MODULE 1

INTRODUCTION TO MANAGEMENT
Introduction
People are often found busy because they are engaged in a number of activities. When these
activities are motivated towards making profit or gain, they are called business activities.
Thus, business means engaging in business activities. Business includes all those activities
that are concerned with production or purchase of goods and services. The object of these
activities is to make profit.
Management plays a pivotal role in the operation of business enterprises. A business is
composed of seven elements, viz., men, materials, money, machines, methods, markets and
management. Of these seven Ms, ‘Management’ stands at the apex of the enterprise pyramid
and it determines and controls all other factors of business operations.
Meaning
Management is a general term. It refers to the organising and directing of human activities for
attaining a definite objective. It is a process through which all the resources are organised and
utilised to attain maximum efficiency. In the words of Dr. James Lundy, “it is principally a
task of planning, co-ordinating, motivating and controlling the efforts of others towards the
specific objectives.”
Definitions of Management
In management literature, we find a large number of definitions of management given by
different scholars who had different orientations. Some of these definitions are given below:
1. Harold Koontz: “Management is the art of getting things done through and with
people in formally organised groups”.
2. Henry Fayol : “To manage is to forecast and to plan, to organise, to command, to co-
ordinate and to control.”
3. J.N. Schulze: “Management is the force which leads, guides and directs an
organisation in the accomplishment of a pre-determined object.”
4. S. George: “Management consists of getting things done through others. Manager is
one who accomplishes the objectives by directing the efforts of others.”
Management has been defined in different senses emphasising different aspects of
management. In its broad sense, management may include the following:
(a) Formulation of plans, policies and objectives,
(b) Securing men, material, machinery, money and methods for this achievement,
(c) Putting all of them into operation,
(d) Directing and motivating the men at work,
(e) Supervising and controlling their performance, and
(f) Providing maximum satisfaction and service to employer, employees and public at large
Business Management
Human activities may be carried out with profit motive or service motive. When human
activities are motivated towards making profit they are called business activities. The
organising as well as directing of business activities is known as business management. In
other words, the management of business organisations or business units is called business
management.
Non-business Management
Human activities may be carried out with service motive also. The organisations which
engage in service activities are called non- business organisations. eg. hospitals, clubs,
associations, educational institutions, etc. The process of organising, directing and controlling
the activities of non-business organisations is called management of non-business
organisations or non-business management.
Nature and Characteristics of Management
1. Multidisciplinary
Management is basically multidisciplinary. It draws knowledge and concepts from various
disciplines like sociology, psychology, economics, ecology, statistics, operations research,
etc. Management integrates ideas and concepts from these disciplines and uses them for
improving the efficiency of the organisation.
2. Goal-oriented
Management aims at achieving some definite goals or objectives. It co-ordinates the efforts of
workers to achieve the goals of the organisation. The success of management is measured by
the extent to which the organisational goals are achieved. The organisational goals must be
well defined and properly understood by the managers of various levels.
3. Economic Resource
Management is a factor of production. It is the force which assembles and integrates other
factors of production like labour, capital and material. These factors do not by themselves
ensure production. They require management to produce goods and services.
4. Dynamic Nature of Principles
The principles of management are flexible in nature. They change with the changes in the
environment in which an organisation exists. Because of the continuous development in the
field, many of the old principles are replaced by new principles. In fact, there is nothing
permanent in the field of management.
5. System of Authority
Authority is the power to get the work done from others and to compel them to work in a
certain manner. Management cannot perform in the absence of authority. It is a rule-making
and rule- enforcing body. There is a chain of authority and responsibility among people
working at different levels of the organisation.
6. Universal Application
Management is applicable in all types of organisations. Wherever there is human activity,
there is management. The basic principles of management have universal application. In the
words of Henry Fayol, “Be it a case of commerce, politics, religion, war... in every concern
there is management function to be performed.”
7. A Science and an Art
Management is a science because it has developed certain principles which are of universal
application. But, the results of management depend upon the personal skills of managers and
in this sense, management is an art. Thus, management is both a science and an art. However,
the science of management is not as exact as physical science. It may better be called as a
social science.
8. A Profession
Management is, now, recognised as a profession. It has a systematic and specialised body of
knowledge consisting of principles, techniques and laws. It can be taught as a separate
discipline or subject. Now, due to the advent of large scale business, the management is
entrusted in the hands of professional managers.
9. Results Through Others
The managers cannot do everything themselves. They must have the necessary ability and
skills to get work done through the efforts of others. They must motivate the subordinates for
the accomplishment of the tasks assigned to them.
10. A Social Process
Management is a social process which consists of getting things done through others. The
management has to direct, co-ordinate and regulate the efforts of the human beings to achieve
the desired results. In this sense, management is regarded as a social process. It also has a
social obligation to make optimum use of scarce resources for the benefit of the society.
11. Intangible Force
Management is an unseen or invisible force. It can not be seen but its presence can be felt
everywhere in the form of results. However, the managers who carry out the managerial
functions are tangible and visible.
12. A Separate Identity
Management is a separate identity. It is the scientific method of getting things done through
and with the people. But the identity of the ‘Thinkers’ is quite different from the identity of
the ‘Doers’.
OBJECTIVES OF MANAGEMENT
1. To ensure the effective carrying out of work smoothly in an organisation.
2. To organise the effective campaign of work.
3. To utilise the resources economically.
4. To assess and evaluate the personnel for work.
5. To improve the performance of each and every factor of production.
6. To draft policies for promoting industrial peace.
7. To provide for expansion of business.
8. To prepare plans for future development.
9. To promote economic development.
10. To maintain a proper environment to attract specialists in various fields.
Scope and Functional Areas of Management
It is difficult to define precisely the scope of management. It is an all pervasive function since
it is required in all types of organised endeavour. Management process consists of several
functions or activities. These activities may be classified as managerial functions and
organisational functions. A distinction should be made between the two. Organisational
functions differ from organisation to organisation depending upon on their nature, while
managerial functions are common to all.

