Nature and Significance of Management PDF

NATURE AND SIGNIFICANCE OF MANAGEMENT Management at HCL At a time when India had a total of 250 computers, Shiv Nadar 1 CHAPTER...

NATURE AND SIGNIFICANCE OF MANAGEMENT Management at HCL At a time when India had a total of 250 computers, Shiv Nadar 1 CHAPTER L E A R N I N G led a young team which passionately believed in the growth OBJECTIVES of the indigenous IT industry. That vision in 1976, born out of a Delhi ‘barsaati’, has resulted three decades later in creating a After studying this US $ 3.5 billion global enterprise. HCL is today a leader in the chapter, you should IT industry, employing 41,000 professionals and having a global be able to: presence in 16 countries spanning locations in the US, Europe, Japan, ASEAN and the Pacific Rim. HCL’s business today spans n Describe the IT hardware manufacturing and distribution, system integration, characteristics of technology and software services, business process outsourcing, and infrastructure management. HCL Enterprises is a leader in management and global technology and IT services. its importance in HCL’s basic plan of developing an indigenous microcomputer an organisation; bore fruit in 1978 at the same time as Apple and three years before IBM. This was considered by many industry observers n Explain the nature as the birth of the Indian computer industry. Under the able of management direction of its founding fathers it commenced global operations as an art, science in the US in 1988. Shiv Nadar’s risk-taking ability is legendary and he has often made daring forays based on his conviction of and profession; the future. At a time when hardware was the name of the game, n Explain the Nadar foresaw the huge potential in the area of IT education and learning from which NIIT was born. Yet again when software functions of development was still in the nascent stages, Shiv Nadar took management; and the lead and today HCL is a force to reckon with in the global markets. The organisation structure of HCL Enterprises consists n Appreciate of two listed companies in India – HCL Technologies and HCL the nature and Infosystems. importance of Shiv Nadar, Chairman and CEO, attributes the success of the group to its management team and their entrepreneurial coordination. spirit, which together have enabled it to handle rapid changes in environments and technologies, and to transform threats into opportunities. Fundamental to the process has been the development of new paradigms for the unprecedented situations into which the group ventures. These include guidelines for organisation restructuring, market creation, technology leveraging 2015-16(21/01/2015) 2 Business Studies and business up-scaling. Like any other business enterprise profits are important for the survival and growth of HCL as an enterprise. At HCL the management believes that a satisfied employee creates a satisfied customer, who in turn creates profits that lead to satisfied shareholders. HCL has a strong sense of social responsibility. It has set up educational institutions in the fields of management, engineering and computer education, in which one-third of the students are girls. According to Shiv Nadar, the future belongs to the global enterprise which is able to transform itself according to the challenges of global economy. Source: www.hcl.in Introduction Suhasini to the rural artisans who The above case is an example of actually implement them. a successful organisation which Fabmart is a private limited is amongst the top companies in company with several branches all India. It has risen to the top because over the country. It has a complex of its quality of management. organisation structure in which Management is required in all kinds actual production is in the hands of of organisations whether they are several skilled artisans and marketing manufacturing computers or hand- is done by staff at branches such as looms, trading in consumer goods the one managed by Suhasini. This or providing hairstyling services and means constantly providing direction even in non-business organisations. and motivation to her employees. She Let us take another example. also has to ensure that production Suhasini is the branch manager is carried out according to plans in of Fabmart, an organisation that order to ensure regular sales. promotes the sales of Indian A typical day in Suhasini’s life handloom and handicraft products consists of a series of interrelated while providing equitable employment and continuous functions. She has to traditional artisans. Fabmart to plan a special festive collection sources its products from over 7500 for Diwali and Christmas. This craft persons and artisans across means organising more funds and India. Planning the products is a recruiting more artisans. She also difficult task that is done by a team has to regularly communicate with of marketing and design experts to her suppliers to ensure that deadlines ensure that whatever is produced is regarding delivery of goods are met. according to market demand. These In the course of the day she meets plans are then communicated by customers for a general feedback 2015-16(21/01/2015) Nature and Significance of Management 3 and any suggestions that they Management is essential for all may have. organisations big or small, profit or Suhasini is the manager of non-profit, services or manufacturing. Fabmart. So is Nusli Wadia of Bombay Management is necessary so that Dyeing, Bill Gates of Microsoft, Shiv individuals make their best contri- Nadar of HCL Enterprises, Indra bution towards group objectives. Nooyi of Pepsico and the Principal Management consists of a series of your school. They all manage of interrelated functions that are organisations. Schools, hospitals, performed by all managers. Shiv shops and large corporations are all Nadar, the CEO of HCL Enterprises organisations with diverse goals that performs all these functions and so are aimed at achieving something. does Suhasini at Fabmart. Later in No matter what the organisation is or this chapter you will understand that what its goals might be, they all have although both of them are managers, something in common – management they function at different levels in and managers. the organisation. The time spent You have observed that Suhasini’s by managers in different functions work as a manager consists of however is different. Managers at the a series of different activities or top level spend more time in planning functions aimed at achieving the and organising than managers at goals of the organisation. These lower levels of the organisation. interconnected and interdependent functions are part of management. Concept Successful organisations do not Management is a very popular term achieve their goals by chance but and has been used extensively for by following a deliberate process all types of activities and mainly for called ‘management’. taking charge of different activities in Definitions of Management “Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims.” Harold Koontz and Heinz Weihrich “Management is defined as t he process of planning, organising, actuating and controlling an organisation’s operations in order to achieve coordination of the human and material resources essential in the effective and efficient attainment of objectives.” Robert L. Trewelly and M. Gene Newport “Management is the process of working with and through others to effectively achieve organisational objectives by efficiently using limited resources in the changing environment.” Kreitner 2015-16(21/01/2015) 4 Business Studies any enterprise. As you have seen from also, i.e., being efficient or as we say the above example and case study doing work efficiently. that management is an activity which Efficiency means doing the task is necessary wherever there is a group correctly and with minimum cost. of people working in an organisation. There is a kind of cost-benefit People in organisations are performing analysis involved and the relationship diverse tasks but they are all working between inputs and outputs. If towards the same goal. Management by using less resources (i.e., the aims at guiding their efforts towards inputs) more benefits are derived achieving a common objective — a (i.e., the outputs) then efficiency has goal. Thus, management has to see increased. Efficiency is also increased that tasks are completed and goals when for the same benefit or outputs, are achieved (i.e., effectiveness) with fewer resources are used and less the least amount of resources at a costs are incurred. Input resources minimum cost (i.e., efficiency). are money, materials, equipment and Management, has therefore, been persons required to do a particular defined as a process of getting things