AMS 101 Class Notes PDF

WEEK ONE THE CONCEPT OF MANAGEMENT Learning Objectives: i. Meaning and Definition of Management ii. Characteristics of Management iii. Management as an Art or Science iv. Universality of Management v. Significance of Management Meaning and Definition of Mana...

WEEK ONE THE CONCEPT OF MANAGEMENT Learning Objectives: i. Meaning and Definition of Management ii. Characteristics of Management iii. Management as an Art or Science iv. Universality of Management v. Significance of Management Meaning and Definition of Management The increasing complexities of businesses have made management a crucial necessity. Management is not only essential for businesses but also for various other institutions. It involves coordinating the efforts of many individuals to achieve objectives. According to Peter F. Drucker, the emergence of management as a leading social institution is a pivotal event in history, with little opposition or controversy. Management is a crucial aspect of human economic activity, involving organized group efforts. It is considered an essential institution in modern society, characterized by scientific and technological advancements. Management is necessary whenever collective human efforts are required to fulfil needs through productive activities, occupations, or professions. It is management that supervises and coordinates human productive activities through the efficient use of material resources. Without effective management leadership, production resources remain unused and do not turn into productive outputs. The field of management, over 80 years old, lacks a universally agreed-upon definition. Technological advancements have led to the growth and complexity of business organizations, resulting in significant changes. These changes have also influenced management thought and have been further impacted by developments in behavioural sciences, quantitative techniques, engineering, and technology. Additionally, the dynamic nature of management is influenced by 1 environmental factors such as social, cultural, and religious values, consumer preferences, education, information dissemination, and changes in government structures. Despite these changes, a clear definition of management is essential for teaching, research, and improvement in its practice. Management has been defined in various ways by experts, but no universally accepted definition exists. Let's explore some of the leading definitions. Peter F. Drucker defines management as an organ. Organs can be described and defined only through their functions. According to Terry, management is not about people; it is an activity like walking, reading, swimming, or running. People who perform management can be designated as members or executive leaders. Certainly! Here's the revised text: According to McFarland, management is defined for conceptual, theoretical, and analytical purposes as the process by which managers create, direct, maintain, and operate purposive organizations through systematic, coordinated, cooperative human effort. Henry Fayol defines management as the act of forecasting, planning, organizing, coordinating, and controlling. Harold Koontz describes management as the art of getting things done through and within formally organized groups. William Spriegal states that management is the function of an enterprise that concerns itself with the direction and control of various activities to attain business objectives. Management is essentially an executive function dealing with the active direction of human effort. 2 Kimball and Kimball describe management as encompassing all duties and functions related to starting an enterprise, securing financing, establishing major policies, providing necessary equipment, outlining the organization's general structure, and selecting principal officers. Sir Charles Reynold defines management as the process of accomplishing tasks through the efforts of a community. The functions of management involve handling a community to fulfil its intended purposes. Koontz and O'Donnell define management as "the creation and maintenance of an internal environment in an enterprise where individuals, working in groups, can perform efficiently and effectively toward the attainment of group goals. It is the art of getting the work done through and with people in formally organized groups." James Lundy describes management as "principally a task of planning, coordinating, motivating, and controlling the efforts of others towards a specific objective. It involves the combining of the traditional factors of production (land, labour, and capital) in an optimum manner, paying due attention, of course, to the particular goals of the organization." Oliver Scheldon stated, "Management is the function in the industry concerned with executing policy within the limits set by the administration and employing the organization to achieve specific objectives." In conclusion, it can be said that various definitions of management are not contradictory. Management encompasses activities that determine objectives, plans, policies, and programs, secure resources, put these resources into operation through effective organization, motivate and direct employees, supervise and control performance, and aim to provide prosperity and happiness for employers, employees, and the public. 