Module 1 - Introduction 1

Module 1 : Introduction
In this module, we shall learn about the following :
1. Definition and meaning of management,
2. Characteristics of management,
3. Importance of management,
4. Functions of management-planning, organising, directing, staffing, coordination and
controlling,
5. Principles of management,
6. Difference between administration and management

The term management denotes utilization of all available resources to achieve some specific
objectives. It organises the factors of production for better performance, greater productivity,
increased supply of goods and services etc. Indirectly it gives a helping hand in the development of
society and welfare of the public. The efficient management utilises the limited resources more
effectively to meet the demands of as growing population.

Let us take the example of a housewife. She is the person who manages all the householdwork.
She decides upon a number of things like – how to decorate the house in terms of furniture, curtains,
bed sheets, sofa covers, crockery, cooking utensils etc.; what type of food is to be served to family
members, what shall be the timing of breakfast, lunch, dinner, etc.; and then arranges the requisite
materials to prepare the food, hires a maid/servant to assist household work on a part time or full-
time basis and looks after many other such work. She not only decides all these but ensures that all
this work is carried out properly. For this purpose, she does some work herself and may distribute
certain work among the family members so that work is carried on smoothly. For example, she may
assign the task of dropping the children to the school to her husband, the task of clearing the bed to
the eldest child, the task of cleaning utensils to the part time maid and so on. Every housewife does
all this work in her own way depending upon her understanding, interest and commitment and so
also the resources available.

Similarly, take the case of a school teacher who is given the task of taking school children on a
picnic. The teacher also decides upon a number of things like – where to go, when to go, how many
students and other teacher shall go, how much money is required where to get such money, by what
time students must come back, how to collect them from home and drop them and so on. Then he
also assigns duties to other persons assisting him in the exercise. For example, he may assign the task
to other for arranging a bus for conveyance, collecting money from students, make a group of
students to arrange for food and its distribution, and so on. Again, every school teacher if assigned a
similar exercise may handle it in his own way depending upon the capability and interest of the
teacher as well as a number of other factors.

Let us take another example. There may be many grocery shops in your locality. Consider
any two such shops owned by individuals as sole-proprietors. Both of them do a number of activities
like procuring goods from manufacturers / wholesalers and selling them to consumers, maintaining
records of transactions, paying taxes, supervising the staff, and making efforts to improve sales, etc.
However, how they handle all these jobs dependsupon their capabilities and factors like the location
of their store, the assistants they have and so on.

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 Module 1 - Introduction 2

On analysing the above examples, we find one thing common among the housewife, the
school teacher as well as the grocery owner i.e., they are all involved in managing an important
activity namely the household, the school picnic and the business respectively.

Thus, we find management everywhere, every housewife manages her household work, every
professional manages his tasks and every businessman manages his business.

Objectives
After completion of this module, you will be able to:
1. Understand the meaning of management.
2. Identify the characteristics of management
3. Explain the importance of management
4. Identify the various levels of management
5. Differentiate between administration and management.
6. Describe the functions of management
7. Explain the principles of management.

1.1. Definition:
Different scholars from different disciplines view and interpret management about their own
angles. Some scholars look at the subject of management as an art i.e., application of skills, while
others treat it as science i.e., a systematic body of knowledge based on experiment and observation.
Some of the popular definitions of management are:
1. “Management is defined as the process of planning, organising, staffing and controlling an
organisation’s operations in order to achieve coordination of the human and material
resources essential in the effective and efficient attainment of objectives.”- Robert L.
Trewelly and M. Gene Newport
2. “To manage is to face cast, to plan, to organise, to command, to co-ordinate and to control” –
Henri Fayol.
3. “Management is the art of getting things done through and with other people in formally
organised groups” – Harold Koontz.
4. “Management is effective utilization of human and material resources to achieve the
enterprise’s objective.” – William F. Glueck.

1.2. Characteristics of management:

The various characteristics of management are:
1. Management is universal: It means that management is required for every type of
organisation. It may be a business organisation or social or political. It may be a small firm or
a large one. Management is required by a school or a college or university or a hospital or a
big firm like Reliance Industries Limited or a small variety store in your locality. Thus, it is a
universal phenomenon and is common and essential element in all organisations.
2. Management is goal directed: Every organisation is created to achieve certain goals. For
example, for a business firm it may be to make maximum profit and/or to provide quality
products and services. Management of an organisation is always aimed at achievement of the
 Module 1 - Introduction 3

organisational goals. Success of management is determined by the extent to which these goals
are achieved.
3. Management is a continuous process: Management is an ongoing process. It continues as
long as the organisation exists. No activity can take place without management. To perform
all activities like production, sale, storage, operation etc. management is required. So, as long
as these activities continue the process of management also continues to operate.
4. Management is intangible: Management is not a place like a graphic showing Board
meeting or a graphic showing a school Principal at her office desk which can be seen. It is an
unseen force and you can feel its presence in the form of rules, regulation, output, work
climate, etc.
5. Management is multi-disciplinary: Management of an organisation requires wide
knowledge about various disciplines as it covers handling of man, machine, and material and
looking after production, distribution, accounting and many other functions. Thus, we find
the principles and techniques of management are mostly drawn from almost all fields of study
like – Engineering, Economics, Sociology, Psychology, Anthropology, Mathematics,
Statistics etc.
6. Management is a group activity: Management is the activity that takes in formal groups or
organisations. As members of the organisation people work towards fulfilling the common
organisational goal. Unorganised groups of personas are mere crowds and they are largely
unmanageable.
7. Management is a dynamic function: management is a dynamic process which changes with
the change on time and circumstances. In order to be successful, an organisation must change
itself and its goals according to the needs of the environment.

