MANAGEMENT

MODULE I

Syllabus
Introduction Meaning Nature and characteristics of Management Scope and functional areas of Management Management as a Science, Art or Profession, Management & Administration Roles of Management Levels of Management Development of Management ThoughtEarly Management Approaches-Modern Management Approaches.

Management concept
What is organization? Group of people working together in a systematic manner to achieve a set of goals Understanding Management from resourcebased perspective: Human Resource Financial Resource Physical Resource Information Resource

Resources in organizations
1]Human: managerial talent and labour 2]Financial: capital used to finance both ongoing and long term operations. 3]Physical: raw materials, office, production facilities equipment 4]Information: Usable data needed to make effective decisions

HOW DO MANAGERS COMBINE AND COORDINATE THE VARIOUS KINDS OF RESOURCES?

Management in organizations

Mangers engage in above activities to combine 4 resources efficiently and effectively and to work toward achieving goals of the organization

What is management?

A set of activities (including planning and decision making, organizing, leading, and controlling) directed at an organizations resources (human, financial, physical, and informational) with the aim of achieving organizational goals in an efficient and effective manner.

All sizes of organization

top -------bottom

All organizational areas manufacturing Accounting Finance HRM

Management is needed in

All types of organization Profit--non profit

All organizational level Bottom-------top

Efficient Vs Effective
1. 2.

Efficient Doing the things right Focuses on the process or means of doing things Using resources wisely in a cost effective way and Getting most output from least amount of inputs Efficiency restricted to the present state Efficiency will look at avoiding mistakes or errors Since efficiency is about doing things right, it demands documentation and repetition of the same steps. Doing the same thing again and again in the same manner will certainly discourage innovation

1. 2. 3. 4.

3.

4.

5.
6.

5.

6.

Effective Doing the right things Focuses on achieving the end goal. Making right decisions and successfully implementing them Effectiveness involves thinking long term Effectiveness is about gaining success Effectiveness encourages innovation as it demands people to think, the different ways they can meet the desired goal.

Contd..

Who is a Manager?

One who plans, makes decisions, organizes, leads and controls human, financial, physical and information resources. Helping others to do their work Responsible for getting things done

Other Definitions

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

Nature & Characteristics of Management

1. Multidisciplinary: Because it includes knowledge, information from various disciplines like economics, statistics, psychology, sociology, operations research etc. Management integrates ideas and concepts taken from these disciplines and presents newer concepts which can be put in to practice for managing organizations. 2. Dynamic nature of principles: It tries to visualize problems before they turn in to emergencies & takes suitable steps. It tries to adapt itself to environmental changes quickly. According to Peter Drucker; Managers do not wait for future, they make the future

Contd..
3. Relative not absolute principles: Management principles should be applied according to the need of the organization. A particular management principle has different strengths in different conditions 4. Universality of the management: Basic principles of management can be applied in all managerial situations regardless of size, nature and location of the organization. Universality of managerial tasks and principles also implies that managerial skills can be transferrable and managers can be trained and developed.

Contd..
[Link] science or art: Management is both science as well as art. Its a behavioural science. [Link] is a system of authority: A manager is supposed to get things done by using authority, rather than doing things himself. Authority means right to give orders and power to obtain objective from subordinates. Its a rule making and rule entering body in an organization.

Management Science or Art Art: Art is a systematic application of a skill or knowledge for the accomplishment of results

It represents methods or ways of doing specific things to effect change and accomplish results through deliberate efforts.

Management as an Art

Personal Skill: Manager has to use his skill, knowledge to solve many complimented problems on day to day basis. Practical Knowledge: Management does not merely mean systematic presentation of principles, these principles can be applied in practical to get better results Result Oriented: Management is concerned with accomplishment of objectives, it is result oriented and for that it leads, directs others towards attaining desired goals.

Regular Practice: Efficiency and effectiveness can be attained through regular practice. Like an artist manager also practices regularly so that he can work better and can get output in an effective and efficient manner Creativity: Any art work can be considered as a creative work. Like an art, management is one of the most creative arts as it deals with getting things done through others by motivating their efforts in an innovative manner

Science

Science is a systematic body of knowledge that is developed through observation and experimentation and can be verified Scientific principles establish a cause and effect relationship between various factors Mere knowledge or collection of facts does not qualify as science. It is only when the gathered knowledge is verified in different geographies and over a period of time it becomes science

Management as a Science

Systematic body of knowledge: Management is an organized body of knowledge built up by management practitioners, philosophers and thinkers by conducting extensive research and verification of the same over the years. Principles of management make use of scientific methods. Taylor applied scientific techniques like time and motion study, work study etc Cause and effect relationship: In management also cause and effect relationship is studied. Poor planning cause low productivity, lack of employee benefits, low salary cause high attrition, poor marketing cause less sales etc

Continuous observation: Principles of management have been developed on the basis of continued observations by many theorists and practitioners over a period of years.

