Evolution Of Management Thought PDF

S.Y.B.Com.(NEP) Introduction to Management EVOLUTION OF MANAGEMENT THOUGHT Management is studied in business academics since earlier times, and it is considered as an integral part to understanding business operations. People have...

S.Y.B.Com.(NEP) Introduction to Management EVOLUTION OF MANAGEMENT THOUGHT Management is studied in business academics since earlier times, and it is considered as an integral part to understanding business operations. People have been changing and redesigning organizations for centuries. Though the 20th century is noticeable in history as an ‘Era of scientific management’, still it does not indicate that management tactics were not used in yester years. Many studies indicated that Management theory evolved with “scientific” and “bureaucratic” management that used measurement, procedures and routines as the basis for operations. Firms developed hierarchies to apply standardized rules to the place of work and penalized labour for violating rules. With the “human relations” movement, companies emphasized individual workers. Modern management theories, including system theory, contingency theory and chaos theory, focus on the whole organization, with employees as a key part of the system. The evaluation of management can be categorized into different parts: Pre-Scientific Management Era (before 1880), Classical management Era (1880-1930), Neo-classical Management Era (1930-1950), Modern Management era (1950-on word). Classical Management includes Scientific Management School, Administration Management School, and Bureaucracy Management. Neoclassical Management includes Human relation school and Behavioural Management School. Modern Management includes Social system school, Decision theory school, Quantitative Management School, System Management School, and Contingency Management School. Page | 1 S.Y.B.Com.(NEP) Introduction to Management EVOLUTION OF MANAGEMENT THOUGHTS Early Management Thought The period of 1700 to 1800 emphasizes the industrial revolution and the factory system highlights the industrial revolution and the importance of direction as a managerial purpose. Thus, the development of management theory can be recognized as the way people have struggled with relationships at particular times in olden periods. Many economic theorists during this period described the notion of management. Adam Smith and James Watt have been recognized as two theorists who launched the world toward industrialization. Adam Smith brought about the revolution in financial thought, and James Watt’s steam engine provided cheaper power that revolutionized English commerce and industry. Both provided the base for modern concepts of business management theory and practice. Adam Smith explicated the concept of division of labour, and Jacques Turgot described the importance of direction and control. Smith stated that market and competition should be the controllers of economic activity and that tax policies were destructive. The specialization of labour was the basis of Smith’s market system. According to Smith, a division of labour provided managers with the maximum opportunity for improved output. From 1771 to1858, Robert Owens studied for concern for the workers. He was repulsed by the working conditions and poor treatment of the workers in the factories across Scotland. Owen became a reformer. He reduced the use of child labour and used ethical influence rather than physical punishment in his factories. He reproached his fellow factory owners for treating their equipment better than they treated their workers. In the quantitative approach of early management thought, Charles Babbage (1792–1871) is recognized as the supporter of operations research and management science. Babbage’s scientific innovations are a mechanical calculator, a versatile computer, and a punch-card machine. His projects never became a commercial reality. However, Babbage is considered the creator of the concepts behind the present day computer. The most popular book of Babbage, On the Economy of Machinery and Manufacturers, described the tools and machinery used in English factories. It discussed the economic principles of manufacturing and analysed the operations and the skills used and suggested improved practices. Babbage considered in the benefits of division of labour and was a supporter of profit sharing. He developed a method of observing manufacturing that is the same approach utilized today by operations analysts and consultants analysing manufacturing operations. Other theorists who contributed to the quantitative approach to early management thought were Robert Owen, Andrew Ure and Charles Dupin, Henry Robinson Towne. Page | 2 S.Y.B.Com.(NEP) Introduction to Management The Classical Approach The classical approach is the earliest thought of management. The classical approach was associated with the ways to manage work and organizations more efficiently. The classical approach is categorized into three groups namely, scientific management, administrative management, and bureaucratic management. I. Scientific Management: Scientific management which is also referred to Taylorism or the Taylor system is a theory of management that evaluates and synthesizes workflows, with the aim of improving labour productivity. In other words, conventional rules of thumb are substituted by accurate procedures developed after careful study of an individual at work. Universal approaches to Scientific management are developed for Efficiency of workers, Standardization of job roles/activities and Discipline – the role of managers and the business hierarchy. The scientific management theory had an enormous impact on the business industry at the beginning of the 20th century. Many big and victorious organizations, such as McDonald’s hamburger chain or call centres, utilised a modern version of scientific management. Among famous theorist, Taylor’s contribution in the area of scientific management is invaluable. The components of scientific management are a determination of the task, planning, proper selection and training of workers improvement in methods, modification of organization and mental revolution such as ‘job specialization’. As a result, it became more concerned with physical things than towards the people even though increased the output. Scientific Management focuses on worker and machine relationships. Organizational productivity can be increased by enhancing the competence of production processes. Taylor’s Scientific Management: Academic records indicated that F.W. Taylor and his colleagues developed the first systematic study in management. He initiated an innovative movement in 1910 which is identified as scientific management. Frederick Taylor is known as the father of Scientific Management, and he published Principals of Scientific Management in which he proposed work methods designed to boost worker productivity. Taylor asserted that to succeed in these principles, it is necessary to transform the part of management and labour completely. His philosophy was based on some basic principles. The first principle is a separation of planning and doing. In the pre-Taylor era, an employee himself used to choose or plan how he had to do his work and what machines and equipment would be necessary to perform the work. But Taylor divided the two functions of planning and doing; he stressed that planning should be delegated to specialists. The second principle of Taylor’s management approach is functional foremanship. Taylor launched functional foremanship for administration and direction. Under eight-boss-scheme of functional foremanship, four persons like route clerk, instruction card clerk, time and cost clerk and disciplinarian are associated with planning function, and the remaining four-speed boss, Page | 3 S.Y.B.Com.