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BBA SEM 1 -PRINCIPLES OF MANAGEMENT CHAPTER 1:- INTRODUCTION TO MANAGEMENT POINTS TO BE LEARN  Definitions  Characteristics  Importance  Management Process and Functions  Manager vs Administration  Contribution of Management Thinkers – Taylo...

BBA SEM 1 -PRINCIPLES OF MANAGEMENT CHAPTER 1:- INTRODUCTION TO MANAGEMENT POINTS TO BE LEARN  Definitions  Characteristics  Importance  Management Process and Functions  Manager vs Administration  Contribution of Management Thinkers – Taylor & Fayol  Management as an Art, Science  Early Approaches to Management  Classical Approach  Behavioral Approach  Quantitative Approach  Modern Approaches to Management PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 1  BBA SEM 1 -PRINCIPLES OF MANAGEMENT 1.1 DEFINITION OF MANAGEMENT  According to Henry Fayol, "To manage is to forecast and to plan, to organize, to command, to coordinate and to control".  According to Peter Drucker, "Management is a multi-purpose organ that manages business and manages managers and manages workers and work".  According to Harold Koontz, "Management is the art of getting things done through and with people in formally organized groups”.  According to Mary Parker Fallett, "Management is the art of getting things done through people” 1. 2 CHARACTERISTICS OF MANAGEMENT Management is a managerial process Management is a process and not merely a body of individuals. Those who perform this process are called managers. The managers exercise leadership by assuming authority and direct others to act within the organization. Management is a social process Management takes place through people. The importance of human factor in management cannot be ignored. A manager's job is to get the things done with the support and cooperation of subordinates. Management is action-based: Management is always for achieving certain objectives in terms of sales, profit, etc. It is a result-oriented concept and not merely an abstract philosophy. It gives importance to concrete performance through suitable actions. It is an action based activity. PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 2  BBA SEM 1 -PRINCIPLES OF MANAGEMENT Management involves achieving results through the efforts of others: Management is the art of getting the things done through others. Managers are expected to guide and motivate subordinates and get the expected performance from them. Management acts as an activating factor. Management is a group activity Management is not an isolated individual activity but it is a collective activity or an activity of a group. It aims at using group efforts for achieving objectives. Managers manage the groups and coordinate the activities of groups functioning in an organization. Management is intangible Management is not directly visible but its presence is noticed in the form of concrete results. Management is intangible. It is like invisible spirit, which guides and motivates people working in a business unit. Management is like government, which functions but is not visible in physical form. Management is all pervasive Management is comprehensive and covers all departments, activities and employees. Managers operate at different levels but their functions are identical. This indicates that management is a universal and all pervasive process. Management is an art, science as well as a profession Management is an art because certain skills, essential for good management, are unique to individuals. Management is a science because it has an organized body of knowledge. Management is also a profession because it is based on advanced and cultivated knowledge. Management aims at coordination of activities Coordination is the essence of management. It gives one clear direction to the whole organization and brings unity and harmony in the whole business unit. For such coordination, effective communication at all levels is essential. PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 3  BBA SEM 1 -PRINCIPLES OF MANAGEMENT Management is innovative Management techniques are dynamic and innovative. They need to be adjusted as per the requirements of the situations. Another manager need not repeat the decisions of one manager. Similarly, a manager has to change his decisions under different situations. Management is different from ownership Management is concerned with the management of business activities. Managers are not the owners but they manage the business on behalf of the owners. Separation of ownership and management is a special feature of modem business organization. Management is dynamic Business is influenced by changes in economic, social, political technological and human resource. Management adjusts itself to the changing atmosphere making suitable forecasts and changes in the policies. Hence, management is treated as a dynamic activity. Management aims at achieving predetermined objectives Management is a meaningful activity. All organizations are essentially groups of individuals formed for achieving common objectives. An Organization exists for the attainment of specific objectives. PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 4  BBA SEM 1 -PRINCIPLES OF MANAGEMENT 1.3 IMPORTANCE 1. Effective Utilizations of Resources: Management tries to make effective utilization of various resources. The resources are scarce in nature and to meet the demand of the society, their contribution should be maximum for the general interests of the society. The management not only decides in which particular alternative a particular resource should be used, but also takes actions to utilize it in that particular alternative in the best way. 2. Development of Resources: Management develops various resources. This is true with human as well as non-human factors. Lawrence Appley has emphasized that, management is the development of people. However, most of the researches for resource development are carried on in an organized way and management is involved in these organized activities. Thus, through the development of resources, management improves the quality of lives of people in the society. 