Validity and predictability: Scientific principles represent basic truth and can be applied at all times to all situations. In management also there are certain fundamental principles which can be universally applied and repeatedly tested to verify its validity and predictability, reliability

Management as pure science suffers from following limitations

Principles of management dont always have a universal application. Unity of Command, which means reporting to one superior. It does not mean that he should not report to more than one boss, if superiors have better understanding, know how to balance between the advantages and disadvantages of multiple commands, an employee can have more than one superior. Human beings behavior can not be predicted Management lack certainty about the result.

Conclusion

Science is concerned with knowing why and art is with the how of application management is a mixture of art and science. As an art it demands certain skills from its practitioner and as a science it provides its practitioner with a systematic body of knowledge comprising certain principles laws etc, which have been tested and verified. Management is a crude science because its application varies from person to person and from one situation to another. We can conclude that management is a behavioural science.

Is administration and management one and the same?

No universally accepted view on this point. American school of thought says Administrators think- Top level function Managers do- Lower level function British School of Thought Management is wider concept than administration Administration is a lower level function of day to day activities Management is rule making and rule enforcing activity There is really no clear cut distinction between management and administration-Govt. agencies have administration, Companies have Management

Attributes Nature of work

Administration Concerned about the determination of objectives and major policies of an organisation. Determinative

Management Puts into action the policies & plans laid down by administration.

Type of function

Executive

Level of authority
Main functions Scope

Top level activity

Planning & organising Takes major decision of an enterprise as a whole Popular with government, military, educational & religious organisations

Middle level activity

Motivating & controlling Takes decisions within framework set by administration Used in business enterprises.

Nature of usage

Management as a profession

Profession means an occupation backed by specialized knowledge, expertise and training. The following criteria identifies the statues of a profession to management: Profession is a body of specialized knowledge. Professional knowledge in systemized and codified form can be learned through formal education system. A profession emphasizes on having a central body to formulate a code of behavior for its members. A profession calls for rendering competent and specialized services to clients. A profession maintains the scientific attitude and commitment for discovering new ideas and upgrading in order to improve quality of service and level of efficiency provided to clients. A profession requires members to exercise restraint and self-discipline. Like a Doctor, Managers [consultants] do charge fees on services rendered.

Scope of management
The scope defines the boundaries and the realm of a discipline. The scope of management comprises the following activities:

Intellectual activities of management: as management involves getting things done through and with others, so most of managerial activities are intellectual activities. This enable the manager to accomplish his/her goals and objectives in an effective and efficient manner. Some of these activities are: planning, organizing, directing, coordinating, reporting, budgeting and controlling.

Effective and Efficient utilization of resources: Attainment of productivity in the operations aimed at generating surplus is the key element of management. In other words, management represents an approach that is focused on transformation of inputs into desired outputs in an efficient manner.

Creativity and innovation: the key responsibility of management is to look for innovative solutions to the issues or concerns at hand. Management has to adequately balance the need for stability with the desired level of change for regularly aligning the organization with the changing business environment. Beyond Business administration: Management has been mistakenly equated only with the domain of business administration. This wrong perception has proved detrimental for the discipline of management as it has led to the exclusion of trained management professionals from organizations that do not fall under the purview of conventional trade and commerce. Even the institutes, which impart management education, are being increasingly termed as B-schools. Functional activities of management: the domain of management is classified into a number of specialized functions. Some of the select and leading functions of management are: Financial management, marketing , sales and distribution management, human resource management, production management, R&D management, Purchase management, supply chain management, office management etc.

Functions/Process of Management

These solid lines describe basic logic between activities theoretically. Practically, dotted arrows show that most managers engage in more than one activity at a time and often move back and forth between the activities in unpredictable ways. Manager is likely to be engaged in different activities simultaneously.

Functions of management dont usually occur in a tidy, stepby-step fashion. Managers are constantly engaged in many different activities. A manager may be helping a colleague develop goals for the next quarter-planning, discussing a proposed company restructuring- organizing, praising a subordinate for outstanding performance-leading, and checking on last months sales information- controlling.