task. Obviously, management is done with the aim of achieving goals concerned with the efficient use effectively and efficiently. We need of these resources, because they to analyse this definition. There reduce costs and ultimately lead to are certain terms which require higher profits. elaboration. These are (a) process, (b) effectively, and (c) efficiently. Effectiveness versus Process in the definition means the Efficiency primary functions or activities that These two terms are different but they management performs to get things are interrelated. For management, done. These functions are planning, it is important to be both effective organising, staffing, directing and and efficient. Effectiveness and controlling which we will discuss later efficiency are two sides of the same in the chapter and the book. coin. But these two aspects need Being effective or doing work to be balanced and management effectively basically means finishing at times, has to compromise with the given task. Effectiveness in efficiency. For example, it is easier management is concerned with doing to be effective and ignore efficiency the right task, completing activities i.e., complete the given task but at a and achieving goals. In other words, it high cost. Suppose, a company’s target is concerned with the end result. production is 5000 units in a year. To But it is not enough to just complete achieve this target the manager has to the tasks. There is another aspect operate on double shifts due to power 2015-16(21/01/2015) Nature and Significance of Management 5 failure most of the time. The manager (i) Management is a goal-oriented is able to produce 5000 units but at a process: An organisation has a higher production cost. In this case, set of basic goals which are the the manager was effective but not so basic reason for its existence. efficient, since for the same output, These should be simple and more inputs (labour cost, electricity clearly stated. Different organ­ costs) were used. isations have different goals. For At times, a business may con- example, the goal of a retail store centrate more on producing goods may be to increase sales, but the with fewer resources i.e., cutting goal of The Spastics Society of down cost but not achieving the India is to impart education to target production. Consequently, the children with special needs. goods do not reach the market and Management unites the efforts hence the demand for them declines of different individuals in the and competitors enter the market. organisation towards achieving This is a case of being efficient but these goals. not effective since the goods did not (ii) Management is all pervasive: reach the market. The activities involved in managing Therefore, it is important for an enterprise are common to all management to achieve goals organisations whether economic, (effectiveness) with minimum social or political. A petrol pump resources i.e., as efficiently as possible needs to be managed as much while maintaining a balance between as a hospital or a school. What effectiveness and efficiency. Usually managers do in India, the USA, high efficiency is associated with Germany or Japan is the same. high effectiveness which is the aim of How they do it may be quite all managers. But undue emphasis different. This difference is due on high efficiency without being to the differences in culture, effective is also not desirable. Poor tradition and history. management is due to both ineffi- (iii) Management is multidimen- ciency and ineffectiveness. sional: Management is a complex activity that has three main Characteristics of dimensions. These are: Management (a) Management of work: All After going through some of the organisations exist for the definitions we find some elements performance of some work. In that may be called the basic a factory, a product is characteristics of management: manufactured, in a garment 2015-16(21/01/2015) 6 Business Studies The Management Mantra from GE Jack Welch was appointed CEO of GE in 1981. At that time the firm had a market capitalisation of $13 billion. In 2000 when he stepped down the firm’s turnover had increased multifold to $500 billion. What was the secret of Welch’s success? He has laid down the following pointers for managers to be successful: n Create a vision and then ignite your organisation to make this vision a reality. Get people so passionate about what they are doing that they cannot wait to execute this plan. Have great energy, competitive spirit and the ability to spark excitement and achieve results. Search for leaders who have the same qualities. n Focus on strategic issues. Your job is to understand the vital issues within each of your businesses. Recognise the talent needed to win in those markets. n Focus on the main issue. Your job is to see the big picture. Don’t manage every detail. Don’t get caught up in the minute details, but instead inspire others to execute some of your vision. Surround yourself with great people and trust them to do their job and contribute their best to the organisation. n Involve everyone and welcome great ideas from everywhere. Anyone can be a leader, just so long as they contribute, and the most meaningful way for anyone to contribute is to come up with a good idea. Business is all about getting the best ideas from everyone. New ideas are the lifeblood of the organisation, the fuel that makes it run. “The hero is the person with a new idea.” There is simply nothing more important to an organisation than expressing ideas and creating a vision. n Lead by example. To spark others to perform, you must lead by example. Jack Welch’s mastery of the four E’s of leadership – Energy, Energise, Edge, and Execution – was always in evidence. “He had great energy, sparked others, had incredible competitive spirit, and had a record of execution that was second to none. This is a key of the Welch phenomenon. Had he been lacking in any of the traits he espoused, he would not have commanded such acclaim.” Source: www.ge.co.in store a customer’s need is (b) Management of people: Human satisfied and in a hospital a resources or people are an patient is treated. Management organisation’s greatest asset. translates this work in terms Despite all developments in of goals to be achieved and technology “getting work done assigns the means to achieve through people” is still a major it. This is done in terms of task for the manager. Managing problems to be solved, people has two dimensions decisions to be made, plans to (i) it implies dealing with be established, budgets to be employees as individuals with prepared, responsibilities to diverse needs and behavior; be assigned and authority to (ii) it also means dealing with be delegated. individuals as a group of people. 2015-16(21/01/2015) Nature and Significance of Management 7 The task of management is to is interlinked with both the make people work towards management of work and the achieving the organisation’s management of people. goals, by making their strengths (iv) Management is a continuous effective and their weaknesses process: The process of manage- irrelevant. ment is a series of continuous, (c) Management of operations: No composite, but separate functions matter what the organisation, (planning, organising, directing, it has some basic product or staffing and controlling). These service to provide in order to functions are simultaneously survive. This requires a prod- performed by all managers all the uction process which entails time. You may have observed that the flow of input material and Suhasini at Fabmart performs the technology for transfor- several different tasks in a single ming this input into the desired day. Some days she may spend output for consumption. This more time in planning a future Together Everyone Achieves More as a Team 2015-16(21/01/2015) 8 Business Studies exhibition and on another day gement should enable all its she may spend time in sorting members to grow and develop as out an employee’s problem. The needs and opportunities change. task of a manager consists of an (vi) Management is a dynamic ongoing series of functions. function: Management is a (v) Management is a group activity: dynamic function and has to An organisation is a collection of adapt itself to the changing diverse individuals with different environment. An organisation needs. Every member of the group interacts with its external envi- has a different purpose for joining ronment which consists of the organisation but as members various social, economic and of the organisation they work political factors. In order to be towards fulfilling the common successful, an organisation must organisational goal. This requires change itself and its goals team work and coordination of