3. To Incorporate Innovations: Today, changes are occurring at a very fast rate in both technology and social process and structure. These changes need to be incorporated to keep the organizations alive and efficient. Business organizations are moving from primitive to sophisticated. Therefore, they require high degree of specialization, high level of competence and complex technology. All these require efficient management so that organizations work in the most efficient way. 4. Integrating Various Interest Groups: In the organized efforts, there are various interest groups and they put pressure over other groups for maximum share in the combined output. For example, in the case of a business organization, there are various pressure groups such as shareholders, employees, government, etc. These interest groups have pressure on an organization. In a more advanced and complex society, more such pressure is on the organization. Management has to balance these pressures from various interest groups. PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 5  BBA SEM 1 -PRINCIPLES OF MANAGEMENT 5. Stability in the Society: Management provides stability in the society by changing and modifying the resources in accordance with the changing environment of the society. In the modern age, more emphasis is on new inventions for the betterment of human beings. These inventions make old systems and factors mostly obsolete and inefficient. Management provides integration between traditions and new inventions and safeguards society from the unfavorable impact of these inventions so that continuity in social process is maintained. 1.4 FUNCTIONS OF MANAGEMENT PLANNING Planning is the primary function of management. It involves determination of a course of action to achieve desired results/objectives. Planning is the starting point of management process and all other functions of management are related to and dependent on planning function. Planning is the key to success, stability and prosperity in business. It acts as a tool for solving the problems of a business unit. Planning plays a pivotal role in business management It helps to visualize the future problems and keeps management ready with possible solutions. ORGANISING Organizing is next to planning. It means to bring the resources (men, materials, machines, etc.) together and use them properly for achieving the objectives. Organization is a process as well as it is a structure. Organizing means arranging ways and means for the execution of a business plan. It provides suitable administrative structure and facilitates execution of proposed plan. Organizing involves different aspects such as departmentation, span of control delegation of authority, establishment of superior-subordinate relationship and provision of mechanism for co-ordination of various business activities. PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 6  BBA SEM 1 -PRINCIPLES OF MANAGEMENT STAFFING Staffing refers to manpower required for the execution of a business plan. Staffing, as managerial function, involves recruitment, selection, appraisal, remuneration and development of managerial personnel. The need of staffing arises in the initial period and also from time to time for replacement and also along with the expansion and diversification of business activities. Every business unit needs efficient, stable and cooperative staff for the management of business activities. Manpower is the most important asset of a business unit. DIRECTING (LEADING) Directing as a managerial function, deals with guiding and instructing people to do the work in the right manner. Directing/leading is the responsibility of managers at all levels. They have to work as leaders of their subordinates. Clear plans and sound organization set the stage but it requires a manager to direct and lead his men for achieving the objectives. Directing function is quite comprehensive. It involves Directing as well as raising the morale of subordinates. It also involves communicating, leading and motivating. Leadership is essential on the part of managers for achieving organizational objectives. COORDINATING Effective coordination and also integration of activities of different departments are essential for orderly working of an Organization. This suggests the importance of coordinating as management function. A manager must coordinate the work for which he is accountable. Co-ordination is rightly treated as the essence of management. It may be treated as an independent function or as a part of organisms function. Coordination is essential at all levels of management. It gives one clear-cut direction to the activities of individuals and departments. PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 7  BBA SEM 1 -PRINCIPLES OF MANAGEMENT CONTROLLING Controlling is an important function of management. It is necessary in the case of individuals and departments so as to