FUNCTIONAL AREAS OF MANAGEMENT

Marketing management : marketing management is management process through which goods and services move from concept to customers. It is based on thinking about business in terms of customers needs and satisfaction. As practice it consist in coordination of four elements a) identification, selection and development of product b) determination of its price c) selection of distribution channel to reach customers place d) development and implementation of promotional strategy. Human resource management : is defined as acquiring, developing, motivating, and maintaining human resources to meet the organizational goals. Human resource function include recruitment, selection, training and development, employee relations, compensation management, employee welfare, career planning etc.

Finance management : is planning, directing, monitoring, organizing and controlling of monetary resources in organization. It is concerned with resources allocation, resources management etc. it deals with matters related to money and money markets. Production and operations management : it is management of organizations productive resource or its production system which converts inputs into organizations products and services.

LEVELS OF MANAGEMENT

Top level management Middle level management Lower level management

Cont..

Managing at Different Levels of the organization:

TOP LEVEL MANAGEMENT Small group of executives who manage the overall organization, the strategic level. It is highest level in managerial hierarchy and ultimate source of authority in organization. Top level managers are accountable to owners and all stake holders of the organization and responsible for overall management of company. Major functions of top level management are : I. To make corporate plans for the entire organization. II. To decide upon matters which are vital for survival like profitability and growth of company. III. To allocate resources for various projects and department. IV. To direct middle and lower level management in company.

MIDDLE LEVEL MANAGEMENT [middle level managers ]

A large group that implement the strategies developed at the top. Some of managerial positions are created at middle level management in order to fulfill the gap which exist between functional and operational level. Middle level management consist of departmental managers, deputy managers, administrative managers etc. Functions of middle level managers are I. To prepare departmental plans within framework of corporate plans give by top level management. II. To establish departmental goals III. To decide about means of achieving goals IV. To monitor lower level managers by coordinating their activities.

LOWER LEVEL MANAGEMENT [First-Line Managers]

Lowest point in managerial hierarchy is represented by lower level management. Supervise and coordinate the activities of operating employees. This level consists of supervisors, inspectors, section officers etc. Functions of lower level management are : a) To get things done by core group of workers at operational level. b) To prepare plans for their activities c) To issue orders and instruction d) To guide and assist workers e) To motivate workers.

ROLES OF MANAGEMENT Henry Mintzberg a contemporary management thinker has done research on various roles performed by manager. A role according to him is an organized set of behavior belonging to an identifiable office or position. He has classified 10 managerial roles in three broad categories : Interpersonal roles : managers have to work with many people in organization. Because of their formal authority and superior status, managers have to establish good interpersonal contact with subordinates peers and superiors. Informational roles : information is life blood of any organization and every manager is a clearing house of information related to various task on hand. Decisional roles : involve around making choices among available alternatives. Through decisional roles, strategies are formulated and put into action.

INTERPERSONAL ROLES a) Figure head role : symbolic head. Need to perform number of routine duties. Greeting visitors, represent company or community events, welcome new staff etc.
b)

Leader : role to motivate, influence and direct subordinates, staffing, training. All activities of managers involve handling subordinates. Liaison : connect people outside and maintaining network of contacts like buyers, suppliers, strategic partners. It involves mail coordinating external board work.

c)

INFORMATIONAL ROLES a) Monitor : scan environment and receive wide variety of information from internal and external sources to understand organizational environment. Handling mails, contacts, reading periodicals and reviewing.
b)

Disseminator : transmitting subordinates information to inform staff about company related matters. The manager passes some of his privileged information directly to his key subordinates who would otherwise have no access to it. Spokesperson :deliver information to specific person to individual and groups outside. It comprises of holding board meeting, press conference etc.

c)

DECISIONAL ROLES a) Entrepreneur: In this role, the manager proactively looks out for innovation to improve his organization. searches of new opportunity projects, methods, products. Strategy making, new product launch entry into new markets. b) Disturbance handler: in this role addressing unanticipated problems. Handling issues like excess inventory, production breakdown etc. c) Resource allocator: allocating organizational resources like money, materials. Which includes budget allocation, decision like who should get what. d) Negotiation: representing organization for various negotiations like union management negotiation, sales negotiation, purchase negotiation etc.

Managerial Skills
Conceptual Skills Mental ability to analyze and diagnose complex situations Allow Managers to see how things fit Human Skills Ability to work with, understand, mentor and motivate others Both individually and as a group Many managers fail in this Technical Skills Ability to apply specialized knowledge or expertise

Evolution of management thought

Introduction First known management ideas were recorded in 5000 BC when Sumerian Traders developed written records for government The Egyptians used management functions of planning, organizing, and controlling when they constructed the pyramids. Roman empire and their military hierarchy, public administrative systems.

