Management Foundation PDF

Management Foundation 1 Module-1: Introduction to Management Notes...

Management Foundation 1 Module-1: Introduction to Management Notes e Objectives in 1. To gain basic understanding of the management – its nature, the areas where it can be applied and what are the functions of it. nl 2. To learn different levels of management and its utility, skills required and the role of a manager. 3. The evolution of different management theories. O 4. New trend in management thought, the system approach and the modern organization theory. Outcome ity Upon completion of the course, learners will be able to have clear understanding of the concept of management and its theories. s “Management is a multi-purpose organ that manages a business and manages managers and manages worker and work”. According to Peter F Drucker er 1.1.1 Concept, Nature and Scope of Management – Is it a Science or Art v Though management is implicit in every organized group effort on which it ni constructs human society, its systematic study and analysis is of recent origin only. Management was practiced as an art of having things done by people until almost the end of the 19th century. Very little body of theoretical and conceptual knowledge has U been created. It was only during the 20th century that a concerted effort was made to look closely at the management process to recognize certain trends and relationships and to understand the dynamics of person and group actions in organizational settings. A broad theory of organization and management is emerging around some basic ideas, ity values, and propositions. Management has emerged as a distinct Social Science discipline with enormous potential for a dynamic development process. Management is a critical element of man’s economic life and is a collective coordinated practice. A central organization responsible for managing and m regulating a company is indispensable. Management’s organizational abilities, administrative capacity, and entrepreneurial efforts are entrusted with the productive resourcesinventory, labour, money, etc. Management thus offers an organizational leadership. Without capable managers and successful management leadership, )A production resources remain merely resources and never become revenue. In a dynamic market and a rapidly evolving environment, managers’ efficiency and performance decide the sustainability and success of any business enterprise. Definitions of Management (c In the words of Henry Fayol, “To manage is to forecast and to plan, to organize, to command, to co-ordinate and to control”. Amity Directorate of Distance & Online Education  2 Management Foundation In the words of Koontz and O’Donnel, “Management is defined as the creation Notes e and maintenance of an internal environment in an enterprise where individuals working together in groups can perform efficiently and effectively towards the in attainment of group goals”. According to Ordway Tead, “Management is the process and agency which directs and guides the operations of an organization in realizing of established nl aims”. According to Stanley Vance, “Management is simply the process of decision- making and control over the actions of human beings for the express purpose of attaining pre-determined goals”. O Dalton E. McFarland defines management as “A process, by which managers create, direct, maintain and operate purposive organizations through systematic, coordinated, cooperative human effort”. ity Nature of Management An analysis of the various definitions of management indicates certain characteristics of management. The following are the salient characteristics of management: s 1. Management is a process - Administration is a process, function or operation. er The process continues until it ultimately meets the goals set by the administration. “Management is a social process that involves the coordination of material and human resources by planning, organizing, staffing, directing and controlling functions to achieve specified objectives. v 2. Management is a universal activity - Management doesn’t just refer to business ni enterprises. It is also applicable to institutions of financial, social, religious, and education. Management is needed when group effort is needed. 3. Management is a science as well as an art - Management is an art, since there U are many management values. It is also a science, because pre-determined goals can be achieved by applying these principles. 4. Management is a profession - Management is gradually becoming a profession as there are defined management concepts that are applied in practice and require ity professional preparation and are governed by ethical rules arising from their social obligations. 5. Management is a group activity - Management comes into being only when a group activity is carried out against a shared goal. Management mostly deals with m group efforts and not with individual efforts. It organizes, integrates, directs and monitors the collective effort to accomplish the objectives of an organization’s management strategy. )A 6. Management is a system of authority - Authority means the power to make others act in a pre-determined manner. Management formalizes rules of set standards and the procedure to be followed by the subordinates, ensuring their compliance with the rules and regulations. Since management is a process of (c directing people to perform a task, the authority to extract the work from others is implied in the management concept. Amity Directorate of Distance & Online Education  Management Foundation 3 7. Management involves decision-making - Management implies making decisions Notes e in its various aspects concerning the structure and operation of the business. An organization’s success or failure may be determined by the quality of the in managers’ decisions. So decisions are the key to a manager’s performance. 8. Management implies a good leadership - A manager must have the ability to direct the subordinates to get the right course of action. Following on from R. C. nl Davis, “Management is the executive leadership role everywhere.” High-order management means the managers ability to control their subordinates’ behaviour. 9. Management is dynamic and not static - The principles of management are O dynamic and not static. The principles need to adopt themselves as per the social changes. 10. Management draws ideas and concepts from many disciplines - Management is an interdisciplinary study. It draws concepts and ideas from various disciplines ity such as economics, mathematics, statistics, sociology, psychology, anthropology etc. 11. Management is intangible - Management cannot be seen with the eyes, it is evident only by the quality of the organization and the outcomes, i.e., profits, s surplus, increased productivity, etc. er 12. Management is goal-oriented - Management is a purposeful activity and is concerned with the achievement of pre-determined organizational objectives. 