avoid wrong actions and activities. Controlling involves three broad aspects: (a) establishing standards of performance, (b) measuring work in progress and interpreting results achieved, and (c) taking corrective actions, if required. Business plans do not give positive results automatically. Managers have to exercise effective control in order to bring success to a business plan. Control is closely linked with other managerial functions. It is rightly treated as the soul of management process. MOTIVATING Motivating is one managerial function in which a manager motivates his men to give their best to the Organization. It means to encourage people to take more interest and initiative in the work assigned. Organizations prosper when the employees are motivated through special efforts including provision of facilities and incentives. Motivation is actually inspiring and encouraging people to work more and contribute more to achieve organizational objectives. It is a psychological process of great significance. COMMUNICATING Communication (written or oral) is necessary for the exchange of facts, opinions, ideas and information between individual’s and departments. In an organization, communication is useful for giving information, guidance and instructions. Managers should be good communicators. They have to use major portion of their time on communication in order to direct, motivate and co-ordinate activities of their subordinates. People think and act collectively through communication. According to Louis Allen, "Communication involves a systematic and continuing process of telling, listening and understanding". PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 8  BBA SEM 1 -PRINCIPLES OF MANAGEMENT 1.5 DIFFERENCE PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 9  BBA SEM 1 -PRINCIPLES OF MANAGEMENT 1.6 PRINCIPLES OF MANAGEMENT DESCRIBED BY HENRI FAYOL DAD U C USSR ------------ O I SEE DIVISION OF WORK - The specialization of the workforce according to the skills a person, creating specific personal and professional development within the labor force and therefore increasing productivity; leads to specialization which increases the efficiency of labor. By separating a small part of work, the workers speed and accuracy in its performance increases. This principle is applicable to both technical as well as managerial work. AUTHORITY AND RESPONSIBILITY- The issue of commands followed by responsibility for their consequences. Authority means the right of a superior to give order to his subordinates; responsibility means obligation for performance. This principle suggests that there must be parity between authority and responsibility. They are co-existent and go together, and are two sides of the same coin. DISCIPLINE- Discipline refers to obedience, proper conduct in relation to others, respect of authority, etc. It is essential for the smooth functioning of all organizations. UNITY OF COMMAND - This principle states that every subordinate should receive orders and be accountable to one and only one superior. If an employee receives orders from more than one superior, it is likely to create confusion and conflict. Unity of Command also makes it easier to fix responsibility for mistakes. CENTRALIZATION AND DECENTRALIZATION - The amount of power wielded with the central management depends on company size. Centralization implies the concentration of decision making authority at the top management. Sharing of authority with lower levels is called decentralization. The organization should strive to achieve a proper balance. PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 10  BBA SEM 1 -PRINCIPLES OF MANAGEMENT UNITY OF DIRECTION - All those working in the same line of activity must understand and pursue the same objectives. All related activities should be put under one group, there should be one plan of action for them, and they should be under the control of one manager. It seeks to ensure unity of action, focusing of efforts and coordination of strength. SCALAR CHAIN - Scalar Chain refers to the chain of superiors ranging from top management to the lowest rank. The principle suggests that there should be a clear line of authority from top to bottom linking all managers at all levels. It is considered a chain of command. It involves a concept called a "gang plank" using which a subordinate may contact a superior or his superior in case of an emergency, defying the hierarchy of control. However the immediate superiors must be informed about the matter. STABILITY OF TENURE OF PERSONNEL - The period of service should not be too short and employees should not be moved from positions frequently. An employee cannot render useful service if he is removed before he becomes accustomed to the work assigned to him. REMUNERATION - Workers must be paid sufficiently as this is a chief motivation of employees and therefore greatly influences productivity. The quantum and methods of remuneration payable should be fair, reasonable and rewarding of effort. ORDER - Social order ensures the fluid operation of a company through authoritative procedure. Material order ensures safety and efficiency in the workplace. INITIATIVE – Using the initiative of employees can add strength and new ideas to an organization. Initiative on the part of employees is a source of strength for the organization because it provides new and better ideas. PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 11  BBA SEM 1 -PRINCIPLES OF MANAGEMENT SUBORDINATION OF INDIVIDUAL INTEREST The management must put aside personal considerations and put company objectives first. Therefore the interests of goals of the organization must prevail over the personal interests of individuals. EQUITY - Employees must be treated kindly, and justice must be enacted to ensure a just workplace. Managers should be fair and impartial when dealing with employees. ESPRIT DE CORPS - This refers to the need of managers to ensure and develop morale in the workplace; individually and communally. Team spirit helps develop an atmosphere of mutual trust and understanding. These can be used to initiate and aid the processes of change, organization, decision making, skill management and the overall view of the management function. 