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Management and Organizational Behaviour – 14E00101 Unit – 1

Role of Management – Concept – Significance – Functions – principles of Management - Patterns of

Management: Scientific – Behavioural – Systems – Contingency
This Chapter is intended to introduce the students and management about fundamental of
management and evolution of management thought. After studying this chapter you will be able to:
1. Explain the meaning and characteristics of management.
2. Describe scope of management.
3. Know the nature of management, i.e., is it a science or an art.
4. Describe management as a profession.
5. Understand evolution of management thought.

Management is a vital aspect of the economic life of man, which is an organized group
activity. A central directing and controlling agency is indispensable for a business concern. The
productive resources – material, labour, capital etc. are entrusted to the organizing skill,
administrative ability and enterprising initiative of the management. Thus, management provides
leadership to a business enterprise. Without able managers and effective managerial leadership, the
resources of production remain merely resources and never become production. Under competitive
economy and ever-changing environment, the quality and performance of managers determine both
the survival as well as success o any business enterprise. Management occupies such an important
place in the modern world that the welfare of the people and the destiny of the country are very
much influenced by it.
 According to Lawrence A Appley - "Management is the development of people and not the
direction of things".
 According to Joseph Massie - "Management is defined as the process by which a
cooperative group directs action towards common goals".
 In the words of George R Terry - "Management is a distinct process consisting of planning,
organising, actuating and controlling performed to determine and accomplish the objectives
by the use of people and resources".
 According to James L Lundy - "Management is principally the task of planning, coordinating,
motivating and controlling the efforts of others towards a specific objective".
 In the words of Henry Fayol - "To manage is to forecast and to plan, to organise, to
command, to co-ordinate and to control".

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 According to Peter F Drucker - "Management is a multi-purpose organ that manages a

business and manages managers and manages worker and work".
 In the words of J.N. Schulze - "Management is the force which leads, guides and directsan
organisation in the accomplishment of a pre-determined object".
 In the words of Koontz and O'Donnel - "Management is defined as the creation and
maintenance of an internal environment in an enterprise where individuals working
together in groups can perform efficiently and effectively towards the attainment of group
 According to Ordway Tead - "Management is the process and agency which directs and
guides the operations of an organisation in realising of established aims".
 According to Stanley Vance - "Management is simply the process of decision-making and
control over the actions of human beings for the express purpose of attaining
predetermined goals".
The importance of management can be understood from the following points:
 Optimum use of resources
 Effective leadership and motivation
 Establishes sound industrial relations
 Achievement of goals
 Change and growth
 Improves standard of living

Managerial Functions

The four principal functions or duties of management are planning, organizing, leading, and
controlling an organization’s human, financial, material, and other resources to increase its
effectiveness. And, as our previous examples show, managers who are knowledgeable about OB are
in a good position to improve their ability to perform these functions

Common activities of management

One of the first, and most widely quoted, analyses is that given by Henri Fayol, who divided the
activities of industrial undertakings into six groups:

 Technical (production, manufacture and adaptation);

 Commercial (buying, selling, exchange and market information);
 Financial (obtaining capital and making optimum use of available funds);
 Security (safeguarding property and persons);

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 Accounting (information on the economic position, stocktaking, balance sheet, costs,

statistics); and
 Managerial. (The term ‘management’ is a translation of the French term ‘administration’.)

The managerial activity is divided into five elements of management, which are defined as: ‘to
forecast and plan, to organize, to command, to co-ordinate and to control’. Fayol describes these
elements as:
 Planning
Establish the rules and
(translated from the
Decide on organizational
reporting relationships French prevoyer = to
goals and allocate and
that allow people to
use resources to achieve
achieve organizational foresee, and taken to
those goals
include forecasting)–
examining the future,
deciding what needs to
be achieved and
Evaluate how well the
Encourage and
developing a plan of
organization is achieving
coordinate individuals action.
its goals and take action
and groups so that they
to maintain and improve
performance or take
work toward  Organizing–
organizational goals
corrective action
providing the material
and human resources and building the structure to carry out the activities of the
 Command – maintaining activity among personnel, getting the optimum return from all
employees in the interests of the whole organization.
 Co-ordination – unifying and harmonizing all activities and effort of the organization to
facilitate its working and success.
 Control – verifying that everything occurs in accordance with plans, instructions, established
principles and expressed command.