13. Management has levels - Management follows a system of hierarchy. It is required at different levels of an organization namely, the top level, the middle level v and the lower level. ni 14. Need of organization - There is the need of an organization for the success of management. Management uses the organization for achieving pre-determined objectives. U 15. Management also implies the willingness and expertise to make people do things - Management involves people doing the work. The economic function of earning profitable return cannot be carried out without enlisting cooperation and securing “people” positive response. The key aspect of management is finding the ity right sort of people to run the operations. Is Management a Science or an Art? A question sometimes arises as to whether management is a science or an art. It m is often said that, Management is the oldest of all arts and the youngest of all sciences. This explains the evolving nature of management but does not address precisely what is management? To get an exact answer to the problem, the definitions of the words )A “Science” and “Art” must be understood. What is “Science”? Science can be defined as “The systematic body of knowledge pertaining to a study area, and containing some general truths explaining the past events or (c phenomena”. The definition consists of three significant scientific characteristics which are: Amity Directorate of Distance & Online Education  4 Management Foundation 1. It is a systematic body of knowledge using the scientific methods for Notes e observation, 2. The principles are evolved according to the continued observations and in experiments, and 3. The principles are exact and also have a universal applicability without any limitation. nl What is “Art”? ‘Art’ refers to ‘the way of doing particular things; It indicates how to accomplish an O objective. Management needs to be an art like any other operational practice. Many managerial activities must be cultivated as the arts of gaining mastery to ensure action and outcomes. The definition consists of three important characteristics which are: ity 1. Art is an application of science. It is putting the principles into practice. 2. After the determination of a particular art, practice is required to reach a level of perfection. 3. It is often undertaken to accomplish an end through deliberate efforts. s Management is both a Science as well as an Art er Management science offers some general concepts that may guide the managers in their professional efforts. The art of management consists of successfully handling any situation. Thus, Management is both a science as well as an art. v In reality, neither science should be over-emphasized nor art be discounted. Both science and management art go hand-in-hand and are interdependent and ni complementary with each other. Management, thus, is both a science and an art. It can be said that-”Management art is as old as human history but management science is a recent past occurrence. U 1.1.2 Functions of Management A manager’s functions provide a useful framework for organizing knowledge of ity management under the different headings of Planning, Organizing, Staffing, Leading and Controlling. Management roles are efficient tools for managers to accomplish the intended objectives of the company. They include the general administrative tasks which must be performed in organizations. m The management process and shows the various functions that managers are involved in. It is evident from the figure that managers are involved in more than one activity at the same time. )A Planning Organizing Staffing Leading Controlling Defining the What is to be Planning and Guiding and Monitoring the targets, plans done and how it appointing the directing the work as per the and strategies will be done. manpower for employees. planned status. (c etc. the project. Amity Directorate of Distance & Online Education  Management Foundation 5 1. Planning - Planning can be described as the process by which managers decide Notes e the firm’s mission and goals and take the required steps to achieve the desired goals. At the same time, managers need to identify emerging industry patterns in and from time-to-time introduce change and creativity into the organization. There are various types of plans ranging from planning to define the overall purpose and objectives of an organization. Planning helps a firm decide its future course of action. nl 2. Organizing - Organizing is the process of assigning tasks and allocating the available resources to individuals so as to enable them to accomplish organizational goals. Organizing is a continuous process of determining: O Which tasks are to be performed? How tasks can best be combined into specific jobs? How jobs can be further grouped into various units. ity Reporting and authority relationships within the corporate hierarchy. A firm’s organizational structure is a key determinant of its success or a failure. If the plans aren’t properly organized, then even the best of plans can fail. At the other side, outstanding planning, will remove the problems associated with a poor s plan. er 3. Staffing - Today, staffing is best known as human resources management and includes manning or filling the various roles within the organizational hierarchy. Activities such as personnel requirements, assessment of the number of people currently available in the organization, recruitment and selection of applicants, v training and placement in the organization come under the purview staffing. It also deals with compensations, performance appraisals, promotions and even career ni planning. 4. Leading - Leading is defined as the management role of involving, encouraging, and guiding people towards the attainment of organizational objectives. It is the U management role that involves inducing and empowering team members to perform well and achieve corporate goals. Leading involves: ity communicating with others, leadership styles and approaches. motivating employees to put forward the efforts required to achieve organizational objectives. m In simple words, it is the act of making things happens through others. 5. Controlling: The initial step in the management process is to track an )A organization’s progress against its objectives. Controlling can be defined as the continuous measurement and analysis of actual operations against existing industry standards. These are developed during the process of planning and, if any, deviations, they are corrected. The basis control process involves - Comparing performance with standards, (c Determining where negative deviations occur. Amity Directorate of Distance & Online Education  6 Management Foundation Developing remedial measures to correct deviations Notes e 1.1.3 Administration and Management in The terms management and administration are used synonymously. According to various authors both the terms have a similar meaning and there is no difference between them. This includes - nl 1. Management is the skill required to run a business. 