3 Characteristics of Management The following are the attributes of management: Economic Resource: management is one of the factors of production, along with land, labour, and capital. As industrialization increases, the need for managers also increases. Efficient management is the most critical input in the success of any organized group activity, as it is the force that assembles and integrates other factors of production, namely labour, capital, and materials. Inputs of labour, capital, and materials do not by themselves ensure production; they require the catalyst of management to produce goods and services required by society. Thus, management is an essential ingredient of an organization. Management is Goal-Oriented: Management is a purposeful activity that coordinates the efforts of workers to achieve the goals of the organization. The success of management is measured by the extent to which organizational goals are achieved. Organizational goals must be well-defined and properly understood by management at various levels. Distinct Process Management is a distinct process consisting of functions such as planning, organizing, staffing, directing, and controlling. These functions are so interconnected that it is not possible to lay down the exact sequence of various functions or their relative significance. Integrative Force: The essence of management is the integration of human and other resources to achieve desired objectives. Managers apply knowledge, experience, and management principles to obtain results from workers and non-human resources. Managers also seek to harmonize individuals' goals with the organizational goals for the smooth functioning of the organization. System of Authority: Management, as a team of managers, represents a system of authority, a hierarchy of command and control. Managers at different levels possess varying degrees of 4 authority. Generally, as we move down in the managerial hierarchy, the degree of authority gradually reduces. Authority enables managers to perform their functions effectively. Multi-disciplinary Subject: Management has grown as a field of study (i.e. discipline) by incorporating knowledge from various other disciplines such as engineering, anthropology, sociology, and psychology. Much of the management literature is the result of the association of these disciplines. For instance, productivity orientation drew its inspiration from industrial engineering, and human relations orientation drew from psychology. Similarly, sociology and operations research have also contributed to the development of management science. Universal Application: Management is universal in character. The principles and techniques of management are equally applicable in the fields of business, education, military, government, and healthcare. Henri Fayol suggested that principles of management would apply more or less in every situation. The principles are working guidelines that are flexible and capable of adaptation to every organization where the efforts of human beings are to be coordinated. Management as an Art or Science Management as Science The development of management as a science is relatively recent, although its practice dates back ages. Frederick W. Taylor was the first to make significant contributions to the development of management as a science. Over the last few decades, significant progress has been made in the development of management as a systematized body of knowledge that can be learned, taught, and researched, providing powerful tools of analysis, prediction, and control to practising managers. Management is a social science, and while it lacks the exactitude of natural sciences, it has provided valuable tools to help managers perform their tasks more efficiently and effectively. Science attempts through t h e systematic procedure to establish the relationships between variables and the underlying principles. Management is a science when it employs 5 systematic procedures or scientific methods to obtain complete information about a problem under consideration and the solution is subjected to rigorous control procedures to ensure correctness and establish validity. Management as an art Management as an art: Just as an engineer uses the science of engineering while building a bridge, a manager uses the knowledge of management theory while performing his managerial functions. Engineering is a science; its application to the solution of practical problems is an art. Similarly, management as a body of knowledge and a discipline is a science; its application to the solution of organizational problems is an art. The practice of management, like the practice of medicine, is firmly grounded in an identifiable body of concepts, theories, and principles. Principles of management, like the principles of medicine, are used by the practitioner not as rules of thumb but as guides in solving practical problems. It is often said that managerial decision making involves a large element of judgment. This is true too. The raging controversy whether management is a science or an art is fruitless. It is a science as well as an art. Developments in the field of the knowledge of management help in the improvement of its practice; and improvements in the practice of management spur further research and study resulting in further development of management science. Universality of Management Management function is identical in all formal organisations whether it is a profit-making organisation or a non-profit-making organisation. All people who occupy management positions perform the same type of functions. They plan, organize, staff, direct and control. They get things 6 done through and with a subordinate. Their principal responsibility is to achieve organizational objectives through group efforts. The concept of the universality of management implies that all managers irrespective of their position in the organizational hierarchy perform at one time or the other identically functions. The concept also connotes that management know-how is transferable from one organization to another. Managers seldom perform the actual activities themselves. Their functions are managerial, not technical. What managers do in organizations are the same as the following:- 1. Managers make decisions. 