Nature and Functions of Management PDF

# Chapter 1: Nature and Functions of Management ## Learning Outcomes After studying this chapter, the learners will be able to: - Explain the concept of organisation - Explain the concept of management - Highlight the relationship between organisation and management - Analyse the role of organisa...

# Chapter 1: Nature and Functions of Management ## Learning Outcomes After studying this chapter, the learners will be able to: - Explain the concept of organisation - Explain the concept of management - Highlight the relationship between organisation and management - Analyse the role of organisations and management in modern life - Appreciate the nature and characteristics of management - Examine managerial competencies for effective management - Analyse coordination as the essence of management ## 1.1 Concept and Nature of Organisation ### 1.1.1 Organisation as a Group of Persons/Social Unit Organisation is commonly viewed as a group of people contributing their efforts toward certain common objectives. The process by which organisational objectives are achieved is called 'management'. Thus, management is an essential part of any goal-oriented activity. Every organisation requires planning of activities, organisation of resources, establishment of a communication system, leading and motivation of people, and control of operations for the realisation of its goals or objectives. This chapter is a modest attempt to present the role of organisation and management, meaning, objectives and basic nature of management and to describe the functions performed by managers to achieve organisational objectives. It also discusses the process and mechanisms of coordination considered the 'essence of managing'. ## 1.2 Business Organisation and Management Organisations are social units which are created deliberately by people to seek specific goals. We are surrounded by organisations like municipal corporations, schools, colleges, business firms, hospitals, religious institutions, clubs, etc. According to Chester I. Barnard, “An organisation comes into existence when there are a number of persons in communication and relationship to each other and are willing to contribute towards a common endeavour". People form groups or organisations and pool their efforts by defining and dividing various activities, responsibility and authority. As such an organisation has the following characteristics: - The members of a group are in a position to communicate with each other. - The group represents cooperative relationship between two or more persons. - The group is created to achieve certain common objectives. - The group lays down rules and regulations to regulate the behaviour of group members. Communication is the first major characteristic of an organisation. An organisation comes into existence and then continues because people are in a position to communicate with one another. It is also essential that they are willing to cooperate with one another for the achievement of their goals. They must contribute their efforts voluntarily towards certain objectives. The existence of common objectives is a must, otherwise the members of the group will not be able to stay together for a long time. Lastly, group members lay down the rules and regulations and the formal structure of relationship among themselves. These are necessary for the proper coordination of the efforts of all individuals in the organisation. Broadly, an organisation may be considered as a productive and a planned system consisting of interdependent individuals and groups, deliberately designed and coordinated for achieving common goals efficiently. Thus, for all practical purposes, the term organisation is used as synonymous to group efforts, collective endeavours or cooperative functioning. In the context of modern management, an organisation may be defined as *a composite entity of a number of interdependent and interacting elements or sub-systems within it*. ### 1.1.2 Characteristics of Organisation An organisation has the following characteristics: - **Social Group**: Organisation is a social grouping which consists of individuals. It operates through these individuals who are known as members or employees of the organisation. These individuals have certain needs, interests, perceptions, attitudes and values which affect the functioning of the organisation. - **Co-operation**: Every organisation is based on the principle of cooperation. All members of the organisation and all its sub-systems work together in cooperation with each other in the given situation for realising the common objectives. - **Common Goals**: Organisation is a goal-oriented and purposeful system. It is to achieve these common goals that an organisation is created and its activities are directed and coordinated. Thus, organisation provides ultimate means to seek the goals. In other words, the very existence of the organisation is legitimised by its goals. - **Rules and Regulations**: An organisation is not a casual group of persons. It is a deliberately planned entity for seeking specific objectives. It has its rules and regulations for its smooth working and for regulating the conduct of its members. - **Relationships**: Organisations are generally managed by a small group of persons known as managers. They determine the relationships among the members of the organisation to coordinate their efforts for achieving the organisational goals. Since the relationships are structured, they are illustrated with the help of organisation structure or chart. - **Separate Identity**: Once an organisation is formed, it acquires its own identity. It develops its own structure, plans, policies, procedures, communication and control systems and coordination mechanisms for achieving its objectives. - **External Environment**: It may be noted that every organisation is a part of its external environment consisting of economic, political, social, cultural, legal, technological and ecological factors. Its working is influenced to a great extent, directly or indirectly by these factors. That means external environment provides both opportunities and constraints or threats for the organisation. ## 1.3 Organisation as a Structure / Relationship Many traditional writers viewed organisation in a very narrow sense by defining it as a framework of duties and responsibilities through which an undertaking functions. According to this view, organisation sets up the scope of activities of the enterprise by laying down the structure of relationships. If organisation is merely recognised as a structure, it will be viewed as a static thing meant to explain formal relationships. But an organisation is a dynamic entity consisting of individuals, with common objectives and relationships among them. An organisation is certainly more than a chart. It is also viewed as a mechanism through which management directs, coordinates and controls the activities of the enterprise. ## 1.4 Organisation as a System A business organisation may be viewed as a system created to satisfy society's needs and desires by the production and distribution of goods and services undertaken with a view to earn profits. A business system gets various inputs from the environment and transforms them into goods and services, (i.e., output) as required by the environment. Thus, it has exchange relation with the environment and that is why it is called an open system. A business system is composed of sub-systems such as: Production, Marketing, Finance, Personnel, Research and Development, Legal and Management. These sub-systems are interdependent and interrelated. They must be properly coordinated if the business is to achieve its objectives effectively. The business system has external environment consisting of economic, political, social, cultural, technological and other forces which affect business policies, plans and practices. Each sub-system of the business is influenced by these forces. To deal effectively with the environment, the various sub-systems operate as a coordinated whole or a single entity. A system may be closed or open. A closed system is self-dependent and does not have any interaction with the external environment. For instance, mechanical systems are closed systems. A closed system concentrates on internal relationships only, i.e., interaction between sub-systems. On the other hand, an open system has active interface with the environment through the input-output process as shown in Fig. 1.1) It can respond to changes in the external environment through the feedback mechanism [Image Description: An open system diagram, labelled "Environment" on the left and "Outputs" on the right. The center space shows the organisation, with arrows labelled "Inputs" on the left side, pointing into the organisation, and "Outputs" on the right, pointing out of the organisation. In the middle are arrows for "Organisational and Managerial Processes" pointing both ways. In the lower left corner are arrows for "Feedback" pointing toward the organisation from the environment.] A business organisation as a system has the following characteristics : - It is goal-oriented. The goals include profits, market standing, social responsibility, growth, etc. - It consists of several sub-systems which are interdependent and interrelated. The sub-systems include production, marketing purchasing, finance, research and development, etc. - It is engaged in processing or transformation of inputs into outputs. - An organisation is an open dynamic system. It has continuous interface with the external environment as it gets inputs from the environment and supplies its output to the environment. ## 1.1.4 Economic Organisations and Non-economic Organisations On the basis of nature of objectives, organisations may be classified as economic/or commercial profit/business organisations and non-economic/non- profit organisations/non-commercial organisations. - Economic organisations are basically engaged in performing economic functions with the satisfaction of the consumers. They earn profit out of their operations. Examples include: industrial and trading organisations and service organisations like banks, transport and insurance companies, etc. Industrial organisations produce goods which are distributed by trading firms. Service organisations provide services to all the organisations. - Non-economic or non-profit organisations or non-commercial organisations are engaged in generating and providing services to their members or to public at large without any motive of earning profit. They are generally engaged in promoting social welfare, culture, religion, etc. such as educational institutions, hospitals and charitable institutions etc. Some of the non-economic organisations are formed exclusively for mutual benefits of their members like clubs, trade associations, political groups, cooperative societies, etc., and others totally devoted to public cause of health, education, environment, rural development, and other public utilities. These organisations are known as 'commonweal organisations'. The classification of organisations on the basis of objectives helps in clarifying