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Fayol also suggests that a set of well-established principles would help concentrate general
discussion on management theory. He emphasizes, however, that these principles must be
flexible and adaptable to changing circumstances. Fayol recognized that there was no limit
to the principles of management but in his writing advocated 14 of them.
 Division of work. The object is to produce more and better work from the same
effort, and the advantages of specialization. However, there are limits to division of
work which experience and a sense of proportion tell us should not be exceeded.
 Authority and responsibility. Responsibility is the corollary of authority. Wherever
authority is exercised responsibility arises. The application of sanctions is essential to
good management, and is needed to encourage useful actions and to discourage
their opposite. The best safeguard against abuse of authority is the personal integrity
of the manager.
 Discipline is essential for the efficient operation of the organization. Discipline is in
essence the outward mark of respect for agreements between the organization and
its members. The manager must decide on the most appropriate form of sanction in
cases of offences against discipline.
 Unity of command. In any action an employee should receive orders from one
superior only; if not, authority is undermined and discipline, order and stability
threatened. Dual command is a perpetual source of conflicts.
 Unity of direction. In order to provide for unity of action, co-ordination and focusing
of effort, there should be one head and one plan for any group of activities with the
same objective.
 Subordination of individual interest to general interest. The interest of the
organization should dominate individual or group interests.
 Remuneration of personnel. Remuneration should as far as possible satisfy both
employee and employer. Methods of payment can influence organizational
performance and the method should be fair and should encourage keenness by
rewarding well directed effort, but not lead to overpayment.
 Centralization is always present to some extent in any organization. The degree of
centralization is a question of proportion and will vary in particular organizations.

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 Scalar chain. The chain of superiors from the ultimate authority to the lowest ranks.
Respect for line authority must be reconciled with activities which require urgent
action, and with the need to provide for some measure of initiative at all levels of
 Order. This includes material order and social order. The object of material order is
avoidance of loss. There should be an appointed place for each thing, and each thing
in its appointed place. Social order involves an appointed place for each employee,
and each employee in his or her appointed place. Social order requires good
organization and good selection.
 Equity. The desire for equity and for equality of treatment are aspirations to be
taken into account in dealing with employees throughout all levels of the scalar
 Stability of tenure of personnel. Generally, prosperous organizations have stable
managerial personnel, but changes of personnel are inevitable and stability of tenure
is a question of proportion.
 Initiative. This represents a source of strength for the organization and should been
couraged and developed. Tact and integrity are required to promote initiative and to
retain respect for authority and discipline.
 Esprit de corps should be fostered, as harmony and unity among members of the
organization is a great strength in the organization. The principle of unity of
command should be observed. It is necessary to avoid the dangers of divide and rule
of one’s own team, and the abuse of written communication. Wherever possible
verbal contacts should be used.
A number of these principles relate directly to, or are influenced by, the organization
structure in which the process of management takes place.

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The application of theory brings about change in actual behaviour. Managers reading the work of
leading writers on the subject might see in their ideas and conclusions a message about how they
should behave. This will influence their attitudes towards management practice.

The study of management theory is important for the following reasons:

 It helps to view the interrelationships between the development of theory, behaviour in

organisations and management practice.
 An understanding of the development of management thinking helps in understanding
principles underlying the process of management.
 Knowledge of the history helps in understanding the nature of management and
organizational behaviour and reasons for the attention given to main topic areas.
 Many of the earlier ideas are of continuing importance to the manager and later ideas on
management tend to incorporate earlier ideas and conclusions.
 Management theories are interpretive and evolve in line with changes in the organizational

However, the systematic development of management thinking is viewed, generally, as dating from
the end of the nineteenth century with the emergence of large industrial organizations and the
ensuing problems associated with their structure and management. In order to help identify main
trends in the development of management theory, it is usual to categories the work of writers into
various ‘approaches’, based on their views of organizations, their structure and management.
Although a rather simplistic process, it does provide a framework in which to help direct study and
focus attention on the progression of ideas concerned with improving organizational performance.