2. Managers focus on objectives 3. Managers plan and set policies 4. They organize and staff 5. They communicate with subordinates, colleagues and superiors. 6. Direct and supervise by securing actual performance from subordinates 7. They control organizational activities It is as a result of all these multiple functions that management has grown into a big profession. The professional manager who occupies an important position in an organization is concerned about the corporation and its health and growth. The chief executive is, for example, a professional manager who owes no allegiance to a function or specialty for his function is to guide and direct the company as an integrated unit, not in managing its separate parts. Significance of Management Management is concerned with achieving maximum prosperity with minimal effort. It is essential wherever group efforts are needed to be directed towards common goals. In today's management- 7 conscious age, the significance of management cannot be overstated. Koontz and O'Donnell have rightly observed that there is no more important area of human activity than management, as its task is to get things done through others. The significance of management in business activities is particularly great. The inputs of labour, capital, and raw materials do not become productive without the catalyst of management. It is widely recognised that management is an important factor in the growth of any country. The following points further highlight the significance of management: 1. Achievement of group goals: Management makes group efforts more effective by creating teamwork and team spirit in an organization. It brings human and material resources together and motivates people to achieve the organization's goals. 2. Optimal utilization of resources: Management always focuses on achieving the objectives of the enterprise. The available production resources are used in a way that minimizes waste and inefficiencies. Workers are motivated to perform at their best by inspiring leadership. Managers create and maintain an environment conducive to high efficiency and performance. Through the optimal use of available resources, management accelerates the process of economic growth." 3. Cost minimization: In today's competitive environment, every business enterprise must minimize production and distribution costs. Understanding management principles helps in implementing techniques to reduce costs, such as production control, budgetary control, cost control, financial control, and material control. 4. Change and growth: Business enterprises operate in a constantly changing environment. Effective management not only moulds the enterprise but also changes the environment itself to ensure business success. 8 5. Efficient and smooth business operations: Management ensures efficient and smooth business operations through better planning, sound organization, and effective control of production factors. 6. Increased profits: Profits can be enhanced by decreasing costs, providing opportunities for future growth and development. 7. Provides Innovation: Management provides new ideas, imagination, and visions to an enterprise. 8. Social Benefits: Management not only benefits business firms but also society as a whole by improving living standards through higher production and more efficient use of scarce resources. 9. Importance in Developing Countries: Management plays a crucial role in developing countries with low productivity and limited resources. 10. Sound organization structure: Management establishes a proper organization structure, avoiding conflicts between superiors and subordinates, and fostering cooperation and mutual understanding. Summary Management is the process of unifying various resources and coordinating them to help accomplish organizational goals. It is considered both a science and an art, with principles that have universal application. However, it does not completely fulfil all the criteria of a profession. There are three levels of management - top, middle, and lower. Managers at different levels require and use different types of skills. Lower-level managers require a greater degree of technical skill, while higher-level managers require a greater degree of conceptual skill. Human skills are important at all managerial levels. 9  WEEK TWO MANAGEMENT FUNCTIONS AND MANAGER’S SKILL/ROLE Learning Objectives: i. Process of Management Functions ii. Levels of Management iii. Managerial Skills iv. The Manager and his job Process of Management Functions Various management writers have different perspectives on the classification of managerial functions. Some like Newman and Summer recognize four functions; Fayol identifies five functions of management: planning, organizing, commanding, coordinating, and controlling while Luther Gulick lists seven functions under the acronym "POSDCORB," standing for planning, organizing, staffing, directing, coordinating, reporting, and budgeting, and Koontz and O'Donnell divide these functions into planning, organizing, staffing, directing, and controlling.. For our purpose, we will focus on six functions of a manager: planning, organizing, staffing, directing, coordinating, and controlling. Planning Planning is the most fundamental and pervasive of all management functions. For people working in groups to perform effectively, they should know in advance what needs to be done, what activities they have to perform, and when they need to do them. Planning involves deciding in the present about future objectives and the courses of action for their achievement. This includes determining long and short-range objectives, developing strategies and courses of action for their achievement, and formulating policies, procedures, and rules for their implementation. 