Principles of Management - Unit I PDF

Unit I Principles of Management I- Semester Presentation Outline  Management: concepts, meaning, essence, levels and functions.  Types of managers.  Managerial roles and skills.  Becoming a manager: role of education, experience and situation.  Business environment an...

Unit I Principles of Management I- Semester Presentation Outline  Management: concepts, meaning, essence, levels and functions.  Types of managers.  Managerial roles and skills.  Becoming a manager: role of education, experience and situation.  Business environment and society-external environment, corporate social responsibility, ethics, corporate governance and ethical standards. Management: Concepts & Meanings  The process of getting things done, effectively and efficiently through and with other people.  Management Theorist Mary Parket Follett (1919) gave the first definition of management as: “the art of getting things done with and through people”.  Management is a process of coordinating work activities so that they are completed efficiently and effectively with and through other people. “ Stephen P. Robbins”  American Management Association: “Management is guiding human and physical resources into dynamic organization units which attain their objective to the satisfactions of those served and with high degree of morale and sense of attainment on the part of those rendering service”.  Ricky W. Griffen (2009) “Management is a set of activities (including planning, organizing, leading and controlling) directed at an organization’s resources (human, financial, physical, and information), with the aim of achieving organizational goals effectively and efficiently in a changing environment.” The definition highlights 5 Core components of managerial work. These are (i) planning, organizing, directing, and controlling the activities of human and other resources, (ii) making the most efficient and effective use of resources, (iii) coordinating various activities, (iv) achieving organizational objectives, and (v) coping with a changing environment. Functions/Process of Management  Planning: Includes defining goals, establishing strategy, and developing plans to coordinate activities.  Organizing: Includes determining what tasks are to be done, who is to do them, how the tasks are to be grouped, who reports to whom, and where decisions are to be made.  Leading: Includes motivating employees, directing the activities of others, selecting the most effective communication channel and resolving conflicts.  Controlling: The process of monitoring performance, comparing it with goals, and correcting and significant deviations. Essence/Characteristics of Management Achieving the Objectives/Goal Oriented Working with Others Attaining Efficiency and Effectiveness Adopting Situational Approach Coping with the Environment Universal Activity Social Process Dynamic Activity Group Activity Distinct Process Both Science and Art A Profession Multi-Disciplinary in nature Efficiency and Effectiveness? Means Efficiency: Doing the thing correctly; refers Ends to the relationship between inputs and Efficiency Effectiveness outputs. Seeks to minimize resource costs. Effectiveness: Doing the right thing; goal attainment Goals Goal Attainment Resource Usage Low High Waste Attainment Levels of Management  Three Distinct Levels of management: Executive (top), middle, and first-line (supervisory). This is a vertical rank of the managers in the organization. Managers at each of these levels have different tasks and responsibilities. The first-line managers report to middle managers, and middle managers report to top managers. The hierarchy depicts chain of command, or the channel of communication, coordination, and control.  Top Management:  Also known as executive management.  A limited number of top executives lead the entire organizations.  Overall management responsibilities  Main job is to establish mission and goals, as well as the general operating policies of the organization.  Focus on long-term issues  Emphasis the growth, survival, and effectiveness  Action and result oriented  Middle Management  Lies between the top and the front-line management  Synonymously called Tactical Management  Responsible for implementing strategic plans  Translate the general, long-range goals set down by the top management into concrete, specific goals for their deparments.  Responsible for planning, organizing, leading, coordinating, controlling and supervising the first-line managers.  First-Line Management  Synonymously called operating management, front-line management, or supervisory-level management.  Responsible for carrying out day-to-day activities within various units/departments Importance of Management  Acquisition and utilization of resources: Management performs efficient acquisition, effective development and utilization and proper coordination or resources.  Environmental adaptation: Organizations are influenced by environment. Management adapts organization to changing environmental forces. It manages change and innovation.  Goals achievement: Management achieves goals by balancing the requirements of job and people. It performs the management functions.  Problem Solving: Solves Organizational problems. It identifies and evaluates various alternatives and chooses appropriate courses of action. It implements the decisions.  Performance control: Management sets performance targets for control. It measures and evaluates the actual performance. It takes corrective actions for deviations.  