Principles & Practice of Management PDF

PRINCIPLES & PRACTICE OF Dr. Sushant Kishore Waghmare MANAGEMENT  MODULE-I: MANAGEMENT, MANAGER AND MANAGEMENT THEORIES INTRODUCTION MANAGEMENT The concept of management has acquired special significance in the present competitive and complex business world. Effi...

PRINCIPLES & PRACTICE OF Dr. Sushant Kishore Waghmare MANAGEMENT  MODULE-I: MANAGEMENT, MANAGER AND MANAGEMENT THEORIES INTRODUCTION MANAGEMENT The concept of management has acquired special significance in the present competitive and complex business world. Efficient and purposeful management is absolutely essential for the survival of a business unit. Management concept is comprehensive and covers all aspects of business. In simple words, management means utilizing available resources in the best possible manner and also for achieving well defined objectives. It is a distinct and dynamic process involving use of different resources for achieving well defined objectives 6MS Men Market Money s 6Ms Method Materia s ls Machin es MANAGEMENT EXPLAINED Management is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively. Management comprises planning, organizing, staffing, leading, coordinating and controlling an organization (a group of one or more people or entities) or effort for the purpose of accomplishing a goal. Resourcing encompasses the development and manipulation of human resources, financial resources, technological resources and natural resources. Management is essential for the conduct of business activity in an orderly manner. It is a vital function concerned with all aspects of working of an enterprise. MAJOR DEFINITIONS According to Harold Koontz, "Management is the art of getting things done through and with people in formally organized groups". According to Henry Fayol, "To manage is to forecast and to plan, to organise, 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". MANAG Replication Systematic EMENT body of is possible knowledge SCIENC E Scientific principles are derived on the basis Universal of logical Validity and scientific observation s Principles are based on repeated experiments MANAGEMENT Existence ART of theoretic al knowledg e Personalis ed applicatio n Based on Practice and creativity MANAGEMENT PROFESSION Presence Well of defined Restricte professio Body of d Entry nal knowled associati ge Existenc ons e of Service ethical Motive codes  MANAGEMENT FEATURES Group Activity All Pervasive Continuous Integrates Human, Goal- Physical Oriented and Financial Resources  LEVELS OF MANAGEMENT MANAGEMENT LEVELS Top Middle Low TOP MANAGEMENT Board of directors, chief executive or managing director. Ultimate source of authority and it manages goals and policies for an enterprise. Devotes more time on planning and coordinating functions. The role of the top management can be summarized as follows -  Lays down the objectives and broad policies of the enterprise.  Issues necessary instructions for preparation of department budgets, procedures, schedules etc.  Prepares strategic plans & policies for the enterprise.  Appoints the executive for middle level i.e. departmental managers.  Controls & coordinates the activities of all the departments.  Maintains contact with the outside world.  Provides guidance and direction.  Responsible towards the shareholders for the performance of the enterprise.  MIDDLE MANAGEMENT The branch managers and departmental managers constitute middle level. They are responsible to the top management for the functioning of their department. They devote more time to organizational and directional functions. In small organization, there is only one layer of middle level of management but in big enterprises, there may be senior and junior middle level management. Their role can be emphasized as - Execute the plans of the organization in accordance with the policies and directives of the top management. Make plans for the sub-units of the organization. Participate in employment & training of lower level management. Interpret and explain policies from top level management to lower level. Responsible for coordinating the activities within the division or department Sends important reports and other important data to top level management Evaluate performance of junior managers. Responsible for inspiring lower level managers towards better performance  LOW MANAGEMENT Supervisory / operative level of management. Consists of supervisors, foreman, section officers, superintendent etc. Their activities include -  Assigning of jobs and tasks to various workers.  Guide and instruct workers for day to day activities.  Responsible for the quality as well as quantity of production.  Entrusted with the responsibility of maintaining good relation in the organization.  Communicate workers problems, suggestions, and recommendatory appeals etc to the higher level and higher level goals and objectives to the workers.  