MG8591 Principles Of Management Notes

Notes 111 Pages

Anna University

Principles of Management

Contributed by

Himani Patla

UNIT I
INTRODUCTION TO MANAGEMENT AND ORGANIZATIONS
According to Harold Koontz, ―Management is an art of getting things done through and with the people
in formally organized groups. It is an art of creating an environment in which people can perform and
individuals and can co-operate towards attainment of group goals‖.
IMPORTANCE OF MANAGEMENT
 Encourages Initiative
 Encourages Innovation
 Facilitates growth and expansion
 Improves life of workers
 Improves corporate image
 Optimum use of resources
 Reduces wastage
 Increases efficiency
 Improves relations
 Encourages Team Work
CHARACTERISTICS OF MANAGEMENT
 Continuous and never ending process.
 Getting things done through people.
 Result oriented science and art.
 Multidisciplinary in nature.
 A group and not an individual activity.
 Follows established principles or rules.
 Aided but not replaced by computers.
 Situational in nature.
 Need not be an ownership.
 Both an art and science.
 Management is all pervasive.
 Management is intangible.
 Uses a professional approach in work.
 Dynamic in nature.
Management Vs Administration
Basis
Management
Administration
Meaning
Management is an art of getting things done
through others by directing their efforts towards
achievement of pre-determined goals.
It is concerned with formulation of broad
objectives, plans & policies
Nature
Management is an executing function.
Administration is a decision-making
function.
Process
Management decides who should as it & how
should he do it.
Administration decides what is to be
done & when it is to be done
Function
Management is a doing function because
managers get work done under their supervision.
Administration is a thinking function
because plans & policies are determined
under it
Skills
Technical and Human skills
Conceptual and Human skills
Level
Middle & lower level function
Top level function
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LEVELS OF MANAGEMENT
The Top Management: It consists of board of directors, chief executive or managing director. The top
management is the ultimate source of authority and it manages goals and policies for an enterprise. It
devotes more time on planning and coordinating functions. The role of the top management can be
summarized as follows –
1. Top management lays down the objectives and broad policies of enterprise. It appoints the
executive DM for middle level
2. It issues necessary instructions for preparation of department budgets, procedures, schedules etc.
3. It prepares strategic plans & policies for the enterprise. It controls & coordinates the activities of all
the departments.
4. It is also responsible for maintaining a contact with the outside world. It provides guidance and
direction.
5. The top management is also responsible towards the shareholders for the performance of the
enterprise.

Middle Level Management: The branch managers and departmental managers constitute middle level.
They are responsible to the top management for the functioning of their department. They devote more
time to organizational and directional functions. In small organization, there is only one layer of middle
level of management but in big enterprises, there may be senior and junior middle level management. Their
role can be emphasized as –
1. They execute the plans of the organization in accordance with the policies and directives of the top
management.
2. They participate in employment & training of lower level management. They make plans for the
sub-units of the organizat
3. They interpret and explain policies from top level management to lower level.
4. They are responsible for coordinating the activities within the division or department.
5. It sends important reports, other important data to top level management. They evaluate
performance of junior managers.

Lower Level Management: Lower level is also known as supervisory / operative level of management. It
consists of supervisors, foreman, section officers, superintendent etc. Supervisory management refers to
those executives whose work has to be largely with personal oversight and direction of operative
employees. Their activities include
1. Assigning of jobs and tasks to various workers. They guide and instruct workers for day to day
activities.
2. They are responsible for the quality as well as quantity of production. They supervise & guide the
sub-ordinates.
3. They are also entrusted with the responsibility of maintaining good relation in the organization.
They motivate workers.
4. They communicate workers problems, suggestions, and recommendatory appeals etc to the higher
level and higher level goals and objectives to the workers. They prepare periodical reports about the
performance of the workers.
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5. They help to solve the grievances of the workers. They are responsible for providing training to the
workers.
6. They arrange necessary materials, machines, tools etc for getting the things done.

FUNCTIONS OF MANAGEMENT
Management has been described as a social process involving responsibility for economical and
effective planning & regulation of operation of an enterprise in the fulfillment of given purposes. It is a
dynamic process consisting of various elements and activities. These activities are different from operative
functions like marketing, finance, purchase etc. Rather these activities are common to each and every
manger irrespective of his level or status. Different experts have classified functions of management.
According to George & Jerry, ―There are four fundamental functions of management i.e. planning,
organizing, actuating and controlling‖. According to Henry Fayol, ―To manage is to forecast and plan, to
organize, to command, & to control‖. Whereas Luther Gullick has given a keyword ‗POSDCORB‘ where
P stands for Planning, O for Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for
reporting & B for Budgeting. But the most widely accepted are functions of management given by
KOONTZ and O‘DONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling.