2. Functioning of non-profit institutions and Government institutions require the skill known as administration. O However, it is argued that the executive functions of a business unit are referred as management, whereas the executive functions of other institutions are referred to as administration. In this way, administration is distinguished as a top-level function, while ity management is considered as a low-level function. The basic points of distinction between management and administration are – Basis Management Administration s Meaning An organized way of managing The process of administering people and things of a business an organization by a group er organization is called the of people is known as the Management. Administration. Authority Middle and Lower Level Top Level v Policy Policy Implementation Policy Formulation ni Position Acts as an agency Acts as a principal Applicable to Profit-making organizations, i.e. Government offices, military, business organizations. clubs, business enterprises, U hospitals, religious and educational organizations. Key Person Manager Administrator ity Knowledge Requires technical ability more than Requires administrative ability administrative ability more than technical ability 1.1.4 Levels of Management m The owner is the only member of management team in several small business enterprises. But, with an organization’s size increasing, a more sophisticated organizational structure is required. The categorization of management into three basic )A levels is a common practice: 1. Top-level management, 2. Middle-level management, and 3. Supervisory or First-level management. (c Amity Directorate of Distance & Online Education  Management Foundation 7 The responsibilities and duties at these three levels of management vary from Notes e organization to organization, depending upon the size, technology, culture, etc. prevailing in the organization. in Top nl O Middle ity Lower s Who is a Manager? er A manager is the person in charge of organizing and directing a group of individuals’ work, overseeing their performance, and taking corrective measures if appropriate. This is their first step into a management career for many people. v Managers may guide workers or guide multiple supervisors who direct the workers. They are the persons responsible for monitoring the process, organizing activities, ni achieving targets and providing leadership. A manager must also be familiar with the work of all the groups that he / she supervises, but must not be the best in each or all of the fields. U A manager’s title reflects what they are responsible for. For example: 1. An Accounting Manager supervises the Accounting function. ity 2. AProduction Manager developes a staffing plan for the factory. 3. AManager of Design Engineering supervises engineers and support staff engaged in design of a product or service. m Responsibilities of a Manager Managers constantly change gears and reform and reorganize things to produce efficiency. In the late 1960s, Henry Mintzberg outlined the varied roles managers )A played in discharging their duties under three broad headings: interpersonal positions, analytical positions and decision-making roles. 1. Interpersonal Roles - Three interpersonal positions help the manager ensure smooth functioning of the organization. Managers assume the role (c of figurehead while performing duties of a ceremonial and symbolic nature. These involve receiving guests, attending social events involving their Amity Directorate of Distance & Online Education  8 Management Foundation subordinates (such as weddings, funerals), awarding certificates of merit Notes e to promising employees, etc. Hiring, recruiting, empowering and disciplining workers are among the leadership positions. Managers perform the role of in liaison as they act as a coordinating connection between their company and others, or between their units and other units. In this group are included tasks such as mail acknowledgments, external board work, etc. nl 2. Informational Roles - Mintzberg said that perhaps the most important aspects of a manager’s job are the reception and sharing of information. Managers need input from different sources in order to make the best decisions. This practice is usually achieved by reading magazines and talking O to others to learn about changes in the tastes of the consumers, the moves of the competitors and the like. Mintzberg called the function of manager. In the position of disseminator, the manager distributes valuable knowledge that ity would otherwise be unavailable to subordinates. Managers also play the role of spokesperson when representing the company to outsiders. 3. Decisional Roles - There are four decision roles that are followed by the manager. The manager tries to develop the unit in the role of entrepreneur. To respond to environmental issues he initiates expected improvements. s Managers respond as disturbance handlers to circumstances outside their control, such as strikes, material shortages, complaints, grievances etc. er Managers are responsible in the role of resource allocator for allocating human, physical, and monetary resources. Managers, as negotiators, not only mediate in internal disputes but also bargain with other units to obtain benefits v for their own units. ni Skills of a Manager In order to process activities that are presented to him from time-to-time, an effective manager must possess certain skills in the areas of planning, organizing, U leading, controlling and decision-making. Top Conceptual ity Level Middle Level Skills Human Technical m Lower Level Skills Skills )A Managerial Skills To be effective, a manager must have several essential skills and develop them (c continuously. Robert L. Katz identified three core ability styles which are the human, conceptual and technical. Amity Directorate of Distance & Online Education  Management Foundation 9 1. Technical Skills - It is the ability to use advanced field tools, methods, Notes e or techniques. Technical skills are considered to be very critical for the effectiveness of lower-level managers as they are in direct contact with in employees carrying out work activities within the organization. For example, the effectiveness of an oil rig’s drilling supervisor depends a lot on his professional drilling skills. nl 2. Human Skills - It is the ability to work with others, to understand and to motivate. This ability is necessary at all management levels within the organization, but it is particularly critical at lower management levels where the supervisor has regular interaction with the operational staff. O 3. Conceptual Skills - It is the intellectual capacity to organize and manage the goals and practices of the organization. This refers to the ability to see the ‘big picture,’ knowing how a shift will affect the whole company in any given ity component. Roles of Manager Managers usually work long hours, splitting their days into a large number of brief s and varied tasks, communicating with a large number of different individuals, doing no strategic preparation and spending much of their time in oral contact. They spend a lot er of time getting information, giving it and processing it. 1. Managers work with and through people - In order to achieve organizational goals, administrators collaborate with internal (subordinates, v bosses, peers) as well as external groups (customers, employers, vendors, members of union, etc.) They blend individual efforts into teamwork to plan ni things, create a structure, motivate people and eventually achieve goals. 