1.7 PRINCIPLES OF SCIENTIFIC MANAGEMENT DESCRIBED BY F.W. TAYLOR 1) Separation Of Planning And Doing 2) Functional Foremanship 3) Job Analysis 4) Standardization 5) Scientific Selection And Training Of Workers 6) Financial Incentives 7) Economy 8) Mental Revolution PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 12  BBA SEM 1 -PRINCIPLES OF MANAGEMENT 1.8 MANAGEMENT AS A SCIENCE AND AS AN ART AND AS BOTH According to the nature of management, there is a controversy that whether management is a science or an art. This controversy is very old & is yet to be settled. It should be noted that, learning process of science is different from that of art. Learning of science includes principles while learning of art involves its continuous practice. MANAGEMENT AS A SCIENCE Science is a systematic body of knowledge relating to a specific field of study that contains general facts which explains a phenomenon. It establishes cause and effect relationship between two or more variables and underlines the principles governing their relationship. These principles are developed through scientific method of observation and verification through testing. Science is characterized by following main features: 1. Universally accepted principles – Scientific principles represents basic truth about a particular field of enquiry. These principles may be applied in all situations, at all time & at all places. E.g. – law of gravitation which can be applied in all countries irrespective of the time. Management also contains some fundamental principles which can be applied universally like the Principle of Unity of Command i.e. one man, one boss. This principle is applicable to all type of organization – business or non business. 2. Experimentation & Observation – Scientific principles are derived through scientific investigation & researching i.e. they are based on logic. E.g. the principle that earth goes round the sun has been scientifically proved. Management principles are also based on scientific enquiry & observation and not only on the opinion of Henry Fayol. They have been developed through experiments & practical experiences of large no. of managers. E.g. it is observed that fair remuneration to personal helps in creating a satisfied work force. PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 13  BBA SEM 1 -PRINCIPLES OF MANAGEMENT 3. Cause & Effect Relationship – Principles of science lay down cause and effect relationship between various variables. E.g. when metals are heated, they are expanded. The cause is heating & result is expansion. The same is true for management; therefore it also establishes cause and effect relationship. E.g. lack of parity (balance) between authority & responsibility will lead to ineffectiveness. If you know the cause i.e. lack of balance, the effect can be ascertained easily i.e. ineffectiveness. Similarly if workers are given bonuses, fair wages they will work hard but when not treated in fair and just manner, reduces productivity of organization. 4. Test of Validity & Predictability – Validity of scientific principles can be tested at any time or any number of times i.e. they stand the time of test. Each time these tests will give same result. Moreover future events can be predicted with reasonable accuracy by using scientific principles. E.g. H2 & O2 will always give H2O. Principles of management can also be tested for validity. E.g. principle of unity of command can be tested by comparing two persons – one having single boss and one having 2 bosses. The performance of 1st person will be better than 2nd. It cannot be denied that management has a systematic body of knowledge but it is not as exact as that of other physical sciences like biology, physics, and chemistry etc. The main reason for the inexactness of science of management is that it deals with human beings and it is very difficult to predict their behavior accurately. Since it is a social process, therefore it falls in the area of social sciences. It is a flexible science & that is why its theories and principles may produce different results at different times and therefore it is a behavior science. PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 14  BBA SEM 1 -PRINCIPLES OF MANAGEMENT MANAGEMENT AS AN ART Art means application of knowledge & skill to get the desired results. An art may be defined as personalized application of general theoretical principles for achieving best possible results. Art has the following characters – Practical Knowledge: Every art requires practical knowledge therefore learning of theory is not sufficient. It is very important to know practical application of theoretical principles. E.g. to become a good painter, the person not only should know about the different color and brushes but different designs, dimensions, situations