1.3. Objectives of management:

Management is expected to work for the achievement of the objective of the particular
organisation in which it exits and the objectives if the society in which the organisation exists.
The objectives can be classified into organisational objectives, social objectives and personal
or individual objectives.

Objectives of
management

Organisational Personnel
Social Objective
Objective Objective

Maximum results
Resonable
with minium Economic growth
working condition
inputs

Training and
Survival,growth Employment
development of
and reputation Opportunity
employees

Employees'
Resonable profit Social welfare participation in
decision making
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1. Organisational Objectives: Management is responsible for setting and achieving objectives

for the organisation. It has to achieve a variety of objectives in all areas considering the
interest of all stakeholders including, shareholders, employees, customers and the
government. The main objective of any organisation should be to utilise human and material
resources to the maximum possible advantage, i.e., to fulfil the economic objectives of a
business. These are survival, profit and growth.
2. Social objectives: It involves the creation of benefit for society. As a part of society, every
organisation whether it is business or non-business, has a social obligation to fulfil. Thisrefers
to consistently creating economic value for various constituents of society. This includes
using environmentally friendly methods of production, giving employment opportunities to
the underprivileged sections of society and providing basic amenities like schools and
healthcare, etc., for community.
3. Personnel objectives: Organisations are made up of people who have different personalities,
backgrounds, experiences and objectives. They all become part of the organisation to satisfy
their diverse needs. These vary from financial needs such as competitive salaries and perks,
social needs such as peer recognition and higher-level needs such as personal growth and
development. Management has to reconcile personal goals with organisational objectives for
harmony in the organisation.

1.4. Importance of Management:

The existence and success of any organisation largely depends on the kind of management it
has. No amount of quality resources is going to help unless they are put to productive use by efficient
management. It is because of this reason that management is studied as a subject in almost every
discipline of study. In today’s scenario with globalisation, job specialisation, changing technologies,
new responsibilities of business, consumerism, competition and emphasis on research and
development, the role of management has grown multifold. Its importance is reflected in the positive
result that the organisation can get in respect of the following.

1. Accomplishing of group goals: An organisation consists of large number of persons. Each

person may be working effectively but the organisation may not achieve its goals unless the
contribution of each individuals are properly co-ordinated. Management creates team work
and coordination in the group.
2. Optimum utilization of resources: The management forecasts the need for material,
machinery, money and manpower. The management ensures that the organisation has
adequate resources and at the same time does not have idle resources.
3. Creating sound organisation: Sound management provides maximum satisfaction to its
employees and customers. A satisfied employee does not change his organisation even if he
gets a better opportunity. In the same manner, a satisfied consumer does not like to change
over to other products and services.
4. Change and Development: Management keeps itself in touch with the changes in the
environment and foresees development in the future. Accordingly, plans are made to keep the
organisation ready to meet the challenges. The technologies, operations, process as human
factors are developed on a continuous basis keeping an eye on the future.
5. Efficiency and Effectiveness: By proper planning, staffing, organising, coordinating,
directing, and its controlling activities, the management helps in achieving efficiency and
effectiveness to human efforts and operations.
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1.5. Nature of Management:

The term ‘management’ today has several different connotations that highlight the different
aspects of its nature. The study of management has evolved over a period of time along with the
modern organisations; based both on the experience and practice of managers and a set of theoretical
relationships. Over a period of time, it has grown into a dynamic subject with its own special
characteristics. However, one question that needs to be addressed pertaining to the nature of
management is whether it is a science or an art or both? In order to answer this, let us examine the
features of both science and art to see how far management fulfils them.

1. Management as a Science:
Science is a systematic and formulated knowledge based on careful observation,
experiments and inferences. It emphasises on analysis of data for arriving at a conclusion and
building up certain laws or principles which are universally accepted and applied.
Management is not exact science. It is a social science, economics and sociology, etc. The
principles of science have universal application and validity.
Thus, the essential features of science are as follows:
1. Basic facts or general principles capable of universal application.
2. It should be developed on the basis of scientific enquiry, experiments and
observation, etc.
3. It should be capable of establishing cause and effect relationship between
various factors.
4. Its principles should be verifiable.
5. It should have a systematic body of knowledge including concepts, principles
and theories.
To what extent management satisfies the above condition may be judged as follows:

a) Universal application of principles: this means the principles should be capable of

application in all situations and at all times. Exceptions, if any, can be logically
explained. For example, law of gravitation states that if we throw a ball in the air it
will fall on the ground due to gravitational force of the earth. This principle can be
applied in all countries and at all points of time.
Management contains some principles which can be universally applied. For
example, the principle of unity of command states that at a time only one employee
should be answerable to only one boss.
However, principles of management are not exactly like those of physics or
chemistry. They are flexible and need to be adjusted in different situations.
b) Scientific enquiry and experiments: the principles of science do not reflect the
opinion of an individual. Rather these can be scientifically proved at any time. They
are critically tested.
Management principles are also based on scientific enquiry and investigation.
These have been developed through experiments and practical experience of a large
number of managers.
c) Cause and effect relationship: Principles of science lay down a cause and effect
relationship between related factors. For example, when water is heated upto 100° C,
it starts boiling and turns into vapour. Similarly, the principles of management