Solve the grievances of the workers.  Supervise & guide the sub-ordinates.  Responsible for providing training to the workers.  Arrange necessary materials, machines, tools etc for getting the things done.  Prepare periodical reports about the performance of the workers.  Ensure discipline in the enterprise.  Motivate workers.  Image builders of the enterprise because they are in direct contact with the workers. LEVELS OF SKILLS WHAT DO YOU NEED TO MAKE THIS? MANAGERIAL SKILLS Technical skills: Technical skills that reflect both an understanding of and a proficiency in a specialized field. For example, a manager may have technical skills in accounting, finance, engineering, manufacturing, or computer science. Human Skills: Human skills are skills associated with manager’s ability to work well with others, both as a member of a group and as a leader who gets things done through other. Conceptual Skills: Conceptual skills related to the ability to visualize the organization as a whole, discern interrelationships among organizational parts, and understand how the organization fits into the wider context of the industry, community, and world. Conceptual skills, coupled with technical skills, human skills and knowledge base, are important ingredients in organizational performance. Design Skills: It is the ability to solve the problems in ways that will benefit the enterprise. Managers must be able to solve the problems. MANAGEMENT V. ADMINISTRATION Functions Management Administration Meaning Management is an art of It is concerned with formulation of getting things done through broad objectives, plans & policies. others by directing their efforts towards achievement of pre- determined goals. Nature Management is an executing Administration is a decision- function. making function. Nature Management decides who Administration decides what is to should do it & how should he be done & when it is to be done. do it. Function Management is a doing Administration is a thinking function because managers get function because plans & policies work done under their are determined under it. supervision. Skills & Technical and Human skill Conceptual and Human skills Levels Middle & lower level function Conceptual and Human skills Basis Management Administration Applicabil It is applicable to It is applicable to non- ity business concerns i.e. business concerns i.e. clubs, profit-making schools, hospitals etc. organization. Nature The management The administration is decisions are influenced influenced by public opinion, by the values, opinions, govt. policies, religious beliefs & decisions of the organizations, customs etc. managers. Status Management constitutes Administration represents the employees of the owners of the enterprise organization who are who earn return on their paid remuneration (in the capital invested & profits in form of salaries & the form of dividend. ROLE OF MANAGER HENRY MINZT BERG Interperso Figurehead Leader nal Liasion Monitor Manage Informatio nal Disseminator r Spokesperson Entrepreneur Decisional Negotiator Resource Allocator Disturbance Handler INTERPERSONAL ROLES Leader – Responsible for staffing, training, and associated duties. Figurehead – The symbolic head of the organization. Liaison – Maintains the communication between all contacts and informers that compose the organizational network INFORMATIONAL ROLES Related to collecting, receiving, and disseminating information. Monitor – Personally seek and receive information, to be able to understand the organization. Disseminator – Transmits all import information received from outsiders to the members of the organization. Spokesperson – On the contrary to the above role, here the manager transmits the organization’s plans, policies and actions to outsiders.  DECISIONAL ROLES Roles that revolve around making choices. Entrepreneur – Seeks opportunities. Basically they search for change, respond to it, and exploit it. Negotiator – Represents the organization at major negotiations. Resource Allocator – Makes or approves all significant decisions related to the allocation of resources. Disturbance Handler – Responsible for corrective action when the organization faces disturbances. THEORIES OF MANAGEMENT  Theories Neo- Classical Modern Classical Human Scientific Relations Systems Movement Gilbreth & Hawthorne Quantitative Gantt Experiment Administrati Chester Contingenc ve Theory Bernard y Total Quality Bureaucrati Mary Parker Managemen c Theory Follett t CLASSICAL THEORIES F.W. TAYLOR-SCIENTIFIC MANAGEMENT THEORY PART 1 Considered as “The Father of Scientific Management” Wrote “The Principles of Scientific Management” in 1911. Raised from labourer to chief engineer within 6 years. Faced soldiering problem – practice of employees deliberately working at pace slower than their capabilities. F.W. TAYLOR-SCIENTIFIC MANAGEMENT THEORY PART 2 Scientific management propounded by Taylor emphasizes: Need for developing a scientific way of performing each job. Training & preparing workers to perform that particular job. Establishing harmonious relations between management & workers so that the job is performed in the desired way. Two managerial practices from Taylor’s approach are:  Piece-Rate Incentive System – maximum pieces produced incentives received accordingly.  