1. Production Management,
2. Marketing Management,
3. Financial Management,
4. Personnel Management, and
5. Office Management.
These areas have their own organisation, policies, procedures and sub-activities.
1. Production Management
Production management refers to the management of the production function of an
organisation. It includes the production of the right goods, in right quantity, at the right time
and at the right cost. It consists of the following activities:-
a) designing the product,
b) location and layout of plant and buildings,
c) operation of purchase and storage of materials,
d) planning and control of factory operations,
e) repairs and maintenance,
f) inventory control and quality control, and
g) research and development.
2. Marketing Management
Marketing management refers to the identification of consumers’ need and supplying them
the goods and services. It involves the following activities:-
a) Marketing research to determine the needs and expectations of consumers,
b) Planning and developing suitable products,
c) Setting appropriate prices,
d) Selecting the right channels of distribution, and
e) Promotional activities like, advertising and salesmanship.
3. Financial Management
Financial management ensures the right amount and type of funds to business at the right
time and at reasonable cost. It comprises the following activities:-
a) estimating both the long-term and short-term capital requirements of business,
b) selecting theappropriate sources of funds,
c) raising therequired funds at the right time,
d) ensuring proper utilisation and allocation of raised funds,
e) ensuring a fair return to investors,
f) administration of earnings, and
g) laying down a proper dividend policy
4. Personnel Management
Personnel management deals with the effective control and use of manpower. The success
of an enterprise depends on the effective management of human resources. It consists of
the following activities:
a) Manpower planning,
b) Recruitment,
c) Selection,
d) Training and development of employees,
e) Appraisal of performance,
f) Compensation and promotion,
g) Employee welfare services and benefits, and
h) Personnel records and research.

5. Office Management

Office Management refers to the technique of planning, co-ordinating and controlling office
activities with a view to achieve common business objectives. It includes the following
activities:-
a) Planning the office activities,
b) Co-ordinating and controlling office activities,
c) Organising the office work so as to achieve the goals of business.
d) Working as a service department for other departments, and
e) Providing the required information to various departments in time.

Levels of Management
The term ‘Levels of Management’ stands for the arranged managerial positions in an
organisation. The number of levels of management increases when the size of the
organisation and work force increases. But, it is desirable to restrict the number of levels of
management. According to some scholars, management is a three-tier activity. The top-tier
centres round the determination of mission, objectives and policies, the middle-tier is
concerned with the implementation of the policies and the lower-tier actively assists in the
achievement of goals To achieve the co-ordination between the different parts of the
organisation.
 Importance of Management

Management is the art of securing maximum prosperity with minimum effort.

Management has been significant to the daily lives of people in various ways.
Whenever there is an organised group of people working towards some common
goals, some type of management becomes essential. In the words of Koontz and
O’Donnell, “There is no more important area of human activity than management
since its task is that of getting things done through others.” There is no substitute for
management in modern organisations.

