Principles & Practices Of

Management - UNIT 1
- AMIT JOY
 CONCEPT OF
MANAGEMENT
• A precise definition of management is not simple
as management is used in a variety of ways.
• Being a new discipline it has drawn concepts and
principles from a number of disciplines like
sociology, psychology, economics etc.
• Economist have treated management as a factor of
production.
• Sociologists have treated management as a class or
group of persons.
• Practitioners have treated management as a group
of different activities.
In the present context management is used in
three alternative ways
1. Management as a discipline.
2. Management as a Group of people.
3. Management as a process.
 Production or efficiency oriented.
 Decision oriented.
 People oriented.
 Function oriented.
 Production or efficiency oriented

“Management is the art of knowing what you want to

do and then seeing that it is done in the best and
the cheapest way.”
(Taylor)

This definition emphasizes efforts and results as the

objectives of management but do not specify how
these objectives can be achieved.
 Decision oriented
“Management is simply the process of decision
making and control over the action of human beings
for the expressed purpose of attaining
predetermined goals.”
(Stanley Vance)

The decision oriented definition of management

indicates that the basic activities of a manager is to
make decisions and enforce these decisions.
However, this dose not provide the processes in
which context decision making is applied.
 People oriented
“Management is the art of getting things done
through and with people in formally organized
groups.”
( Koontz)
This definition, no doubt, offer better explanation of
the nature of management, though, this do not
specifies the functions and activities involved in the
process of getting things done by or with the
cooperation of other people.
 Function oriented
“Management is a process involving planning,
organizing, staffing, directing, and controlling
human efforts to achieve stated objectives in an
organization.”

Function oriented definitions of management are

more relevant for understanding the exact nature
and scope of management inspite of the fact that
there is no unanimity over various functions.
Nature of Management
 Nature of Management
Various contributions to the field of management have
changed the nature of management. Therefore, the
nature of management can be described as follow;
1. Multidisciplinary
2. Dynamic nature of principles
3. Relative, not absolute principles
4. Management Science (WHY) or Art (HOW)
5. Management as Profession
6. Universality of Management
SCOPE/FIELDS OF MANAGEMENT
 Production Management
1. Designing the product
2. Location and layout of plant and building
3. Planning and control of factory operations
4. Operation of purchase and storage of
materials
5. Repairs and maintenance
6. Inventory cost and quality control
7. Research and development etc.
 Marketing Management
1. Marketing research to determine the needs
and expectation of consumers
2. Planning and developing suitable products
3. Setting appropriate prices
4. Selecting the right channel of distribution
5. Promotional activities like advertising and
salesmanship to communicate with the
customers
 Financial Management

Th Th

CAPITAL LOAN

1. Estimating the volume of funds.

2. Selecting the appropriate source of funds.
3. Raising the required funds at the right time.
4. Administration of earnings.
 Personnel Management
1. Manpower planning
2. Recruitments
3. Selection
4. Training
5. Appraisal
6. Promotions and transfers
7. Compensation
8. Employee welfare services
9. Personnel records and research
 Importance of management

1. Effective utilisation of resources.

2. Development of resources.
3. To incorporate innovations.
4. Integrating various Interest Groups.
5. Stability in the society.
 Management
Functions/ELEMENTS
1. Planning
2. Organizing
3. Staffing
4. Directing
5. Controlling
Management is getting
things done through
other people
• Firstly, this definition is very simple & easy

to understand.

• Secondly, it highlights the indirect nature of

a manager’s job.
• Thirdly, this definition reveals that a manager is

the leader of people working under him.

• Fourthly, it states that management is basically an

art or practice of achieving results.

 DRAWBACKS………
• This definition does not
reveal that management is
a science.
• The above definition does
not highlight how does
management get things
done through people.
 DRAWBACKS………
• People have their aspirations & are
not mere commodities or means
to achieve certain ends.
Management is certainly much
more than just getting things done
through others.

• The above definition gives an

impression that mgt gets things
done by hook or crook.
Evolution of
Management
 EARLy Years of Management
• A 20th Century phenomenon.
• Management could not get attention because
the field of business in which management
concepts are applied was held low.
• Unworthy of study
• Indifferent approaches of other scientists
towards management and other business
organisations.
 EARLy Years of Management
• Treatment of management as an art but not
as a science.
• Commonly held belief “managers are born
not made”.
• This situation continued till the beginning of
20th century.
 Early contributions
• Organization and administration existed in
Egypt in 1300 B.C.
Eg. Confucius’s parables included suggestions
for proper public administration and
admonitions to choose honest, unselfish and
capable public officers long before Christ.
Kautilya has offered sound principles of state
administration in 320 B.C.
 Early contributions in business
Early contributors : Robert Owen, James Watt,
Charles Babbage, Henry Town.
Owen : emphasized personnel aspects of
management and advocated number of
benefits to employees.
Others : concentrated on developing concepts
related to effective utilization of resources at
shop-floor level.
 Position of Management in 20th
century
In the early 20th century things started looking
up for Management.
Specially in world war 1 people started thinking
about the solution of the problems and how to
utilize resources in a better way. World war 2
added further significance.
 Growing competition and complexity of
managing large business organizations provided
impetus to developing systematic management
concepts and principles.
 Management today
In recent years there has been worldwide rivalry
for Market, Power and Progress.
Factors responsible for these rivalries
i. Technological innovations and their
Dissemination in business.
ii. Growing technological obsolesce.
iii. Increase in capital investment.
iv. Freedom of national and international
markets.
v. Increasing buyers sovereignty in the markets.
 Increasing Complexity of business
1. Increasing size of business organization.
2. High degree of division of labor and
specialization.
3. Help from govt. in regulations and control to
make business more socially oriented.
4. Organized union activities to put pressure on
management.
5. Pressure of various conflicting interest groups
to meet their demands from the organization.
Management as an
Art
Science
or
Profession???
Theories of management
 Classical Theory