etc to use them appropriately. A manager can never be successful just by obtaining degree or diploma in management; he must have also known how to apply various principles in real situations, by functioning as a manager. Personal Skill: Although theoretical base may be same for every artist, but each one has his own style and approach towards his job. That is why the level of success and quality of performance differs from one person to another. E.g. there are several qualified painters but M.F. Hussain is recognized for his style. Similarly management as an art is also personalized. Every manager has his own way of managing things based on his knowledge, experience and personality, that is why some managers are known as good managers (like Aditya Birla, Rahul Bajaj) whereas others as bad. Creativity: Every artist has an element of creativity in line. That is why he aims at producing something that has never existed before which requires combination of intelligence & imagination. Management is also creative in nature like any other art. It combines human and non-human resources in an useful way so as to achieve desired results. It tries to produce sweet music by combining chords in an efficient manner. PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 15  BBA SEM 1 -PRINCIPLES OF MANAGEMENT Perfection through practice: Practice makes a man perfect. Every artist becomes more and more proficient through constant practice. Similarly managers learn through an art of trial and error initially but application of management principles over the years makes them perfect in the job of managing. Goal-Oriented: Every art is result oriented as it seeks to achieve concrete results. In the same manner, management is also directed towards accomplishment of pre-determined goals. Managers use various resources like men, money, material, machinery & methods to help in the growth of an organization. Thus, we can say that management is an art therefore it requires application of certain principles rather it is an art of highest order because it deals with shaping the attitude and behavior of people at work towards the desired goals. MANAGEMENT AS BOTH SCIENCE AND ART Management is both an art and a science. The above mentioned points clearly reveal that management combines features of both science as well as art. It is considered as a science because it has an organized body of knowledge which contains certain universal truth. It is called an art because managing requires certain skills which are personal possessions of managers. Science provides the knowledge & art deals with the application of knowledge and skills. A manager to be successful in his profession must acquire the knowledge of science & the art of applying it. Therefore management is a well-judged combination of science as well as an art because it proves the principles and the way these principles are applied is a matter of art. Science teaches to ’know’ and art teaches to ’do’. E.g. a person cannot become a good singer unless he has knowledge about various ragas & he also applies his personal skill in the art of singing. Same way it is not sufficient for manager to first know the principles but he must also apply them in solving various managerial problems that is why, science and art are not mutually exclusive but they are complementary to each other (like tea and biscuit, bread and butter etc.). To conclude, we can say that science is the root and art is the fruit. PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 16  BBA SEM 1 -PRINCIPLES OF MANAGEMENT OVERVIEW OF MANAGEMENT PROCESS INPUTS OBJECTIVES END RESULTS PLANNING DIRECTING 1. Men 1. Goods & Services 2. Material 2. Productivity 3. Machine ORGANIZING CONTROLLING 3. satisfaction 4. Methods 5. Money 4. information 6. Markets MANAGERIAL ROLES To meet the many demands of performing their functions, managers assume multiple roles. a role is an organized set of behaviors. Henry mintzberg has identified ten roles common to the work of all managers. The ten roles are divided into three groups:  interpersonal  informational  decisional The performance of managerial roles and the requirements of these roles can be played at different times by the same manager and to different degrees depending on the level and function of management. The ten roles are described individually, but they form an integrated whole. PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 17  BBA SEM 1 -PRINCIPLES OF MANAGEMENT 1. INTERPERSONAL ROLES The interpersonal roles link all managerial work together. the three interpersonal roles are primarily concerned with interpersonal relationships.  Figurehead role: the manager represents the organization in all matters of formality. the top level manager represents the company legally and socially to those outside of the organization. The supervisor represents the work group to higher management and higher management to the work group.  Liaison role: the manger interacts with peers and people outside the organization. the top level manager uses the liaison role to gain favors and information, while the supervisor uses it to maintain the routine flow of work.  The leader role: it defines the relationships between the manger and employees. PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 18  BBA SEM 1 -PRINCIPLES OF MANAGEMENT 2. INFORMATIONAL ROLES The informational roles ensure that information is provided. the three informational roles are primarily concerned with the information aspects of managerial work.  