2. Managers are mediators - People employed in an organization don’t always agree on other issues, say, the target setting and the means of achieving U them. At a large bank’s corporate headquarters, managers can think about expanding into merchant banking, leasing, credit card business, while at the branch level, people can focus on expanding deposits by venturing deep into rural areas. ity 3. Managers are diplomats - Managers also serve on organizational committees as official members of their work units. In dealing with external groups (clients, consumers, government officials, etc.,) they represent the entire organization as well as a specific unit. m 4. Managers are symbols - Managers are indicators of success or failure at an organization. If they excel, they get notes of applause and are depreciated and targeted if they fail. In short, they reflect ambitions of both the corporate )A and the employees. Evolution of Management Thought Management origin can be traced back to the days when man started living in communities. One can argue that management took the form of leadership that was (c essential for coordinating the group members’ efforts to arrange life’s necessities. History reveals that according to their intelligence, physical and mental capabilities, strong men organized the masses into groups. Amity Directorate of Distance & Online Education  10 Management Foundation 1.2.1 Bureaucratic Management Notes e Max Weber (1864-1920), a German sociologist, contributed to the thinking of management with his views on bureaucracy. His primary contribution includes his in theory of the structure of authority and his classification of organizations based on the existence of the ties of authority within them. Essentially, it was Weber’s contention that there are three types of legitimate authority which are: nl 1. Rational-legal Authority – Obedience is owed to a role or rank legally formed within the hierarchy of a company, military organization, government, etc. 2. Traditional Authority – People follow an individual because he belongs to O some class or holds a role that is historically recognized as having power, like a real family 3. Charismatic Authority – Obedience is based on the belief of followers that a ity person has some special appeal or power. Weber’s theory ‘bureaucracy’ recognizes the rational-legal authority as the most important type in any organization. Under the traditional authority, leaders are not chosen for their competence, whereas a charismatic authority is too emotional and s irrational. er Limitation of Bureaucratic Management and Administrative Theory Scholars who emphasized the human approach to management criticized classical theorists on several grounds. They felt that the management v principles propounded by the classical theorists were not universally applicable to today’s complex organizations. Moreover, some of Fayol’s ni principles, like that of specialization, were frequently in conflict with the principle of unity of command. Weber’s concept of bureaucracy is not as popular today as it was when it was U first proposed. The principle characteristics of bureaucracy – strict division of labor, adherence to formal rules and regulations, and impersonal application of rules and controls – destroy individual creativity and the flexibility to respond to complex changes in the global environment. ity Classical theorists ignored important aspects of organizational behavior. They did not deal with the problems of leadership, motivation, power or informal relations. They stressed productivity above other aspects of management. They also failed to consider the impact of the external and internal environment upon employee behavior in organizations. m Classical Theory Classical theory signifies the beginning of management organization’s systematic )A study. The classical theory is often referred to as traditional theory and can be traced historically to industrial and military project organizations of the 19th century. In the early years of the 20th century many authors contributed to the classical thought. Among them: Taylor, Fayol, Weber, Luther Gulick, Urwick, Mooney and other. (c The classical theory incorporates three viewpoints: Taylor’s Scientific Management Amity Directorate of Distance & Online Education  Management Foundation 11 Fayol’s Administrative Management; and Notes e Weber’s Ideal Bureaucracy (an organization based on rules and regulations, formal relations, specialization, etc.). in 1.2.2 Scientific Approach In the early 1900s, scientific management became popular. Scientific management nl was described in the early 19th century as “That form of management that conducts a company or company by established standards, by facts or truths obtained by systematic observation, experimentation or reasoning”. It is a classical management O approach emphasizing on the scientific study of work methods to improve the workers efficiency. Some of the earliest advocates of scientific management were Frederick W. Taylor (1856–1915), Frank Gilbreth (1868–1924), Lillian Gilbreth (1879–1972), and Henry Gantt (1861–1919) ity 1. Frederick Winslow Taylor He was the first person to insist that scientific methods should be incorporated into management. During the last decade of the 19th century, he initiated a new trend s known as ‘Scientific Management.’ Therefore Taylor is considered to be the father of scientific management. Taylor was an American engineer who came up against er management problems at the turn of the century. During that time, productivity was very low, labour became extremely dissatisfied, and regular strikes and lockouts were faced by industries. Taylor’s idea was a science- v based method in which lower labor costs could be achieved at the same time as higher wages. He proposed improving the employee’s mental attitudes and the management ni to introduce harmony in the industry. Taylor’s thinking was confined to management at the shop level, but he still demonstrated the possibility and significance of the scientific analysis of the various aspects of management. To sum up, he laid emphasis on the following principles: U 1. Science, not rule of thumb. 2. Harmony in group action, rather than discord. ity 3. Maximum output than the restricted output. 4. The scientific selection, training and placement of workers. 5. Equal division of work and responsibility between workers and managers. Taylor suggested that management should try to find the best ways of doing m different jobs and introduce standardized materials, tools and equipment to reduce wastage. Management should select the right types of people, and provide them with adequate training to increase production quantity and quality. It must establish )A congenial working environments for the employees to be optimally productive. Limitations of Scientific Management 1. There was objection to the use of the word ‘Scientific’ before ‘Management’ (c because what scientific management actually means is nothing but a scientific approach to management. Amity Directorate of Distance & Online Education  12 Management Foundation 2. Scientific management concepts revolve around round issues at the Notes e organizational level and do not rely from a manager’s point of view on the management of an enterprise. From an engineering point of view these in principles focus on problem solving. 