1. Planning: It is the basic function of management. It deals with chalking out a future course of action &
deciding in advance the most appropriate course of actions for achievement of pre-determined goals.
According to KOONTZ, ―Planning is deciding in advance – what to do, when to do & how to do. It bridges
the gap from where we are & where we want to be‖. It is all pervasive, it is an intellectual activity and it
also helps in avoiding confusion, uncertainties, risks, wastages etc.

2. Organizing: It is the process of bringing together physical, financial and human resources and
developing productive relationship amongst them for achievement of organizational goals. According to
Henry Fayol, To organize a business is to provide it with everything useful or its functioning i.e. raw
material, tools, capital and personnel‘s. Organizing as a process involves:
 Identification of activities, Classification of grouping of activities. Assignment of duties.
 Delegation of authority and creation of responsibility. Coordinating authority and responsibility
relationships.

3. Staffing: Staffing has assumed greater importance in the recent years due to advancement of technology,
increase in size of business, complexity of human behavior etc. The main purpose of staffing is to put right
man on right job i.e. square pegs in square holes and round pegs in round holes. Staffing involves:
 Manpower Planning (estimating man power in terms of searching, choose the person and giving
the right place).
 Recruitment, selection & placement. Training & development. Remuneration. Performance
appraisal. Promotions & transfer.

4. Directing: It is considered life-spark of the enterprise which sets it in motion the action of people
because planning, organizing and staffing are the mere preparations for doing the work. Direction is that
inert-personnel aspect of management which deals directly with influencing, guiding, supervising,
motivating sub-ordinate for the achievement of organizational goals. Supervision overseeing the work of
subordinates by their superiors. It is the act of watching & directing work & workers. Motivation- means
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inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive, negative. Monetary.
Leadership- a process by which manager guides and influences the work of subordinates in desired
direction. Communications is the process of passing information, experience, opinion etc from one person
to another. It is a bridge of understanding.

5. Controlling: Controlling is the measurement & correction of performance activities of subordinates in
order to make sure that the enterprise objectives and plans desired to obtain them as being accomplished‖.
Therefore controlling has following steps:
(i) Establishment of standard performance. Measurement of actual performance.
(ii) Comparison of actual performance with the standards and finding out deviation if any.
Corrective action.

ROLES OF MANAGER
Henry Mintzberg identified ten different roles, separated into three categories. The categories he defined
are as follows
a) Interpersonal Roles: Involve people and other ceremonial duties. It can be further classified as follows
• Leader – Responsible for staffing, training, and associated duties.
• Figurehead – The symbolic head of the organization.
• Liaison – Maintains the communication between all contacts and informers that compose the
organizational network.
b) Informational Roles: Related to collecting, receiving, and disseminating information.
• Monitor – Personally seek and receive information, to be able to understand the organization.
• Disseminator – Transmits all import information received from outsiders to the members of the
organization.
• Spokesperson – On the contrary to the above role, here the manager transmits the organization‘s
plans, policies and actions to outsiders.
c) Decisional Roles: Roles that revolve around making choices.
• Entrepreneur – Seeks opportunities. Basically they search for change, respond to it, and exploit it.
• Negotiator – Represents the organization at major negotiations.
• Resource Allocator – Makes or approves all significant decisions related to the allocation of
resources.
• Disturbance Handler – Responsible for corrective action when the organization faces disturbances.

Management as a Science
 Management is a systematic body of knowledge consists of principles, generalizations, approaches
and concepts to be applied in practical situation. The manager can manage the situation or
organization in a systematic and scientific manner only if he posses the adequate knowledge of
management and its principles.
 The principles generalization and concepts of management have been developed and formulated on
the basis of observation research and analysis and experimentation, as is the case with the
principles of other sciences.
 Like other sciences management principles are also based on relationship of cause and effect.
Example if workers are paid more, they will produce more.
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 Management knowledge and its principles are codified and a systematized and can be transferred
from one manager to another and can be taught.
 Management principles are universally applicable to all types of organizations they are generalized
in nature. Forming general guidelines for managers to practice.
 Law of science have universal application example; formula for water or law of gravity is
applicable everywhere same in the case with management. Management process has universal
applicability. Example: high motivation leads to high efficiency in employees.