SCIENTIFIC

ADMINISTRATIVE/OPERATIONAL

BUREAUCRATIC
 SCIENTIFIC MANAGEMENT
F.W TAYLOR- Father of the
Scientific Management.
- emphasized on shop-floor level
efficiency in a scientific manner.
- conducted various experiments
to find out how human beings
could be made to work more
efficiently by standardizing the
work and better method of doing
the work.
 Principles of Scientific Management
1. Replacing Rule of thumb with science. (Estimation)

2. Harmony in group action. (mutual give and take situation

and proper understanding)

3. Cooperation. (hearty and brotherly cooperation among

workers)

4. Maximum output. (continuous increase in production)

5. Development of workers. (scientific selection and training)

 Elements of Scientific Management
1. Separation of planning and doing.
2. Functional foremanship
Planning Production
Route Clerk Speed Boss
Instruction Card Clerk Inspector
Time and Cost Clerk Maintenance Foreman
Disciplinarian Clerk Gang Boss

3. Job analysis- find out the best way of doing the

things through Time-Motion and fatigue
studies.
 Elements of Scientific Management
4. Standardization. (Instruments, Tools, Period of
work, amount of work etc.)
5. Scientific selection and Training of workers.
(Education, Work exp, Aptitude etc.)
6. Financial incentives. (Differential Piece Rate
System)
7. Economy. (Effective utilization of Resources,
Wastage elimination)
8. Mental revolution. (cooperation between
management and workers)
 Other contributors of Scientific
Management
Carl Berth – developed mathematical
techniques and formulae
Henry Gantt - developed graphic methods of
depicting plans. Developed GANTT chart
which led to PERT (Programme Evaluation and
Review Technique).
Frank and Lillian. Gibreth – looked at workers
problems from social and psychological point
of view
 Critical Analysis of Scientific
Management
Concerned with problems related to operating levels
More relevant from engineering point of view rather
than management point of view
More relevant to mechanisation and automation
than the broader aspects of management
Taylor’s Scientific Management was opposed by
trade unions, industrialists and general public:
-aggressive mechanical view of production
-close and strict supervision
-exploitation by industrialists
 Operational /Administrative Management

HENRY FAYOL: French Industrialist

- looked at the problems of the
management from top
management point of view.
- used the word Administration
rather than management.
 FAYOL’S MANAGEMENT ACTIVITIES

1. Technical – related to production.

2. Commercial –buying, selling, exchange.
3. Financial – searching for capital and its
optimum use.
4. Security –protection of property and person.
5. Accounting – including statistics.
6. Managerial –planning, organising,
coordinating, controlling.
 Fayol’s approach of studying
management

Fayol has divided his approach of studying

management into three parts.

1. Managerial Qualities and Training.

2. General Principles of Management.
3. Elements of Management.
 Managerial qualities

1. Physical –health, vigor.

2. Mental –learning ability, judgment, mental
vigor and capability.
3. Moral – Loyalty, Dignity, Firmness.
4. Educational –general awareness.
5. Technical –peculiar to the function.
6. Experience –arising from work.
 Principles of Management
given by Fayol
[Link] of work- to yield the benefits of
specialisation.
2. Authority and Responsibility – official and
personal.
3. Discipline –self imposed or command discipline
4. Unity of Command – only one superior.
5. Unity of Direction – same objectives under one
group.
6. Subordination of Individual Interest to General
Interest.
7. Remuneration of personnel – no profit sharing
for workers.
8. Centralisation –extent to which authority is
centralised.
9. Scalar chain – Gang Plank
[Link] –arrangement of things and people.
[Link]- justice and kindliness to all.
[Link] of tenure – Employee Job Security.
13. Initiative-thinking out and execution of a plan
14. Esprit de Corps- Union is Strength
 Taylor vs. FAYOL
(TEXT BOOK)

• Both have attempted to overcome managerial

problems in a systematic way.
• Both have developed some principles which can
be applied in solving managerial problems.
• Both have emphasized that management
actions can be effective if these are based on
sound principles.
 Taylor vs. FAYOL
(TEXT BOOK)