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establish cause and effect relationship between different variables. For example,
proper motivation improves productivity.
d) Tests of validity and predictability: Validity of scientific principles can be tested at
any time and any numbers of times. Every time the test will give the same result.
Principles of management can be tested by comparing two persons, one having a
single boss and the other having two bosses. The performance of the first person will
be higher than that of second.
e) Systematic body of knowledge: Management has a systematic body of knowledge
consisting of general principles and techniques. These help to explain events and erve
as guidelines for managers in different types of organisation.
2. Management as an Art:
Art is the skilful and personal application of existing knowledge to achieve desired
results. It can be acquired through study, observation and experience. Since art is concerned
with personal application of knowledge some kind of ingenuity and creativity is required to
practice the basic principles learnt. The basic features of an art are as follows:

1. Practical knowledge
2. Personal skill
3. Result-oriented approach
4. Creativity
5. Improvement through continues practice.
To what extent management satisfies the above features may be examined as under:

a) Practical knowledge: A person may have adequate technical knowledge of painting

but he cannot become a good painter unless he knows how to make use of brush and
colours. Similarly, a person cannot become a successful manager simply by reading
the theory and getting a degree or diploma in management. He must also learn to
apply his knowledge in solving managerial problems in practical life.
b) Personal skill: The success of different artists differ when all of them posses the same
technical knowledge or qualifications. This is due to the level of their personal skill.
Similarly in management also, every manager has his individual approach and style in
solving managerial problems.
c) Result-oriented approach: Art seeks to achieve concrete results. The process of
management is also directed towards the accomplishment of desirable goals.
d) Creativity: An artist aims at producing something that had not existed before.
Therefore every piece of art requires’ imagination and intelligence to create. A
manager effectively combines and co-ordinates the factors of production to create
new goods and services.
e) Improvement through practice: Practice makes a man perfect. Every artist becomes
more and more efficient through constant practice. Similarly, a manager gains
experience through regular practice and become more effective.

Management is regarded as a science as well as an art. Science refers to a systematic body of

knowledge with reference to understanding of some phenomenon or subject or object of study. It
establishes a cause and effect relationship between variables. It is based on systematic explanation,
experimental analysis, critical evaluation and logical consistency.

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As for the art, it refers to bringing about the desired result through application of skill. It is a
personalised process and states that there is no best way of doing a thing. Thus, it is creative and it
improves by practice. Now look at management. Here also we apply a lot of skill (like technical,
conceptual, human etc.) and it is also creative in nature. Nobody can say that this is the best way of
managing. It varies from one manager to another. The more one manages, the more experienced and
expert he becomes. Thus, management is a combination of both science and art.

3. Management as a profession:
A profession may be defined as an occupation which involves renderings of personal services
of specialised nature, based on professional skill knowledge, education and training. The examples
are physicians, lawyers, accountants, etc.
Profession posses the following characteristics:

1. A body of principles, techniques, skills and specialised knowledge,

2. Formalised methods of acquiring training and experience,
3. The establishment of a representative organisation with professionalization as
its goals
4. The formation of ethical codes for the guidance of conduct.
Lets us examine to what extent management satisfies the above requirements.

a) Specialised body of knowledge: In order to practice a profession, a persona requires

specialised knowledge of its principles and techniques. There exist a substantial and a
rapid expanding body of knowledge in management. There should be competent
application or judicious utilisation of knowledge in solving complex problems. Today,
management is a separate discipline having a specialised and organised body of
knowledge.
b) Restricted entry: There exist institutions and universities to impart education and
training in management to prepare people for this profession. Several management
constancy firms have also come into existence to offer advice for solving managerial
problems. But no minimum qualification has been prescribed for manager by any
apex body.
c) Service motive: a profession is a source of live hood but professionals are primarily
motivated by the desire to serve the community. A manager of a factory is responsible
not only to its owners but he is also expected to produce quality goods at reasonable
cost and to contribute to the well being of the community.
d) Representative association: in every profession there is a statutory association or
institution which regulates and guides the profession. For example, The Institute of
Chartered Accountants of India establishes and administers standards of competence
for the auditors. In management also, associations have been established both in India
and abroad. Managers have formed associations for the regular exchange of
knowledge and experience, in India, there is All India Management Association.
However, this association does not have the statutory power to regulate the activities
of managers. Membership of this association is not compulsory in order ro be a
manager.

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 Module 1 - Introduction 8

e) Code of conduct:: Members of one one profession have to abide by a code of conduct
c
which contains rules and regulations providing the norms of honesty, integrity and
professional ethics. The All India Management Association has framed a code of
conduct for managers. The code requires the ma mangers
ngers to fulfil their social and moral
obligations. But this code does not have legal sanctions.
The discussion shows that management fulfils several conditions. But like other professions,
management does not restrict the entry into managerial jobs to peo
people
ple with special academic degree.
The management associations have no legal right to enforce their code of conduct. Thus,
management is not full-fledged
fledged profession like medicine, law, etc.

1.6. Levels of Management:

The term ‘Levels of Management’ means tthe he arrangement of managerial positions from
highest level to the lowest level in an organisation. All the Managerial activities cannot
cannot be performed
by an officer at the top and hence the activities are delegated to the different managers on the basis of
nature
ture and responsibilities of activities which creates a chain or levels among the managers. Broadly
speaking, management is a three-tier tier activity, the top tier centres the determination of missions,
objectives and activities, the middle--tier is concerned with
ith the implementation of the polices and the
lower –tier
tier assists in the achievements of the goals. Managers performing different types of duties
may, thus, be divided into three categories:

1. Top-Level
Level Management
2. Middle-Level
Level Management
3. Lower-Level
Level Management
Manageme

The following diagram will give you an idea about the functions, positions and relations of
different levels of management.