10 Organizational objectives are set by top management in the context of its basic purpose and mission, environmental factors, business forecasts, and available and potential resources. These objectives are both long-range and short-range and are divided into divisional, departmental, sectional, and individual objectives or goals. This is followed by the development of strategies and courses of action at various levels of management and in various segments of the organization. Policies, procedures, and rules provide the framework for decision-making and the method and order for the making and implementation of those decisions. Every manager performs these planning functions or contributes to their performance. While in some organizations, planning may not be done deliberately and systematically, it is still done. The plans may be in the minds of the managers rather than explicitly and precisely spelt out; they may be fuzzy/uncertain/blurry rather than clear, but they are always there. Planning is thus the most basic function of management and is performed in all kinds of organizations by all managers at all levels of the hierarchy. Organizing Organizing involves identifying the activities required for achieving enterprise objectives and implementing plans. It includes grouping activities into jobs, assigning these jobs and activities to departments and individuals, delegating responsibility and authority for performance, and providing vertical and horizontal coordination of activities. Every manager needs to decide which activities need to be undertaken in their department or section to achieve their goals. Once the activities are identified, the manager needs to group similar activities to create jobs, assign these jobs or groups of activities to 11 subordinates, delegate authority to them so they can make decisions and take action, and ensure coordination between themselves and their subordinates, and among their subordinates. The organizing process involves several sub-functions: (a) Identifying activities required for achieving objectives and implementing plans. (b) Grouping the activities to create self-contained jobs. (c) Assigning jobs to employees. Staffing Staffing is a continuous and vital function of management. Once the objectives have been determined and strategies, policies, programs, procedures, and rules have been formulated for their achievement, the next logical step is to procure suitable personnel for the jobs. The efficiency and effectiveness of an organization significantly depend on the quality of its personnel, making staffing a distinct function of management. This function comprises several sub-functions: (a) Manpower planning involving the determination of the number and the kind of personnel required. (b) Recruitment for attracting an adequate number of potential employees to seek jobs in the enterprise. (c) Selection of the most suitable persons for the jobs under consideration. (d) Placement, induction, and orientation. (e) Transfers, promotions, termination, and layoff. 12 (f) Training and development of employees. As the importance of the human factor in organizational effectiveness is increasingly recognized, staffing is gaining acceptance as a distinct function of management. It is essential to emphasize that no organization can ever be better than its people, and managers must perform the staffing function with as much concern as any other function. Directing Directing is the function of leading employees to perform efficiently and contribute their best to achieve organizational objectives. It involves explaining and clarifying assigned tasks, providing guidance in job performance, and motivating employees to give their best performance with enthusiasm. The function of directing includes the following sub- functions: (a) Communication (b) Motivation (c) Leadership Coordination Coordination is the function of establishing relationships among various parts of the organization so that they all work together towards organizational objectives. It involves tying together all organizational decisions, operations, activities, and efforts to achieve unity of action for the accomplishment of organizational goals. Mary Parker Follet highlighted the significance of the coordinating process. She emphasized that the manager should ensure that the organization functions as a closely knit and adjusting unit, with 13 all its parts coordinated and moving together. This ensures that the organization is a functional whole or integrative unity, rather than a conglomeration of separate pieces. Coordination, as a management function, involves the following sub-functions: (a) Clear definition of authority-responsibility relationships (b) Unity of direction (c) Unity of command (d) Effective communication (e) Effective leadership Controlling Controlling ensures that the performances of various divisions, departments, sections, and individuals are in line with predetermined objectives and goals. Any deviations from objectives and plans need to be identified, investigated, and corrected. Deviations provide feedback to managers, leading to continuous reviews and modifications of all management processes including planning, organizing, staffing, directing, and coordinating. Controlling assumes the existence of objectives, goals, and performance standards known to employees and their superiors. It also implies a flexible and dynamic organization that allows changes in objectives, plans, programs, strategies, policies, organizational design, staffing policies and practices, leadership style, communication systems, etc. It is not uncommon for employees' failure to meet predetermined standards to be due to defects in any one or more of these management dimensions. The process of controlling involves: (a) Measuring performance against predetermined goals. 