UNIT ONE

Fundamentals of Management
1.1. Definition of Management
The term management has several meanings, depending on the contexts and purposes. There is
no universally accepted standard definition of management.
Different scholars have been defined the term management differently, among
 Management is the accomplishment of results through the efforts of other people.
(Lawrence A. Appley)
 Management is the art of getting things done through and with the people in formally
organized groups. (Koontz H.)
 Management is a process of planning organizing, actuating and controlling to determine
and accomplish the objectives by the use of people and resources. (Terry G.)
 Management is the process by which managers create, direct, maintain and operate
purposive organizations through systematic, coordinated, cooperative human effort.
(McFarland)
 It is the coordination of all resources through the process of planning organizing,
directing and controlling in order to attain stated objectives. (Sisk)
Management involves coordinating and overseeing the work activities of others so that their
activities are completed efficiently and effectively.
1) Coordinating and overseeing the work of others is what distinguishes a managerial position
from a non managerial one.
2) Efficiency is getting the most output from the least amount of inputs in order to minimize
resource costs. Efficiency is often referred to as “doing things right”
3) Effectiveness is completing activities so that organizational goals are attained and is often
described as “doing the right things”
Management is the process of working with and through other to accomplish
organizational objective through effective and efficient utilization of resources by using
the five managerial function. It the processes by which human and non-human resources
are coordinated to accomplish a set of objectives.

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1.2. Significance of Management
Management is concerned with acquiring maximum prosperity with a minimum effort.
Management is essential wherever group efforts are required to be directed towards achievement
of common goals. The inputs of labor, capital and raw material never become productive without
the catalyst of management. It is now widely recognized that management is an important factor
of growth of any country. The following points further highlight the significance of management:
1. Achievements of group goals: Management makes group efforts more effective. The group
as a whole cannot realize its objectives unless and until there is mutual co-operation and co-
ordination among the members of the group. Management creates team work and team spirit in
an organization by developing a sound organization structure. It brings the human and material
resources together and motivates the people for the achievement of the goals of the organization.

2. Optimum utilization of resources: Management always concentrates on achieving the

objectives of the enterprise. The available resources of production are put to use in such a way
that all sort of wastage and inefficiencies are reduced to a minimum. Workers are motivated to
put in their best performance by the inspiring leadership. Managers create and maintain an
environment conducive to highest efficiency and performance. Through the optimum use of
available resources, management accelerates the process of economic growth.

3. Minimization of cost: In the modern era of intense competition, every business enterprise
must minimize the cost of production and distribution. Only those concerns can survive in the
market, which can produce goods of better quality at the minimum cost. A study of the principles
of management helps in knowing certain techniques used for reducing costs. These techniques
are production control, budgetary control, cost control, financial control, material control, etc.

4. Change and growth: A business enterprise operates in a constantly changing environment.

Changes in business environment create uncertainties and risk and also produce opportunities for
growth. An enterprise has to change and adjust itself in the ever changing environment. Sound
management molds not only the enterprise but also alters the environment itself to ensure the
success of the business. Many of the giant business corporations of today had a humble
beginning and grew continuously through effective management.

5. Efficient and smooth running of business: Management ensures efficient and smooth
running of business, through better planning, sound organization and effective control of the
various factors of production.

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6. Higher profits: Profits can be enhanced in any enterprise either by increasing the sales
revenue or reducing costs. To increase the sales revenue is beyond the control of an enterprise.
Management by decreasing costs increases its profits and thus provides opportunities for future
growth and development.

7. Provide innovation: Management gives new ideas, imagination and visions to an enterprise.

8. Social benefits: Management is useful not only to the business firms but to the society as a
whole. It improves the standard of living of the people through higher production and more
efficient use of scarce resources. By establishing cordial relations between different social
groups, management promotes peace and prosperity in society.

10. Sound organization structure: Management establishes proper organization structure and
avoids conflict between the superiors and subordinates. This helps in the development of spirit of
cooperation and mutual understanding, and a congenial environment is provided in the
organization.

1.3. Managerial functions

Management is a dynamic process consisting of several elements or activities. These elements or

activities, which every manager has to perform, are known as the function of management.
Regardless of the type of firm and the organizational level, all managers perform certain basic
functions. These managerial functions are Planning, organizing, staffing, directing/leading/ and
controlling.