Social Responsibility: management responds to social needs. It keeps the organization socially responsible. Managers MANAGERS On the basis of Nature or Area of Managerial On the basis of Levels of Management Job 1. Top Level Managers 1. Generalist Manager 2. Middle Level 2. Functional Manager Managers 3. Staff Manager 3. Lower Level Managers Supervise Others Top Managers Middle Managers First-Line Managers Work Operative Employees on Jobs The Levels of an Organization: Job responsibilities  First-line managers supervise the day-to-day activities of operative employees.  Middle managers represent the level of management between first-line managers and top management. These managers translate the goals of top management into specific details that lower-level managers can perform.  Top managers make decisions about the direction of the organization and set policies that affect all organizational members  Generalist Manager:  Managers who perform different types of jobs in an organization as per the requirements are called the Generalist Managers.  No specialization in any area.  Look after overall activities of an organization.  Work overload  Functional Manager:  Performs the functions of their specific departments/units.  Clear Job description  Functions like production, sales, finance, public relation, R&D, and so on.  Department Heads = Functional Managers  Staff Managers  Staff Managers are experts and play the role of advisors for both generalist and functional managers.  No specific formal position in management level.  Management consultant, Legal advisor, auditors … Managerial Skills  A skill refers to the proficiency or ability of a person to perform the given responsibility.  Manager skill can be better understood when it is jointly discussed with the level on management.  The skill required to perform the jobs is different at the different level of management. Managerial Skills Required to Work at Different Levels of Management  Conceptual Skill:  Conceptual Skills refer to the mental ability to analyze and diagnose complex situations. It involves seeing the organization as a whole and understanding how its parts will affect the whole. These skills are necessary at the top level management.  Conceptual skill helps the manager to conceptualize the environment, to analyze the forces working in a situation and to take a broad farsighted view of the organization.  Such skills are required to analyze and understand complexities of the organizaitons.  Human Skills  Human Skills refers to the ability to work with, understand and motivate other people individually or in a group.  Managers with these skills are able to get the best output from subordinates---motivation, communication, leadership, inspiration and trustworthiness among subordinates.  Such skills are required for all managers working at different levels of management.  Technical Skills  Technical Skills refer to the ability and knowledge in using the equipments, techniques and procedures involved in performing a specific task.  It consists of specialized knowledge and ability to perform within that specialty.  Important for first line manager.  Required to solve technical problems.  Specific Management Skills  Handling conflicts  Motivating employees  Solving problems  Handling information  Growing and developing  Controlling the environment  Organizing and coordinating Managerial Roles Interpersonal Role  Figurehead Role:  Roles comes by virtue of a manager's position itself.  Duties are ceremonial and symbolic in nature.  Cutting ribbons, distributing gifts, chief guests, attending ceremonial functions etc.  Leader Role:  They perform official functions.  Essential to maintain discipline and efficiency among the staff of the organization.  Involves directing, motivating, leading and controlling  Liaison  They work as connecting link between their organization and outside institutions or people  Managers work as a bridge between different units of the organization and outsiders. Informational Role  Monitor  A manager has to assess environmental changes  The assessment and watching over the activities taking place in and around the organization  The formal and informal contacts are useful for collecting information  Disseminator  Provides information to subordinates and keep them informed o what is going on around the organization and the precautions to be taken  Transmitting relevant information to the members of the organization  Spokesperson  Representing the unit of work to explain to organizational members and outsiders about the related issues of their interest  Act as a agent of the organization. Decisional Role  Entrepreneurship Role  Concerned with planning and initiating change within the organization  Develops new ideas and strategic models for implementation.  Disturbance Handler Role  Take corrective actions when problem raised like strike, conflict between subordinates etc.  Managers need to handle the conflict tactfully  Resource Allocator Role  Related with the managerial function of allocating resources (money, people, time, equipment, etc) to different units and subordinates  Manager has to decide exactly who should get what.  Negotiator Role  Involves representing as well as protecting organization's interest in dealing with insiders and outsiders to add value to work. Becoming a Manager  Manager's job is unpredictable and full of uncertainties.  Becoming a manager in a competitive environment is not so easy.  Role of Education  Role of Experience  Role of Situation  Role of Education  Education is necessary for managerial skills  It makes person rational and more logical  Enhance theories  Critical thinking approach  Role of Experience  Experience enhances managerial skills  Management development programs for the prospective managers to enhance their skills.  