(NEP) Introduction to Management inspector, maintenance foreman, and gang boss are concerned with operating function. The third principle is elements of scientific management. The main constituents of scientific management are work-study involving work important and work measurement using method and time study, standardization of tools and equipment for workers and improving working conditions, scientific Selection, placement and training of workers by a centralized personal department. The fourth principle is a bilateral mental revolution. Scientific management involves a complete mental change of employees towards their work, toward their fellow-men and their employers. Mental revolution is also necessary on the part of management’s side, the foreman, the superintendent, the owners and board of directions. The fifth principle is financial incentives. To encourage workers to give better performance, Taylor introduced the differential piece-rate system. (ii) Administrative Management: Administrative Management emphasizes the manager and the functions of management. The main objective of Administrative management is to describe the management process and philosophy of management. In contradiction of scientific management, which deals mainly with jobs and works at the individual level of scrutiny, administrative management gives a universal theory of management. Page | 4 S.Y.B.Com.(NEP) Introduction to Management HENRY FAYOL’S ADMINISTRATIVE MANAGEMENT (1841–1925) Henri fayol is known as the father of Modern Management. He was a popular industrialist and victorious manager. Fayol considered that good management practice falls into certain patterns that can be recognized and analysed. From this basic perspective, he devised a blueprint for a consistent policy of managers one that retains much of its force to this day. His five function of managers was the plan, organize, command, co-ordinate, and control. The principal of administrative management: 1. Division of work: This is the principle of specialization which is detailed by economists as an important to efficiency in the utilization of labour. Fayol goes beyond shop labour to apply the principle to all kinds of work, managerial as well as technical. 2. Authority and responsibility: In this principle, Fayol discovers authority and responsibility to be linked with the letter, the consequence of the former and arising from the latter. 3. Discipline: This discipline denotes “respect for agreements which are directed at achieving obedience, application, energy and the outward marks of respect”. Fayol declares that discipline requires good superiors at all levels, clear and fair agreement, and judicious application of penalties. 4.Unity of command: This is the principle that an employee should receive orders from one superior only. 5. Unity of direction: Fayol asserted that unity of direction is the principle that each group of activities having the same objective must have one head and one plan. As distinguished from the principle of unity of command, Fayol observes unity of direction as related to the functioning of personnel. 6. Subordination of individual interest to general interest: In any group, the interest of the group should supersede that of the individual. When these are found to differ, it is the function of management to reconcile them. 7. Remuneration of personnel: Fayol recognizes that salary and methods of payment should be fair and give the utmost satisfaction to worker and boss. Page | 5 S.Y.B.Com.(NEP) Introduction to Management 8. Centralization: Fayol principle of centralization refers to the extent to which authority is concentrated or dispersed in an enterprise. Individual circumstances will determine the degree of centralization that will give the best overall yield. 9. Scalar chair: Fayol believe of the scalar chair as a line of authority, a ‘Chain of Superiors” from the highest to the lowest ranks and held that, while it is an error of subordinate to depart ‘needlessly’ from lines of authority, the chain should be short-circuited when scrupulous following of it would be detrimental. 10. Order: Breaking this principle into ‘Material order’ and ‘Social Order’, Fayol thinks of it as the simple edge of “a place for everything (everyone), and everything (everyone) in its (his) place”. This is a principle of organization in the arrangement of things and persons. 11. Equity: Fayol perceives this principle as one of eliciting loyalty and devotion from personnel by a combination of kindliness and justice in managers dealing with subordinates. 12. Stability of tenure of personnel: Finding that such instability is both the cause and effect of bad management, Fayol indicated the dangers and costs of unnecessary turnover. 13. Initiative: Initiative is envisaged as the thinking out and execution of a plan. Since it is one of the “Keenest satisfactions for an intelligent man to experience”, Fayol exhorts managers to “Sacrifice Personal Vanity” to permit subordinates to exercise it. 14. Esprit de corps: This is the principle that ‘union is strength’ an extension of the principle of unity of command. Fayol here emphasizes the need for teamwork and the importance of communication in obtaining it. (iii) Bureaucratic Management: Bureaucratic management denotes to the perfect type of organization. The principal of Bureaucracy include defined and specialized functions, use of legal authority, hierarchical form, written rules and procedures, technically trained bureaucrats, appointment to positions based on technical expertise, promotions based on competence and defined career paths. The German sociologist, Max Weber recognized as the father of modern Sociology who appraised bureaucracy as the most logical and structure for the big organization. With this observation in the business world, Weber summarized that earlier business firms were unproductively managed,with decisions based on personal relationships and faithfulness. He proposed that a form of organization, called a bureaucracy, characterized by division of labour, hierarchy, formalized rules, impersonality, and the selection and promotion of employees based on ability, would lead to more well-organised management. Weber also argued that authoritative position of managers in an organization should be based not on tradition or personality but the position held by managers in the organizational hierarchy. Page | 6 S.Y.B.Com.