3. Scientific management proponents believed that people were “normal” and were mainly motivated by the desire for material gain. Taylor and his nl supporters disregarded the workers’ social needs and overemphasized their economic and physical needs. 4. Theorists in Science Management have dismissed the human need for work O satisfaction. As employees are more likely to strike on issues such as working conditions and job content (the job itself) than salaries, empirical management concepts based on the “fair worker” paradigm have become increasingly ineffective. ity 1.2.3 Administrative Theory While the proponents of science developed principles that could help workers perform their tasks more efficiently, another classical theory – the theory of s administrative management – focused on principles that managers could use to coordinate the organizations’ internal activities. The Administrative Theorists’ most famous one was Henri Fayol. er Henri Fayol v A general theory of management developed by the French industrialist Henri Fayol (1841–1925), a prominent European management theorist. Fayol believed that ni “Satisfactory outcomes were unavoidable with proper management techniques and scientific forecasts”. Fayol was unknown to American managers and scholars until his most important work, General and Industrial Management, was translated into English in 1949. U According to Fayol, the business operations of an organization could be divided into six activities. ity Technical Producing and manufacturing products Commercial Buying, selling and exchange Accounting Recording and taking stock of costs, profits, a and liabilities, maintaining balance sheets, and compiling statistics m Security Protecting employees and property. Financial Search for and optimal use of capital )A Managerial Planning, Organizing, Commanding, Coordinating and Controlling. Fayol has further outlined 14 principals of management. These include – 1. Division of Work - Only the division of labor or specialization may provide (c optimum productivity and efficiency. It is only by division of labor and specialization that both technological and administrative tasks can be carried out in the best possible way. Amity Directorate of Distance & Online Education  Management Foundation 13 2. Authority and Responsibility - Authority is called the power to issue Notes e an order. Responsibility is the obligation to accomplish. Both sides of the management coin are the authority and Obligation and they exist together. in They are complimentary and interdependent on one another. 3. Discipline - The objectives, rules and regulations, and the policies and procedures should be honoured by each member In an organisation. There nl must be clear and fair agreement on the rules and also penalties/punishment for the non-obedience or indiscipline. An organisation cannot work smoothly without discipline – preferably voluntary discipline. O 4. Unity of Command - To avoid any confusion and conflict among the team members, it is necessary that each member of the organisation must receive orders and instructions only from one superior (boss). 5. Unity of Direction - All members of an organisation must work together for ity the accomplishment of common objectives. 6. Emphasis on Subordination of Personal Interest to Common Interest - This is also known as the principle of co-operation. Each employee must work for all and all for each. In any joint enterprise the general or common interest s must be supreme. er 7. Remuneration - A fair pay with the non-financial rewards will act as the best incentive or motivator for good performance of the employees. It is to be ensured that the exploitation of employees in any manner must be eliminated and a sound scheme of remuneration must include adequate financial and v non-financial incentives. 8. Centralization - There should be a good balance between centralization and ni decentralization of authority and power. Organization should avoid extreme centralization and decentralization. U 9. Scalar Chain - This refers to the chain of authority that extends from the top to the bottom of an organization. The scalar chain defines the communication path in an organization. 10. Order - This refers to both material and social order in organizations. Material ity order indicates that everything is kept in the right place to facilitate the smooth coordination of work activities. Similarly, social order implies that the right person is placed in the right job (this is achieved by having a proper selection procedure in the organization). m 11. Equity - An organisation consists of a group of people involved in joint effort. Hence, equity (i.e., justice) must be there. Without equity, we cannot have sustained and adequate joint collaboration. All employees should be treated )A fairly. A manager should treat all employees in the same manner without prejudice. 12. Esprit de Corps - Esprit de corps is the foundation of a sound organization. This means “a sense of union.” Management must inculcate a team spirit in its employees. Pride, loyalty and sense of belonging are responsible for good (c performance. Amity Directorate of Distance & Online Education  14 Management Foundation 13. Stability of Tenure - A person needs time to adjust himself with the new work Notes e environment and demonstrate efficiency in due course. Hence, employees and managers must have job security. Security of income and employment is in a pre-requisite of sound organisation and management. A high labor turnover should be prevented and managers should motivate their employees to do a better job. nl 14. Initiative - Creative thinking and capacity to take initiative can give us sound managerial planning and execution of pre-determined plans. Employees should be encouraged to give suggestions and develop new and better work practices. O 1.2.4 Douglas McGregor: Challenging Traditional Assumptions about Employees ity Douglas McGregor (1906-1964) established two ideas about human behaviour, which he called “Theory X” and “Theory Y.” According to McGregor, these two theories represent the two extreme sets of views that various managers hold about their workers. s Theory X provides an individual’s perspective that is fundamentally negative. Managers in Theory X assume that workers are lazy, have little ambition, avoid er responsibilities, dislike work and need to be closely directed to make efficient workers. Theory Y is more optimistic, and presumes that workers can be imaginative and inventive, that they are able to take responsibility, that they can exercise self-control v and enjoy their jobs. They usually have higher-level needs that the job failed to fulfill. Like the theory of Maslow, McGregor’s Theory X and Y stimulated several practitioner ni managers who helped managers learn new ways of handling the staff. Theory X Theory Y U Essentially negative view of the Positive view of the people people. Assumes workers are active Assumes workers are lazy. Have high ambition, like work, like ity Have little ambition, dislike work, responsibilities want to avoid the responsibility, 1.3.1 Neo Classical Theory m 1. Human Relations Approach The topic of human relations was overlooked by the classical writers like Weber, )A Taylor, and Fayol. The neo-classicists focused on industrial human dimension. By stressing the fact that organization is a social structure and the human factor is the most important element within it, they updated the classical theory. They carried out some studies (known as Hawthorne Studies) and studied informal (c groupings, informal connections, contact patterns, patterns of informal leadership, etc. That has contributed to the growth of the approach to human relations. Elton Mayo Amity Directorate of Distance & Online Education  Management Foundation 15 is generally regarded as father of the School of Human Relations. The approach to Notes e human relations is concerned with understanding the significance of the human factor in organisations. It showed the significance of the psychological and social factors in in deciding the efficiency and satisfaction of workers. It was instrumental in developing a new image of the man and the place of work. The basic tenets of neo-classical theory or human relations approach are - nl 1. Business organisation is a social system. 