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The classical writers thought of the organisation in terms of its purpose and formal
structure. They placed emphasis on the planning of work, the technical requirements of the
organisation, principles of management, and the assumption of rational and logical
behaviour. The analysis of organisation in this manner is associated with work carried out
initially in the early part of the last century, by such writers as Taylor, Fayol, Urwick, Mooney
and Reiley, and Brech. Such writers were laying the foundation for a comprehensive theory
of management.
A clear understanding of the purpose of an organisation is seen as essential to
understanding how the organisation works and how its methods of working can be
improved. Identification of general objectives would lead to the clarification of purposes
and responsibilities at all levels of the organisation and to the most effective structure.
Attention is given to the division of work, the clear definition of duties and responsibilities,
and maintaining specialisation and co-ordination. Emphasis is on a hierarchy of
management and formal organisational relationships.
Sets of principles
The classical writers (also variously known as the formal or scientific management writers
although scientific management is really only a part of the classical approach) were
concerned with improving the organisation structure as a means of increasing efficiency.
They emphasised the importance of principles for the design of a logical structure of
organisation. Their writings were in a normative style and they saw these principles as a set
of ‘rules’ offering general solutions to common problems of organisation and management.
Mooney and Reiley set out a number of common principles which relate to all types of
organisations. They place particular attention on:
The principle of co-ordination – the need for people to act together with unity of action,
the exercise of authority and the need for discipline;
The scalar principle – the hierarchy of organisation, the grading of duties and the process of
delegation; and
The functional principle – specialisation and the distinction between different kinds of
The classical writers have been criticised generally for not taking sufficient account of
personality factors and for creating an organisation structure in which people can exercise
only limited control over their work environment. The idea of sets of principles to guide
managerial action has also been subject to much criticism. For example, Simon writes:
Organisational design is not unlike architectural design. It involves creating large, complex
systems having multiple goals. It is illusory to suppose that good designs can be created by
using the so-called principles of classical organisation theory.

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Research studies have also expressed doubt about the effectiveness of these principles
when applied in practice. However, the classical approach prompted the start of a more
systematic view of management and attempted to provide some common principles
applicable to all organisations. These principles are still of relevance in that they offer a
useful starting point in attempting to analyse the effectiveness of the design of organisation
The application of these principles must take full account of:

 The particular situational variables of each individual organisation; and

 The psychological and social factors relating to members of the organisation.
Two major ‘sub-groupings’ of the classical approach are:
1. Scientific Management, and
2. Bureaucracy.

Many of the classical writers were concerned with the improvement of management as a
means of increasing productivity. At this time emphasis was on the problem of obtaining
increased productivity from individual workers through the technical structuring of the work
organisation and the provision of monetary incentives as the motivator for higher levels of
output. A major contributor to this approach was F. W. Taylor (1856–1917), the ‘father’ of
scientific management. Taylor believed that in the same way that there is a best machine for
each job, so there is a best working method by which people should undertake their jobs.
He considered that all work processes could be analysed into discrete tasks and that by
scientific method it was possible to find the ‘one best way’ to perform each task. Each job
was broken down into component parts, each part timed and the parts rearranged into the
most efficient method of working.
Principles to guide management
Taylor was a believer in the rational–economic needs concept of motivation. He believed
that if management acted on his ideas, work would become more satisfying and profitable
for all concerned. Workers would be motivated by obtaining the highest possible wages
through working in the most efficient and productive way. Taylor was concerned with
finding more efficient methods and procedures for co-ordination and control of work. He
set out a number of principles to guide management. These principles are usually
summarised as:
1. The development of a true science for each person’s work;
2. The scientific selection, training and development of the workers;
3. Co-operation with the workers to ensure work is carried out in the prescribed way;
4. The division of work and responsibility between management and the workers.

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Benefits of Scientific Management