Planning:

- It refers to making decisions today about future actions

- Planning refers to determining what should be done in the future.
- It is future course of action.
- Planning bridges the gap between where we are to where we want to be in a desired
future.
- It consists of setting mission, goals, objectives, policy, procedure and other plan need to
achieve the purpose of the organization.
- Planning is the first managerial function that all managers engaged in because it lays the
groundwork for other managerial functions.
-

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Organizing:

- It refers to arranging and distributing work among members of the work group to
accomplish the organization’s goals.
- It is the management function of assembling and coordinating human, financial,
physical, information and other resources needed to achieve organizational goals.
- Organizing is the process of identifying and grouping the work to be performed, defining
and delegating responsibility and the authority and establishing relationships for the
purpose of enabling people to work effectively together in accomplishing objectives.
Staffing:

- The staffing function of management controls all recruitment and personnel needs of the organization.
- The main purpose of staffing is to hire the right people for the right jobs to achieve the objectives of
the organization.
- Staffing function involves recruitment, selection, orientation, training and development,
performance appraisals, promotions and transfers of employees.
- Staffing is concerned with human resource of the organization

Leading/Directing:

-It is the managerial function of guiding employees toward organizational objectives.

-Leading refers to influencing of people behavior and attitude for the purpose of organization
goals.
-The leading function of management involves guiding, teaching and supervising subordinate.
-Leading involves motivating, directing, actuating, stimulating and communicating employees.
-Leading is the most complex managerial function because it deals with complex human
behavior.
Controlling:
 Ensuring that actual performance is in line with intended performance and taking corrective
action.
 Controlling is devising the ways and means of ensuring that planned performance is actually
achieved.
 It measures performance against goals and plans.

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Note: - Controlling function involves the following elements.
a. Establishing standards of performance
b. Measuring the current performance and comparing it against the established standards
c. Taking action to correct any performance that does not meet those standards
d. Checking for deviation
1.4. Characteristics of Management
Management is a distinct activity having the following features:
1. Goal Oriented: Management is a purposeful activity. It coordinates the efforts of
workers to achieve the goals of the organization. The success of management is measured by
the extent to which the organizational goals are achieved. It is imperative that the
organizational goals must be well defined and properly understood by the management at
various levels.
2. Economic Resource: Management is one of the factors of production together with land,
labor and capital. As industrialization increases, the need for managers also increases.
Efficient management is the most critical input in the success of any organized group activity
as it is the force which assembles and integrates other factors of production, namely, labor,
capital and materials. Inputs of labor, capital and materials do not by themselves ensure
production; they require the catalyst of management to produce goods and services required
by the society.
3. Distinct Process: Management is a distinct process consisting of such functions as planning,
organizing, staffing, directing and controlling. These functions are so interwoven that it is not
possible to lay down exactly the sequence of various functions or their relative significance.
4. Integrative Force: The essence of management is integration of human and other resources to
achieve the desired objectives. All these resources are made available to those who manage.
Managers apply knowledge, experience and management principles for getting the results from
the workers by the use of non-human resources. Managers also seek to harmonize the
individuals' goals with the organizational goals for the smooth working of the organization.
5. System of Authority: Management as a team of managers represents a system of authority, a
hierarchy of command and control. Managers at different levels possess varying degree of
authority. Generally, as we move down in the managerial hierarchy, the degree of authority gets
gradually reduced. Authority enables the managers to perform their functions effectively.

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6. Multi-disciplinary Subject: Management has grown as a field of study (i.e. discipline) taking
the help of so many other disciplines such as engineering, anthropology, sociology and
psychology. Much of the management literature is the result of the association of these
disciplines. For instance, productivity orientation drew its inspiration from industrial engineering
and human relations orientation from psychology. Similarly, sociology and operations research
have also contributed to the development of management science.
7. Universal Application: Management is universal in character. The principles and techniques
of management are equally applicable in the fields of business, education, military, government
and hospital.