Evolution of Management Thought

Evolution of management Thought

Early Management Approaches

Neo Classical Approaches Early Classical Approaches

Modern Approaches Quantitative Approach System Approach Contingency Approach

Scientific Management Administrative Mgt Bureaucratic Organization

Human Relation Approach Behavioural Science Approach

Classical Approach Scientific Management

Frederick Winslow Taylor(18561915) Graduated in science and engineering through evening study

1878- joined as Midvale steel works.

worker

at

1898- joined Bethlehem steel company as Engineer Acknowledged as Father scientific Management of

Steps in Scientific Management

Frederick Winslow Taylor is considered to be father of scientific management. During his career span of 26 years, he conducted series of experiment in three companies at this time Taylor made several important contributions which are classified under scientific management : 1. Time and motion study : Taylor focused in time duration required by employees to accomplish given task, in which he timed motion of job with help of a stop watch. Thus through this best way of doing job was found. 2. Differential payment : Taylor introduced payment plan in which employee remuneration is linked to performance of employee in company.

[Link] reorganization of supervision : Taylor suggested two new concepts in which he was of opinion that work should be planned by foreman and not by worker, secondly as there are special functions involved in doing a job and each of these foreman should give orders to workers based on their specialization. [Link] recruitment and training : Taylor suggested that management should develop and train every worker to get best quality of output, desired behavior from employees in company. [Link] friendly cooperation between management and workers : Taylor was of opinion that organization success depends upon effective cooperation and coordination between management and employee in company.

Limitations of scientific management

It ignored human touch in an organization and viewed workers as machines

Monotonous and boring job

Exploitation device Harsh and difficult to perform

Administration Management

Scientific management deals with improving efficiency and productivity of individual employees

Administrative management managing whole organization. Henry Fayol [1841-1925] contributor to this approach is

focuses

on

the

main

Henry Fayol [1841-1925]

A French Industrialist

Regarded as Father of Modern Management Theory

Suggested conceptual framework for studying management by dividing industrial activities into 6 groups Technical Financial Security Accounting Managerial Commercial

Identified 5 managerial functions to carry out these activities; planning, organizing, commanding, coordinating and controlling. Fayol was the 1st management thinker to recognize need for management teaching Believed that management was an activity common for all organizations including government agencies Published a famous book named General And Industrial Management In his book, he presented 14 principles of management for running an organization efficiently.

Fayols 14 principles of management

1. Division of Work:

division of total task lightens the work, specialization[one person does only one thing] increases the efficiency and output. [Link] between Authority and responsibility: managers should balance between both. They should have right to give orders and should own accountability for the task [Link]: Respect of authority and following rules. Clarity of rules, built in rewards, punishments help to maintain discipline 4. Unity of Command: One should receive orders from only one superior 5. Unity of Direction: there should be single plan and head for each group of activity with same objective/ direction

6. Subordination of Individual interests to general interests Individuals interests should be harmonious with organizations interests. Integrate the both 7. Fair remuneration to workers: Remuneration should be based on cost of living, business condition. Additional works should get incentives. This increases morale and efficiency
8. Centralization: Major decisions should be taken by Top Management, operations level decision making power can be given to lower level. 9. Scalar Chain: Chain of superiors from highest to lowest ranks. Authority should run from top to bottom in proper channel 10. Order: there should be a place for everything and every thing should be in its place

11. Equity: managers should be kind and fair to their workers 12. Stability of tenure of personnel: Try to minimize employees turnover, build long term commitment, a sense of belongingness among their subordinates. Provide job security 13. Initiative: Managers should encourage their subordinates to take initiatives. 14. Esprit de corps:[ team spirit] Management should create team spirit among employees for harmony and unity

Bureaucratic Management

Max Weber (1864-1920) German sociologist Known as Father of Modern Sociology

Contd..
Focuses on development and implementation of rational guidelines like organizations structure, hierarchy of authority, rules and procedures, division of roles and responsibilities for managing work in an organization.

Webers Principles of Bureaucracy

Neo Classical Approaches

Behavioural Science Approach
Unlike the classical management perspective, the behavioral management perspective placed more emphasis on individual attitudes and behaviors and on group processes

recognized the importance of behavioral processes in the work place.