and understanding the role organisations play in the society. ## 1.2 Management of Organisation Management of an enterprise is represented by the group of people which performs managerial functions for the accomplishment of organisational goals. These people are individually known as Managers. In other words, *a manager is a person who performs the managerial functions of planning, organising, staffing, directing and controlling and is a member of the management team of the organisation*. Used in this sense management of a company includes all the managers from the chief executive to the front line supervisor. However, in practice, the term 'management' is used to imply the top management of a company. When we say that management of Reliance, Infosysis or WIPRO is very efficient, we imply the efficiency of the company's top executives. Management is a coordinative force. The essence of management is the *coordination or integration of human and other resources for effective performance*. It brings together physical and financial resources and leads the human resources for the efficient use of non-human resources. All the resources are properly organised and divided into various work-units for the purpose of achieving greater coordination. Management acts as a catalytic agent in getting maximum productivity. Management is an integral part of the organisation. It can't have its existence in the absence of an organisation. Every organisation requires some people to plan organise and coordinate its activities. Such people are known individually as managers and collectively as management. ## 1.2.1 Relationship between Organisation and Management There is a close relationship between organisation and its management (i.e., team of managers). Organisational objectives are achieved by the management through the effective and efficient utilisation of people, capital, machinery, material and other resources. It is also true that management does not have any existence without the existence of the organisation. In other words, managers have no role to play unless they are a part of an organisation and assume responsibility for its effective and efficient functioning for its survival and growth. Many organisations have ceased to exist because of the inefficiency of their managements. Organisations seek the attainment of organisational objectives. Management plans and organises various activities and groups them into several departments (units and sub-units). They place competent people on various jobs created in these departments and provide them necessary guidance and training. They motivate the employees to contribute to their maximum for the accomplishment of organisational objectives. It is the top management which provides leadership to the staff working with the organisation. As top management, senior executives lay down policies, formulate plans and strategies and oversee their execution. The effectiveness of leadership determines the effectiveness of the organisation. Organisations like Infosys, TCS, Reliance, ITC, L&T, etc. are well-known in the business world because of their top management and leadership. ## 1.3 Role of Organisations and Management ### 1.3.1 Role and Importance of Organisations We are surrounded by organisations. In the absence of organisations, human life would have been very difficult, if not impossible. It is because of the fact that they provide basic support to the survival and betterment of human life. People are exposed to organisations throughout their life. The examples include hospitals, schools, retail stores, religious and social organisations, work organisations, municipalities, banks, financial institutions and so on. On the basis of their objectives, organisations may be classified as (1) economic/profit/business organisations, and (2) non-economic/profit organisations. Both types of organisations play different roles as discussed below: - Economic organisations are basically engaged in performing economic functions of production and distribution of goods and services for the satisfaction of human needs. These organisations earn profits out of their operations. For example, industries, trading organisations and service organisations like banks, transport companies insurance companies, etc. Economic organisations have acquired a great importance in our life because of the following reasons: - They assemble and utilise various resources for productive purpose. They undertake creative and innovative activities and bring about new products and services for the customers. - They produce and distribute goods and services desired by the consumers. Thus, they serve the consumers by satisfying their needs. - They help the people to increase their standard of living by supplying multi-utility and time saving products. - They generate employment opportunities for the people and thus help them earn their livelihood. - They facilitate economic development of the country by contributing to Gross National Product (GDP). - They serve the society by undertaking socially responsible activities such as planting trees, conservation of water and other natural resources, contributing to social causes such as education and health of people, etc. - **Non-economic or non-profit organisations** are engaged in generating and providing services to its members or to a public at large without any motive of earning profit. For example, they may operate for promoting social welfare, such as educational institutions, hospitals and charitable institutions, and spiritual upliftment, such as religious institutions, etc. Some