1.5. Levels of management

Levels are hierarchical arrangement of managerial positions in an organization. The number of

levels of management, among other things, depends on the size and nature of the organization.
In general there are three managerial levels. These are

i. Top level management

ii. Middle level management
iii. First level ( operating level) management or the lower level of management

Top-level management (the upper level of management or administrative management)

This level of management consist small group of individuals who are at the highest level of
management and responsible for making decisions and formulating polices that affect all aspects
of the organizations.
Top level management includes that of board of directors, executives, committee and chief
executive, or president, or general manager, etc of an organization. Function of top management
includes:

 Establishing broad objectives

 Designing major strategies
 Outlining principal policies
 Providing effective organizational structure that insures integration
 Providing overall leadership and direction
 Making over all control of the organization

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  Dealing with external parties such as the government, community, business, etc,
by representing the organization.
 Analyzing the changes in the external environment and respond to it

Middle level management:

- Middle level management includes all management levels below top level management
and above operational level of management. This level of management is used as a bridge
to link two extremes of management levels.
- It includes heads of the different functional areas and their assistants, divisional heads,
department managers, sections heads, plant managers, branch managements etc.
Managers in this level are specialists and their activities are limited to a particular area of
operation or to a section or department. The major faction of Middle level management
are:
 Acting as intermediary between top and operating level management
 Translating long-term plans of top level management into medium range plans
 Coordinating inputs, productivity and outputs of operating level management

First line management:

- The lowest level in an organization at which individuals are responsible for the work of
others.
- First line mangers direct non-management employees, they do not supervise other mangers.
Examples foreman or production supervisor in a manufacturing plant, the technical supervisor
in a research department and the clerical supervisor in a large office. First level managers are
often called ‘supervisors’.

Types of Managers based on scope ofresponsibility

Based on the scope of responsibility/activities they manage, managers are divided into two:
i. Functional Managers
Functional managers are managers who are responsible for a department that performs a single
functional task and has employees with similar training and skills.
Supervise employees with specialized skills in specific areas of operations such as accounting,
payroll, finance, marketing, production, or sales etc.

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 ii. General Managers
General Managers are managers who are responsible for several departments that perform
different functions. They are responsible for the entire operations of the organization without
being specific.
Oversee a complex unit, such as a company, a subsidiary, or an independent operating division.
1.6. Managerial skills and Roles
Managerial Skills
Mangers require three main kinds of skills, namely: technical, human, and conceptual skills.
Technical skill is the ability to perform the specific job. Technical skill is the ability to use the
tools, procedures or techniques of a specialized field. Technical skill is considered to be very
crucial to the effectiveness of lower level (operational) managers because these persons have
direct contact with employees performing work activities within the firm.

Human skill is the ability to work with people; it is cooperative effort; it is teamwork; it is the
creation of an environment in which people feel secure and free to express their opinions
Human skills are also called Interpersonal skills. It helps the managers to understand,
communicate and work with others. It also helps the managers to lead, motivate and develop
team spirit. Human relations skills are required by all managers at all levels of management
equally, since all managers have to interact and work with people.

Conceptual skill is the ability to serve the “big picture”. It is also about recognizing significant
elements in a situation, and to understand the relationships among the elements. It is the ability to
view the organization as whole and recognize its relationships to the larger environment. It
includes analytical, creative and initiative skills. Conceptual skill is used mostly by top
management.

Top Level
T H C

Middle level T H C

Operational Level
T H C

Fig. 1.2 Relative relationship between management levels and managerial skills
T= Technical Skills H= Human Skills C= Conceptual Skills

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As shown in the above figure, a technical skill is the most important at the lower (operational)
level of management and it becomes less important as one move up the hierarchy.

Human skill is equally important at every level of the management, finally the importance of
conceptual increases as we rise in the ranks of management. Conceptual skill is mostly important
at top level management.
Managerial roles
Role is an organized set of behaviors that is associated with a particular office or position. It is a
pattern of behavior expected by others from a person occupying a certain position in an
organizational hierarchy.
A role is any one of several behaviors a manager displays as s/he functions in the organization
Factors which affect managerial roles are: manager’s formal job description, and the values &
expectations of other managers, subordinates and peers.
Henry Mintzberg identified 10 managerial roles which are in turn grouped into three categories:
Interpersonal, Informational and Decisional Roles.

A. Interpersonal roles

These roles involve the behaviors associated with human interaction. In other words,
interpersonal roles are those roles that allow a manager to interact with his or her employees for
the purpose of achieving organizational goals.

These roles, which arise directly from a manager’s formal authority, involve interpersonal
relationships. Managers play three interpersonal roles.

