Principles Of Management PDF (2nd Edition, 2018)

 About Pearson Pearson is the world’s learning company, with presence across 70 countries worldwide. Our unique insights and world-class expertise come from a long history of working closely with renowned teachers, authors and thought leaders, as a result of which, we have emerge...

 About Pearson Pearson is the world’s learning company, with presence across 70 countries worldwide. Our unique insights and world-class expertise come from a long history of working closely with renowned teachers, authors and thought leaders, as a result of which, we have emerged as the preferred choice for millions of teachers and learners across the world. We believe learning opens up opportunities, creates fulfilling careers and hence better lives. We hence collaborate with the best of minds to deliver you class- leading products, spread across the Higher Education and K12 spectrum. Superior learning experience and improved outcomes are at the heart of everything we do. This product is the result of one such effort. Your feedback plays a critical role in the evolution of our products and you can contact us - [email protected]. We look forward to it.  Principles of Management TEXT AND CASES Second Edition Pravin Durai Director Pondicherry University – St. Joseph’s College MBA Twinning Programme Formerly, Dean, School of Management Studies St. Joseph’s College (Autonomous) Tiruchirappalli  To The Lord Almighty  Contents Preface About the Author PART I MANAGEMENT—A CONCEPTUAL FRAMEWORK 1 Introduction to Management India’s Inspirational Managers Introduction Meaning of Management Definitions of Management Characteristics of Management Objectives of Management Levels of Management Functional Management Management Process or Functions Managerial Roles Managerial Skills for Success Management vs. Administration Management—Science or Art Debate Management as a Profession Challenges Facing Management Strategic Management—An Overview Summary Review Questions Case Study 2 The Evolution and the Environment of Management India’s Inspirational Managers Introduction Origin of Management Early Management Thought Earliest Texts on Management Approaches to the Study of Management The Organizational Environment Recent Trends in Management Summary Review Questions Case Study 3 Social Responsibilities of Managers India’s Inspirational Managers Introduction Corporate Social Responsibility Managers’ Responsibility Towards Society Green Management Managerial Ethics Social Audit—Role and Relevance Corporate Governance—An Overview Managing Sexual Harassment Summary Review Questions Case Study PART II PLANNING, DECISION MAKING AND FORECASTING 4 Planning India’s Inspirational Managers Introduction Definitions of Planning Goals—An Overview Types of Planning Classifications of Planning Strategy Approaches to Planning Management by Objectives SWOT Analysis Strategic Quality Planning Summary Review Questions Case Study 5 Decision Making India’s Inspirational Managers Introduction Definitions of Decision Making Characteristics of Managerial Decisions Approaches to Decision Making Decision-making Environments—Types Strategies for Decision Making Decision-making Styles Steps in the Rational Decision-making Process Factors Influencing the Decision-making Process Challenges to Effective Decision Making Decision Tree Group Decision Making—An Overview Decision Support System Summary Review Questions Case Study 6 Forecasting India’s Inspirational Managers Introduction Definitions of Forecasting Importance of Business Forecasting Types of Forecasting Principles of Forecasting Key Elements of Forecasting Forecasting Process Techniques of Forecasting Challenges in Forecasting Guidelines for Effective Forecasting Summary Review Questions Case Study PART III ORGANIZING 7 Organizational Structure India’s Inspirational Managers Introduction Definitions of Organizing Characteristics of Organizing Importance of Organizing Principles of Organizing The Process of Organizing Organizational Design Organizational Structure Types of Organizations Organizational Chart Elements of Organizational Design and Structure Span of Management Factors Affecting Organizational Design and Structure Summary Review Questions Case Study 8 Authority, Responsibility and Accountability India’s Inspirational Managers Introduction Authority Responsibility Accountability Process of Delegation Centralization vs. Decentralization of Authority Job Design Informal Organizations Organizational Culture—An Overview Summary Review Questions Case Study PART IV STAFFING 9 Human Resource Management—Processes India’s Inspirational Managers Introduction Characteristics of Human Resource Management/Staffing Objectives of HRM/Staffing HRM Process Procurement Human Resource Planning Process Selection Training Methods of Training Management Development Induction Orientation Compensation Performance Evaluation Methods Summary Review Questions Case Study 10 Human Resource Management–Policies and Practices India’s Inspirational Managers Introduction Employee Promotion Demotion Transfer Employee Separation Practices Discipline and Disciplinary Policy Types of Discipline Employee Grievances and Grievance Handling Practices Industrial Relations Practices Employee Welfare Practices Strategic Human Resource Management (SHRM) Workforce Diversity Management Ethical Issues in Human Resource Management Emerging Trends in Human Resource Management Green HR Practices Summary Review Questions Case Study PART V DIRECTING 11 Directing India’s Inspirational Managers Introduction Motivation Communication Leadership Supervision Human Behaviour in an Organization—An Overview Summary Review Questions Case Study 12 Managerial Communication India’s Inspirational Managers Introduction Communication Process Interpersonal Communication Forms of Organizational Communication Barriers to Organizational Communication Summary Review Questions Case Study 13 Leadership India’s Inspirational Managers Introduction Leadership vs. Management Process of Leadership Leadership Theories Leadership and Organizational Life Cycle Recent Trends in Leadership Approaches Leadership Succession Planning summary Review Questions Case Study 14 Motivation and Morale India’s Inspirational Managers Introduction Forms of Employee Motivation Approaches to Motivation Factors Influencing Work Motivation Motivational Process Theories of Motivation Content Theories Process Theories Employee Engagement Factors Determining the Level of Engagement Employee Engagement Process Prerequisites for Successful Employee Engagement Summary Review Questions Case Study 15 Teams and Teamwork India’s Inspirational Managers Introduction Team vs. Group Types of Teams Stages in Team Formation Characteristics of Effective Teams Benefits of Team Problems in Team-building Summary Review Questions Case Study PART VI CONTROLLING AND COORDINATION 16 Controlling India’s Inspirational Managers Introduction Steps in the Control Process Approaches to Management Control System Types of Control Reasons for Resistance to Control in Organizations Summary Review Questions Case Study 17 Coordination India’s Inspirational Managers Introduction Principles of Coordination Types of Coordination Techniques of Coordination Steps in the Coordination Process Requirements for Effective Coordination Summary Review Questions Case Study PART VII EMERGING TOPICS 18 Change Management India’s Inspirational Managers Introduction Objectives of Change Management Elements of Change Causes of Change in Organizations Types of Organizational Changes Steps in the Change Management Process The Change Management Cycle Resistance to Change Why Change Initiatives Fail? Strategies to Enhance Success in Change Management Organizational Restructuring Summary Review Questions Case Study 19 International Management India’s Inspirational Managers Introduction Skills Requirement of International Managers Need for International Business Elements of International Management Environment Functions of International Managers Approaches to Control in the International Business Environment Challenges Facing International Management Summary Review Questions Case Study Index  Preface To the First Edition In today’s fast-paced, complex and culturally-diverse work environment, managers often find their existing knowledge inadequate and outdated. These managers need to learn, utilize and adapt modern management concepts and practices to achieve corporate and personal excellence. Principles of Management has been written in response to these increasing requirements of practising managers and students of management. This book enables future managers to get acquainted with current management concepts, practices and trends even before stepping into the actual work environment. This comprehensive and reader-friendly book covers the entire field of management and enables individuals to perform their managerial functions with precision and confidence. To facilitate better, deeper and easier understanding of management concepts, each chapter in the book has several unique real-life examples, including the inspirational life stories of globally renowned managers. Principles of Management also satisfies the long-felt need of Indian students for a book with Indian case studies and examples, and highlights the challenges faced by managers in organizations from the developing world. To the Second Edition In a knowledge society, continuous learning is no longer an option but a basic necessity. Managers should keep themselves abreast of the changes and developments in their profession. However, managers have little time to understand, assimilate and absorb those changes and benefit from them. In this regard, this new edition will enable the practicing managers and the student community to keep track of the changes in various facets of managements and develop strategies to deal with those changes. The second edition of Principles of Management is a revised and updated edition with discussions on several new and important topics like Managing Sexual Harassment, Value Based Management, Employee Life Cycle, Green HR Practices and Employee Engagement. In this edition, the chapters on staffing are thoroughly revised and consolidated into two main chapters keeping in mind the recent developments in Human Resource Management. The new chapters are Human Resource Management-Processes and Human Resource Management-Policies and Practices. In second edition, new case studies are introduced in several chapters and as a unique initiative; solutions to these cases are made available in the companion site of this book. Though there can be no universally acceptable solution to the case studies, the well experienced managers have analysed the situations given in the cases and developed solutions based on their field knowledge and experience. These analysis and solutions to the cases will help the readers in properly understanding and analysing the case studies and finding their own solutions. Organization This book has 19 chapters, which help students and practising managers acquire insights into the different domains of management. Based on the functions and trends in management, these chapters are divided into seven parts. Each part has been given adequate weightage in terms of treatment and coverage to help readers gain detailed knowledge even on emerging areas of management; namely, change management, strategic management and international management. The seven parts and their objectives are: Part I—Management: A Conceptual Framework familiarizes readers with the elements, evolution and environment of management and also elaborates on the social responsibilities of managers. Part II—Planning, Decision Making and Forecasting focuses extensively on all activities connected with organizational planning. Part III—Organizing enables readers to gain insights into the organizing function. The areas of discussion in this part include organizational structure and authority, responsibility and accountability. Part IV—Staffing discusses the management of human resources (HR). This part includes Human Resource Management-Processes and Human Resource Management-Policies and Practices. Part V—Directing elaborates on the important elements of directing; namely, communication, leadership and motivation. Part VI—Controlling and Coordination discusses the topics that facilitate efficient control of the organizational resources. This part comprises chapters on controlling and coordination. Part VII—Emerging Topics provides an insight into emerging areas of management such as change management and international management. Features Each chapter includes some unique features that help readers gain an in-depth understanding of the concepts in the chapter. Learning Objectives The learning objectives outline the main learning goals of each chapter.  