2. Behaviour of an individual is dominated by the informal group, he is a member of. O 3. An individual employee cannot be motivated by economic incentives alone. To improve the level of motivation the social and psychological needs must also be satisfied. ity 4. In an organisation, it is ultimately the cooperative attitude and not the extra commands that yields result. 5. The objective of the management must be to develop the social and leadership skills in addition to the technical skills. It should take interest for the s employee welfare. er 6. In an organization, both morale and productivity go hand. 2. Hawthrone Studies In 1927, at the Hawthorne Works of Western Electric Company, Chicago, a group v of researchers led by George Elton Mayo and Fritz J. Roethlisberger at Harvard Business School were invited to participate in the study. The experiment continued to ni run until 1932. Previously, the Notes National Research Council, in conjunction with the Western Electric Company, conducted a report from 1924 to 1927 to assess the impact of lighting and other factors on workers and their productivity. U 1. Illumination Experiment - This experiment was carried out to create a relationship between performance and enlightenment. Each time the output tended to increase as the light intensity improved. But the output showed ity again an upward trend when the illumination was slowly brought down from the normal level. It was found, therefore, that there is no clear relationship between workers’ production and factory illumination. There were several other factors that affected the workers’ productivity when light intensity increased or decreased. m 2. Relay Assembly Room Experiment- In this experiment, a small homogeneous girl’s work-group was constituted. In the work atmosphere new elements were introduced, that included short working hours, improved )A physical conditions, rest time, friendly and informal supervision, free social interaction among group members, etc. The productivity and morale increased considerably during the period of the experiment and were still maintained even if improvements in working conditions were withdrawn. The research concluded that the key to higher productivity was held by socio-psychological (c factors such as feeling significant, appreciation, attention, involvement, unified workgroup and non-directive supervision. Amity Directorate of Distance & Online Education  16 Management Foundation 3. Bank Wiring Observation Room Experiment - This experiment was Notes e performed for observing a group of workers under conditions that were as similar to natural as possible. This party comprised 14 staff. Following the in experiment this group’s production records were compared with their previous production records. Due to the maintenance of normal conditions, there were no significant changes. However, existence of informal cliques in the group, informal production norms were observed by the researchers. The Bank nl Wiring Experiment led to the following observations: (a) Each individual was restricting output. O (b) The group had its own “unofficial” performance standards. (c) Over a time period, the individual output remained fairly constant (d) Departmental records were distorted due to differences between actual ity and reported output or between the standard and reported working time. Contributions of Human Relations Approach or Hawthorne Studies The human creationists proposed the following points as a result of their findings of the Hawthorne experiments: s 1. Social System - The organisation in general is a social system composed er of numerous interacting parts. The social system defines individual roles and establishes norms that may differ from those of the formal organisation. 2. Social Environment - The social environment on the job affects the workers v and is also affected by them. Management is not the only variable. Social and psychological factors exercise a great influence on the behaviour of workers. ni Therefore, every manager should adopt a sound human approach to all organizational problems. 3. Informal Organisation - The informal organisation does also exist within the U frame work of formal organisation and it affects and is affected by the formal organisation. 4. Group Dynamics - At the workplace, the workers often do not act or react as individuals but as members of groups. The group determines the norms of ity behaviour for the group members and thus exercises a powerful influence on the attitudes and performance of individual workers. The management should deal with workers as members of work group rather than as individuals. 5. Communication - Two-way communication is necessary because it carries m necessary information downward for the proper functioning of the organisation and transmits upward the feelings and sentiments of people who work in the organisation. It will help in securing workers’ cooperation and participation in )A the decision-making process. Workers tend to be more productive when they are given the opportunity to express their feelings, opinions and grievances. This also gives them psychological satisfaction. 6. Non-economic Rewards - Money is only one of the motivators, but not (c the sole motivator of human behaviour. The social and psychological needs of the workers are very strong. So non-economic rewards such as praise, status, interpersonal relations, etc. play an important role in motivating the Amity Directorate of Distance & Online Education  Management Foundation 17 employees. Such rewards must be integrated with the wages and fringe Notes e benefits of the employees. 7. Conflicts - There may arise conflicts between the organizational goals and in group goals. Conflicts will harm the interest of workers if they are not handled properly. Conflicts can be resolved through improvement of human relations in the organisation. nl Behavioural Approach The management behavioral school emphasized what the classical theorists had O overlooked-the human dimension. Although classical theorists viewed the organization from a point of view of development, behavioral theorists viewed it from the perspective of the individual. The essential characteristics of behavioural science approach are: 1. Data must be objectively collected and analyzed. ity 2. Findings must be presented so that the distinction between cause and effect, as opposed to chance occurrences, is clear. 