(NEP) Introduction to Management Max Weber (1864-1920) devised a theory of bureaucratic management that emphasized the need for a firmly defined hierarchy governed by clearly defined regulations and lines of authority. He considered the perfect organization to be a bureaucracy whose activities and objectives were reasonably thought out and whose divisions of labour were defined. Weber also believed that technical capability should be emphasized and that performance evaluations should be made completely by merit. Presently, it is considered that bureaucracies are huge, impersonal organizations that put impersonal competence ahead of human needs. Like the scientific management theorists, Weber sought to advance the performance of socially important organizations by making their operations predictable and productive. Although we now value innovation and flexibility as much as efficiency and predictability, Weber’s model of bureaucratic management evidently advanced the development of vast corporations such as Ford. The bureaucracy was a particular pattern of relationships for which Weber saw great promise. Although bureaucracy has been successful for many companies, in the competitive global market of the 1990s organizations such as General Electric and Xerox, have adopted bureaucracy, throwing away the organization chart and replacing it with ever-changing constellations of teams, projects, and alliances with the goal of unleashing employee creativeness. Modern Management Approaches Behavioural Approach: Numerous theorists developed the behavioural approach of management thought as they observed weaknesses in the assumptions of the classical approach. The classical approach emphasized efficiency, process, and principles. Some management scholars considered that this thought ignored important aspects of organizational life, particularly as it related to human behaviour. Therefore the behavioural approach concentrated on the understanding of the factors that affect human behaviour at work. This is an improved and more matured description of human relations approach. The various theorists who have great contribution in developing principles of management in this are Douglas Mc Gregor, Abraham Maslow, Curt Levin, Mary Porker Follelt, Rensis Likert. Behavioural Scientists hold the classical approach as highly mechanistic, which finds to degrade the human spirit. They choose more flexible organization structures and jobs built around the capabilities and talent of average employees. The behavioural approach has based the numerous principles. 1. Decision-making is done in a sub-optimal manner, because of practical and situational constraints on the human rationality of decision-making. The behaviourists attach great weight age on participative and group decision-making. 2. Behavioural Scientists promote self-direction and control instead of imposed control. 3. Behavioural Scientists believe the organization as a group of individuals with certain goals. Page | 7 S.Y.B.Com.(NEP) Introduction to Management 4. Behavioural scientists perceive that the democratic-participative styles of leadership are enviable, the autocratic, task-oriented styles may also be appropriate in the certain situation. 5. Behavioural scientists propose that different people react differently to the same situation. No two people are exactly similar, and manager should tailor his attempts to influence his people according to their needs. 6. Behavioural scientists identify that organizational variance and change are predictable. The approach of Mary parker follett: Mary Parker Follett (1868-1933) developed the classic structure of the classical school. However, she initiated many new elements particularly in the area of human relations and organizational structure. In this, she introduced trends that would be further developed by the talented behavioural and management science schools. Follett was persuaded that no one could become a whole person except as a member of a group. Human beings grew through their relationships with others in organizations. In fact, she explained management as “the art of getting things done through people.” She took for granted Taylor’s statement that labour and management shared a common purpose as members of the same organization, but she considered that the artificial difference between managers and subordinates is vague in this natural partnership. She believed in the power of the group, where individuals could combine their diverse talents into something bigger. Moreover, Follett’s “holistic” model of control took into account not just individuals and groups, but the effects of such environmental factors as politics, economics, and biology. Follett’s model was a significant precursor of the idea that management meant more than just what was happening inside a particular organization. Douglas McGregor theory of management suggested that there is need to motivate employees through authoritative direction and employee self-control and he introduced the concept of Theory X and Y. Theory X is a management theory focused more on classical management theory and assumed that workforce needs a high amount of supervision because they are inherently lazy. It presupposes that managers need to motivate through coercion and punishment. Theory Y is a management theory that assumes employees are determined, self-motivated, exercise self-control, and enjoy mental and physical work duties. Theory Y is in line with behavioural management theories. Theory X and Theory Y relates to Maslow’s hierarchy of needs in how human behaviour and motivation is the main priority in the workplace to maximize output. Theory X: The theory that employees are inherently lazy and irresponsible and will tend to avoid works unless closely supervised and given incentives, contrasted with Theory Y. Theory Human Relations Approach: The human rationalists which also denote to neo-classicists, focused as human aspect of the business. These theorists emphasize that organization is a social system and the human factor is the most vital element within it. Page | 8 S.Y.B.Com.(NEP) Introduction to Management There are numerous basic principles of the human relations approach that are mentioned below: 1. Decentralization: The concept of hierarchy employed by classical management theorists is replaced with the idea that individual workers and functional areas (i.e., departments) should be given greater autonomy and decision-making power. This needs greater emphasis on lateral communication so that coordination of efforts and resources can occur. This communication occurs via informal communication channels rather than the formal, hierarchical ones. 2. Participatory Decision-Making: Decision-making is participatory in the sense that those making decisions on a day-to-day basis include line workers not normally considered to be “management.” The greater sovereignty afforded individual employees and the subsequent reduction in “height” and increased in the span of control of the organizational structure requires that they have the knowledge and ability to make their own decisions and the communication skills to coordinate their efforts with others without a nearby supervisor. 