Principles of Management Unit I

Evolution of Management Science

• Management concept is comprehensive and covers all aspects of business
• Management means utilizing available resources in the best possible manner to achieve well-defined objectives
• Resources: men, money, materials, machines, methods, and markets (six M's of management)
• Management is essential for the conduct of business activity in an orderly manner

Definition of Management

• According to Harold Koontz: "Management is the art of getting things done through and with people in formally organized groups"
• According to Henry Fayol: "To manage is to forecast and to plan, to organize, to command, to coordinate, and to control"
• According to Peter Drucker: "Management is a multi-purpose organ that manages business and manages managers and manages workers and work"

Management Functions

• Planning: determining courses of action to achieve desired goals
• Organizing: bringing together physical, financial, and human resources to achieve organizational goals
• Staffing: manning the organization structure through proper and effective selection, appraisal, and development of personnel
• Directing: actuating the organizational methods to work efficiently for achieving organizational purposes
• Controlling: measuring and correcting performance activities to ensure achievement of organizational goals

Levels of Management

• Top level: board of directors, chief executive, or managing director
  • Responsible for laying down objectives and broad policies of the enterprise
  • Devotes more time to planning and coordinating functions
• Middle level: branch managers and departmental managers
  • Responsible for executing plans of the organization
  • Devotes more time to organizational and directional functions
• Lower level: supervisors, foremen, section officers, and superintendent
  • Responsible for direction and controlling function of management
  • Devotes more time to day-to-day activities and supervising subordinates

Roles of Manager

• Interpersonal roles: leader, figurehead, liaison
• Informational roles: monitor, disseminator, spokesperson
• Decisional roles: entrepreneur, negotiator, resource allocator, disturbance handler

Managerial Skills

• Technical skills: understanding of and proficiency in a specialized field
• Human skills: ability to work well with others
• Conceptual skills: ability to visualize the organization as a whole
• Design skills: ability to solve problems in ways that benefit the enterprise

Management and Administration

• Management is an executing function, while administration is a decision-making function
• Management decides who should do it and how, while administration decides what is to be done and when

Management Theories

• Classical theory of management: scientific management, bureaucratic management, administrative management
• Neo-Classical theory: behavioral science approach
• Modern management theories: quantitative approach, system approach, contingency approach

Contributions of F.W. Taylor, Frank and Lillian Gilbreth, and Henry Laurence Gantt

• F.W. Taylor: scientific management, piece-rate incentive system, time-and-motion study
• Frank and Lillian Gilbreth: motion study, eliminating unnecessary motions, and reducing work fatigue
• Henry Laurence Gantt: task-and-bonus system, Gantt chart, and incentive plan for foremen### Bureaucratic Management
• Weber believed that bureaucracy was the most efficient way to set up and manage an organization.
• Ideal bureaucracy favors efficiency, uniformity, and a clear distribution of power.
• Major characteristics of Weber's Ideal Bureaucracy:
  • Work specialization and division of labor
  • Abstract rules and regulations
  • Impersonality of managers
  • Hierarchy of organization structure

Administrative Management

• Focuses on principles to coordinate internal activities of organizations.
• Henry Fayol introduced a general theory applicable to all levels of management and every department.
• Fayol's 14 Principles of Management:
  • Division of Work: segregating work to enhance quality, productivity, and efficiency.
  • Authority and Responsibility: authority facilitates efficient management, and responsibility makes managers accountable.
  • Discipline: essential for accomplishment, and good performance and behavior make management easier.
  • Unity of Command: each employee should have only one boss to avoid conflict of interest.
  • Unity of Direction: all individuals working on the same activity should have a unified goal.
  • Subordination of Individual Interest: company goals should take precedence over personal interests.
  • Remuneration: monetary or non-monetary rewards to motivate workers.
  • Centralization: balance between hierarchy and division of power.
  • Scalar Chain: clear hierarchy with well-defined roles and communication.
  • Order: well-defined work order for favorable work culture.
  • Equity: equal treatment of all employees.
  • Stability: job security for employees.
  • Initiative: encouraging employees to take initiatives.
  • Esprit de Corps: management should motivate and support employees.

Limitations of Bureaucratic & Administrative Management

• Destroyed individual creativity and flexibility.
• Ignored important aspects of organizational behavior.
• Did not consider external and internal environmental impacts on employee behavior.

Neo-Classical Theory

• Contributed to understanding human behavior at work and in organizations.
• Features:
  • Business organization is a social system.
  • Human factor is the most important element in the social system.
  • Social and psychological factors determine worker productivity and satisfaction.