1. Top- Level management: The top level management derives its power or authority directly
from the owners of the enterprise, who constitute the upper most administrators of the
enterprise. The top level management consists of Board of Directors, Managing Director or
General Manager, Chairman, etc.
 Module 1 - Introduction 9

Functions of top level management:

i. Setting the overall objective of the enterprise.
ii. Formulation of basic policies, plans, programs, budgets, strategies, etc. for achieving the
main objective of the organisation.
iii. Delegating authority and responsibility.
iv. Appointment of key managerial personnel at the middle and lower levels of management.
v. Policy formation for guiding the decision-making.
vi. Issuing orders to get the work done.
2. Middle-Level management: The Job of middle-level management is to put the plans into
action. It consists of all the departmental and assistant managers namely, production, finance,
etc. They are concerned with the managerial functions of their departments.
Functions of Middle-Level management:
i. Plays a role of link between the top level and lower level management.
ii. Implementation of departmental policies.
iii. It provides for and looks after inter- departmental co-ordination and co-operation.
iv. Selecting the right man for the right job for their departments.
v. Issuing orders to departmental subordinates.
3. Lower-Level management: It consists of factory supervisor, superintendents, foeman, sales
supervisors, accounts officers, etc. They issue orders ad instructions and guide to day to day
activities.
Functions of lower-level management:
i. It does day to day operational planning.
ii. It arranges for all the facilities to the operators and provides them with and environment
conductive to their work performance.
iii. It provides leadership to operators and motivates them towards best performance.
iv. It supervises the work of operators to ensure that their performance is according to
standards and norms laid down in place.
v. It submits reports on the performance of operating staff to the middle management.

1.7. Distinction between Management and Administration:

SL. Basis of distinction Administration Management
1 Policy making and It is concerned with policy It is concerned with the
implementation making and in determination of implementation of the plans and
gaols, targets, objectives, etc. policies.
2 Main functions Planning and organising Motivation and controlling
3. Managerial level It relates to apex or top level It relates to Middle and lower level
management. management.
4 Nature of organisation It is used in relation to It is mainly used in business firms
government military, educational which have economic motives.
5 Status It consists of the owners of the It consists of managerial personnel
enterprise with specialised knowledge who
may be the employees
6. Influence Its decisions are generally Its decisions are influenced by
influenced by external factors like internal factors such as production
social, political, and legal. Etc. capacity, efficiency of employees,
tec.

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1.8. Functions of Management

Management is described as the process of planning, organising, staffing, directing and
controlling the efforts of organisational members and of using organisational resources to achieve
specific goals.

Figure 1.1. Functions of management.

1. Planning
It is the basic function of management. It deals with chalking out a future course of action &
deciding in advance the most appropriate course of actions for achievement of pre-determined goals.
According to KOONTZ, “Planning is deciding in advance - what to do, when to do & how to do. It
bridges the gap from where we are & where we want to be”. A plan is a future course of actions. It is
an exercise in problem solving & decision making. Planning is determination of courses of action to
achieve desired goals. Thus, planning is a systematic thinking about ways & means for
accomplishment of pre-determined goals. Planning is necessary to ensure proper utilization of human
& non-human resources. It is all pervasive, it is an intellectual activity and it also helps in avoiding
confusion, uncertainties, risks, wastages etc.

2. Organizing
It is the process of bringing together physical, financial and human resources and developing
productive relationship amongst them for achievement of organizational goals. According to Henri
Fayol, “To organize a business is to provide it with everything useful or its functioning i.e. raw
material, tools, capital and personnel’s”. To organize a business involves determining & providing
human and non-human resources to the organizational structure. Organizing as a process involves:

Identification of activities.
a) Classification of grouping of activities.
b) Assignment of duties.
c) Delegation of authority and creation of responsibility.
d) Coordinating authority and responsibility relationships.
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3. Staffing
It is the function of manning the organization structure and keeping it manned. Staffing has
assumed greater importance in the recent years due to advancement of technology, increase in size of
business, complexity of human behaviour etc. The main purpose of staffing is to put right man on
right job i.e. square pegs in square holes and round pegs in round holes. According to Kootz &
O’Donell, “Managerial function of staffing involves manning the organization structure through
proper and effective selection, appraisal & development of personnel to fill the roles designed in the
structure”. Staffing involves:

a) Manpower Planning (estimating man power in terms of searching, choose the person
and giving the right place).
b) Recruitment, Selection & Placement.
c) Training & Development.
d) Remuneration.
e) Performance Appraisal.
f) Promotions & Transfer.

4. Directing
It is that part of managerial function which actuates the organizational methods to work
efficiently for achievement of organizational purposes. It is considered life-spark of the enterprise
which sets it in motion the action of people because planning, organizing and staffing are the mere
preparations for doing the work. Direction is that inert-personnel aspect of management which deals
directly with influencing, guiding, supervising, motivating sub-ordinate for the achievement of
organizational goals.
Direction has following elements:

a) Supervision - It implies overseeing the work of subordinates by their superiors. It is

the act of watching & directing work & workers.
b) Motivation - means inspiring, stimulating or encouraging the sub-ordinates with zeal
to work. Positive, negative, monetary, non-monetary incentives may be used for this
purpose.
c) Leadership- may be defined as a process by which manager guides and influences the
work of subordinates in desired direction.
d) Communications- is the process of passing information, experience, opinion etc. from
one person to another. It is a bridge of understanding.