Chapter-opening Vignettes Examples from the lives of inspirational Indian managers are used to illustrate complex management concepts.  Real-world Examples Numerous boxes highlight the unique management practices of Indian companies and provide students with real-world applications and perspectives. Summary The summary at the end of each chapter recapitulates the key topics discussed in the chapter.  Review Questions Review questions at the end of each chapter help students gauge their understanding of the concepts in the chapter. Case Study A detailed case study along with discussion questions at the end of each chapter replicates real- life situations faced by managers and enables readers to correlate theoretical topics to actual practice.  Supplements and Media Resources The resources are available for download at www.pearsoned.co.in/pom2edurai Acknowledgements I would like to express my sincere thanks to all those who helped me in the fruitful development and promotion of this book. Those who worked with me in the second edition of this book deserve my special thanks. I gratefully acknowledge the Indian and foreign business organizations whose websites provided wealth of information useful for enriching the theoretical content of this book with real-life examples. I profusely thank Anil Kaushik, Chief Editor, Business Manager Magazine for permitting me to use the case study solutions published in the magazine. I wholeheartedly thank the corporate managers Mihir Gosalia and Bhaskar Dhariwal for writing the solutions to my case studies. I owe my debt of gratitude to all the reviewers for their critical comments and brilliant suggestions which greatly helped me in fine-tuning this book. I record my special thanks to the Jesuit management of the 175 year old St. Joseph’s College (Autonomous), Tiruchirappalli – a special heritage status college, for their support and encouragement which greatly helped me to write this book. I wish to thank my wife Pramila Pravin and my children Felix Ashwin and Sherine Roveena in a special way for their abundant love, care and affection. Finally, I express my profound sense of gratitude to Pearson Education for its unstinted support and also for publishing this book. I place on record my deep appreciation to Pradeep Kumar Bhattacharjee for the timely guidance and useful suggestions given at every stage of this book development process. Pravin Durai  About the Author Pravin Durai is Director, Pondicherry University - St. Joseph’s College MBA Twinning Programme at St. Joseph’s College (Autonomous), Tiruchirappalli. He was earlier the Dean of School of Management Studies of St. Joseph’s College, Tiruchirappalli. At present, he is a member of the Board of Studies for M.Com. courses at Bharathidasan University. He was a visiting faculty at the Tiruchirappalli Branch of the Southern India Regional Council of the Institute of Chartered Accountants of India (ICAI) for over a decade. Dr Durai holds master’s degree in commerce and business administration and a Ph.D. in organizational behaviour. In his teaching career spanning over twenty eight years, Professor Durai has guided the research conducted by ten doctoral and 45 M.Phil. scholars. He has also published many articles and case studies in reputed journals and carried out UGC funded research projects on HR and ethical practices of manufacturing firms across Tamil Nadu. Dr Durai is the author of Human Resource Management published by Pearson Education, the first edition in 2010 and the second in 2016. He attended a two-week immersion programme on the Fundamentals of American Higher Education at Concordia College, New York, USA on invitation. He has vast experience in conducting government sponsored training workshops for young entrepreneurs of Tamil Nadu.  PART I: Management—A Conceptual Framework  CHAPTER 1 Introduction to Management CHAPTER OBJECTIVES After reading this chapter, you should be able to: 1. Understand the meaning and characteristics of management 2. Enumerate the objectives, levels and functions of management 3. Discuss the roles of management 4. Differentiate between management and administration 5. Debate whether management is science, art or profession 6. List the challenges facing management India’s Inspirational Managers Mukesh Ambani is the Chairman and Managing Director (CMD) of Reliance Industries Limited (RIL), the flagship company of Reliance Group. As a result of Mukesh’s effective leadership and path-breaking management practices, RIL has now become the largest private-sector enterprise in India and also features in the Fortune 500 list of companies. It has a turnover of nearly USD 66.8 billion and a net profit of over USD 3.9 billion. Mukesh is the only Indian to be featured on Forbes Global Game Changers List (2017). Mukesh strongly believes that growth is a way of life for an enterprise and that it has to grow at all times. Mukesh’s unique formula for management includes, among others, (i) establishment of an open system of management through the introduction of standard operating procedures (SOPs) and standard operating conditions (SOCs), (ii) adoption of a disruptive style of management as against the feudal style to easily meet the future challenges, (iii) investing in good talent and building competencies, (iv) demanding excellence and aiming for the best in everything, (v) diligence and foresight in planning and (vi) challenging the limits and never accepting defeat. The success story of Mukesh Ambani is proof that the bold and innovative practices of managers can make a momentous difference to the fortunes of organizations. Keeping the accomplishments of Reliance’s top manager in the background, let us now learn the basics of management in this chapter. Introduction Every organization requires talented and committed managers to ensure success and stability in its business operations. Managers are needed to design, develop and maintain an organizational environment that encourages both individual and group performance and cooperation. Managers also provide good leadership and definite direction to their subordinates, which enable them to fulfill the goals of the organization. Thus, every organization, whether big or small, public or private, profit or service-oriented, should have managers to manage its operations. Managers usually perform at higher, middle and lower levels of an organization. What the managers do as a part of their job is usually known as management. All managers perform certain management functions for effectively coordinating, and supervising the activities entrusted to their subordinates. These fundamental management functions are planning, organizing, staffing, leading (also called directing) and controlling. To be successful in their work, managers need to possess different managerial skills such as leadership skills, team-building skills, communication skills, and motivational skills. However, the skills and attributes required for effective management and goal accomplishment must be updated and upgraded constantly. This is because managers have to work in a constantly changing environment characterized by rising competition, changing technologies and an increasingly assertive workforce. The primary purpose of any management is to create an internal environment suitable for the members of the organization to perform their jobs efficiently and effectively. The internal environment is normally made up of factors such as the organization (including organizational culture, structure and control system), its 1 employees and the physical resources. The internal environment so developed by the management may enable or disable its efforts to accomplish the goals of the firm. An enabling environment would help managers to create surplus in their operations while a disabling environment could become an obstacle to achieving success. Certainly, the surplus or deficit arising out of resource mobilization and utilization by an organization is an indicator of its managerial efficiency. Meaning of Management Though the term management encompasses the physical as well as human resource management of a firm, it is primarily concerned with the latter. Indeed, management is all about managing people effectively and dealing with people-centred problems professionally. Managers need to lead, inspire, direct and decide on matters relating to employees in a way that facilitates the accomplishment of organizational goals. In brief, management involves, “getting things done by other 2 people.” In this context, we shall now see a few definitions of management. Definitions of Management “Management is the process of planning, organizing, leading and controlling the work of organization members and of using all available organization resources to reach stated organizational goals.” —James 3 A. Stoner, et al. “Management involves coordinating and overseeing the work activities of others so that their activities are completed efficiently and effectively.” —Stephen P. 4 Robbins. “Management is the process of designing and maintaining an environment in which individuals working together in groups efficiently accomplish 5 selected aims.” —Harold Koontz and Heinz Weihrich. “Management is the process consisting of planning, organizing, actuating, and controlling, performed to determine and accomplish the objectives by the use of 6 people and resources.” —George R. Terry. “Management is the process undertaken by one or more persons to coordinate the activities of other persons to achieve results not attainable by any one person acting 7 alone.” —Thomas N. Duening and John M. Ivancevich. In simple terms, we may define management as a process concerned with the effective utilization of human and physical resources for attaining organizational and individual goals through a facilitating environment. Characteristics of Management Based on the definitions given in the preceding section, we may list out the characteristics of management as follows: Management is a process involving a series of activities. It involves performance of certain functions and activities, such as planning, organizing and directing, by the managers. It is a goal-directed activity as the accomplishment of goals is the primary consideration in determining the activities of the managers. Thus, all the managerial activities are decided and guided by the definite goals and objectives of the firm. Management is principally a decision-making activity as it often involves the evaluation of available alternatives to deal with specific problems and the selection of the best alternatives to resolve them. Management involves the effective integration and utilization of both physical and human resources towards goal accomplishment.  