according to the needs of the individual effort in a common environment. You probably know direction. At the same time mana- that McDonalds, the fast food Management – a multidimensional activity 2015-16(21/01/2015) Nature and Significance of Management 9 giant made major changes in its and material resources to the menu to be able to survive in the maximum possible advantage, Indian market. i.e., to fulfill the economic (vii) Management is an intangible objectives of a business. These force: Management is an intangi­ are survival, profit and growth. ble force that cannot be seen but Survival: The basic objectives its presence can be felt in the of any business is survival. way the organisation functions. Management must strive to ensure The effect of management is the survival of the organisation. In noticeable in an organisation order to survive, an organisation where targets are met according to must earn enough revenues to plans, employees are happy and cover costs. satisfied, and there is orderliness Profit: Mere survival is not enough instead of chaos. for business. Management has to ensure that the organisation Objectives of Management makes a profit. Profit provides a Management seeks to achieve vital incentive for the continued certain objectives which are the successful operation of the desired result of any activity. They enterprise. Profit is essential for must be derived from the basic purpose covering costs and risks of the of the business. In any organisation business. there are different objectives and Growth: A business needs to add management has to achieve all to its prospects in the long run, objectives in an effective and efficient for this it is important for the manner. Objectives can be classified business to grow. To remain in into organisational objectives, social the industry, management must objectives and personal or individual exploit fully the growth potential objectives. of the organisation. Growth of (i) Organisational Objectives: a business can be measured in Management is responsible for terms of sales volume increase setting and achieving objectives in the number of employees, for the organisation. It has to the number of products or the achieve a variety of objectives in increase in capital investment, all areas considering the interest etc. There can be other indicators of all stakeholders including, of growth. shareholders, employees, cust­ (ii) Social objectives: It involves omers and the government. The the creation of benefit for main objective of any organisation society. As a part of society, should be to utilise human every organisation whether it is 2015-16(21/01/2015) 10 Business Studies business or non-business, has amenities like schools and a social obligation to fulfill. This crèches to employees. The box refers to consistently creating given below illustrates how a economic value for various company can fulfill its social constituents of society. This responsibility. includes using environmental (iii) Personal objectives: Organi- friendly methods of production, sations are made up of people giving employment opportunities who have different personalities, to the disadvantaged sections backgrounds, experiences and of society and providing basic objectives. They all become part ITC – Empowering Rural India A quiet digital revolution is reshaping the lives of farmers in remote Indian villages. In these villages, farmers grow soyabeans, wheat and coffee in small plots of land, as they have done for thousands of years. A typical village has no reliable electricity and has antiquated telephone lines. The farmers are largely illiterate and have never seen a computer. But farmers in these villages are conducting e-business through an initiative called E-Choupal, created by ITC, one of India’s largest consumer product and agribusiness companies. ITC’s E-Chaupal initiative is a fine example of a business organisation fulfilling corporate social responsibility. The basic aim of the programme is to provide farmers in rural India with the opportunity to make use of a direct marketing channel eliminating multiple intermediation and wasteful handling and unnecessary transaction costs. It is the single-largest information technology-based intervention by a corporate entity in rural India, transforming the Indian farmer into a progressive knowledge-seeking citizen, enriching him with knowledge and elevating him to a new order of empowerment. E-Choupal delivers real-time information and customised knowledge to improve the farmer’s decision-making ability, thereby better aligning farm output to market demands; securing better quality, productivity and improved price discovery. Given the low levels of literacy in the rural sector, the role of the Choupal Sanchalak, the lead farmer of the village, in facilitating physical interface between the computer terminal and the farmers is central to the project. E-Choupal Smart Cards enable farmer identification to provide customised information on the E-Choupal website. Online transactions are captured to reward farmers for volume and value of usage. The E-Chaupal initiative has found its way into the Harvard Business School as a leading case study illustarating the use of modern technology by a leading business house for the benefit of the rural poor. Source: Mohanbir Sawhney, McCormick Tribune Professor of Technology, Kellogg School of Management, USA. 2015-16(21/01/2015) Nature and Significance of Management 11 of the organisation to satisfy as it often means moving from a their diverse needs. These vary familiar, secure environment into from financial needs such as a newer and more challenging competitive salaries and perks, one. Management helps people social needs such as peer adapt to these changes so that the recognition and higher level organisation is able to maintain needs such as personal growth its competitive edge. and development. Management (iv) Management helps in achieving has to reconcile personal goals personal objectives: A manager with organisational objectives for motivates and leads his team in harmony in the organisation. such a manner that individual members are able to achieve Importance of Management personal goals while contributing Having understood that management to the overall organisational is a universal activity that is integral objective. Through motivation and to any organisation we now examine leadership the management helps some of the reasons that have made individuals to develop team spirit, management so important: cooperation and commitment to (i) Management helps in achieving group success. group goals: Management (v) Management helps in the is required not for itself but development of society: An orga- for achieving the goals of the nisation has multiple objectives organisation. The task of a manager to serve the purpose of the is to give a common direction to the different groups that constitute it. individual effort in achieving the In the process of fulfilling all overall goal of the organisation. these, management helps in the (ii) Management increases effici­ development of the organisation ency: The aim of a manager is and through that it helps in the to reduce costs and increase development of society. It helps to productivity through better provide good quality products planning, organising, directing, and services, creates employment staffing and controlling the opportu­nities, adopts new techno- activities of the organisation. logy for the greater good of the (iii) Management creates a dynamic people and leads the path towards organisation: All organisations growth and development. have to function in an environment which is constantly changing. It Nature of Management is generally seen that individuals Management is as old as civilisation. in an organisation resist change Although modern organisations are 2015-16(21/01/2015) 12 Business Studies of recent origin, organised activity has art is concerned with personal existed since the time of the ancient application of knowledge some kind civilisations. In fact, organisations of ingenuity and creativity is required may be considered the distinguishing to practice the basic principles learnt. feature that separated civilised society The basic features of an art are from uncivilised ones. The earliest as follows: management practices were a set of (i) Existence of theoretical rules and regulations that grew out knowledge: Art presupposes the of the experiences of governmental existence of certain theoretical and commercial activities. The knowledge. Experts in their development of trade and commerce respective areas have derived gradually led to the development of certain basic principles which are management principles and practices. applicable to a particular form of The term ‘management’ today has art. For example, literature on several different connotations that dancing, public speaking, acting highlight the different aspects of its or music is widely recognised. nature. The study of management has (ii) Personalised application: The evolved over a period of time along use of this basic knowledge varies with the modern organisations; based from individual to individual. both on the experience and practice Art, therefore, is a very person­ of managers and a set of theoretical alised concept. For example, two relationships. Over a period of time, dancers, two speakers, two actors, it has grown into a dynamic subject or two writers will always differ in with its own special characteristics. demonstrating their art. However, one question that needs (iii) Based on practice and to be addressed pertaining to the creativity: All art is practical. nature of management is whether Art involves the creative practice it is a science or an art or both? of existing theoretical knowledge. In order to answer this let us We know that all music is based examine the features of both science on seven basic notes. However, and art to see how far management what makes the composition of fulfills them. a musician unique or different is his use of these notes in a Management as an Art creative manner that is entirely What is art? Art is the skillful and his own interpretation. personal application of existing Management can be said to be an art knowledge to achieve desired results. since it satisfies the following criteria: It can be acquired through study, (i) A successful manager practices observation and experience. Since the art of management in the 2015-16(21/01/2015) Nature and Significance of Management 13 day-to-day job of managing qualities such as ambition, self- an enterprise based on study, motivation, creativity and imagination, observation and experience. There a desire for development of the self is a lot of literature available in and the organisation they belong to. various areas of management like All management practices are based marketing, finance and human on the same set of principles; what resources which the manager has distinguishes a successful manager to specialise in. There is existence from a less successful one is the of theoretical knowledge. ability to put these principles into (ii) There are various theories of practice. management, as propounded by many management thinkers, Management as a Science which prescribe certain universal Science is a systematised body of principles. A manager applies knowledge that explains certain these scientific methods and body general truths or the operation of of knowledge to a given situation, general laws. The basic features of an issue or a problem, in his own science are as follows: unique manner. A good manager (i) Systematised body of knowledge: works through a combination of Science is a systematic body practice, creativity, imagination, of knowledge. Its principles are initiative and innovation. A based on a cause and effect manager achieves perfection relationship. For example, the after long practice. Students of phenomenon of an apple falling management also apply these from a tree towards the ground is principles differently depending explained by the law of gravity. on how creative they are. (ii) Principles based on experimen- (iii) A manager applies this acquired tation: Scientific principles are knowledge in a personalised first developed through observation and skillful manner in the light and then tested through repeated of the realities of a given situation. experimentation under controlled He is involved in the activities of conditions. the organisation, studies critical (iii) Universal validity: Scientific situations and formulates his principles have universal validity own theories for use in a given and application. situation. This gives rise to Based on the above features, we different styles of management can say that management has some The best managers are committed characteristics of science. and dedicated individuals; highly (i) Management has a systematised trained and educated, with personal body of knowledge. It has its 2015-16(21/01/2015) 14 Business Studies Some Interesting Cross-disciplinary Perspectives Anthropology – Anthropology is the study of societies, which helps us learn about human beings and their activities. Anthropologists’ work on cultures and environments, for instance, has helped managers to better understand differences in fundamental values, attitudes, and behavior between people in different countries and within different organisations. Economics – Economics is concerned with the allocation and distribution of scarce resources. It provides us with an understanding of the changing economy as well as the role of competition and free markets in a global context. An understanding of free trade and protectionist policies is absolutely essential to any manager operating in the global marketplace, and these topics are addressed by economists. Philosophy – Philosophy courses inquire into the nature of things, particularly values and ethics. Ethics are standards that govern human conduct. These ethics have shaped today’s organisations by providing a basis for legitimate authority, linking rewards to performance, and justifying the existence of business and the corporate form. Political Science – Political science is the study of the behavior of individuals and groups within a political environment. Management is affected by a nation’s form of government – by whether it allows its citizens to hold property, by its citizens’ ability to engage in and enforce contracts, and by the appeal mechanisms available to redress grievances. A nation’s stand on property, contracts, and justice, in turn, shapes the type, form, and policies of its organisations. Psychology – Psychology is the science that seeks to measure, explain, and sometimes change the behaviour of humans and other animals. Today’s managers confront both a diverse customer base and a diverse set of employees. Psychologists’ efforts to understand gender and cultural diversity provide managers with a better perception of the needs of their changing customer and employee populations. Psychology courses are also relevant to managers in terms of gaining a better understanding of motivation, leadership, trust, employee selection, performance appraisals, and training techniques. Sociology – Sociology is the study of people in relation to their fellow human beings. What are some of the sociological issues that have relevance to managers? Here are a few. How are societal changes such as globalisation, increasing cultural diversity, changing gender roles, and varying forms of family life affecting organisational practices? What are the implications of schooling practices and education trends on future employees’ skills and abilities? Answers to questions such as these have a major effect on how managers operate their businesses. Source: Fundamentals of Management Stephen P. Robbins David A. DeCenzo 2015-16(21/01/2015) Nature and Significance of Management 15 own theory and principles that Fayol which you will study in the have developed over a period next chapter. of time, but it also draws on (iii) Since the principles of mana- other disciplines such as gement are not as exact as Economics, Sociology, Psychology the principles of science, and Mathematics. Like all other their application and use is organised activity, management not universal. They have to has its own vocabulary of terms be modified according to a and concepts. For example, all given situation. However, they of us discuss sports like cricket provide managers with certain and soccer using a common standardised techniques that vocabulary. The players also can be used in different use these terms to communicate situations. These principles with each other. Similarly are also used for training and managers need to communicate development of managers. with one another with the help You must have understood from the of a common vocabulary for a foregoing discussion that manage- better understanding of their ment has features of both art and work situation. science. The practice of management (ii) The principles of management is an art. However, managers can have evolved over a period work better if their practice is based on of time based on repeated the principles of management. These experimentation and observation principles constitute the science of in different types of organisations. management. Management as an However, since management art and a science are therefore not deals with human beings and mutually exclusive, but complement human behaviour, the outcomes each other. of these experiments are not capable of being