5. Controlling
It implies measurement of accomplishment against the standards and correction of deviation if
any to ensure achievement of organizational goals. The purpose of controlling is to ensure that
everything occurs in conformities with the standards. An efficient system of control helps to predict
deviations before they actually occur. According to Theo Haimann, “Controlling is the process of
checking whether or not proper progress is being made towards the objectives and goals and acting if
necessary, to correct any deviation”. According to Koontz &O’Donell “Controlling is the
measurement & correction of performance activities of subordinates in order to make sure that the

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enterprise objectives and plans desired to obtain them as being accomplished”. Therefore controlling
has following steps:

a) Establishment of standard performance.

b) Measurement of actual performance.
c) Comparison of actual performance with the standards and finding out deviation if any.
d) Corrective action.

1.9. Principles of Management

The term ‘principle’ may be defined as a statement of fundamental truth which is established
with reference to a ‘cause and effect relationship’ between two or more variables. Therefore, a
principle necessarily lends some sort of predictability to a science having principles of its own and
enables the use of the discipline to estimate or calculate the effects of certain causes and apply the
principle in practical field so as to make the science more purposeful and useful for other people in
the society.
A managerial principle is a broad and general guideline for decision making and behaviour.
For example while deciding about promotion of an employee one manager may consider seniority,
whereas the other may follow the principle of merit. One may distinguish principles of management
from those of pure science. Management principles are not as rigid as principles of pure science.
They deal with human behaviour and, thus, are to be applied creatively given the demands of the
situation. Human behaviour is never static and so also technology, which affects business. Hence all
the principles have to keep pace with these changes.

We will study the contributions of Fredrick Winslow Taylor and Henri Fayol. Both of them
contributed immensely towards the study of management as a discipline. Whereas F.W. Taylor was
an American mechanical engineer, Henri Fayol was a French mining engineer. Taylor gave the
concept of ‘Scientific Management’ whereas Fayol emphasised ‘Administrative Principles’.

1.9.1. Scientific management

Fredrick Winslow Taylor (March 20, 1856 - March 21, 1915) commonly known as ’Father of
Scientific Management’ started his career as an operator and rose to the position of chief engineer.
He conducted various experiments during this process which forms the basis of scientific
management. It implies application of scientific principles for studying & identifying management
problems.

According to Taylor, “Scientific Management is an art of knowing exactly what you want
your men to do and seeing that they do it in the best and cheapest way”. In Taylors view, if a work is
analysed scientifically it will be possible to find one best way to do it.

Hence scientific management is a thoughtful, organized, dual approach towards the job of
management against hit or miss or Rule of Thumb.
Principles of scientific management

1. Science, not the Rule of Thumb

This rule focuses on increasing the efficiency of an organisation through scientific analysis of
work and not with the ‘Rule of Thumb’ method. Taylor believed that even a small activity like

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loading paper sheets into boxcars can be planned scientifically. This will save time and also human
energy. This decision should be based on scientific analysis and cause and effect relationships rather
than ‘Rule of Thumb’ where the decision is taken according to the manager’s personal judgement.

2. Harmony, Not Discord

Taylor indicated and believed that the relationship between the workers and management should
be cordial and complete harmony. Difference between the two will never be beneficial to either side.
Management and workers should acknowledge and understand each other’s importance. Taylor also
suggested the mental revolution for both management and workers to achieve total harmony.

3. Cooperation, not Individualism

It is similar to ‘Harmony, not discord’ and believes in mutual collaboration between workers and
the management. Managers and workers should have mutual cooperation & confidence and a sense
of goodwill. The main purpose is to substitute internal competition with cooperation.

4. Development of Every Person to his Greatest Efficiency

The effectiveness of a company also relies on the abilities and skills of its employees. Thus,
implementing training, learning best practices and technology, is the scientific approach to brush up
the employee skill. To assure that the training is given to the right employee, the right steps should
be taken at the time of selection and recruiting candidates based on a scientific selection.

Techniques of scientific management

Taylor has devised the following techniques for actually implementing the principles of scientific
management.

1. Functional Foremanship
F.W. Taylor has propounded the functional organisation. This form of organisation is totally
based on the principle of specialisation and makes full utilisation of the expertise of various experts.
In a functional organisation, work is divided into many small parts and each part is assigned
to an expert. In this manner, all the benefits of specialisation are availed of.
Taylor has defined functional organisation as follows:

“Functional organisation consists of so dividing the management that each man from the assistant
superintendent shall have as few functions as possible to perform. The work of each man in the
management should be confined to the performance of a single leading function.”
Taylor has suggested the division of the work of factory manager into two sub departments:

i. Planning department,
ii. Production department.

The experts in the planning department do planning and the experts in the production
department help in production.

i. Specialists of Planning Department and their Functions:

a) Route Clerk:

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This clerk ensures the sequence of completing a particular work, meaning thereby the stages
it shall have to pass before being finalised. He also decides the job to be done for the day and
where it is to be done.
b) Instruction Card Clerk:

This clerk prepares the instruction cards for the workers and hands them over to the gang
boss. These cards contain information about the nature of the work, procedure of doing it,
material to be used and the details about machinery.
c) Time and Cost Clerk:

This clerk decides as to when a particular work is to be started and finished, meaning thereby
as to what time the whole work will take place. It is also decided at the same time at what
cost the product will be produced.
d) Discipline Officer:
The discipline officer ensures that every work is being performed in a disciplined manner.

ii. Specialists of Production Department and their Functions:

a) Gang Boss:

The workers are divided into various groups from the point of view of control. A group
leader is selected who is known as the gang boss. He is expected to ensure that both the
workers and the machines are fit enough for production and that the material required for
their use has been made available to them.
b) Speed Boss:

The main function of the speed boss is to ensure that all the workers are performing their job
at the required or expected speed. If it is not so, the speed boss tries to find out the cause of
slow speed and hence a solution for it.
c) Repair Boss:
The main function of the repair boss is to keep the machines and tools in working condition.
d) Inspector:

He inspects the things produced and compares their quality with the standard prescribed for
them and tries to find out the difference. In case of unfavourable result he initiates corrective
action.