However, the thrust of management is on efficient management of human resources. Management is an extensive activity practised at different levels of an organization. Management is usually classified as top, middle and lower (first line) levels. It is universal in character as every form, size and nature of an organization requires management to manage its affairs. As such, management is applicable to organizations performing business, charity, military, sport, cultural and political activities. Management is a dynamic activity performed continuously in organizations. It shapes and reshapes itself depending upon the trends and developments in its environment. Management is a group-based activity. The presence of a group with at least two people is a prerequisite for management because the basic task of managers is getting work done through others. The core function of management is to achieve efficiency and effectiveness in accomplishing the goals of the firm. Efficiency here implies obtaining optimum output or productivity from the reasonably minimum use of organizational resources. Similarly, effectiveness stands for doing only those activities that contribute to the accomplishment of goals in an efficient manner. In this regard, the management thinker and philosopher, Peter Drucker, has identified a few major tasks of management. They are, (i) framing the organizational objectives and mission clearly (ii) achieving the required level of work productivity and (iii) ensuring adherence to 8 social responsibilities. Objectives of Management To properly plan and effectively execute the activities of an organization, it is important to have clear-cut, long- term objectives and short-term goals. In case of profit- making organizations, the primary objective of the management is making as much profit as possible. In contrast, the management of non-profit-making organizations would have “need satisfaction” as their focus. Every organization may be driven by one or more of the following objectives: To constantly attempt to accomplish the predetermined performance and productivity goals of the firm.  To develop an environment that facilitates the minimum use of physical and human resources to achieve maximum output. To build a mutually beneficial relationship between the employers and employees. This relationship is essential to achieve effective coordination and cooperation in resource mobilization and goal accomplishment. To provide stability and growth to the operations of the organization through consistent innovations and quality enhancement initiatives. Organizations require stability and growth to build a desirable future for all its members. To work continuously towards the betterment of the society by satisfying the organization’s social responsibilities in an efficient and fair manner. Management experts usually make a distinction between the performance of an organization and the performance of management. Organizational performance indicates how effectively and appropriately an organization determines its objectives. In this regard, managers help in achieving organizational performance by developing achievable objectives and minimizing any obstacles to the accomplishment of such objectives. For instance, when managers choose a goal that exactly reflects the market realities and customer requirements, it may be described as an appropriate goal for the organization. The ability of managers to “do the right thing” is usually the measure of organizational performance. Managerial performance, alternatively, is concerned with how efficiently the managers do their job and accomplish the work assigned to them. The ability of managers to “do 9 things right” is the measure of managerial performance. Levels of Management All managers perform certain administrative roles (decision making) and managerial roles (execution) as a part of their job. However, the extent of each role performed by these managers usually depends on their position in the management. The authority and responsibility of a job is also determined by the location of the job in the managerial hierarchy. The time and effort spent on managerial functions like planning, directing and controlling differs from one level of management to another. Typically, the management of an organization is classified into three categories as top, middle and front-line management. We shall now see them in detail. Top Management Managers who operate from the highest level of an organization are usually called top managers. These managers are generally few in number but vested with enormous powers. Top managers are entrusted with the overall responsibility of managing the whole organization. They make organization-wide decisions with long-term implications for the survival and growth of the firm. They are even empowered to set new directions for the organization. These managers usually spend more time on planning and directing, and less time on controlling. Further, they determine the nature of the relationship between the organization and its external environment. They also guide the firm’s interactions with external individuals and institutions. Positions like chief executive officer, president, vice- president, managing director, chief financial officer and chief operating officer are usually regarded as constituents of top management. Top managers often deal with the unstructured problems of the firm (for which no best solution is available) and develop policies and guidelines for resolving them. Such policies and guidelines convert unstructured problems into structured problems (for which correct solution is available). Top-level managers are normally accountable only to the owners who invest their resources in the organization. The board of directors who represent the interest of these owners ensure that the actions of the top managers enhance the general organizational interest.  Middle Management Managers belonging to this category fall between the top management and front-line management. They receive goals, orders and directions from the top management and implement them through front-line managers. In this regard, each middle manager supervises a number of front-line managers normally within the related field. Managers at this level generally distribute their time fairly equally among planning, organizing and controlling. These middle managers transmit the organizational goals to the front-line managers and then direct, coordinate and control their efforts toward its accomplishment. Middle managers are more interested in the near future and plan their activities accordingly. Hence, they set short-term goals for their subordinates, which finally lead to the achievement of the long-term objectives of the firm. Middle managers usually deal with the semi-structured and structured problems of the firm. Positions like regional heads, divisional heads, project leaders and directors of research wings are examples of middle managers. The increasing presence of teams and projects in organizations has greatly enhanced the role and 10 relevance of today’s middle managers. Front-line Managers Front-line managers are usually positioned at the bottom of the managerial hierarchy and operate directly above the non-managerial employees. They serve as a liaison between the management and the workers. The primary responsibility of front-line managers is to execute the goals and plans entrusted to them by the middle management. These managers direct the activities of the workers and get the organizational goals achieved through them. They normally spend more time and effort on controlling and less time on planning. They are primarily concerned about accomplishing the day-to-day organizational activities such as the manufacture of goods and delivery of services. Front-line managers are also responsible for motivating the employees at work and persuading them to observe the rules and regulations relating to safety and health. They deal with structured problems and resolve them by applying the guidelines and policies prescribed by the higher level management. These managers are usually known by titles such as supervisors, line managers, operational managers, sectional/departmental heads, office managers and shift managers. Functional Management Managers at each level of the organization will have to discharge certain functional responsibilities depending upon their specializations. According to Thomas N. Duening and John M. Ivancevich, function refers to those activities that the manager actually supervises consequent to their horizontal specialization of the 11 management process. Some of the important organizational functions are production, finance, marketing and human resources. Usually, each manager is assigned a function and his or her designation —marketing manager, human resource manager and production manager—reveals the function performed by the manager. However, when managers assume responsibilities for all the activities of the entire organization or its branch office, then they become general or line managers. These managers then supervise their subordinates who perform different functions like marketing, finance, human resources, etc. Managerial activities like planning, organizing, directing and controlling are the same for both general and functional managers. Figure 1.1 shows the classification of managers based on their functions. We shall now see the rules and responsibilities of functional managers. Figure 1.1 Classification of Managers Production Management Production management is responsible for all aspects of a production process. Production managers plan, supervise, coordinate and control the resources and activities required to produce goods in a cost-effective manner. Production managers oversee activities like production scheduling, staffing, machines and materials procurement, development and maintenance of quality standards and implementation of quality enhancement programmes. They coordinate production-related activities with other departments, supervise and motivate their subordinates and also review their performances. Production managers usually act as the link between the top management and first-line managers including supervisors. They ensure that the goals and policies of the organization are implemented effectively. In a nutshell, they ensure that quality goods are produced within the prescribed time limit. Marketing Management Marketing management is concerned with planning, directing, coordinating and controlling the marketing activities that promote goods and services. Marketing managers are responsible for conceptualizing new product ideas, determining product prices, channel development and product promotion. They also undertake activities like estimating manpower requirements, training and motivating sales staff and evaluating their performance, conducting market research, product positioning and differentiation and managing customer relations. The exact role and responsibilities of marketing managers are determined by the size of the organization, nature of the product or services and characteristics of the industry. In general, these managers focus on marketing programmes that meet the business goals of the organization and report to the top management. Financial Management Financial management involves the management of the finance department. Financial managers are responsible for the arrangement and allocation of funds. They are responsible for the implementation of a firm’s financial goals and budgets and increasing the efficiency of the firm’s financial operations. They fulfil the organizational goals by controlling the cost of funds and optimizing fund utilization. Financial Managers also undertake activities like financial analysis and planning, fund and asset management, investment decision, payroll preparation and taxation. They also supervise preparation of financial reports such as the income statement and balance sheet. Further, these managers train and motivate their team members and also evaluate their performance. They liaise between the organization and the financial institutions that lend necessary funds.  