The importance of management will be more clear by going through the following
points:-
1. Determination of Objectives
The management determines the objectives of an organisation and communicates
them to all its employees. An organisation cannot succeed in its mission unless its
objectives are identified and well- defined.
2. Achievement of Objectives
Management provides efficient leadership to the organisation to achieve its objectives.
Managing is not a mere exercise of authority. It involves scientific thinking, direction
and control to ensure better results
3. Effective Use of Resources
Management tries to make effective use of resources. The resources are scarce in
nature. The effective use of resources increases the productivity which can lead the
business towards growth and prosperity.
4. Development of Resources
Management develops various resources. This is true with human as well as non-
human factors. Management improves the quality of lives of people in the society
through development of resources.
5. Incorporating Innovations
Changes occur very fast in both technology and social process. These changes need to
be incorporated to keep the organisations alive and efficient.
6. Integrating Various Interest Groups
In the case of a business organisation, there are various pressure groups like
shareholders, employees, government, etc. Management has to balance the pressure
from various interest groups.
7. 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.
8. Co-ordination of Human Efforts
Management provides leadership and guidance to the workers. It reconciles their
personal interests with the organisational objectives. This leads to better co-ordination
among human efforts.
9. Meeting Challenges of Changes
 Management keeps itself in touch with the current environment. It takes necessary
steps to ensure that the enterprise is able to meet the demands of changing
environment
10. Economic Development
According to Peter Drucker, “Management is the crucial factor in economic and social
development.” India is the best example for this point. There was no lack of human
and material resources in India, but certainly there was lack of managerial personnel
to exploit the resources properly for development.

Nature of Management Principles

The nature of management principles is different from that of physical sciences. The
management principles have the following distinctive features:
1. Universal
The principles of management are universal. They can be applied under all situations
and in all types of business and non-business organisations.
2. Dynamic
The management principles are flexible in nature. They are not rigid or static. They
change according to the environment and are even given the freedom to modify the
principles as per the needs of the organisation.
3. Relative
The principles are relative in nature. They are neither absolute nor stable for all times
to come. They are to be applied according to the requirements of the organisation.
4. Human nature
Human nature is very complex and unpredictable. So, management principles cannot
be applied uniformly in all cases.
5. General principles
Management principles must be applied very carefully depending on organisational
requirements and situational demands.
6. Lack of Unanimity
The principles of management lack unanimity. Different scholars suggested different
views on management. For instance Henry Fayol suggested ‘unity of command’
where one person is answerable to one boss. On the other hand, F.W. Taylor
advocated functional foreman-ship where one subordinate will be accountable to
many experts.

General Principles of Management

1. Division of Labour
The principle of division of labour is known as specialisation. It consists in dividing
the work among the various individuals in the organisation according to their aptitude,
skill, qualification and ability. When a person performs the same work again, he
becomes a specialist in that work. Division of labour leads to efficiency, reduces cost
and increases productivity.
2. Authority and responsibility
Authority means the right to give orders and the power to extract obedience. Without
proper authority management cannot discharge its duties. It is always accompanied by
responsibility. Responsibility refers to the obligation to perform the assigned task.
3. Discipline
It means the willingness on the part of the employees to obey the rules and procedures
of the organisation. Good discipline promotes team work among the workers. It helps
them to achieve the common objectives of the concern.
4. Unity of command
This principle means that each worker shall have only one supervisor. He shall receive
orders from him alone and he shall be accountable to him only. No worker can do his
best under two superiors. If there is unity of command, effective control can be
exercised in the organisation.
5. Unity of Direction
It means that there should be “only one head and one plan for groups of activities
having the same objectives.” That is, there should be only one plan of action for each
category of work. It should be carried out under the control of a single authority.
6. Subordination of Individual interest to the general interest
The management should give greater importance to the general interest of the concern
than to the interest of individuals. This can be achieved by eliminating personal
interest from the work of the concern. Thus, the common interest should always
prevail over individual interest
7. Remuneration
If employees are paid fair wages they will be satisfied. Then, they will be ready to co-
operate with the management. This improves the efficiency of labour also.
8. Centralisation
Management may be centralised or decentralised. If the authority is retained by the
higher management it is centralisation. On the other hand, if there is delegation of
authority to the subordinates it is decentralisation. Fayol advocated a centralised
management.
9. Scalar Chain
Scalar chain refers to the unbroken line of authority that exists from the top executive
to the lowest one. If the chain is clear from the top to the bottom, it will ensure the
smooth functioning of the concern. Every concern should have such a superior -
subordinate relationship. Then, it can identify the person who issues orders and fix the
responsibility upon the subordinate.
10. Order
This principle refers to the arrangement of things and persons. If the right man is
placed in the right place and the right thing in the right place the management can
achieve the best result from the concern.
11. Equity
It means that the management should be just and fair in its dealing with the
employees. This will ensure a cordial relationship between the management and the
employees.
12. Stability of Tenure of Personnel
Every worker should have security of job tenure. Tenure represents the terms and
conditions upon which a worker is appointed in the concern. It is the duty of the
management to create a feeling of security in the minds of the workers. It will lead to
better performance on the part of the employees
13. Initiative
Initiative means the ability to formulate original plans and execute them with free
mind and intellect. Management must encourage the workers to exercise their
initiative and intelligence.
14. Esprit de Corps
This principle refers to the development of a team spirit among the workers. It also
includes creating a feeling of ‘loyalty’ among the staff to achieve the objectives of the
concern. It promotes unity, increases loyalty and raises the efficiency of the
employees. This principle denotes the well known rule that “union is strength”.