3. Facts must be systematically related to one another within a systematic s framework. Data collection alone does not constitute a science. 4. The findings of a study must always be open to further examination and question. er The distinctive characteristic of the approach to behavioral sciences is the methodology used in the management discipline in the production of the study. The crux v of methodology lies in collecting and evaluating the relevant data. In that sense, this approach differs from the approach to human relations. ni 1.3.3 Decision Theory The decision theory of management led by Herbart Simon ‘s management looks U at management as a decision-making mechanism. Decisions are taken by means of rational choice among the various available alternatives. It is a decision-taking task, and our role is decided by preference. Decision theories have expanded their theory building to the study of decisions, decision-makers and the world of decision-makers in ity the decision-making process Everything a manager does, he takes choices by taking them. Decision-making therefore is essential to the management. Simon created the administrative decision- making model that explains how decisions actually are made. Managers often find m themselves in a position of confusion and unprogrammed decision-taking. The decision model used by Simon is based on two principles: )A (1) Minimal rationality and (2) Satisfying. The manager who seeks to take logical and rationale approach to decision can follow the following six steps: (c 1. Recognition and definition of the decision situation 2. Identification of appropriate alternatives Amity Directorate of Distance & Online Education  18 Management Foundation 3. Evaluation of each alternative Notes e 4. Selecting the best alternative 5. Implementing the alternative. in 6. Evaluating the results and follow up. Simon has further identified four types of rationality in decision-making: nl (i) ‘Objectively’ rational, if it maximizes given values in a given situation. (ii) ‘Subjectively’ rational, if it maximizes attainment of given values in the context of the ‘bounded’ or limited knowledge of the decision-maker (that is, bounded O rationality). (iii) ‘Organizationally’ rational, if it is oriented to the attainment of organizational goals or objectives (for example, Peter Drucker’s seven objectives discussed ity here¬after on ‘Planning’). (iv) ‘Personally’ rational, if it is oriented to an individual’s goals 1.3.4 Modern Organization Theory s In addition to the traditional, behavioral, and quantitative management methods, there are several contemporary management methods. Some of these theories er are the theory of processes and the theory of contingency, which have influenced current thinking in management in a major way. These two management methods are discussed in this section. v 1. Systems Theory ni Those who support a system view argue that an entity cannot operate in isolation and that without addressing external environmental factors, management cannot work effectively. The approach to systems offers administrators a new way to look at an enterprise as a whole and as part of the wider, external world. U According to this theory, an organizational system has four major components, the inputs, outputs, transformation processes and the feedback. ity Inputs–money, materials, men machines and informational sources – are required to produce goods and services. Transformation processes or throughputs – managerial and technical abilities – are used to concert inputs into outputs. Outputs are the products, services, profits and other results produced by the m organization. Feedback refers to information about the outcomes and the position of the organization relative to the environment it operates. )A 2. Contingency Theory The contingency theory is also known as a situational theory. In recent years, this method has been widely employed to combine management theory with growing (c organizational complexity. There is no one right way of handling all problems according to this principle. In other words, there is not one best way to manage. The response “it depends” holds good for several management situations. Amity Directorate of Distance & Online Education  Management Foundation 19 The approach to contingency was developed by administrators, consultants Notes e and researchers who tried to adapt the principles of the major management schools of thought to real life circumstances. Managers who pursue this method can only in make strategic decisions or implement a specific style of management after careful consideration of all situational factors. According to the contingency approach, “The role of managers is to determine which strategy can better lead to the achievement of management goals in a given situation, under different circumstances and at a nl particular time”. Systems Approach Contingency Approach O It treats every organization as same It treats every organization as unique. and has no unique nature. The contributors are social The contributors are sociologist. ity psychologists. It is vague and specific. Pragmatic, specific and action-oriented. It focuses on internal environment of Focuses on external environment of an organization an organization. s It provides a global theoretical model It provided operational tools and techniques for er for understanding organizations. analyzing and solving business problem. It is pioneer to the contingency It has been built over systems approach. approach. v Key Takeaways: ni Management: The art of getting things done. Administration: It is a higher-level function concerned with the determination of policies. U Directing: It deals with the steps a manager takes (guiding, supervising, motivating, etc.) to get subordinates and others to carry out plans. Leadership: Influencing others to act toward the attainment of a goal. ity Motivation: Any influence that brings out, directs, or maintains goal directed behaviour. Organisation: Two or more persons engaged in a systematic effort to produce goods or services. m Organizing: It is the process of creating a structure of relationships to enable employees to carry out management’s plans and meet its goals )A Bureaucracy: Highly specialized organisation structure Classical Approach: It emphasizes organizational efficiency to increase organizational success. Hawthorne Studies: A group of studies conducted at the Hawthorne plant of the (c Western Electric company during the late 1920s and early 1930s whose results ultimately led to the human relations view of management. Amity Directorate of Distance & Online Education  20 Management Foundation Human Relations Theory: A movement in management thinking and practice that Notes e emphasized satisfaction of employees’ basic needs as the key to increased worker productivity. in Scientific Management: Scientific study of work to improve efficiency. Systems Theory: It tries to solve problems by diagnosing them within a framework of inputs, transformation processes, outputs and feedback. nl Check your progress: 1. Management is _______________ science and art. O a) between b) through c) along ity d) both 2. Managers work with and ______________ other people. a) between s b) through er c) along d) clients v 3. There are ____________ functions of management. a) 4 ni b) 5 c) 6 U d) 8 4. ____________ the process of assigning tasks and allocating the available resources to individuals so as to enable them to accomplish organizational goals. ity a) Planning b) Directing c) Organizing m d) Motivating 5. How many levels of management are there? a) 3 )A b) 5 c) 4 d) 8 (c Questions and Exercises 1. “Management is getting things done through other people”. Elaborate. Amity Directorate of Distance & Online Education  Management Foundation 21 2. Is management a profession? Give arguments for your answer. Notes e 3. Distinguish between management and administration. 