Human Resource Management The primary objective of human resource (HR) management is to ensure the well-being of the employees at work from their joining to their exit from the organization. HR management is a unique function because HR managers not only supervise the activities of their own department but also advise other functional managers on matters relating to labour management in their departments. HR managers usually act as liaison between the top management and the employees of different departments. Like other functional managers, they too perform managerial functions like planning, organizing, directing, controlling and coordinating with employees for their own departments. HR Managers also perform certain specialized functions such as manpower planning, recruitment and selection, training and development, integration, performance evaluation, compensation fixation, maintenance of employee welfare, safety and health and separation of all employees. These managers also involve themselves in activities like maintenance of employee discipline, grievance identification and redressal, prevention and settlement of industrial disputes and promotion of industrial relations. Management Process or Functions Managers perform certain interrelated activities or functions while getting work done through their subordinates. Since these managerial activities are carried out in a systematic way to accomplish the goals of the firm, it is known as management process. In this regard, Henri Fayol identified planning, organizing, coordinating, commanding and controlling as the five 12 primary functions of management. However, the universally accepted basic managerial functions performed for organizational goal accomplishment are planning, organizing, leading (directing) and controlling 13 (see Figure 1.2). Let us now discuss them briefly. Planning Planning helps an organization in formulating clear-cut objectives and determining the best course of action for achieving them. It involves steps such as the analysis of the existing environment, forecasting the future scenario, formulating specific objectives and goals, and determining the resources and activities required for goal accomplishment. Planning is generally considered to be the foremost function in the management process because of its critical role in deciding the success of the organization. Planning is carried out by all managers at all levels. It forms the basis and provides direction for other managerial functions such as organizing, directing and controlling. This is because the accomplishment of organizational goals is the ultimate purpose of all managerial functions. Planning may initially cost the organization in terms of time and resources but it can considerably reduce future uncertainties and difficulties in its operations. It enables the organization to predetermine the right mix of physical and human resources to achieve optimum operational efficiency. It also enables the employees to know in advance what is expected of them. This knowledge, in turn, can help them to work in a systematic manner to fulfil those expectations.  Figure 1.2 Management Functions Organizing Organizing is a vital step in converting plans into action by putting in place the necessary structure and resources. Organizing involves the arrangement and allocation of the necessary physical and human resources for achieving the goals of the firm. The specific steps involved in the organizing process are: (i) establishing the organizational structure, (ii) determining the work, authority, responsibility and accountability of each member in relation to the job, (iii) assembling and allocating physical, financial, informational and other resources required for task execution and (iv) developing conditions appropriate for the optimum utilization of available resources. However, each firm may require a unique organizational structure based on its goals and the availability of required resources. Since the organizing process involves attracting, assigning and maintaining people for goal accomplishment, staffing usually becomes an integral part of the organizing function. However, due to the complexities involved in the mobilization, maintenance and motivation of the employees in the organization, many experts tend to view staffing as an independent managerial function. We shall now discuss the role and responsibilities of the managers in staffing.  Staffing Staffing function is performed by all the managers when they involve themselves in activities related to human resources such as the selection and motivation of their subordinates. The guiding principle of the staffing function is the selection of the right person at the right time for the right position at the right cost. Managers may perform the staffing function jointly with the human resource managers or alone in the absence of an exclusive HR department. Generally, the activities involved in staffing are recruitment and selection, training and development, performance evaluation, compensation and benefits fixation and industrial relations maintenance. Even large organizations with exclusive HR departments widely involve line managers in the staffing function. This is because of their good knowledge of the jobs, job holders and job environment in their own department. Leading Leading is also known by different terms like directing, supervising and guiding. Leading as a managerial function aims at positively influencing the behaviour of subordinates. By effectively leading, managers look to secure the best and willing cooperation of individuals and groups to achieve the organizational goals. Leading essentially involves activities like directing, communicating with and motivating the employees. Box 1.1 shows the leadership and teamwork practices at BHEL. As good leaders, managers should influence, inspire and motivate their subordinates as they work. Managers should also establish an encouraging work environment that keeps the individual and group morale up. The efficacy of leadership usually depends on a manager’s own personal traits and also the situation involved.  Box 1.1 Leadership and Teamwork at BHEL The role of managers is pivotal in influencing the attitude and behaviour of employees. Effective leadership calls for effective communication with and motivation of employees. In due course of time, effective leadership will result in the development of a positive work culture. Organizations may adopt different leadership styles and strategies for achieving employee cooperation. In this regard, leading power equipment manufacturer BHEL’s strategy is worth mentioning. BHEL encourages its managers to adopt transparent channels of communication, an open work environment, teamwork and respect for new ideas and thoughts to ensure the desired level of employee involvement. Similarly, new employees are encouraged by their managers to freely voice their ideas. Peers facilitate this process by extending their undying support and encouragement to these employees. The overall objective of managers at all levels of the management at BHEL is to convert the whole organization into a family through necessary 37 freedom and support to all its members. Controlling Controlling is the last stage in the management process. While planning determines the future course of action for the firm, controlling keeps it on course. Controlling involves verification of the efficiency of the individuals and groups in accomplishing the organizational plans and goals by means of follow-up measures. It ensures that all the activities are carried out by the subordinates as per the plans formulated, instructions issued and procedures established. Controlling usually involves the following steps: (i) developing standards of performance in the form of objectives and goals, (ii) measuring the actual performance of subordinates, (iii) comparing the actual performance with standards to assess the deviations and (iv) initiating necessary corrective and preventive actions in the case of negative deviation or deficit in actual performance. The basic functions that describe managers’ jobs in the organization remain unchanged despite tremendous changes in the environment. They continue to retain their relevance to the study of management and help the managers in effectively discharging their roles and responsibilities. Managerial Roles Managerial roles refer to the specific actions or roles performed by managers as a part of their job. Managerial roles indicate what managers actually do, what roles they play and how they share their time for different roles. The Canadian academician, Henry Mintzberg, after studying the work styles and time management of top managers identified 10 different but interrelated roles for 14 them. They are: figurehead role, leader role, liaison role, monitor role, disseminator role, spokesperson role, entrepreneur role, disturbance handler role, resource allocator role and negotiator role. These roles were then grouped under three major headings based on their common characteristics. These major roles are interpersonal role, informational role and decisional role. We shall now discuss these roles in detail. Figure 1.3 shows the various roles performed by managers.  Figure 1.3 Various Roles Performed by Managers Interpersonal Roles These roles are mainly concerned with the interpersonal and social relationships of managers with their subordinates and others. This role performed by 15 managers is ceremonial and symbolic in nature. It facilitates managers in developing positive interpersonal relationships, which usually grow out of their formal authority. Roles like figurehead, leader and liaison are forms of the interpersonal role. We shall now discuss them briefly. Figurehead—This indicates the role of managers as the representative of the organization in all matters of formality. Managers play this role at every level in some form, when activities of ceremonial nature are required. For instance, top managers represent the organization legally and socially to the people outside the firm. Similarly, middle- and lower-level managers act as representatives of their subordinates to their superiors and also represent the superiors to their subordinates. Some examples of the figurehead role are—a chief executive officer formally greeting trainees after their successful training programme, managers attending the wedding of their subordinates or a principal congratulating the winners of the school cricket “championship.” This kind of activity normally lacks serious communication and important decision-making requirements on the part of the managers. Since this role is ceremonial and symbolic in nature, the position held by an individual as a manager counts more than the individual’s personal identity (as who he or she is) in determining this role. Leader—This role specifies the relationship between managers and their subordinates. It focuses on the effective coordination and control of subordinates’ work by the managers. Depending upon the circumstances and requirements, managers may directly or indirectly control the activities of their subordinates. For instance, hiring and training of subordinates by managers may necessitate direct contact between them. In contrast, implementation of predetermined quality goals and time management at work may not require any direct interaction between managers and their subordinates. The leadership role is shaped by the manager’s official position in the firm and also by his or her individual identity. Liaison—This role establishes contact for managers with persons outside the organization, department or work unit. Managers usually interact with the people outside their area of authority to complete the work assigned to their department or work unit. A production manager’s interaction with stores managers or marketing managers is an example of the liaison role. A stores manager’s call to a vendor to ascertain the exact date of arrival of raw material to the stores is also an example of the liaison role. Likewise, the top manager may use the liaison role to gather information about the industry and changes in government policies from external sources.  