Managerial Roles : Mintzberg Model

Managerial role stands for the specific pattern of behaviour associated with the
managerial task. Henry Mintzberg conducted a comprehensive study of the nature of
managerial roles in 1973. Based on his study of the activities of five practicing chief
executives, Mintzberg generalised his description of the nature of managerial work in
actual practice. His findings give a complete picture of what a manager actually does.
Mintzberg stressed that managing is an integrated activity and hence the managerial
roles are intertwined. Mintzberg identified ten basic roles performed by managers and
classified them under three heads : 1. Inter personal, 2. Informational and 3.
Decisional. While interpersonal roles deal with people, informational roles deal with
knowledge. Decisional roles are concerned with taking decisions which affect the
future of the organisation. The Managerial roles are as follows:
I. Interpersonal roles
1. As a figure head
In this role, a manager performs symbolic duties required by the stations of
his office. He represents the organisation at community events. He has to
sign various documents, make speeches, welcome
2. As a Leader
This role defines his relationship with his own subordinates. A manager
serves as a leader of the group. He trains, encourages, motivates, inspires,
remunerates, judges and guides his subordinates. A manager sets an
example, legitimises the powers of subordinates and brings their needs in
accord with those of his organisation.
3. As a Liaison
A manager acts as a liaison between outsiders and the organisation. He
maintains mutually beneficial relations with other organisations,
governments, industry groups etc.
II. Informational Roles
4. As a Monitor
A manager seeks and receives information about his organisation and the
outside environment. This information is collected through reports,
periodicals, personal contacts, observational tours etc. He observes,
collects and reviews data on the meeting of standards.
5. As a Disseminator
It involves transmitting information and judgement to the members of the
organisation. A manager regularly informs his subordinates about the goals
and direction of the organisation. He transmits information received from
outsiders and insiders to other members of the organisation. He forwards
mail and review sessions with his subordinates.
6. As a Spokesman
In this role, a manager speaks for his organisation. He lobbies and defends
his enterprise and transmits information to outsiders on organisation plans,
policies and actions. He conducts board meetings, handles mail and
engages in public relations. He transmits information through letters,
telephone calls or personal meetings.