4. Describe the skills of a manager in 5. Explain some principles of management? Check your progress: nl 1. d) Both 2. b) through O 3. b) 5 4. c) Organizing 5. a) 3 ity For further readings 1. Etzel, M. J., Bruce, J. W., Stanton, W. J., & Pandit, A. (2011). Marketing (14thed.). New Delhi: Tata McGraw-Hill. s 2. Kotler, P. & Armstrong, G. (2017). Principles of Marketing (17th ed.).Pearson er 3. Aswathappa, K. (2017) Human Resource Management: Text and Cases. (8thed.) New Delhi: McGraw Hill. 4. Pareek, U. &Khanna, S. (2016). Understanding Organizational Behaviour (4th ed.). New Delhi: Oxford University Press. v 5. David S. Bright, ‎Anastasia H. Cortes – 2019. Principles of Management ni U ity m )A (c Amity Directorate of Distance & Online Education  22 Management Foundation Module-2: Planning Process Notes e Objectives in Learner will understand: 1. The different steps in the process of management; nl 2. The functions, characteristics, objective and limitations of planning. 3. The concept of management by objective. O Outcome After completion of this module, learners will be able to learn the importance of Management planning process and its implementation. ity “Planning is a thinking process, an organized foresight, a vision based on fact and experience that is required for intelligent action” According to (Alford and Beatty) s 1.1.1 Planning: An Overview er Planning is the organization’s first of the four management roles and sets of direction. Planning is conducted after the organization’s mission is identified and its v priorities and goals are set. It requires a series of decisions required to undertake a range of activities to achieve the organization’s goals and objectives, in line with ni its mandate. Effective implementation, as defined during the planning process, of policies, procedures and regulations guarantees the performance of the organisation. Planning is needed at all managerial levels. Strategic preparation, carried out by top management, focuses on where the company is going to be in the near future. U Planning Planning is a vital feature of management. It is the cycle that decides how the ity company will arrive where it needs to go. This is a prime management role as all the other functions rely on how the company aims to achieve its goals. Planning involves deciding what to do and how to do in advance. It is one of the main executive functions. The manager must formulate an idea about how to proceed m on a given task before doing something. Therefore planning is closely related to imagination and innovation. But first the manager will have to set goals, only then would a manager know where he will go. Planning helps to close the distance between where )A we find ourselves and where we want to go. Planning is what the managers do at every level. It includes decision-making, as it involves choosing from alternative approaches. 1.1.2 Features of Planning The planning function of the management has certain special features. These (c features throw light on its nature and scope. Features of planning are - Amity Directorate of Distance & Online Education  Management Foundation 23 1. Planning focuses on achievement of objectives - Organizations are Notes e formed with a general purpose in mind. The plans set out goals along with the measures to be performed to achieve the objectives. And it’s purposeful in preparation. Planning is pointless unless it leads to attaining pre-determined organizational objectives. 2. Planning is primary function of management - Planning sets the nl groundwork for other management roles. All other administrative tasks are carried out within the context of the drawn up plans. Planning therefore takes precedence over other roles. This is often called the planning primacy. The diverse management roles are interrelated and equally essential. Planning O therefore provides the basis for all other roles. 3. Planning helps in the process of motivation - If plans are properly communicate to all levels of the organization, then everyone can feel involved ity to carry them out. When people get involved, their sense of belonging increases and thus they are highly motivated. 4. Planning is pervasive - Planning is required at all management levels, as well as in all organization’s departments. It is neither an exclusive role of top s management nor of any particular department. But the planning framework varies from one level to another and across various departments. For er example, the top management participates in organizational planning as a whole. Middle management does the departmental planning. At the lowest level, day-to-day operational planning is done by supervisors. v 5. Planning is continuous - Plans are planned for a particular time period, could be one month, a quarter, or a year. At the end of that time a new plan ni will be drawn up in compliance with current criteria and future circumstances. Therefore preparation is an ongoing process. Planning consistency is linked to the planning process. It means a plan is framed, executed and followed by a specific plan, and so on. U 6. Planning is futuristic - Essentially planning means looking ahead and preparing for the future. The aim of the planning is to efficiently meet future events to an organization’s best advantage. It implies looking into, analyzing ity and predicting the future. Therefore planning is considered a forward-looking function based on forecasting. Importance of Planning m Although planning does not guarantee success in organizational goals, there is evidence that organizations that have regularly performed better than those with zero or minimal organized preparation and have enhanced their own performance over time. Luck or conditions alone make it very difficult for an enterprise to succeed. Below are )A some of the reasons why planning is considered a critical managerial function: 1. Planning is essential in modern business - With rapid technological advances, unpredictable shifts in customer tastes and rising tough competition, the increasing complexity of modern business needs organized (c operations not only in the current environment but also in the future. Since planning takes a potential perspective it takes likely future developments into account. Amity Directorate of Distance & Online Education  24 Management Foundation 2. Planning puts focus on objectives - Formal planning’s effectiveness is Notes e focused primarily on the consistency and specificity of the goals. Goals