using trial and error method for determining the job use systematic way such as data collection, Analysis of data and then drawing conclusions.
2.] Scientific Selection, Training & Development of Worker: According to Taylor selection of employees is an important task before the manager. The Selection procedure should be perfect and systematic. For this purpose the following points should be considered.
- The procedures of selection should be scientific. It means the selection should not be based on the judgment of a single person.
- The physical, mental, technical or other qualities required for the job should be clearly defined. This makes the selection easier.
- These Employees should be selected on the basis of tests and interview.
- The employees should be trained from time to time. Training makes employees capable to survive in the job.
- The manger should provide opportunities for development of worker having better capabilities.
- The manger should develop each employee in such a way the that employee shows maximum
3.] Co-operation between Management and Employees: To achieve the objectives or goals there should be proper co-operations between the employees and management. The relations between them should be harmonious. Following points should be noted in this regard:
- In the organization the emphasis should be given to co-operative between the management and workers and not to individuals.
- The goals can be achieved effectively only by co-operation.
- The interest of the management and the workers should be one and the same. They should harmonies.
4.] Division of Responsibility: While dividing the work there should be the division of responsibilities between the managers and the employees. This can be done by the following ways:
- The nature and role played by different levels of managers and employees should be determined properly.
- The managers should be given the responsibility of planning whereas the workers or employees should concentrate on the execution.
- This principle helps the employees to perform their best.
5.] Mental Revolution: This principle focuses on the complete change in the attitude of the management and Employees as regards their relations are concerned. For this change the following points should be taken in to Account.
- The managers should create a suitable working condition for the employees.
- All the problems should be solved scientifically.
- The employees should perform their jobs carefully and with devotion.
- The employees should use the resources carefully. They should not waste the resources.
- On the other hand management should provide fair remuneration to the employees and boost up their morale.
6.] Maximum prosperity for Employer and Employees: This aim of scientific management is to give maximum prosperity to the employer and employee. However it is possible with the help of following points.
- Each employee should be given proper opportunity to attain this highest efficiency.
- The employees should give maximum output.
- There should be optimum utilization of resources.
MODERN MANAGEMENT APPROACH BY PETER DUNKER
Drucker believed that managers should, above all else, be leaders. Instead of setting strict hours and discouraging innovation, he opted for a more flexible, collaborative approach. He placed high importance on decentralization, knowledge work, and management by objectives (MBO) and a process called SMART.
Management by Objectives
In the changing economic environment old techniques of management don't give better results. The expansion of business in size and changes in technology has necessitated replacement thinking in managerial approach. a number of latest techniques of management are developed within the recent past and Management by Objectives (MBO) is one among them. Though MBO is now practiced round the world yet there's no unanimity about its meaning. Some consider it as an appraisal tool, others see it as a motivational technique, and still others consider it as an impact device.
MBO is one among the techniques by which executives can improve organizational performance and effectiveness. The thought of MBO was contributed by Donaldson Brown and Alfred Sloan in 1920s and Edward Hagenin in 1930s. Peter Drucker, referred to as father of MBO technique, coined this term in 1954. Other authorities on the topic are Charles L. Hughes, Goal Setting (American Management Association, 1965); Dale D. Mc Conkey, the way to Manage by Results (American Management Association, 1967); George S. Ordiorne, Management by Objectives (Pitman, 1965); W.J. Reddin, Effective Management by Objectives (Mc Graw-Hill, 1971).
In order to know the concept of MBO some definitions are given:
According to George S. Ordiorue, “The system of management by objectives are often described as a process whereby the superior and subordinate managers of a corporation jointly identify its common goals, define each individual’s major areas of responsibility in terms of results expected of him, and use these measures as guides for operating the unit and assessing the contribution of each of its members.”
According to Koontz and Weihrich, “Management by objectives may be a comprehensive managerial system that integrates many key managerial activities during a systematic manner which is consciously directed toward the effective and efficient achievement of organizational and individual objectives.”
S.K. Chakravarty defines it as, “MBO may be a result-centered, non-specialist, operational managerial process for the effective utilization of material, physical, and human resources of the organization by integrating the individual with the organization and organization with the environment.”
The characteristics of MBO system:
(i) Some sort of corporate or unit plan by which objectives are laid down;
(ii) Measurable and time bound objectives for every managerial position;
(iii) Objectives for every position are established by the job holder and therefore the boss together;
(iv) Mutually agreed job improvement plans to facilitate the accomplishment of objectives;
(v) Periodic reviews and updating, wherever necessary, of the mutually agreed objectives by the boss and subordinates together;
(vi) Such mutually agreed objectives form the premise of performance evaluation;
(vii) Sharp definition of responsibilities and authorities for positions, which brings in clarity within the organizations; and
(viii) Aligning and linking of objectives up, down and across.
Management Theory of Michael Porter
Michael Porter theory focuses on several major models. the foremost practical are Expectancy Theory and Value Chain Analysis.
Through Expectancy Theory, Porter codified the main factors that impact an employee's motivation to perform. He stated that numerous factors fuel an employee's efforts to reach an organizational goal, including the expectation that performance will yield positive rewards which rewards will match effort. Through Value Chain Analysis, Porter defined effective supply chain management, presenting a model which categorizes the activities that form a company's product-delivery system as either Primary or Support activities and showing how they work together to make profit. Both models, along side Porter's more complex Five Forces model, form the center of Michael Porter's Strategic Management Theory.
In order to properly understand Porter's Leadership Theory, you need to focus on the subsequent information:
1. you need to achieve as much knowledge as possible on Porter management theory.
2. you'll need to hire a business consultant who is thoroughly comfortable with management theories.
3. you must find tools that allow you to place Porter's theory into action.
Value chain model of Michael Porter
The Value chain model by Michael Porter offers an summary of the components that can make up an organization. The model is therefore ideal for stopping a new strategy for a while to see whether you have not overlooked a business unit. the value chain comes from the book Competitive Advantage: creating and sustaining superior performance from 1985.
5 forces model of Michael Porter
The 5 forces model by Michael Porter is that the leading management model to analyze an industry and determine how competitive this industry is. From this analysis you'll determine how attractive the market is that a corporation enters (or wants to enter). Michael Porter's five forces model relies on five forces which will play a role within a branch or industry. Michael Porter's famous five-force model was developed in 1979.
Generic strategies of Michael Porter
The Generic strategies by Michael Porter mean that you can select from four strategies as a corporation . As a corporation , consistent with Michael Porter, you have to make sure that you concentrate on one of these strategies and that you do not get stuck within the middle of anything. The four Generic strategies of Michael Porter are:
• Cost leadership
• Differentiation
• Cost focus
• Differentiation focus