accurately Management as a Profession predicted or replicated. You have understood so far that Therefore, management can all forms of organised activity need be called an inexact science. to be managed. You would also Despite these limitations, have observed that organisations management scholars have been look for individuals with specific able to identify general principles qualifications and experience to of management. For example, manage them. It has also been scientific management principles observed that there has been an by F.W. Taylor and Functional increase in the corporate form of Management principles by Henri business on the one hand and 2015-16(21/01/2015) 16 Business Studies increasing emphasis on managed oath of ethical practice at the business concerns. Does this imply time they enter the profession. that management is a profession? To (v) Service motive: The basic motive answer this question let us examine of a profession is to serve their the salient features of a profession client’s interests by rendering and see whether management dedicated and committed service. satisfies them. The task of a lawyer is to ensure A profession has the following that his client gets justice. characteristics: Management does not meet the (i) Well-defined body of know- exact criteria of a profession. However, ledge: All professions are based on it does have some of the features of a a well-defined body of knowledge profession: that can be acquired through (i) All over the world there is instruction. marked growth in management (ii) Restricted entry: The entry to as a discipline. It is based a profession is restricted on a systematic body of through an examination or knowledge comprising well- through acquiring an educational defined principles based on a degree. For example, to become variety of business situations. a chartered accountant in This knowledge can be acquired India a candidate has to clear a at different colleges and professional specified examination conducted institutes and through a number by the Institute of Chartered of books and journals. The Accountants of India. subject of management is taught (iii) Professional association: All at different institutions. Some professions are affiliated to a of these have been set up with professional association which the specific purpose of providing regulates entry, grants certificate management education such of practice and formulates and as the Indian Institutes of enforces a code of conduct. To be Management (IIMs) in India. able to practice in India lawyers Entry to different institutes is have to become members of the usually through an examination. Bar Council which regulates and (ii) There is no restriction on anyone controls their activities. being designated or appointed (iv) Ethical code of conduct: All as manager in any business professions are bound by a code enterprise. Anyone can be of conduct which guides the called a manager irrespective of behaviour of its members. All the educational qualifications doctors, for example, take the possessed. 2015-16(21/01/2015) Nature and Significance of Management 17 Unlike professions such as Levels of Management medicine or law which require Shiv Nadar and Suhasini are both a practicing doctor or lawyer to possess valid degrees, nowhere managers of an enterprise. Shiv Nadar in the world is it mandatory is the CEO of HCL and Suhasini is a for a manager to possess any branch manager at Fabmart. They such specific degree. But manage their enterprise at different professional knowledge and levels. Management is a universal term training is considered to be a used for certain functions performed desirable qualification, since by individuals in an enterprise who there is greater demand for those are bound together in a hierarchy of who possess degrees or diplomas relationships. Every individual in the from reputed institutions. hierarchy is responsible for successful Therefore, as such the second completion of a particular task. To be criterion has not been strictly met. able to fulfill that responsibility he is (iii) There are several associations assigned a certain amount of authority of practising managers in India, like the AIMA (All India or the right to take a decision. This Management Association) that authority-responsibility relationship has laid down a code of conduct binds individuals as superiors and to regulate the activities of their subordinates and gives rise to different members. There is, however, levels in an organisation. Generally no compulsion for managers speaking there are three levels in the to be members of such an hierarchy of an organisation. association nor does it have any (i) Top Management: They consist statutory backing. of the senior-most executives of the (iv) The basic purpose of manage- organisation by whatever name ment is to help the organisation they are called. They are usually achieve its stated goal. This may referred to as the chairman, be profit maximisation for a the chief executive officer, chief business enterprise and service operating officer, president and for a hospital. However, profit vice-president. Top management maximisation as the objective is a team consisting of managers of management does not hold true and is fast changing. from different functional levels, Therefore, if an organisation heading finance, marketing etc. has a good management team For example chief finance officer, that is efficient and effective it vice president (marketing). Their automatically serves society by basic task is to integrate diverse providing good quality products elements and coordinate the at reasonable prices. activities of different departments 2015-16(21/01/2015) 18 Business Studies according to the overall objectives (iv) motivate them to achieve of the organisation. These top desired objectives, and (v) co­ - level managers are responsible operate with other departments for the welfare and survival of for smooth functioning of the the organisation. They analyse organisation. At the same time the business environment and they are responsible for all the its implications for the survival activities of first line managers. of the firm. They formulate (iii) Supervisory or Operational overall organisational goals and Management: Foremen and strategies for their achievement. supervisors comprise the lower They are responsible for all the level in the hierarchy of the activities of the business and for organisation. Supervisors directly its impact on society. The job oversee the efforts of the workforce. of the top manager is complex Their authority and responsibility and stressful, demanding long is limited according to the plans hours and commitment to the drawn by the top management. organisation. Supervisory management plays (ii) Middle Management: is the a very important role in the link between top and lower level organisation since they interact managers. They are subordinate with the actual work force and pass to top managers and superior on instructions of the middle to the first line managers. They are usually known as division heads, for example production manager. Middle management is responsible for implementing and controlling plans and strategies developed by top management. At the same time they are responsible for all the activities of first line managers. Their main task is to carry out the plans formulated by the top managers. For this they need to: (i) interpret the policies framed by top management, (ii) ensure that their department has the necessary personnel, “You don’t learn management (iii) assign necessary duties from books alone...” and responsibilities to them, 2015-16(21/01/2015) Nature and Significance of Management 19 management to the workers. be done and who is to do it. This Through their efforts quality of implies setting goals in advance output is maintained, wastage and developing a way of achieving of materials is minimised and them efficiently and effectively. In safety standards are maintained. Suhasini’s organisation the objective The quality of workmanship and is procurement and sale of traditional the quantity of output depends Indian handloom and handicraft on the hard work, discipline and items. They sell fabrics, furnishings, loyalty of the workers. readymades and household items made out of traditional Indian fabrics. Functions of Management Suhasini has to decide quantities, Management is described as the variety, colour and texture of all the process of planning, organising, above and then allocate resources directing and controlling the efforts for their purchase from different of organisational members and of suppliers or for their inhouse using organisational resources to development. Planning cannot achieve specific goals. prevent problems, but it can