1. Figurehead role: in figurehead role, the manager represents the organizations at

ceremonial and symbolic [Link] social and legal duties, act as symbolic
leader.
It is the most basic and the simplest of all managerial roles. In this role, every manager
has to perform some duties of a ceremonial nature, such greet visitors, sign legal
documents, attend ribbon cutting ceremonies, host receptions, etc.
2. Leadership role: Manager plays this role by having clear vision and objectives of his/her
organization to make himself and herself as exemplary leader in which subordinates
follow general direction. As a leader, every manager must motivate and encourage

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 his employees. Leader must also try to reconcile their individual needs with the
goals of the organization.
3. Liaison role: Managers maintain a network within and outside the organization to assess
the external environment of competition, social changes, rules and regulations of the
government and cope up with new and modern technology.
B. Informational roles
Managers should collect, disseminate and transmit information both from internal and external
environment of their organization.
In order to make the right decisions, managers need information from various sources.
Informational roles involve exchanging information with other people. The following three roles
describe the informational aspects of managerial work.
1. Monitor role: it refers to gathering internal and external information relevant to the
organization. It involves seeking out, receiving, and screening information that are basic
to the organization.
2. Disseminator role: in this role, the manager shares information with subordinates and
other members of the organization. Mangers communicate or disseminate information to
others within the organization. Sometimes the manager passes along special or
“privileged” information to certain subordinates who would not originally have access to
it and who can be trusted not to let it go further.
3. Spokesperson role: in the spokesperson role mangers transmit information to others,
especially those outside the organization, as the official position of the company. The
manager is the person who speaks for his or her work unit or organization to people
outside the work unit or organization.
C. Decisional roles
It involves making significant decisions that affect the organization. Managers collect and screen
information to make sound decision
1. Entrepreneurial role: the role involves designing and initiating planned change in order
to improve the organization’s position. Mangers play this role when they initiate new
projects, launch a survey, test a new market, or enter a new business.
2. Disturbance handler role: Managers play the disturbance handler role when dealing
with problems and changes beyond their immediate control. As disturbance handlers
managers respond to situations that are the internal and external conflicts with the
employees and customers, suppliers, and other institutions respectively. Typical problems

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 include strikes by labor, bankruptcy of major suppliers, or contracts by customers.
Sometimes, disturbances may arise because a poor manager ignores the situation until it
becomes a crisis.
3. Resource allocator role: Mangers decide on who should get what resources (human,
financial, material and others).
4. Negotiator role: it refers to participating in negotiation activities with other
organizations and individuals. In this role mangers meet and discuss their differences
with individuals or groups for the purpose of reaching an agreement. Negotiations are an
integral part of a manager’s job.
1.7. Universality of management
Universality of management refers to the transferability of its principle, techniques, function and
skill form one time, place or job to another. All these management practice are equally
practicable and applicable everywhere in the world irrespective of the nature of the job,
differences in customs, habits and social laws. Managerial functions and techniques can be
practiced in every organized effort. Whether it is a business, industry, government office,
educational, social, profitable or non-profitable organization, management principles, functions
and techniques are applied to all organization. It means that management is common in content
and is applicable to all types of organizations.

1.8. Nature of Management

Management as Art or Science

Management involves characteristics of both art and science. While certain aspects of
management make it a science, certain others which involve application of skills make it an art.
Every discipline of art is always backed by science which is basic knowledge of that art.
Similarly, every discipline of science is complete only when it is used in practice for solving
various kinds of problems. Whereas under "science" one normally learns the "why" of a
phenomenon, under "art" one learns the "how" of it. In the words of Robert H. Hilkert: "In the
area of management, science and art are two sides of the same coin".

In the beginning of development of management knowledge, it was considered as an art. There

was a jungle of management knowledge. Any one used it to get things done in his own way. But
later by codifying and systemizing the management, it became a science as well as being an art.

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Management as an Art

Management can be an art in the sense that it has the following characteristics:

 Just like other arts it has to be practiced and performed. The knowledge should be learned
and practiced, just as medical or legal practitioners practice their respective sciences.
 The manager gains experience by continuous application of management knowledge and
facing new experiences. This helps to develop more skills and abilities for translating
knowledge into practice.
 Application calls for innovativeness and creativity.

Management as a Science

Management as a science has the following characteristics:

 Its principles, generalizations and concepts are systematically. In this case the manager can
manage the situation or organization in a systematic and scientific manner.
 Its principles, generalizations and concepts are formulated on the basis of observation,
research, analysis and experimentation, as is the case with the principles of other sciences.
 Like other sciences, management principles are also based on relationship of cause and
effect. It states that same cause under similar circumstance will produce same effect.
Suppose if workers are paid more (cause), they produce more (effect).
 Management principles are codified and systematic, and can be transferred from one to
another and can be taught.

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