of these non-economic organisations are formed exclusively for mutual benefit of their members like clubs, trade associations, political groups, cooperative societies, etc. while others are totally devoted to public-cause of health, education, environment protection, rural development, and provision of public utilities. The classification of such organisations on the basis of objectives helps mainly in clarifying and understanding the role in their respective society. But it is also true that organisations serve the society through their managers, by whatever title they may be addressed. ### 1.3.2 Role and Importance of Management There is no substitute for management in modern organisations. As remarked by Peter F. Drucker, "Management is the dynamic, life-giving element in every business. Without it the resources of production remain resources and never become production". An organisation may have raw materials, machines, human resources and other factors, but these can't produce satisfying products unless they are efficiently managed. Managers act as catalyst to make productive use of various resources for the accomplishment of organisational objectives. Managing is an essential part of organised activity. Efficient management of human, financial and physical resources is essential for the achievement of objectives of any group. The significance of management will be more clear by going through the following points: - Accomplishment of Organisational Goals: It is the management which determines the goals of the organisation and of various departments and functional groups. The goals are communicated to the employees to seek their cooperation. All organisational activities are directed towards the organisational objectives. Clear-cut definition of goals is essential for the success of any organisation. - Efficient Utilisation of Resources: Management ensures optimum utilisation of resources. Through planning and organisation, management eliminates all types of wastages and achieves efficiency in all business operations. Management motivates workers to put in their best performance. This would lead to the effective working for the business. - Sound Organisation Structure: Management establishes sound organisation for the accomplishment of the desired objectives. It clarifies authority-responsibility relationship among various positions in the enterprise. It fills various positions with persons having the right qualifications and training. Management also provides the workers with proper environment and encourages the spirit of co-operation. - Integration of Endeavours or Efforts: Management coordinates the utilisation of human and non-human resources in order to achieve organisational objectives. It directs and coordinates the activities of individuals and group in the use of materials, methods and machines. It, thus brings order to endeavours of different groups. - Meeting Challenges: Management is the brain of any enterprise. All the policy decisions are taken by it. Management keeps itself in touch with the current environment and supplies foresight to the enterprise. It helps in predicting what is going to happen in future which will influence the working of the enterprise. It also takes steps to ensure that the enterprise is able to meet the demands of changing environment. - Contribution to Economic Development: According to Peter Druker, "Management is the crucial factor in economic and social development". The experience of India fully illustrates Druker's viewpoint. Indian economic history-prior to her independence clearly reveals that there was no lack of human and material resources in India, but certainly there was lack of managerial personnel who could exploit the material resources with the help of human resources. The development of a country is virtually dependent upon the quality of management of its resources. It is only efficient management which enables the nations to make better use of material and human resources for economic development. In fact, management is the single most critical social activity in connection with economic progress. Physical, financial and human resources are by themselves passive agents; they must be effectively combined and coordinated for economic development. This can be done by competent managers who run the affairs of productive organisations. ## 1.4 Concept of Management The term 'management' has been defined differently by different authors. Traditional authors define it as an art of getting things done whereas modern authors define it as a process of accomplishing certain objectives through the utilisation of human and other resources. These viewpoints have been discussed below. ### 1.4.1 Management as an Art of Getting Things Done Traditionally, management is defined as an art of getting things done through others. This is the simplest definition of management. The person who directs the efforts of others is known as 'Manager'. The manager accomplishes the goals of the organisation through and with the help of operative employees. **Management: Art of Getting Things Done** * *“Management is the art of getting things done through people.”* - Mary Parker Follett * *“Management consists of getting things done through others... A manager is one who accomplishes organisational objectives by directing the efforts of others".