Management as an Art Art means application of knowledge & skill to get the desired results. An art may
be defined as personalized application of general theoretical principles for achieving best possible results.
Art has the following characters –
 Practical Knowledge: Every art requires practical knowledge therefore learning of theory is not
sufficient. It is very important to know practical application of theoretical principles.
 Personal Skill: Although theoretical base may be same for every artist, but each one has his own
style and approach towards his job. That is why the level of success and quality of performance
differs from one person to another.
 Creativity: Every artist has an element of creativity in line. That is why he aims at producing
something that has never existed before which requires combination of intelligence & imagination.
 Perfection through practice: Practice makes a man perfect. Goal-Oriented: Every art is result
oriented as it seeks to achieve concrete results.

Management as both Science and Art
To be successful manger, a person requires the knowledge of management principles and also skills how
the knowledge can be utilized. Absence of either will result in inefficiency. So management use both
scientific knowledge and art in managing the organization. According to Dr. Terry ―if sciences teaches one
to know, art teaches one to do.‖
Management as Science

Management as Art

Advances by knowledge

Advances by practices

Proves

Feels

Predicts

Guesses

Defines

Describes

Measures

Opiness

Impresses

Expresses

Basis for
Comparison
Entrepreneur
Manager
Meaning
Entrepreneur refers to a person who
creates an enterprise, by taking financial
risk in order to get profit.
Manager is an individual who takes the
responsibility of controlling and
administering the organization.
Focus
Business startup
Ongoing operations
Primary motivation
Achievement
Power
Approach to task
Informal
Formal
Status
Owner
Employee
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Reward
Profit
Salary
Decision making
Intuitive
Calculative
Driving force
Creativity and Innovation
Preserving status quo
Risk orientation
Risk taker
Risk averse

CONTRIBUTION OF FAYOL AND TAYLOR
F.W. Taylor and Henry Fayol are generally regarded as the founders of scientific management and
administrative management and both provided the bases for science and art of management.

Taylor's Scientific Management
Frederick Winslow Taylor well-known as the founder of scientific management was the first to recognize
and emphasis the need for adopting a scientific approach to the task of managing an enterprise.
He tried to diagnose the causes of low efficiency in industry and came to the conclusion that much of
waste and inefficiency is due to the lack of order and system in the methods of management.
He found that the management was usually ignorant of the amount of work that could be done by a
worker in a day as also the best method of doing the job. As a result, it remained largely at the mercy of
the workers who deliberately shirked work.
He therefore, suggested that those responsible for management should adopt a scientific approach in their
work, and make use of "scientific method" for achieving higher efficiency. The scientific method consists
essentially of
 Observation
 Measurement
 Experimentation and
 Inference

He advocated a thorough planning of the job by the management and emphasized the necessity of perfect
understanding and co-operation between the management and the workers both for the enlargement of
profits and the use of scientific investigation and knowledge in industrial work. He summed up his
approach in these words:
• Science, not rule of thumb
• Harmony, not discord
• Co-operation, not individualism
• Maximum output, in place of restricted
output
• The development of each man to his greatest
efficiency and prosperity
Elements of Scientific Management:
The techniques which Taylor regarded as its essential elements or features may be classified as under:
1. Scientific Task and Rate-Setting (work study): Work study may be defined as the systematic,
objective and critical examination of all the factors governing the operational efficiency of any specified
activity in order to effect improvement. Work study includes.
 Methods Study: The management should try to ensure that the plant is laid out in the best
manner and is equipped with the best tools and machinery. The possibilities of eliminating or
combining certain operations may be studied.
 Motion Study: It is a study of the movement, of an operator (or even of a machine) in
performing an operation with the purpose of eliminating useless motions.
 Time Study (work measurement): The basic purpose of time study is to determine the proper
time for performing the operation. Such study may be conducted after the motion study. Both
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time study and motion study help in determining the best method of doing a job and the standard
time allowed for it.
 Fatigue Study: If, a standard task is set without providing for measures to eliminate fatigue, it
may either be beyond the workers or the workers may over strain themselves to attain it. It is
necessary, therefore, to regulate the working hours and provide for rest pauses at scientifically
determined intervals.
 Rate-setting: Taylor recommended the differential piece wage system, under which workers
performing the standard task within prescribed time are paid a much higher rate per unit than
inefficient workers who are not able to come up to the standard set.

2. Planning the Task: Having set the task which an average worker must strive to perform to get wages
at the higher piece-rate, necessary steps have to be taken to plan the production thoroughly so that there
are no bottlenecks and the work goes on systematically.