Time-and-Motion study – jobs are broken down into various small tasks or motions & unnecessary motions are removed to find out the best way of doing a job.  SCIENTIFIC MANAGEMENT Divide Ensure work Science Train most Pay between not Rule Employe efficient Based on Manager of Thumb es way is Results s and used Labour  FRANK & LILLIAN GILBRETH Frank Gilbreth (1868-1924) is considered as the “Father of Motion Study”. Motion study involves finding out the best sequence & minimum number of motions needed to complete a task. Both were mainly involved in exploring new ways for eliminating unnecessary motions & reducing work fatigue. Gilbreths devised classification scheme to label 17 basic hand motions of workers such as “search, select, position & hold” called as “therbligs”. Frank Gilbreth is best known for his experiment in reducing the number of motions in bricklaying. By analyzing brick layers job, he reduced the number of motions in bricklaying TIME & MOTION STUDY HENRY LAURENCE GANTT He was a close associate of Taylor. Remembered for his work on the task-and-bonus system & the Gantt Chart. Under this, if worker completed the work fast in less than standard time, he received bonus. Introduced incentive plan for foremen, who would be paid bonus for every worker who reached daily standard & would receive extra bonus if all workers reached daily standard. Chart compares actual & planned performance. Indicates the production in terms of time rather than quantity. Horizontal axis – time, work scheduled & work completed. Vertical axis – individuals & machines assigned. GANTT CHARTS BUREAUCRATIC MANAGEMENT Weber believed that bureaucracy was the most efficient way to set up and manage an organization, and absolutely necessary for larger companies to achieve maximum productivity with many employees and tasks. Overall, Weber's ideal bureaucracy favors efficiency, uniformity and a clear distribution of power. He argued that bureaucracy constitutes the most efficient and rational way in which human activity can be organized and that systematic processes and organized hierarchies are necessary to maintain order, to maximize efficiency, and to eliminate favoritism. Major characteristics of Weber’s Ideal Bureaucracy Work specialization & division of labour Abstract rules & regulations Impersonality of managers Hierarchy of organization structure  Hierarchic al Managem ent Structure Impartialit Division y of Labour Bureaucracy Formal Formal Selection Rules Process Career Orientatio n HENRI FAYOL’S ADMINISTRATIVE MANAGEMENT This theory focuses on principles that could be used by managers to coordinate the internal activities of organizations. Henri Fayol, also known as the ‘father of modern management theory’ gave a new perception of the concept of management. He introduced a general theory that can be applied to all levels of management and every department. The Fayol theory is practiced by the managers to organize and regulate the internal activities of an organization. He concentrated on accomplishing managerial efficiency. BUSINESS OPERATIONS Technical – Commercial – Financial – search producing & buying, selling & for & optimal use manufacturing exchange. of capital. products. Accounting – recording & Managerial – taking stack of Security – planning, costs, profits & protecting organizing, liabilities, employees & commanding, maintaining property. coordinating & balance sheets & controlling. compiling statistics. QUIZ WHAT ARE THEY DOING? HOW DO YOU INTERPRET THIS? WHAT COMES TO YOUR MIND? WHAT DO YOU INTERPRET? WHAT’S HAPPENING HERE? HOW DOES THIS MAKE YOU FEEL? WHAT DOES THIS SIGNIFY? WHAT IS HE DOING? WHO DO WE FOLLOW? WHAT DOES THE WORLD DEMAND? WHAT WILL HAPPEN NOW? DO YOU RECOGNIZE THIS PERSON? WHAT WOULD YOU CALL THESE PEOPLE?  