3. Concern for Developing Self-Motivated Employees: The importance of a system of decentralized and autonomous decision-making by members of the organization necessitates that those members be extremely “self-motivated”. The goal of managers in such an organization is to design and implement organizational structures that reward such self-motivation and autonomy. Another is to negotiate working relationships with subordinates that foster effective communication in both directions. Elton Mayo and others conducted experiments that were known as Hawthorne experiments and explored informal groupings, informal relationships, patterns of communication, and patterns of internal leadership. Elton Mayo is usually popular as the father of Human Relations School. The human relationists advocate the several factors after conducting Hawthorne experiments which are mentioned below. 1. Social system: The organization, in general, is a social system consists of numerous interacting parts. The social system established individual roles and established norms that may differ from those of formal organization. 2. Social environment: The social climate of the job affects the workers and is also affected. 3. Informal organization: The informal organization does also exist within the framework of the formal organization, and it affects and is affected by the formal organization. 4. Group dynamics: At the place of work, the workers often do not act or react as individuals but as members of the group. The group plays an important role in determining the attitudes and performance of individual workers. 5. Informal leader: There is an appearance of informal leadership as against formal leadership and the informal leader sets and enforces group norms. Page | 9 S.Y.B.Com.(NEP) Introduction to Management 6. Non-economic reward: Money is an encouraging element but not the only motivator of human behaviour. Man is diversely motivated and socio-psychological factors act as important motivators. Behavioural Science: Behavioural science and the study of organizational behaviour emanated during 1950s and1960s. The behavioural science approach was a natural development of the human relations movement. It concentrated on applying conceptual and analytical tools to the problem of understanding and foresees behaviour in the place of work. The behavioural science approach has contributed to the study of management through its elements of personality, attitudes, values, motivation, group behaviour, leadership, communication, and conflict, among other issues. Contingency Approach: This approach of management thought focuses on management principles and concepts that have no general and universal application under all conditions. Joan Woodward in the 1950s has contributed to developing this approach in management. Contingency school states that management is situational and the study of management recognize the important variables in the situation. It distinguishes that all the subsystem of the environment is interconnected and interrelated. By studying their interrelationship, the management can find a resolution to the specific situation. Theorists stated that there is no effective way of doing things under all business conditions. Methods and techniques which are extremely effective in one situation may not give the same results in another situation. References Senge, Peter. The Fifth Discipline: The Art and Practice of Learning Organizations. New York: Doubleday/Currency, 1990. Warner, Malcolm. “Organizational Behavior Revisited.” Human Relations 47, no. 10 (1994) Seth Accra Jaja(2003) Praxis of Work Behavior. Pinnacle publishers, Lagos. Houghton Mifflin Harcourt, Behavioural Management Theory Disha, Behavioural approach to management (with criticism) Sherri Hartzell, The emergence of the neo classical theory of management Kootnz & O’Donnell, Principles of Management. J.S. Chandan, Management Concepts and Strategies. Research Paper : chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://core.ac.uk/download/pdf/2346 28188.pdf Page | 10 S.Y.B.Com.(NEP) Introduction to Management What is Fayol and HENRY FAYOL THEORY OF MANAGEMENT Henry Fayol also known as ‘father of modern management theory’ gave a new perception to the concept of management. He introduced a general theory that can be applied to all levels of management and every department. The Fayol theory is practised by the managers to organize and regulate the internal activities of an organization. He concentrated on accomplishing managerial efficiency. Henri Fayol's 14 Principles of Management Henry Fayol, also known as the Father of Modern Management Theory, gave a new perception on the concept of management. He introduced a general theory that can be applied to all levels of management and every department. He envisioned maximising managerial efficiency. Today, Fayol’s theory is practised by the management to organise and regulate the internal activities of an organisation. THE FOURTEEN PRINCIPLES OF MANAGEMENT CREATED BY HENRI FAYOL ARE EXPLAINED BELOW. 1. Division of Work Henri believed that segregating work in the workforce amongst the workers will enhance the quality of the product. Similarly, he also concluded that the division of work improves the productivity, efficiency, accuracy and speed of the workers. This principle is appropriate for both the managerial as well as a technical work level. 2. Authority and Responsibility These are the two key aspects of management. Authority facilitates the management to work efficiently, and responsibility makes them responsible for the work done under their guidance or leadership. 3. Discipline Without discipline, nothing can be accomplished. It is the core value for any project or any management. Good performance and sensible interrelation make the management job easy and comprehensive. Employees’ good behaviour also helps them smoothly build and progress in their professional careers. Page | 11 S.Y.B.Com.(NEP) Introduction to Management 4. Unity of Command This means an employee should have only one boss and follow his command. If an employee has to follow more than one boss, there begins a conflict of interest and can create confusion. 5. Unity of Direction Whoever is engaged in the same activity should have a unified goal. This means all the people working in a company should have one goal and motive which will make the work easier and achieve the set goal easily. 6. Subordination of Individual Interest This indicates a company should work unitedly towards the interest of a company rather than personal interest. Be subordinate to the purposes of an organisation. This refers to the whole chain of command in a company. 7. Remuneration This plays an important role in motivating the workers of a company. Remuneration can be monetary or non-monetary. Ideally, it should be according to an individual’s efforts they have put forth. 8. Centralization In any company, the management or any authority responsible for the decision-making process should be neutral. However, this depends on the size of an organisation. Henri Fayol stressed on the point that there should be a balance between the hierarchy and division of power. 