Elton Mayo and the Hawthorne Studies

• Led the team that conducted the Hawthorne experiments (1927-1932).
• Findings:
  • Amount of work done is not determined by physical capacity but by social norms.
  • Non-economic rewards significantly influence worker behavior.
  • Workers generally react as members of a group, not individuals.
• Experiments:
  • Illumination Experiment (1924-1927): lighting levels did not affect productivity.
  • Relay Assembly Test Room Experiment (1927): changes in working conditions did not affect output.
  • Mass Interviewing Programme (1928-1931): workers expressed likes, dislikes, and feelings.
  • Bank Wiring Experiment (1931-1932): group behavior, social norms, and output.

Criticisms of Mayo's Human Relations Theory

• Lacked scientific basis.
• Influenced by workers' feelings of importance and attention.
• Anti-union and pro-management.
• Neglected the nature of work and environmental factors.
• Ignored effects of conflicts and tensions on workers.

Mary Parker Follett

• Influential management theorist.
• Contributions:
  • Conflict resolution through integration.
  • Leadership as "power with" rather than "power over."
  • True leaders create group power, not personal power.

Maslow's Hierarchy of Needs

• A five-tier model of human needs:
  1. Physiological needs (basic survival needs).
  2. Safety needs (security and stability).
  3. Love and belongingness needs (social relationships).
  4. Esteem needs (self-esteem and reputation).
  5. Self-actualization needs (personal growth and fulfillment).

McGregor Theory X and Theory Y

• Two views of human behavior at work:
• Theory X: assumes people dislike work and need control and direction.
• Theory Y: assumes people are motivated to work and seek responsibility.### Theory X and Theory Y
• According to McGregor, the "carrot and stick" approach can be effective, but it is limited in its ability to motivate people, especially when their needs are social and egoistic.
• Theory X assumes that people are inherently lazy and need to be controlled and directed, whereas Theory Y assumes that people are motivated and can be self-directed.

Assumptions of Theory Y

• The expenditure of physical and mental effort in work is as natural as play or rest.
• External control and the threat of punishment are not the only means to bring about effort towards organisational objectives.
• People will exercise self-direction and self-control in the service of objectives to which they are committed.
• Commitment to objectives is a function of the rewards associated with their achievement.
• The average human being learns, under proper conditions, not only to accept but to seek responsibility.
• The capacity to exercise a relatively high degree of imagination, ingenuity, and creativity in the solution of organisational problems is widely, not narrowly, distributed in the population.

Modern Management Theory

• From 1960 onwards, management thought has shifted away from extreme human relations ideas and towards a more balanced approach that considers both man and machine.
• This period has seen the development of quantitative, systems, and contingency approaches to management.

Quantitative or Mathematical Approach

• This approach uses mathematical models and techniques to analyze and solve managerial problems.
• It is based on the Decision Theory School and is also known as the "Management Science School".
• This approach is useful for providing a quantitative basis for decision-making, but it has limitations, such as:
  • Not considering the human element in organisations.
  • Being too narrow and focused on mathematical models.
  • Not being able to fully capture the complexities of real-world problems.

Systems Approach

• This approach views organisations as open systems that interact with their environment.
• It considers the organisation as a whole, rather than focusing on individual parts or sub-systems.
• Key features of this approach include:
  • Interacting and interdependent parts.
  • A boundary that distinguishes between internal and external components.
  • Input, transformation, and output processes.
  • Dynamic and responsive to changes in the environment.

Contingency or Situational Approach

• This approach recognizes that management problems are different in different situations and require different solutions.
• It aims to integrate theory with practice in a systems framework.
• Key features of this approach include:
  • Recognizing the importance of the environment and external factors.
  • Identifying the internal and external variables that influence organisational performance.
  • Developing organisational designs and managerial actions that are tailored to specific situations.

Planning

• Planning is a fundamental management function that involves deciding beforehand what to do, how to do it, when to do it, and who is to do it.
• It is an intellectual process that lays down an organisation's objectives and develops various courses of action.
• Key characteristics of planning include:
  • Being a managerial function.
  • Being goal-oriented.
  • Being pervasive and present in all segments of the organisation.
  • Being a continuous process.
  • Involving intellectual processes such as thinking, forecasting, and decision-making.
  • Focusing on the future and anticipating future challenges.

Importance of Planning

• Planning helps to improve future performance by establishing objectives and selecting a course of action.
• It minimizes risk and uncertainty by looking ahead into the future.
• It facilitates the coordination of activities and reduces overlapping and unproductive work.
• It provides direction for action and sets out standards for controlling.
• It uncovers and identifies future opportunities and threats.