14 PRINCIPLES OF MANAGEMENT BY HENRI FAYOL Division PART of Work: 1 that segregating work in the workforce Henri believed amongst the worker will enhance the quality of the product. Similarly, he also concluded that the division of work improves the productivity, efficiency, accuracy and speed of the workers. This principle is appropriate for both the managerial as well as a technical work level Authority and Responsibility: These are the two key aspects of management. Authority facilitates the management to work efficiently, and responsibility makes them responsible for the work done under their guidance or leadership. Discipline: Without discipline, nothing can be accomplished. It is the core value for any project or any management. Good performance and sensible interrelation make the management job easy and comprehensive. Employees good behaviour also helps them smoothly build and progress in their professional careers. Unity of Command: This means an employee should have only one boss and follow his command. If an employee has to follow more than one boss, there begins a conflict of interest and can create confusion  14 PRINCIPLES OF MANAGEMENT BY HENRI FAYOL PART 2 Unity of Direction: Whoever is engaged in the same activity should have a unified goal. This means all the person working in a company should have one goal and motive which will make the work easier and achieve the set goal easily. Subordination of Individual Interest: This indicates a company should work unitedly towards the interest of a company rather than personal interest. Be subordinate to the purposes of an organization. This refers to the whole chain of command in a company. Remuneration: This plays an important role in motivating the workers of a company. Remuneration can be monetary or non-monetary. However, it should be according to an individual’s efforts they have made. Centralization: In any company, the management or any authority responsible for the decision-making process should be neutral. However, this depends on the size of an organization. Henri Fayol stressed on the point that there should be a balance between the hierarchy and division of power. 14 PRINCIPLES OF MANAGEMENT BY HENRI FAYOL PART 3 Scalar Chain: Fayol on this principle highlights that the hierarchy steps should be from the top to the lowest. This is necessary so that every employee knows their immediate senior also they should be able to contact any, if needed. Order: A company should maintain a well-defined work order to have a favourable work culture. The positive atmosphere in the workplace will boost more positive productivity. Equity: All employees should be treated equally and respectfully. It’s the responsibility of a manager that no employees face discrimination 14 PRINCIPLES OF MANAGEMENT BY HENRI FAYOL PART 4 Stability: An employee delivers the best if they feel secure in their job. It is the duty of the management to offer job security to their employees. Initiative: The management should support and encourage the employees to take initiatives in an organization. It will help them to increase their interest and make them work. Esprit de Corps: It is the responsibility of the management to motivate their employees and be supportive of each other regularly. Developing trust and mutual understanding will lead to a positive outcome and work environment. NEO-CLASSICAL NEO-CLASSICAL CONTRIBUTION Neoclassical theory has made significant contribution to an understanding of human behavior at work and in organization. It has generated awareness of the overwhelming role of human factor in industry. This approach has given new ideas and techniques for better understanding of human behavior. The basic features of neoclassical approach are: The business organization is a social system. Human factor is the most important element in the social system. It revealed the importance of social and psychological factors in determining worker productivity and satisfaction What do you mean by MOTIVATION? MARY PARKER FOLLET PART- 1 Mary Parker Follett, writer, social worker, political theorist and organizational consultant, has been called "the woman who invented management." Follett never managed a for-profit enterprise herself, yet her keen insight into the dynamics of organizations and groups gave her theories widespread appeal. She advocated a "pull" rather than "push" approach to employee motivation, differentiated between "power over" and "power with," and postulated insightful ideas on negotiation, conflict resolution and power sharing which helped shape modern management theory. MARY PARKER FOLLET PART- 2 The Mary Parker Follett Theory of Management is marked by such principles as the following:  Conflict resolution through Integration (i.e., identifying and meeting each party's underlying and often compatible need, as opposed to attempting to meet the frequently-incompatible expressed desire of each) often results in a win-win situation.  In Mary Parker Follett leadership theory, genuine power is not "coercive" ("power over") but "coactive" ("power with").  