predict Planning is the function of them and prepare contingency plans determining in advance what is to to deal with them if and when they occur. Organising is the management function of assigning duties, grouping tasks, establishing authority and allocating resources required to carry TOP out a specific plan. Once a specific MANAGEMENT plan has been established for the accomplishment of an organisational goal, the organising function examines MIDDLE MANAGEMENT OPERATIONAL MANAGEMENT Managerial Levels 2015-16(21/01/2015) 20 Business Studies the activities and resources required employees to do their best. Motivation to implement the plan. It determines and leadership are two key what activities and resources are components of direction. Directing required. It decides who will do a also involves communicating particular task, where it will be done, effectively as well as supervising and when it will be done. Organising employees at work. Motivating involves the grouping of the required workers means simply creating an tasks into manageable departments environment that makes them want or work units and the establishment of to work. Leadership is influencing authority and reporting relationships others to do what the leader wants within the organisational hierarchy. them to do. A good manager directs Proper organisational techniques through praise and criticism in help in the accomplishment of work such a way that it brings out the and promote both the efficiency of best in the employee. Suhasini’s design team developed some prints operations and the effectiveness of for bedcovers in bright colours on results. Different kinds of business silk. Although they looked very require different structures according impressive, the use of silk made to the nature of work. You will read the product too expensive for the more about this in a later chapter. average customer. Praising their Staffing simply stated, is finding the effort, Suhasini suggested that they right people for the right job. A very keep the silk bedcovers for special important aspect of management is occasions like Diwali and Christmas to make sure that the right people and offer the cotton bedcovers on a with the right qualifications are regular basis. available at the right places and times to accomplish the goals of the Controlling is the management organisation. This is also known as function of monitoring organisational the human resource function and it performance towards the attainment involves activities such as recruitment, of organisational goals. The task selection, placement and training of of controlling involves establishing personnel. Infosys Technologies which standards of performance, measuring develops software needs systems current performance, comparing analysts and programmers, whereas this with established standards and Fabmart needs a team of designers taking corrective action where any and craftspeople. deviation is found. Here management must determine what activities and Directing involves leading, influ­ outputs are critical to success, how encing and motivating employees and where they can be measured to perform the tasks assigned to and who should have the authority to them. This requires establishing take corrective action. When Suhasini an atmosphere that encourages 2015-16(21/01/2015) Nature and Significance of Management 21 discovered that her team of designers It is however, the essence of had produced bedcovers that were management, for achieving harmony more expensive than they had among individual efforts towards planned to sell, she decided to change the accomplishment of group goals. the fabric to keep costs in check. Each managerial function is an The various functions of a manager exercise contributing individually to are usually discussed in the order coordination. Coordination is implicit given above, suggesting that a and inherent in all functions of an manager first plans, then organises, organisation. puts staff in position, then directs, The process of coordinating the and finally controls. In reality, activities of an organisation begins managers are rarely able to carry at the planning stage itself. Top out these functions in isolation. management plans for the entire The activities of a manager are organisation. According to these plans the organisational structure interrelated and it is often difficult is developed and staffed. In order to to pinpoint where one ended and the ensure that these plans are executed other began. according to plans directing is Coordination — The required. Any discrepancies between Essence of Management actual and realised activities are then taken care of at the stage of You have understood by now that controlling. It is through the process a manager has to perform five of coordination that a manager interrelated functions in the process of ensures the orderly arrangement of managing an organisation which is a individual and group efforts to ensure system made up of different interlinked unity of action in the realisation of and interdependent subsystems. A common objectives. Coordination manager has to link these diverse therefore involves synchronisation groups towards the achievement of a of the different actions or efforts of common goal. The process by which the various units of an organisation. a manager synchronises the activities This provides the requisite amount, of different departments is known as quality, timing and sequence of coordination. efforts which ensures that planned Coordination is the force that objectives are achieved with a binds all the other functions of minimum of conflict. management. It is the common thread that runs through all activities Characteristics of such as purchase, production, sales, and finance to ensure continuity Coordination in the working of the organisation. The definitions given above Coordination is sometimes considered highlight the following features of a separate function of management. coordination: 2015-16(21/01/2015) 22 Business Studies (i) Coordination integrates group (iii) Coordination is a continuous efforts: Coordination unifies process: Coordination is not unrelated or diverse interests into a one-time function but a purposeful work activity. It gives continuous process. It begins at a common focus to group effort the planning stage and continues to ensure that performance is as till controlling. Suhasini plans it was planned and scheduled. her winter collection in the month (ii) Coordination ensures unity of June itself. She has to then of action: The purpose of ensure that there is adequate coordination is to secure unity workforce and continuously of action in the realisation of monitor whether production is a common purpose. It acts proceeding according to plans. as the binding force between Her marketing department also departments and ensures that has to be briefed in time to all action is aimed at achieving prepare their promotional and the goals of the organisation. advertising campaigns. You have observed that at (iv) Coordination is an all pervasive Fabmart, the production and function: Coordination is required sales department have to at all levels of management due coordinate their work, so that to the interdependent nature of production takes place according activities of various departments. to the demand in the market. It integrates the efforts of different departments and different levels. In the absence of The purchase, production and coordination what sales departmental efforts have results is chaos to be coordinated by Suhasini for achieving organisational objectives harmoniously. The purchase department is responsible for procuring fabric. This then becomes the basis of the activities of the production department and finally sales can take place. If fabric purchased is of an inferior quality or is not according to the specifications of the production department, further sales will also decline. In the absence of coordination there is overlapping 2015-16(21/01/2015) Nature and Significance of Management 23 and chaos instead of harmony coordination without cooperation and integration of activities. may lead to dissatisfaction (v) Coordination is the responsibi- among employees. lity of all managers: Coordi- Coordination, therefore, is not a nation is the function of every separate function of management, manager in the organisation. Top but its very essence. For an level managers need to coordinate organisation to effectively and with their subordinates to ensure efficiently achieve its objectives that the overall policies for the coordination is required. Like a organisation are duly carried thread in a garland, coordination is out. Middle level management a part of all management functions. coordinates with both the top level and first