Role of Situation  Learning by doing  Problem solving with respect to case  Every organization is unique and their structure with decision making is different. Concept of Business Environment  Business Environment consists of all components of the surroundings of a business organization, which affect on influence its operations and determine the effectiveness.  The effectiveness of organizational performance depends upon the ability of the management to deal and adjust with environmental forces.  Stephen P Robbins and Mary Coulter- “Environment refers to institutions or forces that affect the organizations performance”.  Keith Davis- “Business environment is the aggregate of all conditions, events, and influences that surround and affect it”.  Arthur M Weimer – “Business environment encompasses the climate or set of conditions, economic, social, political or institutional in which business operations are conducted”. Types of Environment  Internal Environment  Owners  Board of Directors  Organizational Resources  Organizational Structure  Organizational Culture  External Environment  The external environment is made up of two components,  Specific or Task Environment and  General Environment.  Specific or Task Environment  Customers  Suppliers  Competitors  Government  Pressure Groups  Financial Institutions  Political Environment Constitutions Political Philosophy Political Parties Political Institutions Legal Institutions Socio-Culture Environment Technological Environment Demography General Nature of Technology Life Cycle Pace of Technological Change Social Institutions Environment Technology Transfer Religion Research and Development Language Budget Economic Environment Economic System Economic Policies Economic Conditions Capital Market Globalization Exchange Rate  Management: Science or Art?  Science of Management  Assumes that problems can be approached using rational, logical, objective, and systematic ways.  Requires the use of technical, diagnostic, and decision-making skills and techniques to solve problems.  Art of Management  Decisions are made and problems solved using a blend of intuition, experience, instinct, and personal insights.  Requires the use of conceptual, communication, interpersonal, and time-management skills to successfully accomplish the tasks associated with managerial activities. Approaches  Classical Perspective/Theory  Classical Theory is the initial stage of the development of management thought.  This theory includes three different approaches consisting of  Scientific Management  Administrative Management  Bureaucratic Management 41   Scientific Management  The concept of Scientific Management is introduced to replace the traditional method of management  George Black- “Scientific management is that kind of management with conducts a business or affairs by standards established by facts, or truths gained through systematic observation, experiment or reasoning.”  Frederick Winslow Taylor- “Scientific management means knowing exactly what you want men to do and seeing that they do it in the best and cheapest way.” 42  Principles of Scientific Management 1. Development of a science for each element of an individual’s work 2. Scientific selection, training and development of workers 3. Close co-operation between management and workers 4. Equal division of work and responsibility between management and workers 5. Maximum output in place of restricted output 6. Mental Revolution 43   Development of a science for each element of an individual’s work:  Work assigned to employee should be observed and analyzed in order to replace the old rule of thumb approach.  Development of science for each element of an individual’s job requires that decisions should be made on the basis of facts rather than on opinion and beliefs.  Scientific Selection, Training and Development of Workers:  Workers should be selected and trained in accordance with the requirements of the job to be entrusted to them.  The physical, mental and other requirements should be specified for each job and workers should be selected and trained to make them fit for the job.  Management has to design systematic training to improve their skills and efficiency. Efforts should be made to develop each employee’s 44 greatest efficiency.   Close Co-Operation Between Management and Workers  Interest of the employer and employees should be fully harmonized to create a mutually beneficial relationship.  Understanding of mutual relationship between Labor and Management knowing the meaning of each other.  Equal Division of Work and Responsibility Between Management and Workers  Division of task and responsibility  Group should be effective  Manager is responsible ….. 45   Maximum Output in Place of Restricted Output  Economies of scale  Helpful to the society as it upgrades the living standard of the people  Mental-Revolution  Working environment is required  Minimizing the resources and wastes 46  Administrative Management  Henry Fayol tried to develop a comprehensive conceptual framework and general theory of management that are applicable to all organizations.  Management involves many functions like to forecast and to plan, to organize, to command, to co-ordinate and to control. 47  Fayol’s 14 Principles of Management 1. Division of Work: Specialization increases output by making employees more efficient. 2. Authority: Managers must be able to give orders, and authority gives them this right. 3. Discipline: Employees must obey and respect the rules that govern the organization. 