True leaders, according to Follett's theory, "create group power, rather than expressing personal power. What do you DESIRE? MASLOW'S HIERARCHY OF NEEDS Maslow's hierarchy of needs is a motivational theory in psychology comprising a five-tier model of human needs, often depicted as hierarchical levels within a pyramid. From the bottom of the hierarchy upwards, the needs are: physiological, safety, love, esteem, and self-actualization. Maslow (1943, 1954) stated that people are motivated to achieve certain needs and that some needs take precedence over others. Our most basic need is for physical survival, and this will be the first thing that motivates our behavior. Once that level is fulfilled the next level up is what motivates us, and so on MASLOW’S HIERARCHY Self- Actualization Esteem Social Safety Physiological  MASLOW’S NEEDS EXPLAINED Physiological needs - PART-1 these are biological requirements for human survival, e.g. air, food, drink, shelter, clothing, warmth, sleep. If these needs are not satisfied the human body cannot function optimally. Maslow considered physiological needs the most important as all the other needs become secondary until these needs are met. Safety needs - Once an individual’s physiological needs are satisfied, the needs for security and safety become salient. People want to experience order, predictability and control in their lives. These needs can be fulfilled by the family and society (e.g. police, schools, business and medical care). For example, emotional security, financial security (e.g. employment, social welfare), law and order, freedom from fear, social stability, property, health and wellbeing (e.g. safety against accidents and injury). Love and belongingness needs - after physiological and safety needs have been fulfilled, the third level of human needs is social and involves feelings of belongingness. The need for interpersonal relationships motivates behavior Examples include friendship, intimacy, trust, and acceptance, receiving and giving affection and love. Affiliating, being part of a group (family, friends, work) MASLOW’S NEEDS EXPLAINED PART-2 Esteem needs - are the fourth level in Maslow’s hierarchy - which Maslow classified into two categories: (i) esteem for oneself (dignity, achievement, mastery, independence) and (ii) the desire for reputation or respect from others (e.g., status, prestige). Maslow indicated that the need for respect or reputation is most important for children and adolescents and precedes real self- esteem or dignity. Self-actualization needs - are the highest level in Maslow's hierarchy, and refer to the realization of a person's potential, self- fulfillment, seeking personal growth and peak experiences. Maslow (1943) describes this level as the desire to accomplish everything that one can, to become the most that one can be. What kind of person are YOU? MCGREGOR’S X & Y THEORY McGregor believed that managers' basic beliefs have a dominant influence on the way that organizations are run. Managers' assumptions about the behavior of people are central to this. McGregor argued that these assumptions fall into two broad categories - Theory X and Theory Y. These findings were detailed in The Human Side of Enterprise, first published in 1960. Theory X and Theory Y describe two views of people at work and may be used to describe two opposing management styles. THEORY X The traditional view of direction and control Theory X is based on the assumptions that: 1. The average human being has an inherent dislike of work and will avoid it if possible. 2. Because of this human dislike of work, most people must be coerced, controlled, directed, and threatened with punishment to get them to put forth adequate effort toward the achievement of organizational objectives. 3. The average human being prefers to be directed, wishes to avoid responsibility, has relatively little ambition, and wants security above all. THEORY X MANAGEMENT STYLE A Theory X management style therefore requires close, firm supervision with clearly specified tasks and the threat of punishment or the promise of greater pay as motivating factors. A manager working under these assumptions will employ autocratic controls which can lead to mistrust and resentment from those they manage. McGregor acknowledges that the `carrot and stick' approach can have a place, but will not work when the needs of people are predominantly social and egoistic. Objective is to persuade people to be docile, to do what they are told in exchange for reward or escape from punishment, is presented as flawed and in need of re-evaluation. THEORY Y The integration of individual and organizational goals Theory Y is based on the assumptions that:  The expenditure of physical and mental effort in work is as natural as play or rest. The average human being does not inherently dislike work. Depending upon controllable conditions, work may be a source of satisfaction, or a source of punishment.  External control and the threat of punishment are not the only means for bringing about effort toward organizational objectives. People will exercise self-direction and self-control in the service of objectives to which they are committed.  