III. Decisional Roles

A manager has to take decisions regarding sources of funds, arranging of various
inputs, marketing strategies etc. His decisional role includes the role of an
Entrepreneur, Disturbance Handler, Resource Allocator and Negotiator
7. As an Entrepreneur
As an entrepreneur, a manager has to initiate changes or to act as an agent of
change. He authorizes action, sets goals, formulates plans and discovers problems.
Being innovative he has to design improvement projects that direct and control
change in the organisation.
8. As a Disturbance Handler
A manager has to take charge when the organisation faces unexpected crises like a
strike, feud between subordinates, resignation of subordinates, loss of an
important customer etc. He handles conflicts, complaints and competitive actions
and maintains cordial relations in the organisation.
9. As a Resource Allocator
As a resource allocator, a manager approves budgets, schedules and programmes
and sets priorities. He allocates human, monetary and material resources. He looks
into the demands of various segments and take necessary actions.
10. As a Negotiator
 A manager bargains with customers, suppliers, dealers, trade union agents and
negotiates with them. The rates may be fixed with customer, the prices may be
negotiated with suppliers, the purchase of various assets may be negotiated with
manufactures. He also deals with the trade unions on various issues. There may be
other issues which require negotiations by the manager. Mintzberg model of
managerial roles describes what a manager does, but not what he should do. It also
provides significant insights
Functions of Management
The management of a business or non-business organisation has to perform various functions
for the achievement of pre- determined objectives. Many scholars on management have
discussed the functions of management. But, there is no unanimity among them regarding the
managerial functions.
Among those who tried to analyse the functions of management, Henry Fayol’s name is the
most outstanding. According to him “To manage is to forecast and plan, to organise, to
command, to co-ordinate and to control”. Thus, Fayol suggests the following five functions
for management: (1) Forecasting and planning, (2) Organising, (3) Commanding, (4) Co-
ordination, and (5) Control.
William Fox describes planning, organising and controlling as the organic functions of
management. Some scholars like Ernest Dale mention innovating as a separate function of
management. According to them, management involves the planning and introduction of new
schemes, systems, methods, goods and services. Innovation includes all these factors. But the
need for innovation arises from the comparison of existing methods and procedures.

Another authority in management, Mr. Gullick gave a formula word to indicate

the principal functions of management. According to him, management functions
may be indicated by the word PODSCORB wherein each letter indicates a
particular function as mentioned below:
P - Planning
O - Organising
D - Directing
S - Staffing
Co - Co-ordinating
R - Reporting
B – Budgeting
According to George Terry the functions of management are: (i) Planning, (ii)
Organisation, (iii) Motivation, and (iv) Control.
 The functions of management may be subdivided into two categories:
Functions of Management

Main Functions Subsidiary Functions

1 Planning 1 Communication
2 Organising 2 Decision-making
3 Staffing 3 Innovation
4 Directing
5 Co-ordination
6 Motivation
7 Control
The principal functions of management in most of the business and non-business
enterprises are as follows:
1. Planning
Planning is the most basic or primary function of management. It precedes all
other functions. Planning involves determining the objectives and selecting a
course of action to achieve them. It implies looking ahead and deciding in advance
what is to be done, when and where it is to be done, and how and by whom it is to
be done.
The function of planning includes: (1) determination of objectives, (2) forecasting
and choice of a course of action, (3) formulation of policies, programmes,
budgets, schedules etc. to achieve the objectives, and (4) laying down of
procedures and standards of performance. Planning enables an organisation to do
things in an orderly and efficient manner.
2. Organising
Organising is the process of establishing harmonious authority- responsibility
relationships among the members of the enterprise. It is the function of creating a
structure of duties and responsibilities.
The function of organising consists of the following:
a. determining and defining the activities needed to achieve the goals;
b. grouping the activities into convenient units;
c. assigning duties and activities to specific positions and people;
