6 Lecture Notes (Unit 1 - Nature - Scope of Mgt.) PDF

Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 UNIT No 1 Unit Name: Nature & Scope of Management 1.1 Introduction 1.2 Meaning...

Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 UNIT No 1 Unit Name: Nature & Scope of Management 1.1 Introduction 1.2 Meaning of Management 1.3 Definitions of Management 1.4 Management is a Science or An Art? 1.5 Functions of Management 1.6 Functional Area of Management 1.7 Importance of Management in Organizations 1.8 Evolution of Management in Organizations i) Classical ii)Neo- classical iii)Modern 1.9 Contributions of prominent management theorist: a) Fayol b) Taylor c) Weber d) Mayo Page | 1  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 1.1 INTRODUCTION Management is a universal concept that is generally used in every walk of life and more so in the modern business world. It is an activity that is applied to any kind of organisation where human beings are involved as a group in order to accomplish, some common goal. The concept of management has gained importance in the last few decades due to the increase in the scale of operations of modern organisations. Changes in science and technology have created new challenges. In order to meet these challenges, every organisation requires a good management force which would be in position to adapt itself according to changing situations and environments. The major aim of management is not only to ensure maximum returns from the various factors of production but also to make sure that it satisfies its obligations towards different sections of society. Page | 2  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 1.2 Meaning of Management Management is a very broad term which can be analysed in different ways. The meaning of management varies depending upon the context in which it is used. A few important meanings of management are stated below.  Management as a group of Persons: Here management generally denotes a group of managerial personnel who guide and coordinate the efforts of others in order to achieve certain pre-determined objectives. The members of the group are individually called as managers.  Management as a Resource: Like all the other factors of product ion, management is also a factor of production, it is considered to be a very important factor because it integrates the other factors. Management is an economic resource which brings together the Six M’s namely men, money, materials, machines, methods and markets to achieve specified objectives.  Management as an academic Discipline and a Field of Study: Here management refers to a separate branch of knowledge, which includes management concepts, principles, techniques and skills for tackling managerial problems. It is a multi-disciplinary disciple. Today management has become a very popular field of study and this is evident from the fact that institutions imparting management education have a very great demand for admission.  Management as a process: The concept of management as a process is analysed by Geroge R. Terry. According to him, Management is a process that includes distinct management functions namely, planning, organizing, staffing, directing and controlling which are performed to accomplish specified objectives by the use of six M’s (men, money, materials, machines, methods and markets). Management is called a process because it includes a series of functions that lead to the achievement of certain specific objectives. Management as a process is concerned with 1. Defining the goals of an organization 2. Laying down the policies, procedures, strategies and programmes that are required to accomplish the organisational goals 3. Integrating the various resources (6M’s) and making the best use of them 4. Exercising effective control over the various resources 5. Creating an environment which provides for maximum satisfaction to people associated with the organisation. Page | 3  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 1.3 Definitions of Management “Management is what a manager does”. – Louis Allen. This concept of management clearly indicates that irrespective of the level at which a manager may operate, he performs certain functions namely, planning, organizing, directing and controlling. He initially plans the goals to be attained through formulation of policies and plans. He then designs a suitable organisation structure that provides for division of work and assignment of authority and responsibility to the people at various levels. He then plays the role of a leader in trying to guide and motivation the action of others according to his plan. This concept of management is very simple and it indicated a series of functions that are performed simultaneously or continuously. Another important aspect is that the concept of management is universal, which can be applied to any type of organization. “Management is the art of getting things done through the effort of other people.” – Lawrence A. Appley. In this definition, management is considered an art, and the work of a manager is to extract does not give a true picture of the term ‘management’. It ignores the specific aspect of management, workers, and aspirations and feelings are not given any consideration. It gives an impression that a manager has to obtain results by some way or the other without specifying his role clearly. It also does not indicate the formal organisation structure that is required management. “To manage is to forecast and plan, to organization, to command, to coordinate and to control” – Henry Fayol. This concept of management is in line with the views held by Louis Allen. “Management is a multiple organ that manages a business and manages managers and manages workers and work” – Peter F. Drucker. In this concept the task of a manager is to accomplish economic results, to make best use of human and material resources and to provide a conductive environment for the work force. The problem regarding this concept is that the managerial functions are not clear because of the complex nature of this concept. “Management is knowing exactly what you want to do and then seeing that they do it the best and cheapest ways”. – F W TAYLOR. “Management is defined as the creation and maintenance of internal environment of in an enterprise where individuals, working together in groups, can perform efficiently and effectively towards the attainment of group goals”. – Koontz and O’Donnel. “Management is defined as a process by which the elements of a group are integrated, coordinated and utilized so as to effectively and efficiently achieve organizational objectives” – Howard M. Carlisle. Page | 4  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 1.4 Management is a Science or an Art? Management a Science or an Art is a controversial issue with regard to the nature of management. In order to specify the learning process of management, it is necessary to indicate the exact nature of management, as a Science or an Art or both. The learning process in science differs from that of art. Learning of art involves its continuous practice whereas learning of science involves the assimilation of principles. Therefore, it is necessary to analyse and see whether management is a Science or an Art. Management as a Science: Science is a systematised body of knowledge gathered by experiment and observation, critically tested and brought under general principles. Scientific principles are universally applicable, they establish cause-effect relationship between different variables and their validity can be verified. They also help in predicting future events. The following characteristics are essential for a subject to be recognised as a science:  Systematized body of knowledge including concepts, theories and principles that are universally applicable  Based on scientific enquiry  Should establish cause-effect relationship  Principles should be verifiable  Reliable basis for predicting future results Judging from the characteristics, it can be said that management has systematised body knowledge. However, management is an ‘inexact Science’ or “Pseudo science” because it deals with people and predicting their behaviour accurately is a very difficult task. The theories and principles in Management though universal in nature, may produce different results when applied in different situation. That is why management is called a behavioral Science, because its application does not lead to the same results whenever applied. Page | 5  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 Management as an Art Art involves the achievement of desired results through the practical application of theoretical knowledge and skills. If a Science is learnt, an Art is practiced. The following are the features of an Art:  Personal skill and practical knowledge - Management process involves the use of personal skill and practical knowledge. While dealing with people, every manager will have to apply certain skills and knowledge.  Creative in nature - Management is creative. In fact, it is one of the most creative arts, because in changing environment management can achieve desired goals through moulding and welding the activities and behaviour of people.  Helps in achieving desired and concrete results and is result oriented in its approach - Application of certain skills and practical knowledge helps to achieve concrete practical results.  Clearly prescribes how an activity can be performed and how it could be improved through constant practice - Continuous practice of management helps in the efficient accomplishment of organisational goals. Hence, Management is both a Science and an Art. It is a Science because it contains universal truths which form an organised body of knowledge. It is also an Art because it requires certain personal skills which are the possession of the manager, and which when applied achieve desired results. Page | 6  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 1.5 Functions of Management Management to accomplish the organisation’s goal will have to perform certain tasks. We call these tasks, the functions of Management. There is no uniformity regarding the function of Management- different management experts have given their own views regarding the functions of Management. Management consists of five important functions namely: 1) Planning 2) Organising 3) Directing and 4) Controlling. 1. Planning: Planning is a very important function of management; it is the most basic or primary function. It is a mental process requiring the use of intellectual faculties, foresight, imagination and sound judgment. Three important aspects of planning are forecasting, decision making and problem solving. It decides in advance what to do, how, to do, when to and who is to do it. Planning involves systematic thinking about the way specified objectives are to be achieved in future. The planning process involves the following steps: a) Determination of the goal or mission of the organisation. b) Forecasting the future based on past and present activities. c) Selection of best course of action from different alternatives and formulation of plans. d) Formulation of policies, procedures, budgets etc., to achieve the objectives. e) Determining the actual performance. 2. Organising: Once plans have been established, the nest stage is that of organising. Organising establishes harmonious relationships among the members of an organisation by providing them with adequate authority and responsibility. It clearly specifies the task of each individual and the extent to which he can carry it out. According to Louis A. Allen, “organisation involves identification and grouping the activities to be performed and dividing them among the individuals and creating authority and responsibility relationships among them for the accomplishment of organisational objectives”. From this definition, it is clear that organizing determines the tasks to be performed, it groups the task in such a manner that each individual knows the task to be performed by him and thereby creates a structure of authority and responsibility among them to achieve organisational objectives. A good organisation helps to avoid overlapping and duplication of work. Organisation process involves the following steps: a) Identification and analysis of activities required for the achievement of objectives Grouping of activities according to the requirement of the organisation Page | 7  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 b) Assignment of duties to the individuals concerned c) Delegating authority to the subordinates and thereby fixing responsibility for performance d) Establishing proper authority relationship throughout the organisation. 3. Directing: Directing may be defined as a function of management which is related with instructing, guiding and inspiring the human factor in an organisation to achieve its objectives. Not only orders and instructions with those activities which deal with guiding, supervising, influencing and motivating the subordinates in their jobs. Through direction, management initiates action. It is a function that is carried out throughout the organisation. Direction consists of three important sub-functions or elements, namely motivation, leadership and communication. Through motivation subordinates are stimulated to work effectively, through leadership they are influenced and guided and through communication they are provided with proper information to vary out their activities to accomplish the results. 