9. Scalar Chain Fayol, on this principle, highlights that the hierarchy steps should be from the top to the lowest. This is necessary so that every employee knows their immediate senior also they should be able to contact any, if needed. 10. Order A company should maintain a well-defined work order to have a favourable work culture. The positive atmosphere in the workplace will boost more positive productivity. 11. Equity All employees should be treated equally and respectfully. It’s the responsibility of a manager that no employees face discrimination. 12. Stability An employee delivers the best if they feel secure in their job. It is the duty of the management to offer job security to their employees. 13. Initiative The management should support and encourage the employees to take initiatives in an organisation. It will help them to increase their motivation and morale. 14. Esprit de Corps It is the responsibility of the management to motivate their employees and be supportive of each other regularly. Developing trust and mutual understanding will lead to a positive outcome and work environment. Page | 12 S.Y.B.Com.(NEP) Introduction to Management In conclusion, the 14 Principles of Management the pillars of any organisation. They are integral for prediction, planning, decision-making, process management, control and coordination. F.W.Taylor Theory of Management F.W. Taylor or Fredrick Winslow Taylor is also known as the ‘father of scientific management’ proved with his practical theories that a scientific method can be implemented to management. This scientific process involved experiments, observation, analysis, and inference and was applied to create a cause and effect relationship. Taylor gave much concentration on the supervisory level of management and performance of managers and workers at an operational level. Henry Fayol F.W. Taylor Definition Henry Fayol, father of modern management F.W. Taylor, father of scientific management contributed fourteen management principles, contributed four management principles, for accomplishing managerial efficiency. enhancing overall productivity. Concentrated Top-level management Low-level management Approach Top management based on top downward Supervisory viewpoint and bottom upward approach. approach Focus Page | 13 S.Y.B.Com.(NEP) Introduction to Management Focused on delivering managerial efficiency. Increasing productivity of labour Theory-based on Personal experience Observation and experiment. Research Papers : chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://ijirt.org/master/publishedpape r/IJIRT101155_PAPER.pdf WHAT IS THE ROLE OF MANAGERS? The role of managers is organising and overseeing a particular group, project or sector within a business. The extent and scope of a manager's responsibilities can vary depending on their position in the company. The job title of manager can mean that somebody is managing a team or managing a certain function. For example, a senior manager can be a hugely different role from a business development manager. What are the 5 roles of a manager? A manager's role varies, but there are five roles you're almost always going to see in a manager: 1. Leader A manager needs practical leadership skills, enabling them to steer the employees they're responsible for towards a common goal. For example, if you're working towards an event, it's the manager's job to direct everyone's focus towards this occasion and ensure everyone collaborates to make it come together. A good leader needs a robust and personable character, exhibiting integrity and honesty in their decision-making process. Some aspects of leadership for managers might include: inspiring team members to perform to their best setting goals and targets creating a vision for what the team can become Page | 14 S.Y.B.Com.(NEP) Introduction to Management providing timely and assertive decisions responding to staff concerns and queries 2. Coordinator As the person responsible for their team, the role of a manager includes coordination. A good manager organises their team and knows what they're doing, ensuring that the team works efficiently towards a common goal. If the group faces challenges or obstacles, part of the manager's role as coordinator includes finding solutions to help keep your projects on track. Some tasks that fall into this category may include: organising schedules and assignments implementing organisational tools like Gantt charts tracking progress and celebrating achievements ensuring all tools and resources are accessible and organised regularly checking in on the employees you lead Regardless of your management level, you probably have someone to report to higher up in the business structure. So your manager's coordination includes communicating anything that their superiors need to know and anything their superiors want you to know. A good manager uses communication to keep their team coordinated and their business successful. 3. Team developer Alongside leading your team to success, an essential part of management is encouraging your team's development and learning. This role of a manager includes encouraging your team to grow with each success and ensuring employees feel that their work is valuable, stimulating and engaging. On a group level, development could take the form of team-building exercises to help your team bond and work effectively together. Equally, team retreats help give your employees space to brainstorm new ideas and bring fresh perspectives to challenges you're facing. On an individual level, managers can encourage members of the team to develop their skills by: hosting regular employee reviews to help individuals set professional goals. notifying them of professional development opportunities such as courses, conferences and talks implementing a training schedule or peer mentoring programme 4. Administrator While similar to a manager's role as a coordinator, managers are also responsible for their team's day-to-day administration. Depending on the type of manager and industry sector, this Page | 15 S.Y.B.Com.(NEP) Introduction to Management management role can differ significantly. For example, the administrative tasks might focus more on authorising timesheets for a shift manager on a factory floor. Meanwhile, for a manager of a legal team, the administration might involve more paperwork. Some essential things to consider when organising your administrative tasks as a manager may include: keeping your resources and documents orderly delegating tasks to other team members processing timesheets and payroll ordering materials and supplies tracking the team's expenses recruiting new employees preparing essential paperwork 5. Motivator Creating internal motivation within the workplace can offer a tricky challenge for managers. Succeeding in this role can help increase employee satisfaction, encourage commitment towards the organisation and improve employee retention. There are several ways to motivate employees that are both intrinsic and extrinsic, including: communicating the purpose of each task offering employees a choice on their assignments providing a company rewards scheme offer constructive feedback record and praise positive outcomes Page | 16 S.Y.B.Com.