Elton Mayo[1880-1949] and his associates conducted research [Hawthorne studies], a series of experiments that focused on behaviour in the workplace [ Hawthorne plant of Western Electric Company near Chicago.] First Study/Phase: Illumination Study [1924]: Study involved manipulating illumination for one group of workers and comparing their productivity with another group. But both the groups produced the same output

II Phase- Relay Assembly Test[1925]

The experimental group of employees were given Freedom to fix work schedules Six breaks of five minutes per shift were allowed Work day and week were shortened Work was simplified Financial incentives for increased production Friendly supervision These kinds of special attention and treatment enhanced productivity ( i.e. Hawthorne Effect)

III Phase: [1928] Interviewing Program 21000 employees to find the reasons for increased productivity work groups and their productivity norms were recognized as the main causes for productivity

Interviewed

Informal

IV Phase: Bank Wiring Observation Room Experiment[1929] Team work and performance based incentives introduced Efficient workers did not pressure the others to work more for benefiting by incentive scheme. They formed group norms to regulate the productivity. Over produced named: rate busters Under produced named: chiselers

The group norms were Dont turn out too much work Dont turn out too little work Dont tell supervisors anything that would harm a colleague Dont be too officious-rather follow group norms

Implications of Hawthorne studies Suggested managing through good human relations Involves motivating people, team work, group influence etc Consider the human factor as they are social beings

Human Relation Approach

Proposed that workers respond primarily to the social context of the workplace, including social conditioning, group norms, and interpersonal dynamics. Human behavior in organizations is complex There are two theories on how employees behave;

These theories are developed by Douglas McGregor Theory X and Theory Y

Theory X
Here manager thinks that employees behave like this, they are negative, and scientific management can be applied

Employees dislike work. Employees are irresponsible. Employees lack ambition. Employees resist change.

Theory Y
Here manager thinks that employees behave like this, they are positive, and human relations should can be improved to get more productivity

Employees are willing to work. Employees are self directed. They accept responsibility. Employees are creative. They are self-controlled.

Douglas suggests that managers should follow Theory Y

Limitations of Neo Classical Approaches

Focused more on group behaviour Human behaviour is complex in nature, so cant predict the results

Modern Approaches
Quantitative Approach or Management Science Approach or Operations Research Approach During World War II, military people took some mathematical approaches to deploy its resources efficiently and effectively After war, Companies like DuPont, General Electric began to use some techniques for deploying employees, choosing plant location, planning warehouse etc. Concerned with applying quantitative techniques to management

Features

Organizational efficiency depends quality of managerial decisions

upon

A problem can be expressed in the form of a quantitative/ mathematical model containing mathematical symbol and relationships Different variables in management can be quantified, expressed in the form of an equation.

Contributions Provided precise tools for decision making in areas like production, finance, costing, transportation and storage It has been widely used in planning and control
Limitations Fails wherever human element is involved Most decisions involves human judgment

Systems Approach
Developed during early 1960s Contributors: Kenneth Boulding, Johnson and Bernard etc System: An interrelated set of elements functioning as a whole Organizations are viewed as a system

Basic types of system: Open System: organization that interacts with its environment Closed System: that doesnt interact with its environment

The Organization as an Open System

Environment reacts to these outputs and provides feedback to the system

Sub systems
Approach also focuses on sub systems: systems within a broader system Change in one subsystem can affect other subsystem E.g.: if purchase department does not acquire right quality of inputs [ raw material], production department will not be able to do its job efficiently

Synergy suggests that organizational units or sub units may become more successful working together than working alone.

Example for synergy: Walt Disney Companys movies, theme parks, television programs, other licensed programs all benefit one another Entropy Is a normal process that leads to system decline When an organization does not monitor feedback from its environment and make appropriate adjustments, it may fail

Implications

As per systems approach management should continuously re-energize the organization to avoid entropy Coordination of the organizations parts is essential for proper functioning of the entire organization. Decisions and actions taken in one area of the organization will have an effect in other areas of the organization. Organizations are not self-contained and, therefore, must adapt to changes in their external environment

Contingency Approach/Situational Approach

Classical, neo classical and quantitative approaches considered universal perspectives, because they tried to indentify the one best way to manage organizations. Contingency Approach suggests there is no one best way of doing things under all conditions

Features

Stresses that there is no best way of doing a thing. Conditions of contingency/situation will determine which technique would be most suitable Managers should prepare objectives, policies, procedures, rules and regulations according to situation of business Success in management depends upon the ability to cope with environmental demands Managers should sharpen their diagnostic skills to anticipate and comprehend environment changes

Limitations
This approach lacks theoretical base Manager is required to think through all possible alternatives, as there is no clear cut principles to act upon.