4. Controlling: Controlling as a function of management deals with checking and verifying the activities that have been performed against the pre-determined standards. Controlling helps to take corrective action if the results do not conform to plans already established. According to Henri Fayol, control consists in verifying whether everything occurs in conformity with the plans adopted instructions issued and principles established. The following are the steps involved in the controlling process: a) Establishment of standards b) Measurement of actual performance c) Comparison of actual performance against the standards established d) Determining the reasons for deviation e) Taking corrective action f) Feedback in order to determine actual performance Page | 8  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 1.6 Functional areas of Management The concept of Management is very wide. The functional areas or operational areas of management may be broadly classified into: 1) Production Management 2) Marketing Management 3) Financial Management and 4) Personnel Management. We shall now analyse each one of these functional areas of Management separately. 1. Production Management: The purpose of a business unit is to produce and distribute goods and service. Production Management is concerned with planning, organising, directing and controlling the production function so that the right product is produced at the right time, in the right quantity and at the right price. It involves the following activities:  Product designing.  Layout and location of plant and machinery.  Management of purchase and storage of materials.  Proper repairs and maintenance.  Effective control of inventory and quality.  Research and Development. 2. Marketing Management: Marketing Management is the process of understanding and identifying the consumer needs and wants, and thereby satisfying these wants by supplying the requisite goods and services, it includes the following activities:  Determination of consumer demand through marketing research.  Designing suitable products capable of satisfying wants.  Establishing appropriate pricing strategies and policies.  Choosing the right and best channel of distribution.  Making the best use of promotional activities like advertising, personal selling and sales promotion to reach the customers Page | 9  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 3. Financial Management: Finance is the life blood of business organisation, and every managerial decision has its own financial implication. Financial Management provides the right type of funds to an organisation at the right time and at reasonable cost. The main functions of Financial Management are:  Determining the extent of funds required for both long term and short-term needs of business.  Selection of the appropriate source of funds and maintenance of these funds at the lowest cost.  Making sure that funds are obtained when they are needed.  Ensuring effective use and proper allocation of funds to achieve optimum financial efficiency in the enterprise.  Proper administration and allocation of earnings. Financial Management thus involves proper allocation and utilisation of financial resources. 4. Personnel Management: Personnel Management is that function of management which is primarily concerned with the human relationship within a business enterprise. Personnel management is concerned with managerial (planning, organizing, directing and controlling) and operative functions (procurement, development, maintenance, compensation and utilisation) with a view to accomplishing organisational goals effectively and efficiently and thereby meeting individual and group goals. It involves the following activities:  Organisational planning, development and task specification.  Recruitment and selection.  Placement.  Training and education.  Compensation, wage and salary administration.  Motivation and Incentives.  Employee welfare and benefits.  Labour relations.  Maintenance of employee records to be utilised for promotions transfers.  Personnel research and personal audit. Page | 10  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 1.7 Importance of Management in organizations a) Achieving Organizational Goals: Management helps in determination of the objectives of an organisation through sound resource planning. Unless the objectives are identified and well defined, no organisation can accomplish its goal. b) Optimum Utilization of Resources: The resources of an organisation can be effectively utilised only when there is a sound management force, because only efficient managers can meet new challenges. c) Reduction of Costs: Management helps get maximum input through planning. It uses physical, financial, and manual resources efficiently that provides the best results, and using this manner also helps in cost reductions. d) Creation of dynamic organization: Management helps in providing the required impetus for an organization to transition from one phase of development to another and also in adjusting to the changing dynamics of the business environment. e) Fosters Innovation: Business management fosters a culture of innovation by encouraging creative thinking and problem-solving. It provides a framework for developing new ideas, implementing changes, and adapting to market trends. f) Sound Industrial Relations: A manager maintains balance between the demands of employees and organizational requirements, thereby helps to minimize industrial disputes. g) Maintaining Equilibrium: Management helps the organization adapt to changes in both demands in the market and changes in the needs of society. Management establishes equilibrium and is responsible for the growth and survival of the organization. h) Development of Society: By developing the organization, management helps in its growth. A developed organization has some moral responsibilities towards society, and it does so by creating employment opportunities, providing good quality products and services. Page | 11  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 1.8Evolution of Management in Organizations 1.9 Contributions of prominent management theorist: The need for a systematic study of management was not realized till the beginning of the present century. The study of management is a product of the twentieth century. However management practice did exist among human beings of the past generations while they lived together in groups. Management