(NEP) Introduction to Management SYSTEMS APPROACH TO MANAGEMENT Introduction There are various approaches to management like classical approach, neo-classical approach and modern approach. Systems approach to management is a part of modern approach. This approach was developed by Chester I. Bernard, Herbert Simon and their colleagues. Due to the limitations of considering only a particular aspect by classical and neo – classical approach, systems approach was developed. this approach considers the organisation as a whole rather than considering some particular aspect. Meaning of System System as the name suggests is a group of related parts that move or work together like the human body consists of several parts and each part works in connection with the other. A single function of the body is performed when a number of organs work together as a system. According to the definition given in the Webopedia, “System means a group of interdependent items that interact regularly to perform a task. In other words it is an established or organised procedure. Meaning of System Approach Now relating the word system with approach to management, it conveys that the whole of the organisation is interconnected and interdependent. Every organisation has a structure, where we can see the various departments in which the whole of the organisation is divided. Each department works at its own but can not work in absolute isolation. It has to depend on other departments for various functions to be performed. So the efficiency of one department Page | 17 S.Y.B.Com.(NEP) Introduction to Management depends upon the efficiency of another department. For example, if purchase department does not purchase raw material in time, production department can not produce the product in time. So here it can be said that each department works as a sub-system to make the whole organisation a system. Managers following this approach to management considers the organisation as a whole rather than considering various parts of the organisation separately. Key Concepts of a System Sub-System : A system is made up of various integrated and interdependent parts. Each such part is known as a sub-system. For example an automobile firm may have several departments like purchase department, production department, finance department , marketing department, personnel department etc. So each such department is a sub-system of the whole firm and the whole firm is a sub-system of the automobile industry, which is a sub-system of the Indian economic system and which is a subisystem of world economic system. Each sub-system is a part of other sub-system and change in one sub-system leads to a change in other sub-system. Open and Closed System:- The system may be a closed system or an open system depending upon their interaction with the environment. Here environment is the sum total of the factors and forces outside the organisation such as customer, competitors, suppliers, investors, government etc. The system which have no interaction with the environment , self contained, rigid, static and mechanical are known as the closed systems. These are not at all affected by the environmental factors whereas on the other hand open system are those which interacts with the outside environment, are dynamic and flexible in nature. Systems approach to management follows open system and thus receive inputs from the environment and gives output to the environment. But infact systems should not be differentiated as open or closed rather they should be differentiated on the basis of degree of openness. Because there is hardly any system which is not at all affected by the environmental forces. Synergy: Page | 18 S.Y.B.Com.(NEP) Introduction to Management According to the business dictionary synergy is a state in which two or more things work together in a particularly fruitful way that produce an effect greater than the sum of their individual effects. In other words it can be expressed as ‘ the whole is greater than the sum of its parts.’ It actually refers to the teamwork in which all individuals work together and their collective total output is more than the sum of their individual output if they do it in isolation. So in regard to the system approach to management we can say that a business organisation operates more efficiently if it work in co-operation with each other in a systematic manner rather than working separately. System Boundary: Line that separates the system from its environment is known as boundary. If the boundary is visible and rigid like a wall it is like the closed system but if the boundary is flexible and is visible in form of relationship between the various parts of the organisation and environment, it is like open-system. From here a manager can also know which part he can better control and which he can not control. For example he can not change the policies made by the Government but can replace a worker who is not performing well. Feedback: Feedback means the response, which may either be positive or negative. If the feedback is positive then the manager gets motivated as the plan he initiated was successful and if feedback is negative, he has to check where the problem is, what are the causes and what are the possible ways to remove it. Features of System Approach to Management Hierarchy of Sub-System; It is the basic feature of system-approach which explains that within an organisation there are several parts, where each part is considered to be a sub-system of another sub-system. For example; Similarly in an organisation there are many interdependent parts and each part may consist of various sub-parts. Inter-related and Inter-dependent: The sub-system or parts prevailing in a system are connected to each other and performance of one part is affected by the performance of the other. These sub-parts are always considered in connection to each other and not in isolation. Page | 19 S.Y.B.Com.(NEP) Introduction to Management Boundary: This approach clearly defines what is with in the organisation and what is outside the organisation. In other words a manager is well aware about the controllable factors and uncontrollable factors. Input-Output Process: System takes input from the environment and gives output to the environment. As raw material is purchased from the market, processed in the organisation and transformed into the finished product to supply into the market. Open System: As discussed earlier that system can be either closed or open. An organisation being a social system is an open system which puts effect on the environment and is affected by the environment. Adaptive: Adaptability means adjusting with the changing environment. Under the system approach to management, the organisation is an open organisation and it takes input from the environment and adjust accordingly. Dynamic: An organisation can not be static. It has to move on and on with every change in the environment. So system approach says that the organisation is dynamic and responsive. Within an organisation there are several sub-systems and the process in between these sub-systems are all dynamic and