line managers. Importance of Coordination Operational level management coordinates the activities of its Coordination is important as it workers to ensure that work integrates the efforts of individuals, proceeds according to plans. departments and specialists. The (vi) Coordination is a deliberate primary reason for coordination is function: A manager has that departments and individuals in to coordinate the efforts of the organisation are interdependent, different people in a conscious i.e. they depend on each other and deliberate manner. Even for information and resources to where members of a department perform their respective activities. willingly cooperate and work, Thus, managers need to reconcile coordination gives a direction to differences in approach, timing, effort that willing spirit. Cooperation or interest. At the same time, there is in the absence of coordination a need to harmonise individual goals may lead to wasted effort and and organisational goals. Definitions of Coordination Coordination is balancing and keeping together the team by ensuring suitable allocation of tasks to the various members and seeing that the tasks are performed with harmony among the members themselves. E.F.L. Brech Coordination is the process whereby an executive develops an orderly pattern of group efforts among his subordinates and secures unity of action in the pursuit of common purpose. McFarland Coordination is the orderly synchronising of efforts of subordinates to provide proper amount, timing and quality of execution so that their united efforts lead to the stated objectives, namely, the common purpose of the enterprise. Theo Haimann 2015-16(21/01/2015) 24 Business Studies (i) Growth in size: As organisations goals and organisational goals grow in size, the number of people through coordination. employed by the organisation also (ii) Functional differentiation: increases. At times, it may become Functions of an organisation are difficult to integrate their efforts and divided into departments, divisions and activities. All individuals differ in sections. In an organisation there may their habits of work, background, be separate departments of finance, approaches to situations and production, marketing or human relationships with others. It becomes resources. All these departments may necessary to ensure that all individuals have their own objectives, policies work towards the common goals of and their own style of working. For the organisation. But employees may example, the marketing department’s have their own individual goals also. objective may be to increase sales Therefore, for organisational efficiency, by 10 per cent by offering discounts. it is important to harmonise individual But, the finance department may ‘DABBAWALLAS’ – Excellence through Coordination The Dabbawallas of Mumbai is the story of a SIX SIGMA business enterprise. The success of the business lies in the complex yet well coordinated exercise that is carried out on the streets of Mumbai day after day. What is the secret behind the efficiency with which their business is conducted? The story of the dabbawallas begins in the kitchens of Mumbai. After they step out of their door, someone begins the time-consuming process of preparing the worker a fresh, home- cooked lunch. What happens next for demonstrates the coordination of the dabbawallas system. The first dabbawalla picks up the tiffin from home and takes it to the nearest railway station.The second dabbawalla sorts out the dabbas at the railway station according to destination and puts them in the luggage carriage. The third one travels with the dabbas to the railway stations nearest to the destinations. The fourth one picks up dabbas from the railway station and drops them off at the offices. By mid-morning, thousands of dabbawallas are bicycling through the streets of Mumbai, ensuring a hot home cooked lunch for their customers. The whole tiffin distribution requires negligible technology. The dabbawallas rely on low capital and use cycles, wooden carriages and local trains to achieve their target.There are several groups that work independently and network with each other to achieve their goal. Each area is divided into several small distribution sectors and each sector is handled by a particular person. This person understands the address in that locality very well. Also, this perfection comes with practice. Many new employees work for months under the guidance of their seniors. Punctuality and time management are on top of the agenda for dabbawallas. Whatever be the circumstances, the dabbawallas never get delayed even by a few minutes. 2015-16(21/01/2015) Nature and Significance of Management 25 not approve of such discounts as it Specialisation arises out of the means loss of revenue. These kinds of complexities of modern technology conflict arise in organisations because and the diversity of tasks to be each unit/department is performing performed. Organisations, therefore, activities in isolation from others and need to employ a number of barriers between departments are specialists. Specialists usually becoming more rigid. think that they only are qualified to However, all departments and evaluate, judge and decide according individuals are interdependent and to their professional criteria. They they have to depend on each other for do not take advice or suggestions information to perform their activities. from others in matters pertaining The activity of each department to their area of specialisation. This needs to be focused on attainment often leads to conflict amongst of common organisational goals. The different specialists as well as others process of linking the activities of in the organisation. Therefore, various departments is accomplished some coordination is required by an by coordination. independent person to reconcile the (iii) Specialisation: Modern differences in approach, interest or organisations are characterised opinion of the specialists. by a high degree of specialisation. The Challenge of Being a Global Manager Rajat Lal is the director of a firm that develops software solutions for the travel industry on a global level. He represents a US software services firm that outsources project work to its delivery partners in Gurgaon, the software hub of North India. It develops software for companies in the technology, transportation and leisure sectors, across the world. Rajat is the interface between his global clients and his domestic technical team. That makes his job more challenging than that of a manager who functions in a totally domestic environment. This is what Rajat has to say about the challenges of his job: In the capacity of the ‘country manager’ – the global manager has to deal with establishing his company’s legal and business presence in the form of a local office or business partner, contacting and negotiating with clients, with legal bodies including lawyers and immigration authorities since the services involve having technical staff from India to be based in USA/Europe, as also with local companies offering recruitment services. Another key role he plays is establishing a sense of comfort in potential clients by stressing on the positive effects of cross-cultural and multi-cultural opportunities that outsourcing and global delivery entail, while addressing any concerns out of these. In the capacity of the ‘functional manager’ – the global manager has to ensure he is able to source the right technical skills, build a strong resource base of these skills, and be able to deliver on software projects with these skill-sets working in a globalised 2015-16(21/01/2015) 26 Business Studies work environment – in terms of multiple time-zones, understanding of client’s priorities based on the business cycles that the client’s business operates in, understanding and adapting to the processes and methodologies the client is familiar with. Finally this function also includes customer expectation management, where the functional manager has to coordinate activities in India and in USA/Europe according to the customer’s priorities, communicate what is possible and what is not possible, and accordingly also manage the expectations and satisfaction levels of his own employees. In the capacity of the ‘business leader’ – the global manager has to be alive to changing business situations and customer priorities – he has to keep track of the trends in outsourcing – and have the ability to envision upcoming opportunities as well as potential risks. For example, having a firm grip on the changing legislations on outsourcing is critical for a business manager to understand if his current clients are going to continue giving him business. The global manager also needs to be extremely responsive in