is as old as civilization itself. The origin of management as a discipline was the work of Frederick Winslow Taylor and his associates during the scientific management movement that developed around 1900. The development of a theory of management has come only in the past half century because it was felt that for attainment of an effective enterprise system, proper handling of human factor was necessary. Human unrest, national unionism, manipulation of resources and the attack by government and other social groups on free private enterprises were instrumental in forcing managers to examine the nature of their job. The Second World War and the subsequent defence and space programs also contributed to the development of a theory on Management. The emphasis was to make the best use of limited resources to accomplish the objectives. The increasing complexities of business activities and the growing competition further provided the driving force for developing systematic management concepts and principles. In addition to this,enterprises have been faced with the problem of cost-price squeezes. Businesses which failed to use modern techniques of management were not in a position to cope up with this problem. Pioneers of Management Thought During the last four decades there has been a number of contributions to the development of management thought. The development of management as a discipline has come in a short period of time when compared to other sciences. Among the pioneers of Management thought, the contributions of F.W Taylor. Henri Fayol and Elton Mayo are outstanding. These contributions give a clear view about the development of Management concepts and principles. We will now examine these contributions individually. Page | 12  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 A. Taylor’s Contribution Frederick Winslow Taylor (1856 – 1915) is called as the Father of Scientific Management and his contribution as the Principles of Scientific Management. Taylor gave up his studies in 1875 and started working as an apprentice patternmaker and machinist. In 1878, he joined the Midvale Steel Works in Philadelphia as an ordinary worker and later rose to the position of chief engineer after completing his degree in engineering through evening studies. Later on, he joined Bethlehem Steel Company. He conducted a number of experiments about how to increase the efficiency of people. He studied the problem of management from the shop floor level (lower level). According to Taylor, “Management is knowing exactly what you want men to do and then see that they do it in the best and cheapest way”. He spends most of his life as a consulting engineer. Since Taylor rose from an ordinary worker to the position of a chief engineer, he was in a position to understand the problems and attitudes of workers and this gave him ample opportunity for improving the quality of Management. His contributions were compiled into a book called “The Principles of Scientific Management” in 1911. The contribution of Taylor to Management thought can be analyzed under two broad heads, namely 1) Principles of Scientific Management and 2) Main features or Techniques of Scientific Management.. 1. Principles of Scientific Management The following are the principles of Scientific Management developed by Taylor on the basis of his experiments: i) Replacing Rule of Thumb with Science: Taylor emphasised the use of organised knowledge in scientific management and wanted it to replace rule of thumb. Scientific methods denote precision, while rule of thumb emphasises intuition and experience to determine the work methods and tools. The basic cores of scientific management are fair work, standardisation of work etc. It is essential that these are measured properly and not based on estimates. This concept can be applied in all aspects of management. ii) Harmony in Group Action: Harmony in group action is one of the most important principles of scientific management where Taylor emphasised that there should be harmony in group action rather than discord. This would help in proper understanding and maximum contribution on the part of the group. Page | 13  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 iii) Cooperation of Human Beings: Scientific management stresses on cooperation of human beings rather than chaotic individualism. It is based on mutual confidence, utmost good faith, cooperation and good will. Mutual understanding and positive thinking would develop good cooperation between workers and management. He suggested substitution of peace for war and replacement of suspicion with mutual confidence and cooperation. iv) Working for maximum Output: Taylor was against inefficiency and deliberate curtailment of production. He always emphasised on continuous increase in productivity instead of restricted production either by workers or management. He pointed out that both management and workers could gain from it. Management could secure higher profits and workers could expect higher wages. v) Development of Workers: Another principle of Scientific management is developing all workers to the fullest extent possible for their own and their enterprise’s highest prosperity. This involves scientific selection and training of the workers, which would improve productivity and help a worker to adapt himself according to changing situations. 2. Techniques of Scientific Management Taylor and his close associates suggested the following techniques of Scientific Management in order to put it into practice. i) Separation of Planning and Doing: Taylor emphasized the need for planning work tobe performed and he wanted the planning function to be separated from the executive function. Before Taylor’s scientific management, both planning and execution were carried out by the same individual and there was only a supervisor to control the job. This led to a lot of confusion and Taylor wanted the planning activity to be done separately by the planning department, where the worker had no role to play. Page | 14  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 ii) Functional foreman-ship: Taylor developed a theory on functional authority called functional foreman-ship based on specialization of functions. Here planning was separated from executing. In this system, eight foremen were involved to direct and control the activities of the workers. Of these, four were concerned with planning, namely, route clerk, instruction card clerk, time and cost clerk and shop disciplinarian. The remaining four were concerned with getting the required performance from the workers, namely gang boss, speed boss, repair boss and inspector. The