2. Standardisation of Work
Standardisation means setting standards for different factors, after due deliberation. For
example, the amount of work to be done by a worker in a day may be standardised. In other words,
the worker is expected to do the standard amount of work every day. In the same manner standards
may also be set for raw materials, machines and tools, techniques, conditions of work, etc.
The following is a brief description of such standards:

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i. Standardised Material:

By standardisation of material we mean that the raw material provided should be

according to the quality of finished goods required.

For example, if for producing ‘A’ quality of finished goods ‘X’ quality of raw
materials are required (and the same has been determined after due deliberation), then we can
say that for ‘A’ quality of finished goods ‘X’ quality of raw materials have been standardised.

In the future whenever it is required to produce ‘A’ quality of finished goods, ‘X’
quality of raw materials will be used without any hesitation. By doing so good quality of
finished goods can be produced in the least possible time.
ii. Standardised Machines and Tools:

Standardisation of machines and tools ensures that they are of the required quantity
and type to produce the desired finished goods.

For example, if for producing ‘A’ quality of finished goods ‘X’ machine and M, N
and O tools are required, then whenever finished goods of’ A’ quality are to be produced, it
can be done with the use of ‘X’ machine and M, N and O tools.

Standardisation of machines and tools will reduce errors on the part of workers as to
which machine or tools are to be used, and hence work can proceed at a much faster pace.
iii. Standardised Methods:

By standardising the optimum techniques of doing work, it can proceed at a faster

pace and with much greater ease. The technique determined for doing a particular work is
used uniformly whenever such work is performed.
iv. Standardised Working Conditions:

Working conditions have a very deep impact on the efficiency of workers. In

standardising working conditions, it is noted that how much temperature, ventilation,
lighting, cleanliness and safety is necessary at the workplace.

After due studies, the working conditions are standardised and efforts are made to
maintain them at the workplace.

3. Simplification
Simplification means putting an end to the unnecessary types, qualities, sizes/weights, etc.
For example, it is all right for a shoe manufacturing company to manufacture shoes of 0, 1, 2, 3, 4, 5,
sizes but if it starts manufacturing shoes of 0, 0.5, 1, 1.25, 1.5, 1.75, 2, 2.25, 2.5, 2.75, 3, it will be
simply wrong.

There is no justification in the difference of such sizes. In such a situation different types of
machines shall have to be installed, more stock shall have to be maintained and increased labour
costs shall have to be borne.

Therefore, it is advisable to manufacture shoes only of the proper sizes. In other words,
simplification of the product is the answer.

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Objectives of simplification:

i. Effecting economy in the use of machines.

ii. Bringing down the labour cost with the help of specialisation. (The benefits of
specialisation can be obtained by restricting specialisation only to a few products.)
iii. Affecting economy in the staff.

4. Scientific Study of Work

It means to conduct the deep analysis of all the activities being performed in the organisation with
the aim of producing maximum possible quality output at minimum costs. Taylor has conducted the
following studies:
i. Method Study,
ii. Motion Study,
iii. Time Study, and
iv. Fatigue Study.

i. Method Study:

It refers to identify the most suitable way to do a particular activity. To conduct this
study, process chart and operation research techniques are used. The main objective of this
study is to minimise the cost of production and maximise the quality and level of consumer
satisfaction.
ii. Motion Study:

It refers to conduct the study of motions being performed by workers and machines while
doing the job. The movie camera is used to conduct this study. The main objective of this
study is to eliminate the unnecessary motions.
For example, during an experiment it was found that while laying a brick, a mason was
conducting 18 different activities, but after eliminating the unnecessary activities the number
of activities could be reduced to five, and in certain cases even down to two activities.
iii. Time Study:

It refers to determine the standard time required to complete a particular activity. The
standard time is determined on the basis of average time taken by the several experiences of
the same work.
This study is conducted with the help of a stopwatch. The main objectives of the study are

a) to get the estimated figure of labour costs,

b) to determine the number of required workers and
c) to decide about the suitable incentive plan.

iv. Fatigue Study:

It refers to determine the duration and frequency of rest intervals to complete a particular job.
The rest refreshes the workers. They work again with their full capacity.

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The main objective of this study is to maintain the efficiency level of workers. There may be
so many causes of fatigue, such as long working hours, poor working conditions, unsuitable
work, unhappy relations with the boss, etc.
5. Differential Wage System/Differential Piece Rate

Taylor has advised the adoption of differential wage systems in order to motivate the
employees. According to this system, wages are paid on the basis of work done and not on the basis
of time spent in doing the work.

In this system two different wage rates are used: one is the high wage rate and the other is the
low wage rate. Those workers who are able to produce the standard number of units within a fixed
duration are paid as per the high wage rate, and those workers who are not able to produce the
standard number of units within the same time are paid as per the lower wage rate.

For example, let the standard output per day be 20 units and the two wage rates be 5 per unit
and 4 per unit respectively. Worker ‘A’ produces 20 units in a day and in doing so he earns 100 (20
units X 5 per unit).

Another worker ‘B’ produces only 18 units in a day and hence he will earn only 72 (18 units
x 4 per unit). In this way, even though ‘B’ has produced only 2 units less than ‘A’ the difference in
their wages will be 28, (i.e.100 – 72).