Informational Roles The interpersonal roles of managers aim at gathering necessary information from different sources, whereas informational roles focus on processing and transmitting the information to others. As the name suggests, the informational role focuses mostly on information management activities like information sourcing, checking and disseminating. Thus, it involves the manager playing roles such as the monitor, disseminator and spokesperson. We shall now discuss them briefly. Monitor—This managerial role involves gathering information on events or occurrences in the environment that affect the organization in one way or the other. This role is closely related to the interpersonal roles because interpersonal relationships, developed by the managers in the course of their work, are used for collection of information. Managers look for information on events, issues, opportunities and threats connected with their internal and external environments. Gathering information on the possible response of the competitors to the firm’s new products, changes in the buying behaviour of the consumers or financial crisis in the business of a trade debtor are all examples of a monitor’s tasks. The information gathered should be properly stored and carefully maintained. Disseminator—This role involves sharing of special and significant information by managers with their subordinates. Managers may have gathered some useful facts and figures from outsiders. They may, in turn, transmit the same to a few internal persons in their organization and the department, in particular. However, managers often filter this information and disclose it in a selective manner to some privileged persons only. For instance, the top manager may inform the middle managers about the secret merger moves of their competitor. Similarly, supervisors may alert their superiors about the strike call likely to be made by the trade union. Spokesperson—Managers assume this role when they have to represent the interest of their subordinates to their superiors and others. They can speak on behalf of their department or work unit to suitable persons both within and outside the organization. Often, managers assume this public relations role when lobbying is necessary for obtaining critical resources for the department. Specifically, when managers tell their superiors about the necessities of additional safety measures in their department, they act as the spokesperson for the department. Similarly, when top managers inform shareholders about the performance and future prospects of their organization, they act as the spokespersons of the organization. Decisional Roles In this role, managers make decisions based on the inputs received through interpersonal and informational roles. Interpersonal roles provide information to the manager, while informational roles process and store the same and finally the decisional roles make productive use of that information. Decisional roles are perhaps the most important roles performed by managers as their decisions determine the performance and progress of the organization. The decisional roles of managers are that of entrepreneur, disturbance handler, resource allocator and negotiator. Entrepreneur—As a part of this role, managers usually design and initiate changes in their work unit to achieve desired improvements. Changes may involve the introduction of a new technology, a new work practice or new work culture. Generally, the information collected through the monitor role is used for performing the entrepreneur role. A few examples of the entrepreneur role are the introduction of new incentive schemes for motivating employees and offering additional cash discounts to trade creditors for their prompt payments. Disturbance handler—In this role, managers determine their responses to the work-related disturbances occurring both within and outside their department. They assume this role whenever they face potentially serious disturbances. In such situations, they quickly evaluate all possible solutions to the problem and choose the best one to solve it. For instance, managers assume this role in situations like major machinery breakdown, strike call by workers, bankruptcy of a valuable credit customer or unexpected investigations by the law-enforcing agencies. At times, this role takes precedence over all other roles due to the urgency of the situation. Resource allocator—In this role, managers distribute the firm’s scarce resources among various individuals and groups under their control. This role enables them to decide who gets what and when. As a resource allocator, the manager decides the allocation of both physical and human resources necessary for achieving the organizational goals. They also supervise all the activities connected with resource allocation and utilization. A few examples of this role are allocating funds for research and development purposes, establishing a recreation centre for employees and developing additional plant capacity. Negotiator—This role requires managers to conduct negotiations with individuals and groups to protect and promote the interest of their department or work units. This role is often interrelated to figurehead, spokesperson and resource allocator roles of managers. Since managers need to spend considerable time and resources in negotiations, they must be competent negotiators. As part of this role, managers may hold wage negotiations with union leaders, supervisors may address the grievance of a subordinates and top managers may seek environmental clearances for a new project from government officials. All the roles discussed above are not only interrelated but also equally important in determining the efficiency of managers. Managerial Skills for Success Managers are responsible for performing a series of managerial activities such as planning, organizing, directing and controlling. Each of these functions involves decision making by the managers. Besides, managers often meet with situations or problems that require accurate and timely decisions. Almost every problematic situation requires a best possible solution in the form of a decision. Quite often, managers are compelled to make their decisions purely on the basis of their knowledge, experience, skills and abilities. Understandably, they must possess the necessary managerial skills that will enable them perform their jobs successfully. These managerial skills are essential not only for organizational success but also for the career success of the managers. In this context, we shall now discuss the skill requirements of managers for success in management. Technical Skills A technical skill is the ability to properly perform a specific job of a specialized nature. Organizations expect their managers to possess a set of technical skills necessary to perform their jobs efficiently. Technical skill does not refer to any high technological skills; instead, it refers to one’s knowledge of the job and expertise in job- specific techniques and procedures. Work scheduling by production managers, analysis of marketing statistics by marketing managers, and cost and profit computation by financial managers are a few examples of this skill. Technical skills are usually more important for lower- level managers because their jobs involve guidance and training of workers. Managers can command the respect and confidence of their subordinates and colleagues only if they have the proven technical skills. Understandably, technical skills are major determinants for entry-level managers at the time of their recruitment. These skills are normally taught through formal education in schools and colleges or even through an organization’s in-house training process. However, the importance of technical skills declines as managers go up the higher levels of management. At these levels, conceptual skills usually take precedence over technical skills due to the basic nature of the job. This is because the top managers usually take an overall view of the whole organization while making decisions and never restrict themselves to any specific work domain or unit. Conceptual Skills Conceptual skills enable managers to imagine and understand abstract ideas and situations and decide their responses. It is usually easy to visualize and understand physical and figurative items such as a bike or a pen. In contrast, abstract and non-figurative concepts like quality, ethical values, honesty, satisfaction and morale are difficult to be visualized. With conceptual skills, managers can analyse and understand how ideas are interrelated and also develop creative ideas. Conceptual skills that include creativity, concept formulation and problem identification are thus essential for managers, especially in decision-making activities. Conceptual skills enable top managers to view the issues that affect the organization in proper perspectives and develop interrelated set of decisions. For example, conceptual skills are required for developing new organization-wide quality standards, merger schemes for the firm and new recruitment policies in the event of amendments to existing labour legislations. While making such decisions, conceptual skills enable managers to foresee the likely impact of their decisions on different aspects of the organization. Conceptual skills can be developed through the systematic acquisition of knowledge of the various factors that influence organizational activities. Human Skills Human skills enable managers to work well with their subordinates, peers, superiors and others. Certainly, human skills are crucial for managers as their jobs primarily involve getting things done through others. These skills help managers in securing the willing and voluntary cooperation of their group members. They also facilitate managers to effectively communicate with their subordinates and to successfully lead and motivate them. In due course of time, this skill can generate a positive attitude among the workers about their work, managers and the organization. Human Skills help in maintaining industrial peace and harmony as managers can avert and resolve work-related conflicts through peaceful negotiations. These skills are normally acquired through an understanding of individual and group behaviour. Political Skills Political skills are useful for managers to gain knowledge of others at work and use the same to influence their behaviour such that the organizational and individual 16  16 goals are accomplished. These skills are useful means of acquiring the power necessary for effective management. Specifically speaking, these skills can be used to persuade group members, inspire confidence and mobilize support among them and direct their activities. These skills enable managers to decide when and how information is to be presented to gain desired results. Political skills facilitate managers to exude self- confidence, improve interpersonal effectiveness and 17 sense of personal security. If properly and genuinely applied, Political skills can be a truly positive force for managers and organizations. However, these skills can only be a supplement to other managerial skills and not their replacement. Certainly, too much emphasis on the use of political skills by managers can harm the 18 organization’s interests. Diagnostic Skills Diagnostic skills are helpful for managers in effectively choosing the best course of action for goal accomplishment. Diagnostic or analytical skills help managers in the better understanding of cause–effect relationships and also the problem-solving processes. Managers