concept of functional foreman-ship is clearly indicated in Figure 1. iii) Job Analysis: it is undertaken to find out the best possible way to do a particular activity. Any activity that requires minimum movements and consequently less cost and time is the best way of doing that activity or job. This can be determined by taking up time – motion and fatigue studies. this is otherwise called work measurement. It helps in recording the time required to do each element of an industrial operation. Thus, the precise time for each operation is clearly laid down. This helps in fixing fair and standard work for a period. it helps in studying the movement of an operator or machine. Here, wasteful movements can be eliminated and the earliest method of doing a particular job can be determined. Page | 15  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 Both physical as well as mental fatigue has an adverse effect on the worker’s performance and health. Fatigue study indicates the amount and frequency of rest required in completing the job. Fatigue is normally caused because of continuous work without rest pauses, repetitive operations, poor working environment etc. Fatigue study is to maintain operational efficiency of works. The concept of job analysis, as given by Taylor, suggests a fair day’s work requiring certain movements and rest pauses to complete it. iv) Standardization: Taylor suggested standardisation of instruments and tools, amount of work, period of work, working conditions, cost system and several other items. This would help to reduce wastage and spoilage of materials, reduce fatigue among the workers and improve quality of work. Standardisation of activities and equipment should be fixed well in advance on the basis of job analysis and various elements of costs that are required for performing the work. v) Scientific Selection and Training: According to Scientific Management workers should be scientifically selected taking into account their education, experience, skill, and physical strength so that the right man is put into the right job. A person who is technically and physically fit for a given job should be assigned that work. Besides this, proper training should be given to make him efficient and perfect. vi) Differential Piece Wage Plan: Taylor applied the concept of differential piece-wage plan in order to motivate and attract highly efficient workers. According to the plan if a worker completes the normal work given to him, he will be given a higher piece rate. On the other hand, one who does not complete gets a lower piece rate. Taylor also suggested that only individual performance should be taken into consideration. vii) Economy: Application of scientific management should always lead to economy and profitability. For this purpose, techniques of cost estimates and control should be adopted. By making effective use of resources, wastage can be eliminated and thereby profitability and efficiency can be improved. Scientific management should not be based only on technical and scientific aspects but due consideration should also be given to profit and economy. Page | 16  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 viii) Mental Revolution: The concept of Mental Revolution laid down by Taylor calls for a change in the mental attitudes of the workers and the management towards each other. This change in mental attitude can be brought about through mutual cooperation and confidence. No principle of scientific management can be applied without the revolutionary change in attitude. Mental Revolution can be obtained by i) taking proper efforts to increase production, ii) creating a spirit of mutual confidence and trust, and iii) developing scientific attitude towards problems. Mental Revolution helps in effective accomplishment of organisational goals because both workers and management would turn their attention towards increasing the size of surplus and will not be bothered about the division of surplus. Taylor’s scientific management has provided a number of benefits to the industry. The main benefits are conservation and savings, better utilization of different resources, development of workers and satisfaction of customer needs by providing quality products at lower prices. Criticism of Taylor’s Scientific Management Taylor’s Scientific Management suffers criticism not only from workers and managers but also from psychologists and the general public. The criticisms are as follows: i. Taylor’s Scientific Management Concepts were confined only to functional area of management, namely, production and it ignored others aspects of management like marketing, finance and personnel. ii. The concept of functional foreman-ship cannot be applied in practice as it is against the principle of unity of command. iii. Workers feel that the concept of scientific management is a means to exploit them without providing them with proportionate returns. iv. Introduction of scientific management concepts involve huge expenditure. In spite of these criticisms, many of Taylor’s concepts are still being applied by modern business organizations. It was Taylor who first introduced scientific reasoning to the discipline of management. Page | 17  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 B. Henri Fayol’s Contributions Henri Fayol (1843-1925), a French industrialist is known as the real father of modern management theory. In 1860 Henri Fayol joined a French mining company as a Engineer and later became its Managing Director. When he took charge, the company was on the verge of closure, but when he retired in 1918, the company’s financial position was very sound. Fayol pointed out that the reason for his success was his system of management which he emphasized could be both learnt and taught. His observations on the general principles of management were first published in French in 1916, under the title Administration Industrialist General (General and Industrial Management). This was not translated into English nor made available outside France until 1929. Moreover, no English translation was published in the United States until 1949. Henri Fayol’s contribution could not make much impact on the development of management thought in the earlier periods because of these delays. However, after its publication, Fayol’s perception of management principles, disclosed and extraordinary insight into the basic problem of modern management. Henri Fayol evolved a general theory of management which could be applied to any filed of organized activity, particularly from the top level of management. He viewed the problem of managing an enterprise from the top management angle. Henri Fayol’s