d. delegating authority to these positions and people;
e. defining and fixing responsibility for performance; and
f. establishing authority - responsibility relationships throughout the organisation.
3. Staffing
Staffing is the process of filling all positions in the organisation with qualified
personnel. It includes a large number of activities like manpower planning,
recruitment, selection, communication, participation, appraisal, counselling,
training, compensation, dismissal, integration and maintenance of employees.
4. Directing
Directing is the executive function of management as it is concerned with the
execution of plans and policies. It involves guiding, supervising, motivating and
leading the people towards the achievement of targeted performance.
The directing function includes the following activities:
a. issuing orders and instructions,
b. supervising people at work,
c. motivating the employees to work for certain objectives,
d. establishing communication with employees regarding plans, and
e. influencing the behaviour of employees.
5. Co-ordination
Co-ordination is the essence of management. It is the orderly synchronisation of
the efforts of the subordinates for achieving the goals of the organisation. Co-
ordination consists in unifying the activities of different individuals and groups for
the achievement of common objectives. It has the following features:
a. It is an orderly arrangement of group efforts.
b. It intends to secure unity of action towards common objectives.
c. It is needed at all levels of management.
d. It is the essence of managing.
6. Motivation
Motivation is a constructive force in management. A manager inspires the
subordinates to do what he wants them to do through motivation.
Motivation means inspiring the subordinates with a zeal to work for the
accomplishment objectives of the organisation. Different people are motivated by
different types of rewards. Some employees prefer financial incentives while
others prefer non-pecuniary incentives like job security, job enlargement, freedom
to work etc.
7. Control
 The function of control deals with taking corrective action if the results do not
confirm to plans. According to Henry Fayol “control is verifying whether
everything occurs in confirmity with the plan adopted, instructions issued and
principles established”.
The process of control involves the following steps:
a. Establishment of standards,
b. Measurement of performance,
c. Appraisal of performance, and
d. Taking corrective action
Subsidiary Functions
1. Communication
Communication is the exchange of ideas, facts, opinions of emotions by two or
more persons. It helps in securing the largest possible participation or consultation
in decision-making, planning and general administration. It provides democratic
character to managerial process and strengthens the morale of the people.
2. Decision-making
It is the most important function of management. A manager has to take numerous
decisions. It helps in the smooth running of the enterprise.
3. Innovation
Innovation relates to research and development, which is essential in this age of competition.
Big business units maintain Research and Development Departments to keep pace with
modern techniques.
Contributions of F.W. Taylor and Henry Fayol
Several management thinkers have made significant contributions to the evolution of
management thought. The outstanding contributors of management include F.W. Taylor and
Henry Fayol, Elton Mayo. Their contributions are discussed below:
F.W. TAYLOR (1856-1915)
Frederick Winston Taylor was the first person who insisted on the introduction of scientific
methods in management. He launched a new movement in 1910, which is known as
“Scientific Management”. Taylor is known as the ‘father of scientific management’
His ideas about management grew out of his wide-ranging experience in three companies
where he worked. He conducted several experiments in these companies. He found that the
main cause of general inefficiency and wastage in factories was ignorance on part of both
workers and management. He was convinced that there is a science for doing each job. He
made efforts to replace the primitive rule of thumb methods by modern scientific methods
based on investigation, analysis and measurement. He thought that there was ‘one best way’
of doing things applicable to all situations. Taylor defined management as “the art of knowing
exactly what you want men to do and seeing that they do it in the best and cheapest way.” He
published many papers and books. All his contributions were compiled in his book ‘Scientific
Management’. Scientific management can be studied in two parts; viz. elements and tools of
scientific management and principles of scientific management.
A) Elements and Tools of Scientific Management