* - C.S. George The traditional viewpoint about management is considered inappropriate in the present-day environment where workers are educated and have higher level of aspirations. It has been criticized on the following grounds: - This definition is vague as it does not give the functions which a manager has to perform to get results from others. - It gives the impression of the manipulative character of the practice of management. - The employees are merely treated as means for getting results. In other words, their position is assumed as a cog in the wheel. - The workers are supposed to work like machines in the organisation. - It ignores the needs of the workers and does not offer them human treatment. The present-day workers are not motivated by wages or economic rewards only. They expect the satisfaction of their social and psychological needs by the organisation. Thus, management is certainly more than just getting things done through others. It may be viewed as a technique of getting things done through others by satisfying their needs and providing them opportunities for growth and advancement. ### 1.4.2 Management as a Process of Effective Utilisation of Resources All organisations use some combination of human, financial, physical and information resources to achieve their goals. Human resources include managers and workers, financial resources are the capital used by the organisation to finance operations, physical resources include raw materials, office and production facilities, equipment, etc. and information resources are usable data to make effective decisions. These resources are utilised by the management to achieve organisational goals such as profitability, social responsibility, growth and public image. Management is the process of utilisation of organisational resources with the aim of achieving organisational goals effectively and efficiently. Utilisation of human, financial, physical and information resources in an effective and efficient manner is at the core of management. This is done by the management by performing the functions of planning, organising, staffing, directing and controlling. **Management: Effective Utilisation of Resources** * *“Management is the process of working with and through others to effectively achieve organisational objectives by efficiently utilising the limited resources in the changing environment.”* - Kreitner * *“Management entails the utilisation of human efforts and material resources towards the achievement of organisational objectives”.* - B.M. Richman The basic elements highlighted by the above definitions are discussed below: - **Process**: The term 'process' in the definition means the primary functions or activities that management performs to get things done. These functions are planning, organising, staffing, directing and controlling which we will discuss later in the chapter. - **Effectiveness**: Being effective or doing work effectively means finishing the given task. Effectiveness in management is concerned with doing the right things, completing activities and achieving goals. In other words, it is concerned with the end result of an activity. - **Balancing Effectiveness and Efficiency**: These two terms are different, but interrelated. For management, it is important to be both effective and efficient. Effectiveness and efficiency are two sides of the same coin. But these two aspects need to be balance and management at times, has to compromise with efficiency. For example, it is easier to be effective and ignore efficiency, i.e., complete the given task but at a high cost. Suppose, a company has two units to produce LED TVs and each has a target of 4000 units per month. If the first unit achieves this target at the cost 7,000 per unit as compared to the second unit which achieves the target at the cost of 7,500 per unit, the first unit would be considered more efficient. However, both the units are effective as they are able to achieve the given targets. For the long-term survival and growth of a business, its management must try to achieve goals (i.e., effectiveness) with the use of minimum resources (i.e., efficiency) and thus maintain a balance between effectiveness and efficiency. - **Efficiency**: It means optimum utilisation of resources in performing the given task. It signifies the relationship between inputs and outputs. Efficiency would be greater if less inputs are used to produce the required amount of goods or if more goods are produced with the given inputs. - **Organisational Objectives**: The modern concept of management insists that all the activities of managers must ber directed towards the achievement of organisational goals. ## 1.4.3 Management as a Continuous Process "Management is a distinct process consisting of planning, organising, staffing, directing and controlling, performed to determine and accomplish organisational objectives with the effective and efficient utilisation of human and other resources”. This definition explains management as a process consisting of five elements or functions, viz., (1) planning, (2) organising, (3) staffing, (4) directing, (actuation or leading) and (5) controlling. [Image Description: A diagram showing the inputs, processes, and end results of management. Inputs: - Human Resources - Financial - Physical - Technological - Information Processes (Management Functions): - Planning - Organising - Staffing - Directing - Controlling Outputs: - Organisational Objectives - End Results] As shown in Fig. 1.2, it is through the performance of these functions of the management that management is able to utilise human, financial, physical, technological and information resources. Management is called a process because it comprises a series of interrelated functions that lead to the achievement of certain objectives. The functions include