observations fit well with the requirements of present-day management. That is why he is rightly called the Father of Modern Management Theory. Fayol found that the activities of an industrial undertaking could be classified into six groups, namely: i. Technical (concerned with production); ii. Commercial (related to buying, selling and exchanging): iii. Financial (search for capital and optimum use of it); iv. Security (protection of person and property); v. Accounting (including statistics); and vi. Managerial (relating to planning, organization, command, coordination and control). Fayol pointed out that these activities exist in every type and size of business. He observed that the first five were well known, and consequently devoted most of his book to anyalse the last activity namely Managerial. Fayol’s contribution to management can be divided into three parts: I. Managerial qualities and training, II. General principles of management, and III. Elements of Management. Page | 18  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 General principles indicate the rules or guidelines which are fundamental truths that establish cause-effect relationship, whereas, elements of management indicate the functions that are to be performed by a manger. Let us now discuss Each one of these parts separately. I. Managerial Qualities and Training According to Henri Fayol, there are six types of qualities that a manager should possess in order to be effective in carrying out his duties. They are: 1. Physical (health, vigour and address); 2. Mental (ability to understand and learn, judgment and adaptability); 3. Moral (relating to energy, initiative, firmness, loyalty and dignity); 4. Educational (general acquaintance with matters not belonging exclusively to the functions performed); 5. Technical (peculiar to the function being performed); and 6. Experience (arising from the work). Fayol pointed out that the technical ability of a worker was the important ability and the relative importance of managerial ability increases as one goes up the main of command. On this basis, Fayol developed the need for principles of management and for management teaching. He held that managerial ability should be first acquired in school and later in the workshop. He developed fourteen principle of management to be taught in academic institutions, in order to acquire managerial ability and knowledge. II. General Principles of Management Principles of Management are fundamental truths and they establish cause-effect relationship. Henri Fayol has listed fourteen principles of management. Fayol emphasized on two important aspects with regard to his principles. i. The list of principles is only suggestive and not exhaustive and only those principles which he used on most occasions had been discussed. ii. These principles are flexible and not rigid and they can be adopted to every need and situation provided one knows how to make use of them. Page | 19  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 The fourteen principles of management are as follows: 1. Division of Work: In order to take advantage of specialisation, this concept of division of work was formulated. Specialisation leads to efficiency and accuracy which increases output. Fayol applied this principle to both managerial as well as technical work. The principle of division of work can be applied to all levels of the organisation. 2. Authority and Responsibility: Henri Fayol points out that these two terms ‘authority’ and responsibility are related to one another and they go hand in hand. Responsibility is corollary to the former and arises from it. There should be parity of authority and responsibility, in order to discharge responsibility properly. According to Fayol, authority is derived from one’s position, whereas personal authority is derived from personal qualities like experience, intelligence etc. 3. Discipline: Discipline is “respect for agreements which are directed to achieving obedience, application, energy and outward marks of respect”. Discipline is essential for smooth functioning of an enterprise and it should prevail at all levels of an organization. Discipline can be enforced through good supervision, fair and clear agreements and judicious sanction of penalties. 4. Unity of Command: This principle is based on the concept of “one man – one Boss” Every individual in an organisation should receive instructions and orders from only one superior. If a person receives instructions from two or more superiors, then it would lead to unnecessary conflict and delay. For effective functioning of an organisation, unity of command is essential. But for unity of command, authority is undermined, orders are disturbed and stability is threatened. 5. Unity of Direction: According to this principle, each group of activities having the same objective must have one head and one plan. Unity of direction and unity of command are not the same. Where the later pertains to the functioning of persons, the former is concerned with the functioning of the body corporate directed towards achievement of common goals. Unity of direction leads to unity of action and coordination of efforts. 6. Subordination or Individual to general interest: When there is a conflict between individual interest and general interest, individual interest should be subordinated to general interest. The interest of the organisation is above the individual interest. Factors like ambition, weakness, selfishness etc., may reduce the importance of general interest. Constant supervision, fair agreement and firmness on part of the superiors help in subordination of individual to general interest. Page | 20  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 7. Remuneration of Personnel: Fair remuneration and maximum possible satisfaction to both employees and employers, were advocated by Henri Fayol. In large scale organisation, he favoured non-financial incentives. He favoured profit- sharing plan for managers and not for workers. 8. Centralisation: Without using the term centralization of authority. Fayol refers the extent to which authority is centralised or decentralised. Centralisation and decentralization are only a question of proportion. According to Henri Fayol, the size of the firm and the individual circumstances will determine the degree of Centralisation. 