1. Scientific Task Setting

It is essential to set the standard tasks which an average worker should do in a working day.
Taylor called it ‘a fair day’s work’.
2. Work study
Work study implies analysis of the work to be performed by eliminating unnecessary
operations and finding out the quicker way of doing it. It eliminates wasteful and unnecessary
operations, reduces effort and increases productivity. Work study includes the following
techniques:-
a) Method Study:- This study is conducted to know the best method of doing a particular
job. It brings improvements in handling, transporting, inspection and storing of raw materials
and goods.
(b) Motion Study:- It is the study of movements of a machine or a machine operator. Its
purpose is to eliminate useless motions and find out the best method of doing a particular job.
(c) Time Study:- This is an art of observing, and recording the time required to do each
detailed element of an industrial operation. It helps in fixing the standard time required to do
a particular job.
(d) Fatigue Study:- It is a study relating to physical or mental fatigue among the workers
caused by long working hours without rest. Its purpose is to maintain the operational
efficiency of the workers.
3. Standardisation of Tools and Equipment
Standardisation of tools and equipment was an important element of scientific management.
Taylor wanted to use ‘the best way of doing the work.’ Proper tools and equipment are
essential for increasing the speed of work.
4. Scientific Selection and Training
Workers should be selected by considering their education, experience and attitude towards
work. Workers should be given proper training so that they can perform their jobs effectively.
5. Differential Piece-wage Plan
Under this plan, there are two piece-work rates, one is lower and the other is higher. If a
worker finishes work within the standard time or produces more than standard output within
the standard time, he will be given higher piece rate. One the other hand, if a worker is below
the standard, he shall be given lower piece rate.
6. Introduction of Functional Foremanship
Functional foremanship is the extension of the principle of specialisation to the sphere of
management. According to Taylor the two functions of planning and doing should be
separated. The planning section should concentrate on planning the task and issuing
instructions to the workers for implementing them. Taylor suggested eight functional
specialists, the first four attached with planning the work and the next four with doing the
work.
7. Mental Revolution
Taylor stood for creating a change in the mental attitude of workers and management towards
each other. The feeling of suspicion between them had to be routed out. Mutual
understanding and co- operation between management and workers was an essential aspect of
this mental revolution.
B) Principles of Scientific Management
The scientific management is based on five principles which are discussed below:
1. Replacement of Rule of Thumb
Taylor advocated the replacement of rule of thumb with scientific methods. The rule of thumb
emphasises estimations whereas scientific approach brings precision. Every work should be
properly planned before it is carried out.
2. Scientific Selection and Development of Workers
In scientific management workers have an important role to play. So the workers should be
scientifically selected, placed and developed. Management is responsible for their scientific
education and training.
3. Co-operation between Labour and Management
There should be co-operation between the management and the workers. Both should try to
create mutual confidence, co-operation and goodwill. This requires change of mental attitudes
of the workers and the management towards each other.
4. Maximum Output
The management and the workers should try to achieve maximum output in place of
restricted output. This will be beneficial to both the parties. Maximum output will also be in
the interest of the society.
5. Equal Division of Responsibility
There must be equal division of responsibility and work between the managers and the
workers. The management should be responsible for planning and organising the work. The
workers should be responsible for the execution of work as per instructions of the
management.
Evaluation
Taylor laid the foundation for scientific study of management as a separate discipline. His
ideas led to a powerful scientific management movement in the United States and other
western countries. The movement led to significant improvement in productivity and
remuneration of workers. However, Taylor’s philosophy was widely criticised on many
grounds. Even then, his theory and principles have exercised considerable influence on
modern management thought.