depend on their diagnostic skills in investigating the root cause of any problem and developing solutions. However, these skills are productive only when they are combined with other managerial skills such as technical, conceptual, human 19 and political skills. Diagnostic skills are more important for higher-level managers, who often deal with unstructured and ambiguous problems with long-term implications. Digital Skills Digital skills are essential for managers to make well- informed decisions in the modern electronic environment. Paul Glister defines digital skill (or literacy) as “the ability to understand and use information in multiple formats from a wide range of 20 sources when it is presented via computers.” Digital skills thus include an operational knowledge of computers and telecommunications. Digital skills enable the managers to perform wide and varied tasks in a faster and efficient manner. These skills are useful for managers in activities like human resource planning, budgeting, customer relationship management, supply chain management, enterprise resources planning, financial planning and reporting. Management vs. Administration The differences between management and administration are a topic of discussion among management experts. Different experts view the role and relevance of these concepts in different ways. For instance, a few management writers consider management and administration as identical concepts. According to them, these two are basically similar terms. Even if there are a few subtle differences between them, like in dictionaries, they have little or no relevance in the real world of business. But a majority of management experts view administration and management as two dissimilar concepts with meaningful differences in their 21 characteristics. British and American experts hold different views regarding the relative importance of these concepts. We shall now briefly analyse their viewpoints. British management experts view administration as a 22 part of management. According to them, management in its totality is wider than administration. They believe that management is a broad term as it includes activities like planning, organizing, leading and controlling besides enterprise promotion activities. On the contrary, administration involves just goal setting and policy- making activities alone. Moreover, administration can resolve problems or issues affecting the organization just within the broad framework set by the management. Finally, administrative activities are carried out at the top level only, whereas managerial activities pervade through the entire organization. Management expert, Robert Heller, observes that “the difference between management and administration (which is what bureaucrats used to do exclusively) is the difference 23 between choice and rigidity.” However, American management experts generally do not concur with the views of the British management experts. In their opinion, administration is broader than management in many aspects. Administration involves objective formulating and policy-making activities while management aims at shaping goals and procedures for accomplishing those objectives. All functions of the management must therefore be confined to the broad policies laid down by the administration. Further, the key activities performed at the administrative levels are planning and organizing, while controlling and employee motivation are central to management. Finally, administration is a top-level function while management is a middle-level and supervisory-level activity. Table 1.1 lists the basic differences between administration and management in detail. Table 1.1 Differences Between Administration and Management Management—Science or Art Debate Is management a science or an art? This question has given rise to a lot of discussions among management experts and practitioners alike. Due to its inherent characteristics, management experts find it difficult to decide conclusively whether management is a science or an art. In this regard, a few experts claim management as a science while a few others argue that it is an art. Let us see the basis of their claims. Management as a Science The basic characteristics of pure science, such as physics or chemistry are as follows: Science must have a body of knowledge, which is logical, reasonable and rational. Scientific theory and inferences must be falsifiable. This means that these theories are capable of being tested and verified. Scientific experiments must be repeatable under similar circumstances. This means that the results of the study should be the same under identical conditions. Science assumes that the laws of nature are universal. This means that scientific principles, laws and observation are applicable in all circumstances without any limitations. Science requires constant efforts to attain objectivity. With these characteristics in the background, we shall now see the arguments for and against management as a science. Arguments for management as a science—Over a period of time, management has developed its own theory in the form of scientific principles and rules. Early management experts like Taylor, Max Weber and Henry Fayol have significantly contributed to the development of management theory. For instance, Taylor introduced the principles of scientific management and Fayol advocated the fourteen principles of management. Similarly, Max Weber discussed the administration of social and economic firms. These principles and rules aimed at achieving required efficiency in productivity in normal circumstances on a continuous basis. At a later stage, efforts were made toward establishing management as a system science. In this regard, management experts like Singer, Churchman and Ackoff worked towards the creation of “a science of management that lives up to the standards of good 24  24 science.” Churchman’s social systems design and Ackoff’s social systems science are cases in point. As a result of these and other related works, managers are now able to utilize a systematized body of knowledge to tackle management problems and issues. They now gather information in the most objective manner, statistically analyse them and make decisions using decision-making techniques. They are now able to adopt scientific methods to solve recurring managerial problems, thereby making management eligible to be called a science. Arguments against management as a science— Management discipline has equally strong reasons to reject claims that management is a science. For instance, unlike scientific theory, management theory cannot show up the same results every time it is used or tested. This is primarily because management has to deal with human behaviour, which is highly unpredictable. Thus, management cannot guarantee continuous success in its application, especially in social and economic organizations. In contrast, scientific experiments can produce the same results every time they are repeated because they deal mainly with non-living factors that can be kept constant. Moreover, managers often use their personal intuitions, past experiences and incidents in the decision-making process and this clearly contravenes the rules of science. Finally, management principles are bound to change continuously even on a day-to-day basis due to frequent changes in human behaviour. Management as an Art If organized knowledge is called a science, then practising such knowledge in the real world to achieve the desired result is an art. Management experts like Mary Parker Follet and Harold Koontz describe management as the art of getting things done. Management as an art involves application of managerial rules and principles as well as managers’ abilities, experiences, wisdom and expertise in decision-making activities. Since managers often use their instinct, experiences and individual insight in making decisions, it may be apt to describe management as an art. Moreover, the success of managerial decisions is often determined by managers’ efficiency in human relations, conceptual 25 and time management skills. The unpredictable nature of the human elements involved in the decision-making process makes management more of an art rather than a science. This is because the textbook knowledge may not be of much help to managers in handling different situations especially when the cooperation of subordinates and colleagues is important. However, it is not possible to improve the practices of any discipline without any improvement in its theory. This is equally applicable for management too. In the absence of any organized knowledge for guidance, managers may be compelled to adopt a trial-and-error method for every managerial decision. Thus, science and art need not be mutually exclusive in making up management; instead, they should be complementary. The core elements of science and art; namely, education and experience are equally important for managers to achieve success in management. Understandably, many management experts now firmly believe that management is partly science and partly art. They compare science and art to management as just two sides 26 of the same coin. Management as a Profession To recognize any job as a profession, it should fulfil certain criteria. Further, the practitioners of such a profession must possess specialized and exclusive skills that enjoy high economic and social values. For instance, medical practitioners, chartered accountants and legal practitioners are recognized as professionals because they fulfil the required conditions and also possess certain exclusive skills. While discussing the role of 27 managers as professionals, Louis Allen defines a professional as “one who specializes in the work of planning, organizing, leading and controlling the efforts of others and does so through systematic use of classified knowledge, common vocabulary, and principles and who subscribes to the standards of practice and code of ethics established by a recognized body.” We shall now see the criteria of a profession and also how management fares as a profession in fulfilling those conditions. An Organized Body of Knowledge Like any other profession, management also has well- defined concepts, principles, rules and theories. Besides, it has well-developed management techniques that facilitate managers to perform their jobs efficiently and successfully. There have been continuous research/experiments on management to develop new theories and to strengthen the existing theories. Managers extensively apply such systematized management theories for analysing organizational problems and making decisions. Despite all these, managers still use word-of-mouth as an important source to get information relevant for decision making. Similarly, they still depend on their intuitive feelings and experience to guide them in the decision-making process. Formal Education and Training To be a professional, a person must possess adequate knowledge and competence received through formal education, training, experience and exposure. Further, they must continuously update their skills and knowledge by undergoing periodic training and attending workshops and seminars. Managers of today mostly acquire knowledge and skills through formal education and training. Several schools and institutes of management have emerged to offer formalized education and training for management aspirants and also conduct refresher programmes for working managers at periodic intervals. For instance, the Indian Institutes of Management, Indian universities and other such professional institutions conduct courses on management. However, it is not mandatory for managers to have formal education and training for taking up the management profession. It is also not compulsory for managers to have gone through any continuous educational programme as in the case of chartered accountants. For