9. Scalar Chain: Scalar chain of authority refers to the flow of communication ranging from the highest to the lowest level. All upward and downward communication should flow through each position in the line of authority which he should clear. The chain of command can be short-circuited only in special circumstances when it is absolutely essential. For this purpose, Henri Fayol has suggested the concept of ‘Gang plank’ wherein two subordinates can deal directly with each other, provided they inform their immediate superior of any action taken by them. This concept of gang plan is clearly explained in Figure 2. In Figure 2, A is a superior having two immediate subordinates namely, B and L in turn they have two subordinates C and M and so on until G and Q. any communication from top to bottom should flow through A, B, C, D, E, F and G. Similarly, it should flow from G to A, while to go through the formal chain, namely F to A through E and B and then from A to P through L and A. Fayol suggested that this chain of communication takes time, and this can be substituted by gang plank (dotted line) without weakening the normal chain of command. F and P can communicate directly with one another provided their immediate superiors E and O authorize them to do so and it is the duty of F and P to inform their superiors of any action. By following this pattern quick decisions can be taken without any delay. Page | 21  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 10. Order: This principle relates to two aspects to an order, namely social order and material order. In social order there should be a right person in the right place and in material order there should be a place for everything and everything should be in its place. Order in an organisation helps to establish constant balance between human requirements and resources. 11. Equity: Equity refers to the combination of justice, fairness and kindness. Equity of treatment brings about loyalty in the organisation. The concept of equity should be applied at all levels in the organisation. 12. Stability of Tenure: According to this principle, there should be reasonable security of jobs. Workers should not be removed within a short period. Stability of tenure is required to get a worker accustomed to his new job and help him to perform better in future. Unnecessary labour turnover affects the organisaiton to a great extent and is a cause of bad management. Fayol suggested stability of tenure for all and more so to managerial personnel. 13. Initiative: Fayol advocated that managers should encourage their employees for taking initiative. It is concerned with the power of thinking out a plan and ensuring its successful implementation. It adds to the energy and zeal of human beings. 14. Esprit de Corps: This is a French term which means “union is strength”. It refers to the spirit of loyalty and devotion which integrates the members of a group. Unity can be obtained in an organization, through proper coordination of work, smooth social relationship among the work force and by creating enthusiasm among the workers to contribute to their maximum possible extent. III.Elements of Management According to Henri Fayol, “to manage is to forecast and plan, to organize, to command, to coordinate and to control”. Fayol viewed these as the elements of management. He considered these five elements (planning, organisation, commanding, coordination and controlling) as functions of management. Planning is considered by Fayol as the most important managerial function, and failure to plan affected the organisation badly. In order to put plans into action, creation of organisaiton structure and commanding is necessary. Coordination helps to integrate working and control checks whether everything works according to plans. These functions according to Fayol are required at all levels of management and in every type of organisation. Fayol’s Principles of Management hold good even today, it was he who made the real beginning of development of management as a separate field of study. His aim was to improve and rationalise the system of management. Page | 22  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 C. George Elton Mayo’s contributions George Elton mayo (1880 – 1949) was a pioneer of Human Behaviour School. He was a Professor of Industrial Psychology at the Harvard Business School and his remarkable contribution was his psychological approach to management. He published several papers and books. He led a team of researchers who carried out the famous Hawthorne experiments. The experiments were conducted in the Hawthorne plant of Western Electric Company in Chicago (USA) from 1924 to 1932). It employed about 30,000 employees at the time of experiments. Thought the workers were given a number of material benefits, still there was a great deal of dissatisfaction among the workers. In order to find out the reasons for this problem, the Hawthorne experiments were conducted in four stages, each stage attempting to answer the questions raised at the previous stage: 1. Illumination experiments to determine the effect of changes in illumination on productivity. 2. Relay assembly test room experiment to determine the effects of change in hours and other working conditions on productivity. 3. Mass interview programme to determine workers attitude. 4. Bank wiring observation room experiment to determine social organization at work. The conclusions drawn from the Hawthorne study were: a) Workers behaviour and performance are not materially influenced by physical factors. b) Significant influence on productivity and performance is exercised by social and psychological factors. c) Pay is not the only means of motivation, it is the working environment that influences and motivates workers. d) Workers react as members of a group and not as individuals. Informal groups and social norms determine the behaviour and efficiency of workers. e) Workers attitude and performance are influenced greater by informal leaders. The Hawthorne Studies brought about a remarkable change in the practice and teaching of management. Its findings were a source of information on individual and group behaviour. There was more stress on interpersonal relationship. Mayo’s contribution brought about a complete change in the development of management thought, where he looked at the human element in a new way. That is why, he is called as one of the pioneers of the Human Relations approach to management. Page | 23  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 D. Max Weber and His Bureaucracy Theory Max Weber (1864-1920) was a German sociologist and a political economist, and he came forward with the concept of bureaucracy in management. Weber believed that there could be only three kinds of power in the organization: 1. Traditional: In traditional authority, the workers (considered as servants) are dependent upon the leader (lord) working as their servants and following the stated rules and regulations blindly. 