planning, organising, staffing, directing and controlling. When a manager reaches the last step, viz., control, his job does not end here. He will again start with planning on the basis of his past experience and learning and his projection about the future. One can't say that a manager will organise only when the job of planning is over or will direct only when the stage of organising is complete. In practice, a manager has to perform these functions simultaneously to achieve the desired objectives. Thus, management is a never-ending process. ## 1.5 Nature and Characteristics of Management To understand the nature of management, it is essential to know the features or characteristics of management. The basic characteristics of management are as follows: - Management is Goal-Oriented. The purpose of management is to achieve the goals of the organisation. For instance, management of a business aims at satisfaction of customers, earning of profits and increasing the goodwill and image of the business. There is no need of management if there are no pre-determined goals or objectives. The success of management is judged by the extent to which organisational goals are achieved. The basic purpose of management is to achieve maximum efficiency of the organisation. - Management is a part of group effort. Management is an integral part of every group activity. It is essential to undertake any organised activity. It involves the use of group efforts in the pursuit of certain common goals or objectives. It cannot exist independent of the group or organisation it manages. - Management Accomplishes Results through the Cooperation of Others. The managers cannot do everything themselves. They must have the necessary ability and skills to get work accomplished through the efforts of others. They must motivate the subordinates for the accomplishment of the tasks assigned to them. It is through motivation that managers can influence the behaviour of their subordinates. - Management is an Integrating Force. The essence of management is the *coordination or integration of human and other resources for effective performance*. It brings together physical and financial resources and leads the human resources for the efficient use of non-human resources. All these resources are properly organised and divided into various work-units for the purpose of achieving greater coordination. Management acts as a catalytic agent in getting maximum productivity. - Management is an Intangible Force. Management has been called the unseen force. Its presence is evident by the results of its efforts orderliness, informed employees, buoyant spirit and higher output. Thus, existence of management is felt by looking at the results of its efforts. People often comment on the effectiveness (or ineffectiveness) of management on the basis of the end results although they cannot observe it during operation. - Management Balances Effectiveness and Efficiency. Sound management requires that all organisational activities are performed effectively and efficiently. An organisation is said to be effective if it is able to accomplish its objectives. It will be termed as efficient if it is able to accomplish its objectives by making optimum use (of resources. For example, each of the two Product Managers of a company is given the target to produce 2000 refrigerators per month. Both attain their targets and so are effective. But the cost of production per refrigerator of the first Production Manager is 9,000 per set and that of the second is 9,800 per set. The first Production Manager will be termed both effective and efficient. - Management is an Eclectic Discipline. Management is a distinct branch of knowledge which encompasses concepts, theories, principles and practices meant for managing organisations effectively and efficiently. It is taught as a field of study in universities and management institutes. Management is an eclectic discipline which draws a wide range of knowledge from multiple disciplines like psychology, anthropology, sociology, economics, industrial engineering, etc. That is why, management is also called a multi-disciplinary discipline. - Management is a Science as well as an Art. Management has an organised body of knowledge consisting of distinct concepts, principles and techniques which has wide application. So, it is treated as a science. The application of these concepts, principles and techniques requires specialised knowledge and skills on the part of the manager. Since the skills acquired by a manager are his personal possession, management is viewed as an art. The skills can be learnt through training and experience. - Management is Pervasive or Universal. Management is essential for effective performance of any organised activity. Thus, It is universal in nature. The principles and techniques of management have universal application. They can be applied to all types of organisations - business, social, educational and religious. However, the principles and techniques should not be applied blindly as they are not rigid laws. They should be modified to suit the given situation and the type of organisation. ## 1.6 Management as a Science and an Art ### 1.6.1 Management as a Science Science is a systematised body of knowledge pertaining to a particular field of enquiry. It contains concepts, hypotheses, theories, and principles to explain cause and effect relationship between two or more factors. Any discipline which is scientifically developed and consists of universally accepted principles is a science. In order to be recognised as a science, a