14 (b) Identifying deviations from these goals. (c) Taking corrective action to rectify deviations. It's important to note that although management functions are typically discussed in a specific sequence (planning, organizing, staffing, directing, coordinating, and controlling), they are not necessarily performed in a sequential order. Management functions tend to blend together, making it difficult to separate one from the other. Managers often perform multiple functions simultaneously. For example, when a production manager is discussing work problems with a subordinate, it's hard to determine whether they are guiding, developing, communicating, or doing all of these things at the same time. Levels of Management An organization may have different management levels, including administrative and operating management. Administrative management focuses on planning and setting policies while operating management deals with implementing policies. However, it's difficult to clearly separate thinking and doing functions, as all managers perform fundamental functions. For example, a wage and salary director may participate in setting the company's wage structure as a board member but is primarily responsible for implementing these decisions as the department head. The levels in an organization's management structure explain the authority relationships within the company. There are typically three levels of management: 1. Top management: This includes the owners/shareholders, Board of Directors, Chairman, Managing Director, Chief Executive, General Manager, or Executive Committee members who hold key positions. 15 2. Middle management: This level comprises the heads of functional departments such as Purchase Manager, Production Manager, Marketing Manager, Financial Controller, as well as Divisional and Sectional Officers who work under these Functional Heads. 3. Lower level or operative management: This level includes Superintendents, Foremen, Supervisors, and similar roles within the company. The three levels of management in an enterprise are top management, middle management, and lower or operative management. 1. Top management: Top management is the highest level of authority in the organization. It is responsible for setting goals, policies, and plans for the enterprise. This level of management spends more time on planning and coordinating functions. It is accountable to the owners of the business for the overall management. Top management is also responsible for making policies and directing and ensuring the success of all company activities. Its main functions include: (a) Establishing the objectives or goals of the enterprise. (b) Making policies and plans to achieve the objectives. (c) Setting up an organizational framework to conduct operations. (d) Assembling resources such as money, personnel, materials, and methods to implement plans. (e) Exercising effective control over operations. (f) Providing overall leadership to the enterprise. 2. Middle management: The role of middle management is to put into action the policies and plans set by the top management. It acts as a crucial link between the top management and the lower-level or operational management. Middle managers are accountable to the top management for the 16 operations of their departments. They spend more time on organizational and motivational aspects of management. They provide the direction and structure for a purposeful enterprise. Without them, the top management's plans and ambitious expectations will not be effectively realized. Middle management is responsible for implementing the policies and plans laid out by top management. Its main functions include: (a) Interpreting the policies of top management. (b) Preparing the organizational setup in their departments to fulfill business objectives. (c) Recruiting and selecting suitable staff. (d) Assigning activities, duties, and responsibilities for timely plan implementation. (e) Compiling instructions and issuing them to supervisors. (f) Motivating personnel to achieve higher productivity and rewarding them properly. (g) Cooperating with other departments for smooth functioning. (h) Collecting reports and information on departmental performance. (i) Reporting to top management. (j) Making suitable recommendations to top management for better execution of plans and policies. 3. Lower or operative management: Lower or operative management is positioned at the bottom of the management hierarchy, and it is responsible for the actual operations. This level of management includes foremen, supervisors, sales officers, and accounts officers, who have direct contact with the workers. Their authority and responsibility are limited. They relay the instructions of the middle management to the workers, interpret and implement the management plans, and make short-term operating plans. They also participate in decision-making processes. Their main tasks involve directing and controlling the workers, assigning various jobs, evaluating performance, and reporting to the middle management. 