2. Charismatic: Under charismatic power, due to the extraordinary personality of the managers, the workers are deeply motivated to perform their best on the task allotted to them. However, this charisma may fade away with the manager’s lay off, resignation or demise. 3. Legal-Rational: In legal-rational power, the workers either need to abide by the legal rules or the naturally applicable laws. In short, all the employee need to follow a consistent set of principles. Thus, Weber developed the bureaucratic management theory, where he emphasized on a formal organizational structure. If proper hierarchy is maintained, and hence a clear set of six principles were framed. I. Principles of Bureaucratic Theory Government organizations majorly adopted Max Weber’s bureaucracy theory. Weber gave the following six principles for managing an organization effectively and efficiently: 1. Authority Hierarchy Weber proposed that there should be a systematic hierarchy in the organization, defining the position of each employee from top to the lowest level. In such a system, each employee knows who they have to report, whose orders they need to follow, and what is the role of different personnel in the organization. 2. Formal Rules and Regulations There should be a clear set of principles, procedures, rules and regulations in written form, to be followed universally by everyone working in the organization irrespective of their position. Page | 24  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 3. Division of Labor The whole work should be assorted into smaller task sets to ascertain that every set of tasks is assigned to the right person, i.e., the one who has the capability of fulfilling it. This not only improves the work efficiency but also ensures proper allocation of job responsibilities. 4. Career Orientation Another essential principle is that management should motivate employees to build a long-term career in the organization by providing job security and performance- based incentives to them. 5. Impersonality In an organization, the impersonal relations develop among the employees, which may lead to favoritism or nepotism. Weber said that the application of rules and managerial decisions should be impartial and independent of such relations. Moreover, these decisions must be based on rational and practical grounds rather than emotional or impersonal influence. 6. Formal Selection Process Weber believed that the workers should be recruited through their technical skills and expertise instead of ‘first come first selected’ basis. Even the promotion should be based on performance and merit. This not only leads to better productivity but also adds to employee’s growth and satisfaction. II. Advantages of Bureaucratic Theory Weber’s bureaucracy theory has been widely applied in the era of the 1900s by the business entities, government organizations and political associations. The benefits of this approach are explained in detail below:  Specialization or Expertise: In bureaucracy management, the work is divided among the employees according to their skill, capabilities and expertise, which results in job specialization in the organization.  Skill-Based Recruitment: The employees are recruited by matching their skills and experience with that required for the vacant job position to ensure that the right person is placed at the right job.  Predictability: When there is a systematic hierarchy and defined rules and methods of performing the complicated tasks in the organization, actions in similar situations become somewhat predictable for the management.  Equality: The management remains unbiased towards the employees and ensures a fair-judgement at the time of any issue or problem in the organization. Page | 25  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11  Structure: A systematic organizational structure can be developed through bureaucracy where the rules, regulations, methods and procedures are pre-defined.  Systematic Record Keeping: This approach focuses on systematically recording all the business transactions and operations in documents to be used by the other employees in future.  Rationality: The recording of operations brings rationality, i.e., framing the laws, rules, regulations and procedures for future, based on the experience. III.Disadvantages of Bureaucratic Theory When we talk of bureaucratic management, there are numerous drawbacks of purely adopting this theory to run any organization. Let us now elaborate over each of such shortcomings below:  One Way Communication: The bureaucracy theory emphasizes on the passing of information, i.e., tasks, orders, rules and regulations, from the top-level management to the bottom level; however, feedback concerning the operational issues and other suggestions are not taken from the employees.  The exploitation of Power: In a bureaucracy, managers have a higher authority which can be misused by them to meet their interest or to dominate their subordinates.  Wastage of Time, Efforts and Money: It involves the recording of all the business transactions and operations to create documents which require a lot of time, money and efforts of the personnel.  Delay in Business Decision-Making: The top-level management keeps the decision-making authority with itself. Therefore, the lower-level managers have to rely upon the top-level managers, even in the case of any emergency or situations demanding immediate action.  Hinders Innovation and Creativity: The supervisor controls every activity of the employees, which ultimately restrict the subordinates to apply creativity and innovation to their work.  Inflexible and Rigid Methods: The bureaucracy theory does not entertain any change or modification in the management system, which makes it quite rigid. Page | 26  Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 IV. Conclusion Bureaucracy is rooted in controlling something with the use of power or authority; therefore, it is usually taken as a negative concept by many of us. But, it is not so, the concept of bureaucratic management initiates the creation of a proper hierarchy in the organization. Here, the power or authority is distributed among the workers according to their position in the organization. Every business operation is systematically penned down, and the employees follow the stated rules and regulations. However, in the present scenario, it is tough to have a pure bureaucratic system in the organization. Still, a zest of it can be seen in the management of civil department, political and government organizations. Page | 27 Course Code: 3070343101 Course Name: Principles & Practices of Management SEMESTER: 11 Page | 28