4. Unity of command: Every employee should receive orders from only one superior. 5. Unity of direction: The organization should have a single plan of action to guide managers and workers. 6. Subordination of individual interests to the general interest: The interests of any one employee or group of employees should not take precedence over the interests of the organization as a whole. 7. Remuneration: Workers must be paid a fair wage for their services. 8. Centralization: This term refers to the degree to which subordinates are involved in decision making. 9. Scalar chain: The line of authority from top management to the lowest ranks is the scalar chain. 10. Order: People and materials should be in the right place at the right time. 11. Equity: Managers should be kind and fair to their subordinates. 12. Stability of tenure of personnel: Management should provide orderly personnel planning and ensure that replacements are available to fill vacancies. 13. Initiative: Employees who are allowed to originate and carry out plans will exert high levels of effort. 14. Esprit de corps: Promoting team spirit will build harmony and unity within the organization. 48  Bureaucratic Management (Max Weber 1864-1920)  Max Weber was a German Sociologist.  Bureaucracy theory of Max Weber is most common in large organization and government institutions.  Applicable in the organization where more numbers of employees perform their activities to meet common goals.  Clear division of work, authority, and responsibility. 49 50  Weber’s Ideal Bureaucracy Division of Labor - jobs broken down into simple, routine and well define task. Authority Hierarchy - positions organized in a hierarchy with a clear chain of command. Formal Selection - people selected for jobs based on technical qualifications. 51  Weber’s Ideal Bureaucracy Formal Rules and Regulations - Systems of written rules and standard operating procedures. Impersonality - Uniform applications of rules and controls, not according to personalities. Career Orientation -Managers are career professionals, not owners of units they manage. 52  Behavioral Perspectives  Human relations approach: During 1920’s and 1930’s, there emerged an idea that people are the most important assets for the organization. They are the most important resources for any organization. The human relations approach was developed by Elton Mayo (1881-1949) and other researchers from Harvard University who conducted a series of studies between 1927 and 1932 among several groups of workers at the Hawthorne plant of the western Electric Company in Chicago. 53   The relay assembly test room: The researchers used this experiment with the light in the working place of the workers. When the illumination of the light was increased the productivity increased and when the illumination of the light decreased, the output of the workers or productivity still increased. The result describes that the productivity is not dependent of the illumination of the light but on the feelings of importance. The research concludes that the factors as hours of work, wage incentives etc did not really affect over the employee efficiency but change in attitude of employees has significant effects on the productivity. 54   The interviewing program: The interview was conducted from 1928 to 1929 a total of 1600 employees. The results of the interview concluded that the social groups were being formed informally at the workplaces. These informal groups have a high effect over their members and these groups could exercise huge control over the performance of their members. 55   Bank wiring observation room: This experiment was conducted between 1931 to 1932. This observation was done to understand the influence of the informal groups on the employee’s performance. The researchers found that the informal groups, over the period of time, evolved their own codes of behavior, hierarchy of members, and standards of output. The researchers established the “social man” theory of the organization. The theory says that the management must understand the functioning of groups to increase the output and maintain good relationships with the workers. This part concludes that the group plays a significant role in the organizational performance. 56  Integrating Perspectives  System Perspective (Theory)  A system is a set of interdependent parts arranged in a manner that produces a unified whole.  Subsystems of an organization can be classified as physical, mechanical, biological and social.  Inputs  Processing  Output 57   Elements of System Theory  Goal Orientation: Every System is purposeful. It is directed towards achieving certain objectives.  Subsystem: The parts or components of a system are called subsystems.  Synergy: Synergy means the whole is greater than the sum of its parts. Thus synergic effect means 2+2=5. It means that the performance of the whole is dependent on how well its parts are related and not on how well each part operates.  System Boundary: Every system has a boundary that separates it from environment.  Flow: A system has flow of resources.  Feedback: The reaction or responses to the environment  Open or Closed system:  Open System: Interacts within its environments  Closed System: Self contained and isolated from the environment. 58  Contingency Perspective  This theory focuses on situational factors. It is based on the premises that there is probably no one best way to solve management problem in all organizations and in every situation.  Four Contingency Variables  Organization Size  Task Technology  Environmental Uncertainty  Individual Differences 59