3. Selection and Training: Scientific Management requires a radical change in the methods and
procedures of selecting workers. It is therefore necessary to entrust the task of selection to a central
personnel department. The procedure of selection will also have to be systematized. Proper attention has
also to be devoted to the training of the workers in the correct methods of work.

4. Standardization: Standardization may be introduced in respect of the following.
 Tools and equipment: By standardization is meant the process of bringing about uniformity. The
management must select and store standard tools and implements which will be nearly the best or
the best of their kind.
 Speed: There is usually an optimum speed for every machine. If it is exceeded, it is likely to result
in damage to machinery.
 Conditions of Work: To attain standard performance, the maintenance of standard conditions of
ventilation, heating, cooling, humidity, floor space, safety etc., is very essential.
 Materials: The efficiency of a worker depends on the quality of materials and the method of
handling materials.

5. Specialization: Scientific management will not be complete without the introduction of specialization.
Under this plan, the two functions of 'planning' and 'doing' are separated in the organization of the plant.
The `functional foremen' are specialists who join their heads to give thought to the planning of the
performance of operations in the workshop. Taylor suggested eight functional foremen under his scheme
of functional foremanship.
 The Route Clerk: To lay down the sequence of operations and instruct the workers concerned
about it.
 The Instruction Card Clerk: To prepare detailed instructions regarding different aspects of work.
 The Time and Cost Clerk: To send all information relating to their pay to the workers and to
secure proper returns of work from them.
 The Shop Disciplinarian: To deal with cases of breach of discipline and absenteeism.
 The Gang Boss: To assemble and set up tools and machines and to teach the workers to make all
their personal motions in the quickest and best way.
 The Speed Boss: To ensure that machines are run at their best speeds and proper tools are used by
the workers.
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 The Repair Boss: To ensure that each worker keeps his machine in good order and maintains
cleanliness around him and his machines.
 The Inspector: To show to the worker how to do the work.

6. Mental Revolution: At present, industry is divided into two groups – management and labour. The
major problem between these two groups is the division of surplus. The management wants the maximum
possible share of the surplus as profit; the workers want, as large share in the form of wages. Taylor has in
mind the enormous gain that arises from higher productivity. Such gains can be shared both by the
management and workers in the form of increased profits and increased wages.

Henry Fayol's 14 Principles of Management:
The principles of management are given below:
1. Division of work: Division of work or specialization alone can give maximum productivity and
efficiency. Both technical and managerial activities can be performed in the best manner only
through division of labour and specialization.
2. Authority and Responsibility: The right to give order is called authority. The obligation to
accomplish is called responsibility. Authority and Responsibility are the two sides of the
management coin. They exist together. They are complementary and mutually interdependent.
3. Discipline: The objectives, rules and regulations, the policies and procedures must be honoured
by each member of an organization. There must be clear and fair agreement on the rules and
objectives, on the policies and procedures. There must be penalties (punishment) for non-
obedience or indiscipline. No organization can work smoothly without discipline - preferably
voluntary discipline.
4. Unity of Command: In order to avoid any possible confusion and conflict, each member of an
organization must received orders and instructions only from one superior (boss).
5. Unity of Direction: All members of an organization must work together to accomplish common
objectives.
6. Emphasis on Subordination of Personal Interest to General or Common Interest: This is
also called principle of co-operation. Each shall work for all and all for each. General or common
interest must be supreme in any joint enterprise.
7. Remuneration: Fair pay with non-financial rewards can act as the best incentive or motivator for
good performance. Exploitation of employees in any manner must be eliminated. Sound scheme
of remuneration includes adequate financial and nonfinancial incentives.
8. Centralization: There must be a good balance between centralization and decentralization of
authority and power. Extreme centralization and decentralization must be avoided.
9. Scalar Chain: The unity of command brings about a chain or hierarchy of command linking all
members of the organization from the top to the bottom. Scalar denotes steps.
10. Order: Fayol suggested that there is a place for everything. Order or system alone can create a
sound organization and efficient management.
11. Equity: An organization consists of a group of people involved in joint effort. Hence, equity (i.e.,
justice) must be there. Without equity, we cannot have sustained and adequate joint collaboration.
12. Stability of Tenure: A person needs time to adjust himself with the new work and demonstrate
efficiency in due course. Hence, employees and managers must have job security. Security of
income and employment is a pre-requisite of sound organization and management.
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13. Esprit of Co-operation: Esprit de corps is the foundation of a sound organization. Union is
strength. But unity demands co-operation. Pride, loyalty and sense of belonging are responsible
for good performance.
14. Initiative: Creative thinking and capacity to take initiative can give us sound managerial
planning and execution of predetermined plans.