Monitor role: the manager receives and collects information about the operation of an enterprise.  Disseminator role: the manager transmits special information into the organization. the top level manager receives and transmits more information from people outside the organization than the supervisor.  Spokesperson role: the manager disseminates the organization’s information into its environment. Thus, the top level manager is seen as an industry expert, while the supervisor is seen as a unit or departmental expert. 3. DECISIONAL ROLES The decisional roles make significant use of the information and there are four decisional roles.  Entrepreneur role: the manager initiates change, new projects; identify new ideas, delegate idea responsibility to others.  Disturbance handler role: the manager deals with threats to the organization. The manager takes corrective action during disputes or crises; resolve conflicts among subordinates; adapt to environmental crisis.  Resource allocator role: the manager decides who gets resources; schedule, budget set priorities and chooses where the organization will apply its efforts.  Negotiator role: the manager negotiates on behalf of the organization. The top level manager makes the decisions about the organization as a whole, while the supervisor makes decisions about his or her particular work unit. PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 19  BBA SEM 1 -PRINCIPLES OF MANAGEMENT 1.9 WHAT DO WE MEAN BY MANAGEMENT THEORIES? Management theories are the set of general rules that guide the managers to manage an organization. Management theories (also known as "Transactional theories") focus on the role of supervision, organization, and group performance. Theories are an explanation to assist employees to effectively relate to the business goals and implement effective means to achieve the same. Early management theories base leadership on a system of reward and punishment. Managerial theories are often used in business; when employees are successful, they are rewarded; when they fail, they are reprimanded or punished. TYPES OF MANAGEMENT THEORIES Management theories can be classified into three types. 1. Classical Management Theory 2. Behavioral Management Theory 3. Modern Management Theory PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 20  BBA SEM 1 -PRINCIPLES OF MANAGEMENT 1. CLASSICAL MANAGEMENT THEORY Classical management theory is based on the belief that workers only have physical and economic needs and prescribes specialization of labor. Classical theories recommend centralized leadership and decision-making and focus on profit maximization. Three streams of classical management theory are - Bureaucracy (Weber), Administrative Theory (Fayol), and Scientific Management (Taylor). I. Frederick Taylor’s Theory of Scientific Management: Taylor’s theory of scientific management aimed at, improving economic efficiency, especially labor productivity. Taylor had a simple view about, what motivated people at work, - money. He felt that workers should get a fair day's pay for a fair day's work, and that pay should be linked to the amount produced. Therefore he introduced the differential piece rate system, of paying wages to the workers. Taylor's Differential Piece Rate Plan  If Efficiency is greater than the defined Standard then workers should be paid 120 % of the Normal Piece Rate.  If Efficiency is less than standard then workers should be paid 80% of the Normal Piece Rate. Principles of Scientific Management I. Time and motion study: - Study the way jobs are performed and find new ways to do them. II. Teach, train, and develop the workman with improved methods of doing work. Codify the new methods into rules. III. The interest of the employer & employees should be fully harmonized so as to secure mutually understanding relations between them. IV. Establish fair levels of performance and pay a premium for higher performance. PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 21  BBA SEM 1 -PRINCIPLES OF MANAGEMENT 2. HENRI FAYOL’S ADMINISTRATIVE MANAGEMENT THEORY: Henri Fayol known as the Father of Management laid down the 14 principles of Management. These 14 principles of management are used to manage an organization and are beneficial for prediction, planning, decision-making, organization and process management, control, and coordination.  Division of Work: Improves productivity, efficiency, accuracy, and speed  Equity: Employees should be treated equally and respectfully  Discipline: Makes the management job easy and make progress  Initiative: support and encourage employees taking initiatives  Authority and Responsibility: Efficient delivery of work with defined responsibility  Esprit de Corps: Develop trust and mutual understanding  Subordination of Individual Interest: Company over personal interest and respect the chain of command  Stability: offer job security to their employees  Remuneration: motivating factor linked to the individual’s efforts  Unity of Direction: Unified goals and motives for all personnel working in a company  Centralization: Balance between the hierarchy and division of power  Scalar Chain: Hierarchy steps should be from top to the lowest  Unity of Command: More than one boss brings a conflict of interest and confusion  Order: the positive atmosphere in the workplace boosts productivity 3. Max Weber’s Bureaucratic Theory of Management: Weber made a distinction between authority and power. Weber believed that power educes obedience through force or the threat of force which induces individuals to adhere to regulations. According to Max Weber, there are three types of power in an organization:-  Traditional Power  Charismatic Power  Bureaucratic Power or Legal Power. Features of Bureaucracy:  Division of Labor.  