what customers may perceive as gaps between the operating environment in India vis-à-vis their own countries. He has to position the advantages that outsourcing to India offers – in terms of lowered costs and access to a wide talent-base, while expertly addressing concerns on weak areas like infrastructure in India. What do all these mean for a global manager today? To summarise, a global manager today is one who possesses what can be termed as ‘hard’ types of skills as well as ‘softer’ types of skills. Managers who understand analysis, strategy, engineering, and technology are still going to be needed, but extremely critical to global success are people who understand how teams work, how organisations work, how people are motivated. A manager who really understands different cultures should be able to work in a West European, non-English speaking country, then move to a developing country like Malaysia or Kenya, and then be transferred to an office based in New York, USA, and be almost immediately productive in all three places. It can thus be understood that the role of a global manager has evolved in much the same way that the global industry and economy have evolved. It has changed from being a single dimensional role in a defined business context, to being a multi-faceted role that calls for a diverse combination of technical skills, soft management and people skills, and the ability to imbibe and learn different cultural experiences. Source: Harvard Business School, Working Knowledge Management in the makes it possible to think of the Twenty-first Century world as a ‘global village’, the scope of international and intercultural Even as you read this chapter, the relationships is rapidly expanding. organisation and its management The modern organisation is a are changing. As boundaries between global organisation that has to be cultures and nations get blurred managed in a global perspective. and new communication technology What does this imply? 2015-16(21/01/2015) Nature and Significance of Management 27 Key Terms Management Process Efficiency Effectiveness Art Science Profession Planning Organising Staffing Directing Controlling Coordination Summary Concept Management is the process of planning, organising, staffing, directing and controlling the enterprise resources efficiently and effectively for achieving the goals of the organisation. Effectiveness in management is concerned with doing the right task, completing activities and achieving goals. Efficiency means doing the task correctly and with minimum cost. Characteristics The key features of management are: (i) goal oriented process (ii) all pervasive (iii) multidimensional (iv) continuous process (v) group activity (vi) dynamic function (vii) tangible force. Objectives Management fulfills three basic objectives: organisational, social and personal. Importance Management is important because it helps in achieving group goals, increases efficiency, creates a dynamic organisation, helps achieve personal objectives and contributes to the development of society. Nature Management is a combination of an organised body of knowledge (science) and its skillful application (art). Although it does not satisfy all the requirements of a profession, it is to a large extent professional in character. Levels Management is considered a three-tier activity. The top management focuses on determination of objectives and policies, middle management attempts to achieve these objectives through the effort of other managers and supervisory or operational management directly oversees the efforts of the workforce. Functions All managers perform the following interrelated functions: Planning, Organising, Staffing, Directing and Controlling. Coordination Coordination is the essence of management. It is the process of achieving unity of action among interdependent activities and departments of an organisation. 2015-16(21/01/2015) 28 Business Studies Exercises Short Answer Type 1. Define management. 2. Name any two important characteristics of management. 3. Ritu is the manager of the northern division of a large corporate house. At what level does she work in the organisation? What are her basic functions? 4. Why is management considered a multi-faceted concept? 5. Discuss the basic features of management as a profession. Long Answer Type 1. Management is considered to be both an art and science. Explain. 2. Do you think management has the characteristics of a full fledged profession? 3. Coordination is the essence of management. Do you agree? Give reasons. 4. “A successful enterprise has to achieve its goals effectively and efficiently.” Explain. 5. Management is a series of continuous interrelated functions. Comment. Multiple Choice 1. Which is not a function of management of the following (a) planning (b) staffing (c) cooperating (d) controlling 2. management is (a) an art (b) a science (c) both art and science (d) neither 3. the following is not an objective of management (a) earning profits (b) growth of the organisation (c) providing employment (d) policy making 4. policy formulation is the function of (a) top level managers 2015-16(21/01/2015) Nature and Significance of Management 29 (b) middle level managers (c) operational management (d) all of the above 5. coordination is (a) function of management (b) the essence of management (c) an objective of management (d) none of the above Case Problems 1. Company X is facing a lot of problems these days. It manufactures white goods like washing machines, microwave ovens, refrigerators and air conditioners. The company’s margins are under pressure and the profits and market share are declining. The production department blames marketing for not meeting sales targets and marketing blames production department for producing goods, which are not of good quality meeting customers expectations. The finance department blames both production and marketing for declining return on investment and bad marketing. What quality of management do you think the company is lacking? Explain briefly. What steps should the company management take to bring the company back on track? 2. A company wants to modify its existing product in the market due to decreasing sales. You can imagine any product about which you are familiar. What decisions/steps should each level of management take to give effect to this decision? 3. A firm plans in advance and has a sound organisation structure with efficient supervisory staff and control system. On several occasion it finds that plans are not being adhered to. It leads to confusion and duplication of work. Advise remedy. These activities are meant to reinforce concepts and to make the learning joyful. They also aim to give pupils simulated experiences of the managerial activities relevant to their level of understanding. Activity 1 Make groups of 5 – 6 students each according to the size of class. Let them run a garment manufacturing company. Assign the following tasks to each group. 2015-16(21/01/2015) 30 Business Studies (i) Let group ‘A’ identify the activities that take place in the company. (ii) Let group ‘B’ classify these activities into managerial and non-managerial activities. (iii) Let group ‘C’ identify the planning activities. (iv) Let group ‘D’ identify the organising activities. (v) Let group ‘E’ identify the staffing activities. (vi) Let group ‘F’ identify the directing activities. (vii) Let group ‘G’ identify the controlling activities. (viii) Let group ‘H’ identify the coordinating activities. Activity 2 The teacher can then summarise these activities and derive appropriate conclusions. The above activity can be done for any sector such as software export house, or an auto company. The teacher should do some preparation in finding out the actual activities with the help of Internet and printed material relevant to the sector which is selected. The students can also be involved in the searching exercise by the teacher. This activity involves classifying the activities identified in activity 1 into those taking place at higher management level, middle management level and lower management level. Accordingly 3 groups A, B and C can be formed for the three levels. If the teacher so desires she/he can form more groups. Then the findings of the groups can be summarised by the teacher. Note: The teacher can organise a panel discussion for both these activities where the group leaders can give their findings and the students of the class can ask questions which can be answered by the panel members with the help of the teacher. It should be noted that no expertise is required for the students. This exercise is just to give the feel to the students of the real life work environment and relate it to what they have learnt. 2015-16(21/01/2015)