instance, The Institute of Chartered Accountant of India (ICAI) has a Continuous Professional Education (CPE) programme for its members. Members of ICAI must attend 20-hour CPE programmes for renewing their membership license annually. These aspects make managers different from other professionals like chartered accountants or medical practitioners. Existence of an Association The Institute of Chartered Accountant of India (ICAI) acts as the regulatory body for chartered accountants. Similarly, the All India Management Association (AIMA) acts as the apex body of management professionals. AIMA has 58 affiliated Local Management Associations (LMAs) and two co-operating management associations, i.e. Qatar Indian Management Association and Mauritius Management Association. It offers guidance and advice to all its members that include over 3000 institutions and 30,000 individual professionals directly and through LMAs. It also represents its members in policy-making bodies of the government. However, AIMA cannot be equated with other regulatory bodies such as ICAI and Medical Council of India (MCI). This is because it has no formal authority to regulate the entry of its members and also their behaviour. Existence of an Ethical Code It is compulsory for members of a profession to observe the code of ethics prescribed by their regulatory authorities. Managers are also expected to upkeep ethical values such as integrity, impartiality, responsiveness to public interest, honesty, transparency and accountability 28 while discharging their duties. However, the observation of these codes of ethics is not made mandatory for them by any governing body. Charging of Fees Service to the society should be the motto of any professional whether it is a doctor, auditor or lawyer. They must charge fees only in proportion to the services offered by them. They must not think in terms of personal gain. Similarly, they must never offer or accept improper rewards in any form or manner. In the same way, managers are also expected to uphold the integrity, dignity and honour of their profession. However, management has no regulatory body to enforce these rules. It also has no mechanism to prevent or detect and penalize the violators of such professional codes. The above discussion may show management as a profession but certainly not in its fullest form. Surely, management has a well-developed and highly specialized knowledge base. Similarly, modern and resourceful statistical tools are also available to assist managers in the decision-making process. Further, managers acquire skills and knowledge through formal education and training processes. All these factors move management much closer to be called a profession. But management clearly lacks certain aspects that prevents it from emerging as a full-fledged profession. For instance, management has no statutory body to restrict the entry and exit of its members. Similarly, it has no statutory code of conduct to regulate the behaviour of its members. Challenges Facing Management Managers face a variety of challenges in their job. They are often burdened with the task of resolving problems in a creative and successful way. For instance, faster technological changes, constant innovations, intense competitions, superior education and knowledge among employees and fast-changing customer tastes, preferences have all made managers’ job more challenging than before. Obviously, the extent of success of managers is determined by their ability to rise up to these challenges. We shall now discuss the challenges facing managers in their profession. Cultural Diversity in the Workforce In the past, managers were mostly dealing with a localized and homogenous workforce. In contrast, most managers today deal with a culturally diverse workforce. Socio-cultural development, together with policy interventions by the government, has changed the characteristics of the Indian workforce. For instance, there is an increasing presence of women, religious minorities, socially backward and physically challenged people among the workforce. Further, the reformist policies of the government have also brought in workers from different nations. As a result, the present day workforce is racially and culturally more diverse and also gender balanced.  Box 1.2 Connecting People—The Nokia Diversity Initiative Today, workforce diversity has become the essential concern of many organizations both in India as well as abroad. Top managers have begun to see diversity as one of the effective means of achieving business success and to tackle talent shortage. Companies that have initiated the process of diversifying their workforce have begun to enjoy a distinct competitive advantage over those that have not. Finland-based Nokia, which has a production unit at Chennai, is one of the pioneers in attempting a workforce diversity initiative. Nokia’s diversity goal is to enable men and women of different cultural or ethnic backgrounds, skills and abilities, lifestyles, generations and perspectives to contribute their best to its success. It also uses workforce diversity for the better and deeper understanding of its global customer base and to meet its divergent needs. The diversity initiative of Nokia includes: (i) ensuring adequate flexibility in working conditions and policies to enable an inclusive work environment, (ii) establishing “inclusive leadership” as part of Nokia’s overall leadership umbrella and (iii) seeking, valuing and benefiting from differences. In this regard, the Nokia diversity efforts include programmes and initiatives such as the Asia Talent Program; Women in Nokia (W.I.N.) employee network; Lesbian/Gay/Bisexual/ Trans (LGBT) employee network and a variety of other initiatives to make 38 the best use of the key diversity groups. The workforce diversity compels managers to be more sensitive to the distinct needs of the different groups. Managers are thus required to adopt policies and practices that take care of the interests of different segments of the workforce. Chances for misunderstanding, miscommunication and misinterpretation of the managers’ instructions have 29 increased in this sharply diverse workforce. However, managers through effective cross-cultural training and creative management techniques can overcome these diversity-related difficulties. They can also make it an advantage for the organization in terms of enhanced creativity and competitive advantage. Technological Developments In recent times, the work environment of managers is very much influenced by continuous technological developments. Electronic instruments like computers, mobiles and Internet facilities have increased managers’ access to faster, quality and timely information. They have enhanced the scope for better and accurate problem analysis and quality decisions. The managers’ dependence on technology poses a few challenges to them. They must know exactly when and how these technologies should be used. Excessive dependence on technology might affect the long-term planning, preparation and perspectives of managers. This is because they may give undue importance to short-term trends, phenomena and outcomes. Further, a faulty or underutilized technology may push up the cost of operations of the business. Besides, managers should keep track of technological developments constantly and adapt themselves to these changes quickly. This may require continuous upgrading of their digital knowledge and skills.  Interdependent Nature of Work The basic nature of managers’ job is to get work done through others to accomplish organizational goals. Thus, the success or failure of a manager is decided not by them alone but by their subordinates too. Thus, there is always a possibility of an efficient manager being let down by a bunch of uncooperative and rigid subordinates. Further, the unhelpful attitude of subordinates can also cause conflicts in their relationships with the managers leading to mutual stress, anxiety, fear and work disruption. Ethical Dilemma in Decisions Ethics refer to the ethical principles and practices that determine the behaviour of an individual or a group. Whenever decisions are to be made, modern day managers are required to evaluate their choices against the ethical standards to decide whether their actions are morally right or not. Certainly, decisions that are ethical would enable managers to gain the trust, respect and cooperation of the workers. Thus, managers must ensure that their decisions are not only effective but also ethical. In reality, ethical decisions may not always be practical and their implementation may pose challenge to managers. Managers often face ethical problems in work scheduling, wage fixation and promotion decisions. In any situation they should ensure that ethical values guide all their decisions. Global Perspectives Developments in telecommunication and transportation, besides reduced trade barriers, have helped many organizations to become global entities today. Globalization of business has thrown open several challenges to managers. In a globalized environment, it has become essential for managers to have global perspectives of all issues affecting their organization. Specifically, managers must understand the global environment properly and develop a global attitude while analysing problems and making decisions. Further, they should be sensitive and responsive to the national and regional differences of their workforce. Again, managers must constantly look for globally best business and managerial practices and adopt them quickly to remain globally competitive. Cross-functional Excellence It refers to an employee’s excellence in various functional areas of the organization such as research, engineering, marketing, finance, human resources and operations. Nowadays, organizations require their managers to possess skills and capabilities in various functional areas. Managers are expected to have a good knowledge of other relevant functional areas in addition to specialization in their own functional areas. For instance, it is desirable for a marketing manager to have a good knowledge of the production process and problems. Similarly, a finance manager can have expertise in the production and marketing aspects of the organization. The cross-functional excellence helps managers in understanding the implications of their actions on other departments and also on the organization as a whole. Understandably, managers with cross-functional excellence are preferred for higher managerial positions as they can make the best possible contribution to their organization. In the words of Mark Stevens, “to rise to the ranks of senior management, you must forgo this quest for personal perfection, seeking instead to balance the skills and capabilities of the specialists working for 30 you.” However, managers may find it challenging to be cross-functionally excellent. Though these challenges are common to all management in general, their size and intensity may differ for individual managers depending on their position in and the nature of the organization. For instance, Carina 31 Schofield in a study has identified a few specific challenges for public-sector managers. They are: the increasing pace of change, technological developments, changing perceptions, increasing expectations, citizen empowerment, changing workforce and changing environment. Strategic Management—An Overview Strategic management is the systematic process of determining the goals to be accomplished in the future. It may involve studying the internal and external environment of an organization. The internal environment, i.e. the environment inside an organization, is usually within the control of the organization, while the external environment is usually shaped by factors like customers, suppliers, competitors and legislative practices. The process of strategic management involves