Commitment to objectives is a function of the rewards associated with their achievement. The most significant of such rewards, e.g. the satisfaction of ego and self-actualisation needs, can be direct products of effort directed towards organizational objectives.  The average human being learns, under proper conditions, not only to accept but to seek responsibility. Avoidance of responsibility, lack of ambition, and emphasis on security are generally consequences of experience, not inherent human characteristics.  The capacity to exercise a relatively high degree of imagination, ingenuity, and creativity in the solution of organizational problems is widely, not narrowly, distributed in the population  Under the conditions of modern industrial life, the intellectual potentialities of the average human being are only partially utilized THEORY Y-MANAGEMENT STYLE Theory Y assumptions can lead to more cooperative relationships between managers and workers. A Theory Y management style seeks to establish a working environment in which the personal needs and objectives of individuals can relate to, and harmonize with, the objectives of the organization. In The Human Side of Enterprise McGregor recognized that Theory Y was not a panacea for all ills. By highlighting Theory Y, he hoped instead to persuade managers to abandon the limiting assumptions of Theory X and consider using the techniques suggested by Theory Y. What motivates PEOPLE? ELTON MAYO - INTRODUCTION Elton Mayo (1880-1949) is recommended as the Father of Human Relations School. He introduced human relations approach to management thought. His contribution to the development of management thought is unique and is also treated as human relations approach to management. It was Mayo who led the team for conducting the study at Western Electric's Hawthorne Plant (1927-1932) to evaluate the attributes and psychological reactions of workers in on- the-job situations. CONCLUSIONS FROM HAWTHORNE EXPERIEMENTS The amount of work to be done by a worker is not determined by his physical capacity but by the social norms. Non-economic rewards play a significant role in influencing the behavior of the workers. Generally the workers do not react as individuals, but as members of a group. Informal leaders play an important part in setting and enforcing the group norm. IMPACT ON INDUSTRY There was a clear-cut cause and effect relationship between the physical work, environment, the well-being and productivity of the worker. Also, there was relationship between production and given condition of ventilation, temperature, lighting and other physical working conditions and wage incentives It had been believed that – improper job design, fatigue and other conditions of work mainly block efficiency PHASES Illumination Experiment (1924-27) Relay Assembly Test Room Experiment (1927) Mass Interviewing Programme (1928-31) Bank Wiring Experiment (1931-32) ILLUMINATION EXPERIMENT (1924-27) It was done to determine the effect of different levels of illumination on workers’ productivity. In this experiment, two group of female workers were located in separate rooms, each group performing the same task. The rooms were equally illuminated with stabilized room temperature, humidity, etc. Slowly the conditions of work were changed to mark change in production. After a period of one-and-a half year, it was concluded that – illumination doesn’t affect productivity of workers. RELAY ASSEMBLY TEST ROOM EXPERIMENT (1927) This experiment was conducted to observe the effects of various changes in working conditions on the workers’ output and morale. MASS INTERVIEWING PROGRAMME (1928-31) It was launched to explore the employees’ feelings (i.e., human attitudes and sentiments) by the worker’s social group (informal organization). The workers were asked to express freely and frankly their likes and dislike on the programmes and policies of the management, working conditions, and behavior of their boss with workers, etc. After a few days there was a change in the attitude of the workers, however no reforms were introduced. That change was seen because of the following reasons:- The workers thought that the working conditions were changed because of their complaints. They also felt that the wages were better although the wage scale remained at the same level. A WEIRD PHENOMENON… After interviewing 21, 126 workers, and analyzing their complaints, it was found that – there was no correlation between the nature of complaints and the facts. The experiment succeeded in identifying the following three aspects:- Workers feel elated if they were allowed to express freely. They develop a feeling that the conditions in the environment were changed to the better although no such change took place. Subordinates should be allowed to comment freely about their supervisor. It is difficult to understand the real problems, personal feelings and sentiments of the workers derived from both an