discipline should have the following characteristics: - *Systematised Body of Knowledge*: It should have a systematic body of knowledge including concepts, principles and theories. - *Scientific Observation*: It should have scientific methods of observation and enquiry. There should be no scope of personal likes and dislikes of the scientist. - *Experimentation*: Scientific principles are evolved through observation and tested by repeated experimentation to check their validity. They should produce the same cause and effect relationship every time. - *Verifiable Principles*: Once an observation is confirmed by repeated experimentation and testing, it takes the form of a scientific principle. Anybody can verify the principle by repeating the experiment. The results are the same every time. Thus, it can be said that application of a principle ensures predictable results. - *Universal Application*: The scientific principles have universal validity and application. They give the same results everywhere if the prescribed conditions are satisfied. It is a well-known fact that the management has systematised body of knowledge pertaining to its field. The researchers in management use scientific techniques to collect and analyse data about human cause and effect relationship. These have been developed which also establish cause and effect relationship. These principles have also been verified by many researchers. More or less, these principles have universal application in different types of organisations in different countries. That is why management is called a science. However, management is not a perfect science like other physical sciences such as astronomy, physics, chemistry, biology, etc. The main reasons for the inexactness of science of management are as follows: - Many of the principles of management are not supported by research. - In management, it is difficult to establish cause and effect relationship as in chemistry or biology. - Application of management principles depends upon situations and factors. - Management deals with people at work and it is very difficult to predict their behaviouraccurately. Since it is a social process, it is also called a Social Science. Management is a universal phenomenon, but its theories and principles may produce different results in different situations. Management principles and theories are situation bound because of which applicability does not necessarily lead to the same result every time. That is why, Ernest Dale called management a Soft Science. ### 1.6.2 Management as an Art or Practice Art signifies the application of knowledge and personal skills to bring about desired results. It is based on scientific knowledge and principles. If a science is learnt, an art is practised. Stated differently, science is to seek knowledge and art is to apply knowledge. An art has the following features: - *Body of Knowledge*: Art is based on theoretical knowledge of concepts, principles and applications about a particular field such as music, painting, etc. - *Personalised Application of Knowledge and Skills*: Art implies personalised application of knowledge and skills about a particular field, say, music or painting. Every artist or practitioner develops his personal skills and style of producing concrete results. - *Practice*: Art is learnt and refined through continuous practice. - *Creativity*: Art is creative in nature. An artist uses his skills and style to create better results. Management is considered an art because of the following reasons: - The practice of management does involve the use of knowledge of management concepts, principles and techniques. - Every manager has to apply his personal skills to deal with various problems of the unit he is managing. At times, he may have to use personal judgement to take managerial decisions. - Management is situational, meaning thereby that there is no best management. Every manager has to apply his knowledge and skills to deal with various situations. - The art of management can be learnt and mastered through continuous practice. - The process of management is directed towards the accomplishment of concrete results. Like any other art, management is creative in the sense that management creates new situation needed for further improvement. ## 1.7 Management as a Profession The term 'profession' may be defined as an occupation backed by specialised body of knowledge and training and to which entry is regulated by a representative body. The essential requirements of a profession are as follows: - *Specialised field of knowledge* - *Restricted entry based on education and training* - *Representative or professional association* - *Ethical code of conduct for self-regulation* - *Social responsibility* - *Professional fee* ## 1.8 Functions of Management Luther Gulick coined the word 'PODSCORB' to describe the functions of management. This word is made up of the initials of the following functions, namely, (i) planning, (ii) organising, (iii) directing, (iv) staffing, (v) co-ordinating, (vi) reporting, and (vii) budgeting. Joseph Massie prescribed a list of seven functions of management, namely, decision-making, organising, staffing, planning, controlling, communicating and directing. G.R. Terry described managerial functions under four heads, namely: planning, organising, actuating and controlling. Koontz and O'Donnell have adopted the following classification: (1) planning, (2) organising, (3) staffing, (4) directing and (5) controlling. These functions are briefly described below. ### 1. Planning Planning is a mental process