As a result, less efficient workers will be motivated to work more and efficient workers will
be motivated to maintain their efficiency.
6. Mental Revolution

Mental revolution calls for a change in the mindset of both employers and workers. As per
Taylor, a revolution in mindset of both the employers and the workers is required because it will
promote feeling of cooperation, and will be beneficial to both the parties.

Normally, it is seen that conflict between employers and workers results in division of profits,
with both the parties demanding a larger share of profits.

This is the main reason why a mental revolution is required. According to Taylor, instead of
fighting over division of profits, both the parties should make efforts for increasing the profits. Such
a situation will result in an increase in production, and as such a high increase in profits that will
make any talk of division of profits meaningless.

1.9.2. Fayol’s Principles of Management

Henri Fayol, a famous industrialist of France, has described fourteen principles of
management in his book General and Industrial Management.

While Taylor succeeded in revolutionising the working of factory shop-floor in terms of

devising the best method, fair day’s work, differential piece-rate system and functional foremanship;
Henri Fayol explained what amounts to a manager’s work and what principles should be followed in
doing this work. If workers’ efficiency mattered in the factory system, so does the managerial
efficiency. Fayol’s contribution must be interpreted in terms of the impact that his writings had and
continue to have improvement in managerial efficiencies.

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Explaining the difference between ‘principles’ and ‘elements’ he makes it clear that the
principles of management are fundamentally true and establish a relationship between cause and
effect, while the ‘elements’ of management point towards its functions.

While presenting the principles of management Fayol has kept two things in mind. Firstly,
the list of the principles of management should not be long but should be suggestive and only those
principles should be explained which become applicable in most of the situations.
Secondly, the principles of management should be flexible and not rigid so that changes can
be made in them in case of need. For his contribution he is also known as the ‘Father of General
Management’
The fourteen principles given by Fayol are as under:
1. Division of Work:

This principle of Fayol tells us that as far as possible the whole work should be
divided into different parts and each individual should be assigned only one part of the work
according to his ability and taste rather than giving the whole work to one person.

When a particular individual performs the same job repeatedly, he will become an
expert in doing that particular part of the whole job. Consequently, the benefits of
specialisation will become available.

Thus, division of work facilitates specialisation and improves efficiency. It may be

noted that this principle applies to both managerial work and non-managerial work (i.e.
technical).
2. Authority and Responsibility:

According to this principle, authority and responsibility should go hand in hand. It

means that when a particular individual is given a particular work and he is made responsible
for the results, this can be possible only when he is given sufficient authority to discharge his
responsibility.

If a person is given authority without corresponding responsibility, there may be

arbitrary and unmindful use of authority. Similarly, if a person is given some responsibility
without adequate authority, such person will be ineffective

It is not proper to make a person responsible for any work in the absence of authority.
In the words of Fayol, “The result of authority is responsibility. It is the natural result of
authority and essentially another aspect of authority and whenever authority is used,
responsibility are automatically born.”
3. Discipline:

Discipline is essential for any successful work performance. Fayol considers

discipline to mean obedience, respect for authority, and observance of established rules. It is
required for smooth running of the organisation. It must be enforced throughout the
organisation.

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Discipline can be established by providing good supervision at all levels, clearly

explaining the rules, and implementing a system of reward and punishment. A manager can
present a good example to his subordinates by disciplining himself.
4. Unity of Command:

According to the principle of unity of command, an individual employee should

receive orders from only one superior at a time and that employee should be answerable only
to that superior. If there are many superiors giving orders to the same employee, he will not
be able to decide as to which order is to be given priority. He thus finds himself in a confused
situation.

Such a situation adversely affects the efficiency of the subordinates. On the other hand, when
there are many superiors, every superior would like his orders to be given priority. This ego
problem creates a possibility of clash. Consequently, their own efficiency is likely to be
affected.
5. Unity of Direction:

Unity of direction means that there should be one head for one plan for a group of
activities having the same objective. In other words, there should be one plan of action for a
group of activities having the same objective and there should be one manager to control
them.

This principle emphasise the importance of common goals being pursued by all in a
group activity under the direction of one head.
Difference of Unity of Command & Unity of Direction
Basis Unity of command Unity of direction
1. Meaning It implies that a subordinate should It implies that activities having same
receive orders from one boss only objectives should be directed by only one
man under one plan
2. Guiding principle One subordinate and one boss. One head and one plan.
3. Necessity It is necessary to fix responsibility to It is necessary for sound organisation.
each subordinate
4. Aim It aims at avoiding duplication, It aims at co-ordinating group efforts and
overlapping and confusion bringing uniformity in the work.
5. Implication It affects an individual employee. It affects the entire organisation.

6. Subordination of Individual Interest to General Interest:

This principle can be named ‘Priority to General Interest over Individual Interest.’
According to this principle, the general interest or the interest of the organisation is above
everything. If one is asked to place individual interest and the general interest in order of
priority, definitely the general interest will be placed at the first place.

For example, if a manager takes some decision which harms him personally but
results in a great profit to the company, he should certainly give priority to the interest of the
company and take the decision accordingly. On the contrary, if some decision helps the

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manager personally but results in a great loss to the company, then such a decision should
never be taken.
7. Remuneration to Employees:

The employees should get a fair remuneration so that the employees and the owners
find equal amount of satisfaction. It is the duty of the manager to ensure that employees are
being paid remuneration according to their work. If, however, they are not paid properly for
their work, they will not do their work with perfect dedication, honesty and capacity.