vulnerable. Multidisciplinary: Management in any organisation is not influenced by a single discipline. It is a result of so many disciplines like Economics, Statistics, Sociology, Psychology, Operation Research, mathematics and various schools of Management Thoughts. Management is also described as both science as well as arts since it has its own principles which are applied in most of the organisations and it tries to do the work in a systematic manner. This approach to management integrates knowledge from all the above mentioned disciplines and many more. Probabilistic: In a chemical reaction one can always be sure that what will be the result of mixing different compounds but in an organisation a manager can not be sure that what will be the exact result of his efforts. Thus, system approach to management says that it is probabilistic because the outcome is not certain. For example, a manager asks purchase manager to buy more of raw material in comparison to the last month in anticipation of huge demand in the near future, but he can just predict the probable demand and not the exact demand. Integration of Activities: System Approach is an integrated approach as it integrates the activities and the departments in order to derive the best use of scarce resources. It takes into consideration all the sub-systems of the system. Page | 20 S.Y.B.Com.(NEP) Introduction to Management COORDINATION: THE ESSENCE OF MANAGEMENT Coordination is considered as the essence of management because of the following reasons: 1. Coordination is needed to perform all the functions of management: (i) In planning, coordination is required between the objectives and available resources. (ii) Organising is ineffective if there is a lack of coordination between different departments and divisions. (iii) In staffing, coordination is required between the required skills and abilities of an individual who is selected to perform a job. (iv) Directing is impossible and of no worth, if there is a lack of coordination between superiors and subordinates. (v) In controlling, coordination helps in ensuring that actual results are fruitful. 2. Coordination is needed at all levels of management: (i) Top level: The top level coordinates the activities of the whole organisation keeping in view the desired goals. (ii) Middle level: The middle-level managers coordinate the activities of different departments. (iii) Lower level: The lower level coordinates the activities of the workers for achieving goals. Thus, we can say, coordination is not a separate function of management. It is the essence of management. CONTROLLING: MEANING, PROCESS, AND TECHNIQUES OF CONTROLLING. Controlling is the process through which managers regulate the operations of an organization to ensure achievement of organizational goals and objectives. Control is simply making things happen in the way it was planned. Control refers to the comparison of actual performance of a task with the previously established standards or benchmarks, for the purpose of finding out deviations in performance and correcting them. Page | 21 S.Y.B.Com.(NEP) Introduction to Management According to Bateman and Snell, ‘Control is any process that directs the activities of individuals, towards the achievement of organization goals’ Controlling refers to the process of regulating organizational activities and people carrying out those activities to ensure minimum deviations between actual performance to expected performance. It the process through which the management ensures that all resources of the organization are used effectively and efficiently to meet organizational objectives. PROCESS OF CONTROLLING (1) Establishment of standards – The first task of controlling is establishment of performance standards or benchmarks against which the actual performance will be measured. While setting standards the main focus is on questions like: What standards should be set? How should the standards be set? In what terms should these standards be expressed? Standards are generally set for key management tasks keeping in mind the past achievements, industry average, major competitors, capabilities of a firm, core competencies, risk bearing ability, strategic clarity, flexibility etc. Control standards may be quantitative (expressed in physical or monetary terms) or qualitative (expressed in intangible terms) in nature. Quantitative (production, sales, profit) Qualitative (goodwill, morale, attitude) Time – Length of Time Employee morale Cost – Cost of Production Industrial relations Productivity – Output Goodwill Revenue – Sales/profit (2) Measurement of performance – The next step in controlling is the measurement of actual performance. This may be done through traditional or modern techniques of control. Measurement may be done simply through personal observation or through an elaborate system of accounting, reporting and communicating. However, before choosing a technique of control on must keep in mind the Difficulty, Timing and Periodicity in measurement. Page | 22 S.Y.B.Com.(NEP) Introduction to Management (3) Analyzing deviations – The third step involves finding out the deviations in performance and the cause of those deviations. When actual performance is equal to the expected performance tolerance limits must be set. When actual performance is greater than expected performance one must check the validity of standards and efficiency of management. When actual performance is less than budgeted performance one must pinpoint the areas where performance is low and take corrective actions accordingly. The cause of deviations may be – External or internal, Random or expected, Temporary or permanent. (4) Taking corrective actions – The last step involves taking necessary actions to correct the deviations in performance. It includes – In-depth analysis and diagnosis of the factors that might be responsible for poor performance. Lowering or elevation of standards according to the actual conditions. Reformulating strategies, plans, objectives. Techniques of Controlling Traditional techniques of controlling Modern techniques of controlling Personal observation Return on investment Statistical Data Responsibility accounting Program Evaluation and Review Special Reports & Analysis Technique (PERT) Operational Audit Critical Path method (CPM) Costing Management Information system Break-Even Analysis Management Audit Budgetary control Total Quality Management Zero Based Budgeting Six Sigma Human Resource Accounting Performance Budgeting Social Audit Page | 23 S.Y.B.Com.