Formal Hierarchical Structure.  Selection based on Technical Expertise.  Management by Rules.  Written Documents.  Only Legal Power is Important.  Formal and Impersonal relations. PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 22  BBA SEM 1 -PRINCIPLES OF MANAGEMENT 2. BEHAVIORAL MANAGEMENT THEORY Maslow’s Hierarchy of Needs In his 1943 paper “A Theory of Human Motivation,” psychologist Abraham Maslow proposed what is considered the classic theory of needs: Maslow’s Hierarchy of Needs. He proposed that people are motivated by five categories of needs: physiological, safety, love, esteem, and self-actualization. These needs are represented as a pyramid, with basic physiological needs such as food, water and shelter at the base and the need for self- actualization at the top. Maslow further classified the bottom four levels of the pyramid “deficiency needs,” noting that “a person does not feel anything if they are met, but becomes anxious if they are not.” He classified the fifth level “a ‘growth need’ because it enables a person to ‘self-actualize’ or reach his fullest potential as a human being. PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 23  BBA SEM 1 -PRINCIPLES OF MANAGEMENT Maslow proposed that human behavior is purposeful and is motivated by the desire to satisfy needs and that lower-level needs must be met before a person can focus on the next level of needs. A need that is satisfied no longer motivates. An unmet need is a primary motivator. Thus, Maslow’s hierarchy provides managers with a visual representation of employee motivation. 3. MODERN APPROACHES TO MANAGEMENT The modern approaches to management look at organizational management in the current context. They take a holistic approach and look at organizations as a collection of interrelated parts influenced by both internal dynamics and also the larger external environment. These modern management theories have played a significant role in the evolution of management studies. Besides the classical and behavioral approaches to management, there are certain modern approaches to management, like the systems theory and the contingency theory. These two approaches have significantly shaped modern management thought. I. Systems Theory of Management According to the systems view, an organization cannot exist in isolation. To function effectively the Management must also consider external environmental factors influencing the organization. The two basic types of systems are closed and open systems. Open System: A system that interacts with this environment is regarded as an open system. All organizations are open systems as they are dependent on interactions with their outside environment, whether it is a new product decision or a decision related to the employees of the organization, the organization must consider the role and influence of environmental factors. Closed System: A system that does not interact with its environment is considered a closed system. A closed system is a relatively self-contained, a self-maintaining unit that has little interaction or exchange with its environment. An assembly line could be treated as a closed system as its day-to-day functioning is not dependent on external forces. PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 24  BBA SEM 1 -PRINCIPLES OF MANAGEMENT An organizational system can be further divided into four major components:  Inputs: Inputs are what is put into a system like money, materials, men, machines, and other informational sources. These inputs are required to produce goods and services.  Transformation Process: Transformation processes or throughputs are managerial and technical abilities that are used to convert inputs into outputs  Outputs: Outputs are the products, services, profits, and other results produced by the organization.  Feedback: Feedback refers to information about the outcomes and the position of the organization relative to the environment in which it operates. II. Contingency Theory A contingency approach to management is based on the assumption that the optimal course of management action is contingent (dependent) upon the internal and external situation. Management actions must change and adapt to specific situations as there is no best way to organize a corporation. The contingency approach provides a framework for solving problems based upon the environmental conditions rather than prescribing a specific solution. This theory is also known as the situational theory. It has been widely used in recent years to integrate management theory with the increasing complexity of organizations. When managers, consultants, and researchers tried to apply the concepts of the major schools for management to real-life situations they realized that there is no one best way to manage all situations. Managers, need to make business decisions only after carefully considering all situational factors. According to the contingency approach, the task of managers is to identify based on the particular situation and time which decision best will contribute to the attainment of management goals. Hence this theory holds good for several management situations. ***********************@@@@@@@@@@@@*********************** PREPARED BY: DR. J.K.VASAVADA (SCHOOL OF COM. & MGT.) Page 25