As a result, the organisation shall have to face failure. Proper remuneration depends
on some factors like the cost of living, demand of labour and their ability. Fayol feels that in
order to motivate the employees, apart from general remuneration, they should be given some
monetary and non-monetary incentives.
8. Centralisation and Decentralisation:

According to this principle, the superiors should adopt effective centralisation instead
of complete centralisation and complete decentralisation. By effective centralisation, Fayol
does not mean that authority should be completely centralised.

He feels that the superiors should keep the authority of taking important decisions in their
own hands, while the authority to take daily decisions and decisions of less importance
should be delegated to the subordinates.

The ratio of centralisation and decentralisation can differ in different situations. For example,
it is advantageous to have more centralisation in a small business unit and more
decentralisation in a big business unit.

For example, the decisions in respect of determining the objectives and policies, expansion of
business, etc. should remain in the hands of the superiors. On the other hand, authority for the
purchase of raw material, granting leave to the employees, etc. should be delegated to the
subordinates.
9. Scalar Chain:
(i) Meaning of Scalar Chain:
It refers to a formal line of authority which moves from highest to the lowest ranks in a
straight line,
(ii) Fayol’s Opinion:
This chain must be followed in a strict manner. It means each communication must move
from top to bottom and vice versa in a straight line. The important condition here is that no
step (post) should be overlooked during communication.
(iii) Fayol’s Ladder:
Fayol has explained this principle with the help of a ladder.

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Figure 1.2. Scalar chain

For example, in a company the employee ‘E’ wants to have contact with the employee
‘P’. According to the principle of scalar chain ‘E’ shall have to reach ‘A’ through the medium
of D,C,B and then having contact with M,N,0 shall reach ‘P’. Thus ‘E’ shall have to take the
help of all the nine steps (posts) to have business contact with ‘P’.
(iv) Utility:
Due to more clear system of authority and communication, problems can be solved faster.
(v) Gang Plank:

It is the exception of the principle of scalar chain. This concept was developed to
establish a direct contact with the employee of equal rank in case of emergency to avoid
delay in communication.

For example, as shown in the diagram employee ‘E’ can have direct contact with
employee ‘P’. But for doing so employees ‘E’ and ‘P’ shall have to seek the prior permission
of their immediate bosses ‘D’ and ‘O’. The details of their talk also shall have to be given to
them.
10. Order:
According to the principle of order, a right person should be placed at the right job
and a right thing should be placed at the right place. According to Fayol, every enterprise
should have two different orders-Material Order for Physical Resources and Social Order for
Human Resources.

Keeping the physical resources in order means that ‘a proper place for everything and
everything in its right place’. Similarly, keeping the human resources in order means ‘a place
for everyone and everyone in his appointed place’.

Maintaining these two orders properly will ensure that everybody knows his workplace, what
he is to do and from where he would get his required material. Consequently, all the available
resources in the organisation will be utilised properly.
 Module 1 - Introduction 22

11. Equity:

This principle tells that the managers should treat their subordinates in a just and kind
manner so that they develop a feeling of dedication and attachment for their work. All the
employees should be treated equally and impartially.

Fayol tells us in connection with this principle that there should not be any equality of
treatment between a person whose work is really good and a person who is a shirker by
nature.

Rather, the latter should be treated sternly. Doing so would be equitable. It is because of this
point of view that Taylor has presented his differential remuneration method.
12. Stability of Personnel:

From the point of view of management it is absolutely harmful to change the

employees frequently as it is a reflection of inefficient management. Therefore, according to
this principle there should be stability of tenure of the employees so that the work continues
efficiently.

Fayol thinks that instability in the tenure of employees is a cause of poor management and
results. High rate of labour turnover will result in increased expenses because of selecting
them time and again, and giving them training afresh.

It also lowers the prestige of the organisation and creates a feeling of insecurity among the
employees which keeps them busy in finding out new avenues of work. Consequently, the
sense of dedication cannot be created among them.

For example, it is true that if the workers in a company are not treated well and the
atmosphere in the company is also unhealthy, the employees will not stay for a long time. In
other words, they will leave the company at the first opportunity available. This situation is
absolutely harmful.

For example, a labourer completes 10 units of goods in a day. Another labourer who happens
to be a relative of the supervisor completes 8 units but both get equal remuneration. This
violates the principles of equality. The second labourer should get less remuneration than the
first one.

13. Initiative:

Initiative means the capacity to work while expressing one’s thoughts. According to
Fayol, it is the duty of the manager to encourage the feeling of initiative among his
employees for doing some work or taking some decision but within the limits of authority
and discipline.

It will be possible only when the manager will welcome the thoughts of his/her subordinates.
By doing so the subordinates will present new and useful ideas time and again and gradually
they will become an integral part of the organisation. In order to make this process a success
a manager will have to abandon his false sense of prestige.

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For example, a salesman suggests to his sales manager to implement a new advertisement
technique. The sales manager sends him away by telling him that it is not possible and
ignores the suggestion altogether.

In such a situation the salesman, who has been admonished and belittled, will never venture
to offer any suggestion in future because his desire of taking initiative has been suppressed.

On the contrary, if his suggestion had been listened to carefully (even though not to be
implemented) he could have taken the courage to offer some suggestion in future. Such an
action would simply have encouraged his initiative.
14. Esprit de corps:
As per this principle, a manager should continuously make efforts to develop a team
spirit among the subordinates. To do this, he/she should use the word ‘We’ instead of” during
the conversation with subordinates. This principle emphasis the need for teamwork. It
facilitates the development of an atmosphere of mutual trust and understanding among
employees and minuses the need to use penalties for default.

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