(NEP) Introduction to Management Importance of Controlling Importance of controlling lies in – Achievement of organization goals Efficient execution and implementation of plans Maintaining order and discipline in an organization Facilitating de-centralization of authority and responsibility Promoting coordination by providing unity of direction Coping up with changes and uncertainty CONCEPT OF BUDGETING, REPORTING AND ESSENTIAL FEATURES OF BUDGETING BUDGETARY CONTROL: TYPES OF BUDGETS What is Budgetary Control? The budgetary control meaning can be understood as a financial management technique that helps businesses monitor and manage expenses. Budgetary control means creating a budget. With comparison to how a company performs to what was planned. It helps managers watch and manage costs during a specific period. This is a way to plan and control everything. A company does this by looking at the budget and actual results. By comparing the budgeted numbers with actual results. We can find areas to improve, reduce costs, or adjust the budget. We can explain Budgetary control as a set of steps to ensure a company spends and earns money. It is planned for. Managers set goals based on the budget and get rewards when they reach those goals. People responsible for a financial item in the company's financial statement receive a budget versus actual reports. They have to fix any differences. The budget committee monitors the company's results to ensure they are good. They inform managers if the results are not good. We can put the budget into the purchasing and payment software. To see if we spend too much. Consider the budgetary control example, when a marketing division continuously exceeds its budget. The establishment may have to review its marketing schemes. Allocate more funds to the department. In contrast, if a department's spending consistently falls short of the budget. The enterprise could allocate the leftover funds toward other business areas. Reinvest them in fresh opportunities. Keeping tabs on the budget is crucial for enterprises. Page | 24 S.Y.B.Com.(NEP) Introduction to Management As it enables them to remain financially sound. Additionally, it provides them with real-time data on their expenses and performance, leading to better financial decisions. Employing adequate budgetary control can translate to reduced costs, increased efficiency, and achieving financial objectives. Objectives of Budgetary Control Budgetary control involves the use of budgets to monitor and control business operations. It is an essential aspect of management accounting and financial management. Here are five detailed objectives of budgetary control: Planning Budgetary control helps in setting long-term strategies by forecasting revenues, expenses, and capital needs. It provides a framework for achieving the strategic goals of the organization. It ensures that resources (financial, human, and material) are allocated efficiently and appropriately across different departments or projects within the organization. Anticipating future challenges and opportunities allows organizations to prepare effectively, reducing uncertainty and mitigating risks. Coordination A well-constructed budget ensures that all departments work towards the same financial goals. It aligns the activities of various departments, ensuring that they complement each other. Coordination through budgetary control ensures that the objectives of different departments do not conflict, promoting a harmonious operational flow within the organization. By adhering to a unified budget, the organization maintains a coherent direction, thereby enhancing overall performance and efficiency. Control Budgetary control involves comparing actual performance with budgeted figures. Variances are analyzed to pinpoint areas where performance deviates from expectations. When variances occur, management can take corrective actions to address any issues, ensuring that financial targets are met. Assigning budgetary control responsibilities to managers and departments enhances accountability, encouraging them to operate within budget limits. Motivation Budgetary control establishes clear and attainable financial targets for employees and departments, providing them with specific goals to aim for. Reaching budgetary goals often involves rewards and recognition, motivating employees to perform well and stay committed to their tasks. Involving employees in the budgeting process can increase their commitment to achieving the organization's financial objectives because they feel part of the decision-making process. Page | 25 S.Y.B.Com.(NEP) Introduction to Management Communication A budget communicates the financial goals and expectations of the organization to all levels of management and staff, ensuring everyone is aware of their roles and responsibilities. Budgetary control creates a feedback loop where actual performance data is continuously compared to the budget, providing essential information for ongoing adjustments and improvements. Clear communication of budgetary information enhances transparency, building trust within the organization and with external stakeholders like investors and creditors. Communication is very important. Also Includes All Test Series Prev. Year Paper Practice TYPES OF BUDGETARY CONTROL The different types of budgetary control has been stated below. o Zero-Based Budgeting (ZBB): This approach requires all expenses to be justified for each new period. It starts from a "zero base," analyzing needs and costs as if every new budget period were the first. o Incremental Budgeting: This type considers the previous period's budget and adds a percentage to account for the new period. It’s simple but may ignore changes in business conditions. o Activity-Based Budgeting (ABB): It focuses on the costs of activities necessary to produce and sell products/services. Costs are tied to specific activities, providing a detailed view of spending. o Performance Budgeting: This type allocates funds based on the anticipation of their results or performance objectives. It emphasizes outcomes and efficiency. o Cash Flow Budgeting: It involves forecasting cash inflows and cash outflows to manage liquidity, ensuring the business can meet its financial obligations as they come due. o Capital Budgeting: This focuses on long-term investments and expenditures, evaluating the potential returns from capital projects like purchasing new machinery or expanding facilities. o Flexible Budgeting: This budget can vary based on actual activity levels. It adjusts expenditures according to the actual level of output or revenue, making it more adaptable. o Rolling Budget (Continuous Budget): It’s an ongoing budget that is continuously updated. A new budget period is added as the current period is completed, keeping the budget current and forward-looking. Page | 26 S.Y.B.Com.(NEP) Introduction to Management o Static Budget: Fixed and doesn’t change with variations in business activity levels. It’s useful for assessing performance at a single activity level but can be less effective under fluctuating conditions. o Program Budgeting: Used mainly in non profits and government organizations, it allocates resources to specific programs or projects, grouping expenditures based on objectives or functions. o Operating Budget: Typically includes revenues and expenses for the daily operations of the business, often broken down into departments or units. o Strategic Budgeting: This aligns longer-term financial planning with the organization's strategic goals and objectives, ensuring resources support key strategic initiatives. o Line-Item Budgeting: Budgets are detailed down to specific line items of expenses, allowing for granular control but possibly leading to inflexibility. Page | 27