development, execution and appraisal of corporate strategies to achieve the performance goals of the organization. Donald F. Harvey defines strategic management as the set of managerial decisions and actions that determines the long-run performance of a corporation. It includes environmental scanning, strategy formulation, strategy implementation, 32 and evaluation and control. There are five steps in the strategic management process of an organization. We shall now discuss each of these steps in detail. Determination of Vision and Mission The first step in the strategic management process requires a clear vision and mission statements for an organization. The three components of business vision include core values, core purpose and visionary goals. The vision statement of the organization conveys the future it envisages and the goal it wants to accomplish in the near and distant future. Similarly, its mission statement declares the purpose of the organization. In fact, the mission statement helps the organization link its activities to the needs of the society and legitimize its existence. In strategic management, mission and vision provide the framework for strategic planning within the organization. In fact, it provides the direction to the whole organization and helps decision-makers prioritize their activities. At the first stage of the strategic management process, managers assess their positions and responsibilities related to the vision, mission and goals of the organization. While the vision and mission of an organization remain unaltered, its strategies can be changed in accordance with the changing environment. Analysing the Environment Environmental analysis requires collecting, analysing and providing information for tactical or strategic purposes. A successful management strategy depends to a great extent on the ability of managers to scan the environment with precision. It is essential for managers to be aware of the external environment and to use their understanding of the environment as a critical input for strategic planning and management. While scanning the environment, managers look for changes in the environment and also for their impact on the organization. Environment analysis can be classified into two: external analysis and internal analysis. External analysis refers to the analysis of changes in the external environment and the consequent threats and opportunities for the organization. A proper assessment of the probable changes in the environment will enable the organization to face such changes effectively. Internal analysis involves analysing the existing strengths and weaknesses of the internal factors like production facilities, marketing techniques, management competencies, HR skills and strategic choices in attaining the strategic goals of the organization. While analysing the environment, an organization may opt for ad hoc scanning, in which it prefers a short-term and occasional scanning of the environment, especially when it faces a crisis. Alternatively, it may also go for continuous scanning, in which the environment is analysed on a continuous or regular basis on a broad range of parameters. Strategy Formulation The next step in the strategic management process is strategy formulation. This step involves determining the courses of action suitable for achieving the organizational objectives. After understanding the likely changes in the environment, managers should develop a range of strategic alternatives to deal with the critical issues of the market. While choosing the best strategy, the organization should assess its internal strengths and weaknesses in the background of the opportunities and threats that it has identified in the market. Strategy Implementation In the strategy implementation stage, organizations mostly concentrate on the techniques required for effective execution of strategies. In this regard, they may undertake activities like enhancing organizational capabilities, mobilizing resources, training and motivating HR resources, establishing an information and control system, revamping the work ethos and culture, and ensuring appropriate leadership. Normally, the implementation stage involves: (i) developing the capabilities of the organization steadily to accomplish the strategy efficiently; (ii) distributing the scarce resources among the strategically significant activities; (iii) establishing the necessary policies and practices that support strategy execution and (iv) developing affirmative organizational culture and responsive leadership. Strategy Evaluation The final stage in the strategic management process is performance evaluation. Since strategic management is a continuous process, it is essential for managers to continuously assess the performance of each strategy after its execution. Based on the performance, the organization can bring about necessary changes in its future strategies. Organizations may have to constantly improve their strategies because (i) the market conditions continuously change; (ii) better ways of performing existing activities may emerge and (iii) the existing managers may be replaced with those with new ideologies and orientation. The performance evaluation process usually consists of the following steps: Setting performance standards in the form of tolerance limits for every stage of the strategic management process. Assessing the actual performance of the implemented strategies after a reasonable time frame. Comparing the actual performance of the strategies against the set standards to identify the performance gaps. Initiating necessary adjustments, if the gap exceeds tolerance limits, like modifying the strategies, revamping performance objectives, bettering strategy execution and redefining business vision and mission, if necessary. Value Based Management Values are qualities or traits considered important by people. These values are capable of acting as driving force for organization and its members to fulfil the goals and objectives. The values of individuals mingle with others in the organization to create organizational culture. In fact, the value statements of organizations define how members want to behave with each other in 33 an organization. Broadly, values can be classified as values concerned with end (goals to be accomplished) and values concerned with means (they way the individuals go about to accomplish those goals). The values concerned with means can further be classified into values relating to morality like honesty or fairness and values relating to competence like creativity or 34 logic. Of late, organizations provide priority to value based management to guide employees in the way they do their jobs. This value based management indicates what the company stands for and also necessitates an understanding of what is most important for an organization. Value based management calls for moral and ethical reasoning to develop legitimate and balanced 35 performance goals. One of the most popular organizational values is professionalism. The other important values are honesty, integrity, impartiality, customer care, staff well being, team work, continuous learning and improvement, Diligence, achievement and 36 recognition. Summary 1. Management is a process concerned with the effective utilization of human and physical resources for attaining organizational and individual goals through a facilitating environment. 2. The characteristics of management are: (i) it is a process, (ii) it is a goal-directed activity, (iii) it is a decision-making activity, (iv) it involves effective integration and utilization, (v) it is practised at different levels of an organization, (vi) it is universal in character and (vii) it is a group-based activity. 3. Management of an organization is classified into three categories as top, middle and front-line management based on administrative responsibilities. Management can also be classified into production management, marketing management, financial management and human resource management based on the functions carried out. 4. Managerial process or functions performed for organizational goal accomplishment are planning, organizing, staffing, directing and controlling. 5. Managerial roles refer to the specific actions or roles performed by managers as part of their job. Roles performed by managers in their profession are: (i) interpersonal roles, (ii) informational roles and (iii) decisional roles. Figurehead, leader and liaison roles are examples of interpersonal roles. Informational roles involve roles of monitor, disseminator and spokesperson.  Decisional roles include entrepreneur, disturbance handler, resource allocator and negotiator roles. 6. Managerial skills for success include technical skills, conceptual skills, human skills, political skills, diagnostic skills and digital skills. 7. Administration is basically a determinative function because it predominantly involves decision-making activities while management is mainly an executive function as it is concerned more with the implementation of decisions made by administration. 8. Even though management is close to being called a profession, it has not yet qualified to be termed as a full-fledged profession. 9. The challenges faced by managers in their profession are: (i) cultural diversity in the workforce, (ii) technological developments, (iii) interdependent nature of work, (iv) ethical dilemma in decisions, (v) global perspectives and (vi) cross- functional excellence. 10. Strategic management is the systematic process of determining goals to be accomplished in the future. The five steps in strategic management are: determination of vision and mission, analysing the environment, strategy formulation, strategy implementation and performance evaluation. Review Questions 1. Define the term management and state its characteristics. 2. What are the different objectives of management? 3. Critically examine the various levels of management in an organization. 4. How can we classify management based on functions? 5. Discuss the functions of managers with relevant examples in detail. 6. Enumerate the various roles performed by managers as a part of their profession. 7. Describe the managerial skills essential for the success of managers. 8. Distinguish between administration and management. 9. Administration is a part of management. Do you agree? 10. Is management a science or an art? Substantiate your response. 11. Management can be termed as a profession. Do you concur? 12. Trace and discuss the challenges facing the managers of today. 13. Management involves getting things done through others. Discuss. 14. Discuss the importance of managerial efficiency in the contemporary business environment with special reference to India. 15. Management is both an art and a science. Examine. 16. The fundamental functions of managers are universal. Substantiate. 17. Discuss in detail the universality of management concepts. 18. What do managers do? Why? 19. Crucially evaluate the steps of the strategic management process in detail. 20. The growth of strategic management in Indian organizations is basically due to the increased globalization of its business operations. Comment.  Case Study Talent Management in Small Organisation Akshay Sales Corporation is a partnership firm established in the year 1994 at Surat, Gujarat. The founder and the CEO of this firm is Mr. Amar Patel. This firm is the distributor, wholesaler, and supplier of all types of wood working, laminate pressing, shoes PU adhesive, and SR rubber adhesive for foam and flooring and mattress. Akshay is one of the top five performers in this type of business out of about 50 Small and Medium Enterprises (SMEs) in its region of operations. Being an experienced firm, it also enjoys good competitive edge over others in business. The average turnover of this partnership firm is Rs. 24 crores, whereas the streng