EVOLUTION OF MANAGEMENT THOUGHT
The origin of management as a discipline was developed in the late 19
th
century. Over time, management
thinkers have sought ways to organize and classify the voluminous information about management that
has been collected and disseminated. These attempts at classification have resulted in the identification of
management approaches. The approaches of management are theoretical frameworks for the study of
management. Each of the approaches of management is based on somewhat different assumptions about
human beings and the organizations for which they work. The different approaches of management are.

a) THE CLASSICAL APPROACH:
The classical approach is the oldest formal approach of management thought. Its roots pre-date the
twentieth century. The classical approach of thought generally concerns ways to manage work and
organizations more efficiently. Three areas of study that can be grouped under the classical approach are
scientific management, administrative management, and bureaucratic management.
(i) Scientific Management: Frederick Winslow Taylor is known as the father of scientific management.
Scientific management (also called Taylorism or the Taylor system) is a theory of management that
analyzes and synthesizes workflows, with the objective of improving labor productivity. In other words,
Traditional rules of thumb are replaced by precise procedures developed after careful study of an
individual at work.
(ii) Administrative Management: focuses on the management process and principles of management.
In contrast to scientific management, which deals largely with jobs and work at the individual level of
analysis, it provides a more general theory of management. Henri Fayol is the major contributor to this
approach of management thought.
(iii) Bureaucratic Management: focuses on the ideal form of organization. Max Weber was the major
contributor to it. Based on observation, Weber concluded that many early organizations were inefficiently
managed, with decisions based on personal relationships and loyalty. He proposed that a form of
organization, called a bureaucracy, characterized by division of labor, hierarchy, formalized rules,
impersonality, and the selection and promotion of employees based on ability, would lead to more
efficient management. Weber also contended that managers' authority in an organization should be based
not on tradition or charisma but on the position held by managers in the organizational hierarchy.

b) THE BEHAVIORAL APPROACH:
The behavioral approach of management thought developed, in part, because of perceived weaknesses in
the assumptions of the classical approach. The classical approach emphasized efficiency, process, and
principles. Some felt that this emphasis disregarded important aspects of organizational life, particularly as
it related to human behavior. Thus, the behavioral approach focused on trying to understand the factors
that affect human behavior at work.
(i) Human Relations: The Hawthorne Experiments began in 1924 and continued through the early
1930s. A variety of researchers participated in the studies, including Elton Mayo. One of the major
conclusions of the Hawthorne studies was that workers' attitudes are associated with productivity. Another
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was that the workplace is a social system and informal group influence could exert a powerful effect on
individual behavior. A third was that the style of supervision is an important factor in increasing workers'
job satisfaction.
(ii) Behavioral Science: Behavioral science and the study of organizational behavior emerged in the
1950s and 1960s. The behavioral science approach was a natural progression of the human relations
movement. It focused on applying conceptual and analytical tools to the problem of understanding and
predicting behavior in the workplace.
The behavioral science approach has contributed to the study of management through its focus on
personality, attitudes, values, motivation, group behavior, leadership, communication, and conflict, among
other issues.

c) THE QUANTITATIVE APPROACH:
The quantitative approach focuses on improving decision making via the application of quantitative
techniques. Its roots can be traced back to scientific management.
(i) Management Science (Operations Research): uses mathematical and statistical approaches to solve
management problems. It developed during World War II as strategists tried to apply scientific knowledge
and methods to the complex problems of war. Industry began to apply management science after the war.
The advent of the computer made many management science tools and concepts more practical for
industry
(ii) Production and Operations Management: This approach focuses on the operation and control of
the production process that transforms resources into finished goods and services. It has its roots in
scientific management but became an identifiable area of management study after World War II. It uses
many of the tools of management science. Operations management emphasizes productivity and quality of
both manufacturing and service organizations. W. Edwards Deming exerted a tremendous influence in
shaping modern ideas about improving productivity and quality. Major areas of study within operations
management include capacity planning, facilities location, facilities layout, materials requirement
planning, scheduling, purchasing and inventory control, quality control, computer integrated
manufacturing, just-in-time inventory systems, and flexible manufacturing systems.

d) SYSTEMS APPROACH:

The systems approach focuses on understanding the organization as an open system that transforms
inputs into outputs. The systems approach began to have a strong impact on management thought in the
1960s as a way of thinking about managing techniques that would allow managers to relate different
specialties and parts of the company to one another, as well as to external environmental factors. The
systems approach focuses on the organization as a whole, its interaction with the environment, and its
need to achieve equilibrium

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MG8591 Principles Of Management Notes

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