HENRY FAYOL (1841-1925)

Henry Fayol was a contemporary of Taylor. He started his career as a junior engineer in a
coal mine company in France and became its general manager in 1880. He wrote a book on
General and Industrial Management which is considered to be one of the best classics in
management. Fayol’s contribution may be analysed under three categories: (a) classification
of business activities; (b) functions of management; and (c) principles of management
(A) Classification of Business Activities
According to Fayol, all activities of a business enterprise could be divided into six categories
as follows:
(i) Technical activities (production),
(ii) Commercial activities (buying, selling and exchange),
(iii) Financial activities (search for and optimum use of capital),
(iv) Security activities (protection of property and persons),
(v) Accounting activities (including statistics), and
(vi) Managerial activities.
Fayol indicated that managerial activity was by far the most important among the above and
deserved special attention.
(B) Functions of Management
According to Fayol “to manage is to forecast and plan, to organise, to command, to co-
ordinate and to control”. In this way he identified the following five elements or functions of
management process:
i) Planning (to force and provide means for the future),
ii) Organising (to provide a business everything useful to its functioning - raw materials,
tools, capital and personnel),
iii) Commanding (maintaining activity among personnel),
iv) Co-ordinating (unifying and harmonising all activities), and
v) Controlling (ensuring everything goes as per plans).
Fayol observed that these principles apply not only to business enterprise, but also to
political, religious or other undertakings.
(C) General Principles of Management
Evaluation
Henry Fayol developed a comprehensive theory of management applicable to all
organisations. He identified the functions that constitute the management process and gave
fourteen principles of management. Most of these principles have stood the test of time. His
philosophy and principles are widely accepted as the core of modern management education.
The isolation and analysis of management as a separate discipline is his original contribution
to management thought. He made a unique and outstanding contribution to management
theory. Thus, Fayol was the real father of administrative management theory.
Elton Mayo
(Human Relations Movement)
Key Contributions
• Focus: The psychological and social aspects of work.
• Hawthorne Studies: Discovered that attention, social interaction, and belonging
within informal work groups significantly impacted productivity more than physical
changes.
• Social Man: Showed workers are not just economic beings but social individuals
motivated by recognition and group dynamics.
• Elton Mayo is known as the father of human relations.
Hawthorne Studies
• The Hawthorne Studies were a series of experiments led by Elton Mayo at
the Western Electric Company from 1924 to 1932, which found that social and
psychological factors, like attention from managers and relationships with coworkers,
had a greater impact on worker productivity than physical conditions.
• The studies are famous for the Hawthorne effect, which describes how workers'
productivity increases when they know they are being observed. The research
highlighted the importance of human relations and informal work groups in the
workplace.
• The studies catalyzed the human relations movement in management, shifting focus
from a purely economic and mechanical view of workers to a social and
psychological one.
 • The Hawthorne tests were pivotal examinations in human relations that were
conducted in the vicinity of 1924 and 1932 at Western Electric Company’s Hawthorne
Works in Chicago.
• Some of the major phases of Hawthorne experiments are as follows:
• 1. Illumination Experiments
• 2. Relay Assembly Test Room Experiments
• 3. Mass Interviewing Program
• 4. Bank Wiring Observation Room Experiment.
Illumination Experiments
• Experiments to determine the effects of changes in illumination on productivity,
illumination experiments, 1924-27.
• Enlightenment tests were embraced to discover how fluctuating levels of brightening (
a measure of light at the work environment, a physical element) influenced the
efficiency.
• The speculation was that with higher brightening, efficiency would increment. In the
first arrangement of tests, a gathering of specialists was picked and set in two
separate groups.
• One gathering was presented to fluctuating forces of brightening. Since this gathering
was subjected to test transforms, it was named as test convention. Another forum,
called as control gathering, kept on working under steady powers of enlightenment.
• The scientists found that as they expanded the knowledge in the exploratory
gathering, both gatherings expanded generation. At the point when the power of
enlightenment diminished, the generation kept on expanding in both the gatherings.
• Along these lines, it was reasoned that enlightenment did not have any impact on
profitability
3. Relay Assembly Test Room Experiments:
• Experiments to determine the effects of changes in hours and other working
conditions on productivity, relay assembly test room experiments, 1927-28;
• Relay assembly test room experiments were designed to determine the effect of
changes in various job conditions on group productivity as the illumination
experiments could not establish a relationship between the intensity of light and
production.
• For this purpose, the researchers set up a relay assembly test room two girls were
chosen. These girls were asked to choose for more girls as co-workers. The work is
related to the assembly of telephone relays.
• Each relay consisted of some parts which girls assembled into finished products.
Output depended on the speed and continuity with which girls worked. The
 experiments started with introducing numerous changes in sequence with duration of
each change ranging from four to twelve weeks. An observer was associated with girls
to supervise their work.
• Before each change was introduced, the girls were consulted. They were given the
opportunity to express their viewpoints and concerns to the supervisor. In some cases,
they were allowed to take decisions on matters concerning them.
• Since there was more freedom of work, they developed a sense of responsibility and
self-discipline. The relationship between supervisor and workers became close and
friendly.
4. Mass Interviewing Program:
• Conducting plant-wide interviews to determine worker attitudes and sentiments,
mass interviewing program, 1928-30;
• During experiments, about 20,000 interviews were conducted between 1928 and 1930
to determine employees’ attitudes towards company, supervision, insurance plans,
promotion and wages.
• Initially, these interviews were conducted using direct questioning such as “do you
like your supervisor?” or “is he in your opinion fair or does he have favorites?” etc.
• This method has the disadvantage of stimulating antagonism or the oversimplified
‘yes’ or ‘no’ responses which could not get to the root of the problem; the method was
changed to nondirective interviewing where the interviewer was asked to listen to
instead of talking, arguing or advising. The interview program gave valuable insights
into the human behavior in the company.
• During interviews, it was discovered that workers’ behavior was being influenced by
group behavior. However, this conclusion was not very satisfactory and, therefore,
researchers decided to conduct another series of experiments. As such, the detailed
study of a shop situation was started to find out the behaviour of workers in small
groups.
4. Bank Wiring Observation Room Experiment
• Determination and analysis of social organization at work, bank wiring observation
room experiments, 1931-32.
• These investigations were directed to discover the effect of little gatherings of the
people. In this trial, a group of 14 male labourers were framed into a little work
meeting. The men were occupied with the gathering of terminal banks for the
utilization in phone trades.
• It was normal that profoundly skilled specialists would convey weight on less capable
labourers to build yield and exploit gather motivation design.
• In any case, the technique did not work and experts built up their particular standard
of yield, and this was implemented enthusiastically by different strategies for social
weight.
Conclusions of the Study
• The conclusions derived from the Hawthorne Studies were as follows:-
• The social and psychological factors are responsible for workers’ productivity and job
satisfaction. Only good physical working conditions are not enough to increase
productivity.
• The informal relations among workers influence the employees’ behaviour and
performance more than the formal relationships in the organization.
• Employees will perform better if they are allowed to participate in decision-making
affecting their interests.
• Employees will also work more efficiently when they believe that the management is
interested in their welfare.
• When employees are treated with respect and dignity, their performance will improve.
• Financial incentives alone cannot increase the performance. Social and Psychological
needs must also be satisfied to increase productivity.
• Good communication between the superiors and subordinates can improve the
relations and the productivity of the subordinates.
• Special attention and freedom to express their views will improve the performance of
the workers.