requiring the use of intellectual faculties, foresight and sound judgement. It is the determination of a course of action to achieve the desired result. It is the selecting and relating of facts and the making and using of assumptions regarding the future in the visualisation and formation of proposed activities believed necessary to achieve desired results. It involves deciding in advance what to do, when to do it, where to do it, how to do it and who is to do it and how the results are to be evaluated. Thus, planning denotes the systematic thinking about the ways and means for the accomplishment of pre-determined objectives. Goals or objectives have to be clarified first before taking any other decision. Goals provide the basis for looking into the future and for evaluating the performance with the predetermined standards. The process of planning involves the following steps: - Determination of goals or objectives of the enterprise - Forecasting of future environment - Search of alternative courses of action - Evaluation of various alternatives and formulation of a plan ### 2. Organising Organising is an important activity by which management brings together the human and material resources for the achievement of pre-determined objectives. Organisation helps in establishing relationships among the members of the enterprise. The relationships are created in terms of authority and responsibility. Each member in the organisation is assigned a specific responsibility or duty to perform and is granted the corresponding authority to perform his duty. According to Louis A. Allen, "Organisation involves identification and grouping the activities to be performed and dividing them among the individuals and creating authority and responsibility relationships among them for the accomplishment of organisational objectives". Thus, organising involves the determination of activities to be performed, grouping them and assigning them to various individuals and creating a structure of authority and responsibility among the individuals to achieve the organisational goals. Organisation involves the following steps: - Identification of activities required for the achievement of objectives and implementation of plans. - Grouping of activities so as to create well-defined jobs. - Grouping jobs into sections, departments and divisions. - Assignment of jobs to employees. - Establishment of authority-responsibility relationships throughout the organisation. ### 3. Staffing The staffing function of management pertains to recruitment, selection, training, development and appraisal of personnel. There is a controversy whether staffing is a function of every manager in the organisation as there is a specialised personnel department in every organisation. Since every manager is concerned with management of human resources, he must perform the staffing function. In fact, every manager is associated with the employment and training of human resources and also their performance appraisal. The personnel department is set up to provide necessary help to managers in performing their staffing or personnel function efficiently. Staffing involves the following activities: - Human resource planning - Deciding sources of recruitment - Receiving applications for vacant jobs - Testing and interviewing of candidates - Final selection and appointment letter - Orientation and placement of employees - Training and development of employees - Performance appraisal of employees. Some authors do not view staffing as a separate function of management. They argue that it is a part of organising since it involves manning the positions created by organisation process. It is also viewed by some as a part of direction as staffing activities are closely related to leadership, communication and motivation. However, in this book, staffing has been taken as a distinct function in view of the need to employ right types of people and to train and develop them for the well-being of the organisation. ### 4. Directing/Leading The term 'directing' or 'direction' is generally used in every walk of life. It has got a wide interpretation these days. It is no more restricted to 'commanding' as viewed by Henri Fayol. In the words of Marshall, "Directing involves determining the course, giving orders and instructions and providing dynamic leadership". It relates to those activities which deal directly with influencing, guiding, supervising and motivating subordinates in their jobs. Thus, this function does not cease with mere issuance of directives. According to G.R. Terry, "Directing means moving to action and supplying simulative power to a group of persons". Thus, directing or leading the group involves issuing instructions (or communication) to the subordinates, leading, motivating and supervising them. These sub-functions of directing are discussed below: - Communication. Communication is the process of passing information and understanding from one person to another. It is necessary for making the subordinates understand what the management expects from them. A manager has always to tell the subordinates what to do, how to do it and when to do it. He has to create an understanding in their minds in regard to these things. Communication is a two-way process. A manager to be successful must develop an effective system of communication so that he may issue instructions, receive the reactions of the subordinates and guide and motivate them. - Leadership. A manager must perform the function of leadership if he is to guide the people effectively for the achievement of organisational objectives.