17 This level is responsible for the actual operations of the organization. It consists of foremen, supervisors, sales officers, accounts officers, etc. Their main functions include: (a) Passing on instructions from middle management to workers. (b) Interpreting and implementing management plans. (c) Getting work done through workers. (d) Evaluating worker performance and reporting to middle management. (e) Supervising workers to ensure work is carried out efficiently. Managerial Skills A skill is an individual's ability to apply knowledge into action, as demonstrated in their performance. Skills can be developed through practice and by relating learning to personal experiences and background. For a manager to successfully carry out their roles, they should possess three major skills: conceptual skill, human relations skill, and technical skill. Conceptual skill deals with ideas, technical skill with things, and human skill with people. While both conceptual and technical skills are needed for good decision-making, human skill is necessary for good leadership. Conceptual skill refers to a manager's ability to take a broad and farsighted view of the organization and its future, think abstractly, analyze the forces at play, be creative and innovative, and assess the environment and changes taking place in it. It also involves the ability to set appropriate goals for the organization, oneself, and one's team. This skill becomes increasingly important as a manager moves up to higher positions of responsibility. Conceptual skill is the ability to visualise (see) the organisation as a whole. It includes Analytical, Creative and Initiative skills. It helps the manager to identify the causes of the problems and not the symptoms. It helps him to solve the problems for the benefit of the entire organisation. 18  It helps the manager to fix goals for the whole organisation and to plan for every situation. According to Prof. Robert Katz, conceptual skills are mostly required by the top- level management because they spend more time in planning, organising and problem solving. Technical skill is the manager's understanding of the nature of the jobs performed by those under them. It refers to a person's knowledge and proficiency in any type of process or technique. While it is more important at lower levels of management, its relative importance diminishes as the manager moves to higher positions. In higher functional positions, the conceptual component related to these functional areas becomes more important. A technical skill is the ability to perform the given job. Technical skills help the managers to use different machines and tools. It also helps them to use various procedures and techniques. The low-level managers require more technical skills. This is because they are incharge of the actual operations. Apart from Prof. Robert Katz's three managerial skills, a manager also needs (requires) following additional managerial skills. Human relations skill is the ability to interact effectively with people at all levels. It involves recognizing the feelings and sentiments of others, judging possible actions and outcomes, and examining one's own concepts and values to develop more useful attitudes about oneself. This skill remains consistently important for managers at all levels. Human relations skills are also called Interpersonal skills. It is an ability to work with people. It helps the managers to understand, communicate and work with others. It also helps the managers to lead, motivate and develop team spirit. Human relations skills are required by all managers at all levels of management. This is so, since all managers have to interact and work with people. 19 Skill-mix of different management levels Top Management Conceptual Skills Middle Management Human Relations Skills Low Management Technical Skills The Manager and his job Manager performs different roles. Formal authority gives rise to 3 interpersonal roles and 3 informational roles. And the two sets of roles enable the manager to play the 4 decisional roles. 1. Interpersonal Roles Three of the managers’ roles involve basic interpersonal relationships: i. Figurehead role: Every manager must perform some duties of a ceremonial nature (e.g., the president greets the touring dignitaries, the sales manager takes an important customer to lunch). These activities are important to the smooth functioning of an organization. ii. Leader role: This role involves leadership directly (e.g., the manager is responsible for hiring and training his own staff). The leader role encompasses relationships with subordinates, including motivation, communication, and influence. iii. Liaison role: in which the manager makes contacts inside and outside the organization with a wide range of people: subordinates, clients, business associates, government, trade organization officials, and so on. 2. Informational Roles The processing of information is a key part of the manager's job. Three roles describe the informational aspects of managerial work: i. Monitor role: This role involves seeking current information from many sources. For example, the manager perpetually scans his environment for information, interrogates liaison contacts and subordinates and receives unsolicited information. ii. Disseminator role: In their disseminator role, managers pass information to other, both inside and outside the organization. 20 iii. Spokesperson role: In their spokesman role, managers send some of their information to people outside the organization about company policies, needs, actions, or plans. 3. Decisional Roles: The manager plays the major role in his unit's decision-making system. Four roles describe the decisional aspects of managerial work: i. Entrepreneur role: In his entrepreneur role, managers search for improvement his unit to adopt it to changing conditions in the environment. ii. Disturbance handler role: This role involves responding to high-pressure disturbances. For example, manager must resolve conflicts among subordinates or between manager's department and other departments. iii. Resource allocator role: In their resource allocator role, managers make decisions about how to allocate people, budget, equipment, time and other resources to attain desired outcomes. i..Negotiator role: The negotiations are duties of the manager's job. These activities involve formal negotiations and bargaining to attain outcomes for the manager's unit responsibility. 21