• Both of them have emphasized that managerial

qualities are acquirable and can be acquired
through training. Therefore, Organization
should make attempts to develop these.
• Both have emphasized harmonious
relationships between management and
workers for the achievement of organizational
objectives.
 Taylor vs. FAYOL (Derived)

• Both contributed in the evolution of

management thought
• Both emphasized on proper utilization of
human recourse
• Stressed on the technical and
professional aspects
• Responsible for managerial revolution
• Both were a successful manager in life so
gave a very practical solution
 Taylor vs. FAYOL
(TEXT BOOK)

• Both were unable read to the human

psychology to some extent
• Both emphasized on maximum
output
• Both emphasized on division of work
• Both emphasized on competent
management
 Dissimilarities
Basis of difference Taylor Fayol

1. Perspective Shop-floor level Top management

2. Focus Efficiency through Overall efficiency
work by observing
simplification & certain principles
standardization
3. Orientation Production & Managerial
Engineering Function
 Dissimilarities
Basis of difference Taylor Fayol

4. Results Scientific Personal

Observation & Experiences
measurement translated into
universal truths
5. Overall Basis for Systematic theory
Contributions accomplishment of management
on the production
line
Bureaucracy THEORY
- Max weber
 Meaning
Definition: A bureaucracy is a form
of organization in which
officeholders have defined
positions and (usually) titles.
Formal rules specify the duties of
the officeholders.
 Max Weber embellished the
scientific management theory
with his bureaucratic theory.
 Weber focused on dividing
organizations into hierarchies,
establishing strong lines of
authority and control.
 He suggested organizations
develop comprehensive and
detailed standard operating
procedures for all reutilized tasks.
Weber’s Features of Bureaucracy

1. Administrative class
2. Hierarchy
3. Division of work
4. Official Rules
5. Impersonal Relationships
6. Official Record
neo-classical Theories of
Management

Social Systems Approach

 Features…
• Introduced by Vilferdo Pareto & later developed by
Chester Barnard.
• Organisation is a social system, a system of cultural
relationships.
• Relationships exists among the external as well as
internal environment of the organisation.
• Cooperation among group members is necessary for the
achievement of organizational objectives.
• For effective management, efforts should be made for
establishing harmony between the goals of the
organisation and the various groups therein.
 Contributions of Barnard…
1. Concept of organisation (Communication,
Willingness, Common Purpose)
2. Formal and informal organisations
3. Element of organisation (Departmentation,
Incentives, Power, Decision Making)
4. Authority
5. Functions of the executive
6. Motivation
7. Executive effectiveness (Leadership)
8. Organisational equilibrium
neo-classical Theories of
Management

Decision Theory Approach

 Features…
• Management is essentially Decision Making.
• The member of the organisations are decision
makers and problem solvers.
• Organisation can be treated as a combination of
various decision centre's. The level and
importance of organisational members are
determined on the basis of importance of
decisions which they make.
 Features…
• Quality of decision affects the organisational
effectiveness.
• All factors affecting decision making are subject
matter of study of management. Besides
processes and the techniques involved in
decision making, other factors affecting the
decisions are information system and social and
psychological aspects of decision makers.
 Contributions of Herbert Simon…
1. Concept of organization.
2. Decision Making (Intelligent, Design & Choice
Activity.
3. Bounded Rationality
4. Administrative man
5. Organizational Communication
Modern Theories of Management

Systems Approach
 Systems approach to Management…
• It is a collection of interrelated parts acting together to
achieve some goal which exists in the environment.
Also, system is defined as a set of objects working
together with relationships between the objects and
their attributes related to each other and to the
environment.
• Therefore, system in simple terms in respect to
management, it is a set of different independent parts
working together in interrelated manner to accomplish
a set of objectives.
 Classification of systems
• Open systems - An open system actively interacts
with its environment. By interacting with other
systems, it tries to establish exchange relationships.

• Closed systems - A closed system is self contained and

isolated from the environment. It is a non-adaptive
system. It does not receive inputs often from other
systems and does not trade with the outside world.

Example: ??????
 Environment

Transformation
Input Output
Process

Organization as a System receives

Input, transforms it through a Process
for Output and Operates in an System
Environment (economic, regulatory Boundary
and other forces)
 Elements of Systems Approach
• An organization is a unified and purposeful system
consisting of several interconnected, interacting and
interdependent parts.

• The parts of a system are called sub-systems. Each sub-

system influences the other sub-systems and the system
as a whole.

• The position and function of each sub-system can be

analyzed and understood only in relation to other sub-
systems and to organization as a whole.
 Elements of Systems Approach
• Each sub-system derives its strength by its association
and interaction with the other sub-systems. As a
result the collective contribution of the organization is
greater than the aggregate of individual contributions
of its sub-systems. This is known as synergy.
• Each system has a boundary that separates it from its
environment. The boundary determines which parts
are internal to the organization and which are
external. For example, employees are within the
boundary and creditors; customers are external to a
firm.
 Elements of Systems Approach
• The reaction or response of the environment
to the output is known as feedback. Feedback
is useful in evaluating and improving the
functioning of the system.

• Organizations operate on the principle that

they have several alternative ways of doing the
same thing or achieving the same goal.