Taylor's ideas, research and recommendations brought into focus technological, human and
organizational issues in industrial management. Benefits of Taylor's scientific management
included wider scope for specialization, accurate planning, timely delivery, standardized
methods, better quality, lesser costs, minimum wastage of materials, time and energy and
cordial relations between management and workers. According to Gilbreths, the main
benefits of scientific management are "conservation and savings, making an adequate use
of every one's energy of any type that is expended". The benefits of scientific management
1. Replacement of traditional rule of thumb method by scientific techniques.
2. Proper selection and training of workers.
3. Incentive wages to the workers for higher production.
4. Elimination of wastes and rationalization of system of control.
5. Standardization of tools, equipment, materials and work methods.
6. Detailed instructions and constant guidance of the workers.
7. Establishment of harmonious relationship between the workers.
8. Better utilization of various resources.
9. Satisfaction of the needs of the customers by providing higher quality products at
lower prices.
1. Worker's Criticism:
a. Speeding up of workers: Scientific Management is only a device to speed up
the workers without much regard for their health and well-being.
b. Loss of individual worker's initiative: Scientific Management reduces
workers to automatic machine by taking away from them the function of
c. Problem of monotony: By separating the function of planning and thinking
from that of doing, Scientific Management reduces work to mere routine.
d. Reduction of Employment: Scientific Management creates unemployment
and hits the workers hard.
e. Weakening of Trade Unions: Under Scientific Management, the important
issues of wages and working conditions are decided by the management
through scientific investigation and the trade unions may have little say in the
f. Exploitation of workers: Scientific Management improves productivity
through the agency of workers and yet they are given a very small share of
the benefit of such improvement.
2. Employer's Criticism:
a. Heavy Investment: It requires too heavy an investment. The employer has to
meet the extra cost of the planning department though the foreman in this
department do not work in the workshop and directly contribute towards
higher production.

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b. Loss due to re-organization: The introduction of Scientific Management

requires a virtual reorganization of the whole set-up of the industrial unit.
Work may have to be suspended to complete such re-organization.
c. Unsuitable for small scale firms: various measures like the establishment of a
separate personnel department and the conducting of time and motion
studies are too expensive for a small or modest size industrial unit.
Contributions of Scientific Management: Chief among these are:
1. Emphasis on rational thinking on the part of management.
2. Focus on the need for better methods of industrial work through systematic study
and research.
3. Emphasis on planning and control of production.
4. Development of Cost Accounting.
5. Development of incentive plans of wage payment based on systematic study of
6. Focus on need for a separate Personnel Department.
7. Focus on the problem of fatigue and rest in industrial work.
Bureaucratic Model: Max Weber, a German Sociologist developed the bureaucratic model.
His model of bureaucracy include
1. Hierarchy of authority.
2. Division of labour based upon functional specialization.
3. A system of rules.
4. Impersonality of interpersonal relationships.
5. A system of work procedures.
6. Placement of employees based upon technical competence.
7. Legal authority and power.
Bureaucracy provides a rigid model of an organization. It does not account for important
human elements. The features of Bureaucracy are:-
1. Rigidity, impersonality and higher cost of controls.
2. Anxiety due to pressure of conformity to rules and procedure.
3. Dependence on superior.
4. Tendency to forget ultimate goals of the organization.
Bureaucratic Model is preferred where change is not anticipated or where rate of change
can be predicated. It is followed in government departments and in large business
The main emphasis of the classical writers was on structure and the formal organisation, but
during the 1920s, the years of the Great Depression, greater attention began to be paid to
the social factors at work and to the behaviour of employees within an organisation – that
is, to human relations.

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The Hawthorne experiments

The turning point in the development of the human relations movement (‘behavioural’ and
‘informal’ are alternative headings sometimes given to this approach) came with the famous
experiments at the Hawthorne plant of the Western Electric Company near Chicago,
America (1924–32) and the subsequent publication of the research findings. Among the
people who wrote about the Hawthorne experiments was Elton Mayo (1880–1949), who is
often quoted as having been a leader of the researchers. However, there appears to be
some doubt as to the extent to which Mayo was actually involved in conducting the
experiments and his exact contribution to the human relations movement.
There were four main phases to the Hawthorne experiments:
1. The illumination experiments;
2. The relay assembly test room;
3. The interviewing programme;
4. The bank wiring observation room.
The illumination experiments
The original investigation was conducted on the lines of the classical approach and was
concerned, in typical scientific management style, with the effects of the intensity of lighting
upon the workers’ productivity. The workers were divided into two groups, an experimental
group and a control group. The results of these tests were inconclusive as production in the
experimental group varied with no apparent relationship to the level of lighting, but actually
increased when conditions were made much worse. Production also increased in the control
group although the lighting remained unchanged. The level of production was influenced,
clearly, by factors other than changes in physical conditions of work. This prompted a series
of other experiments investigating factors of worker productivity.
The relay assembly test room
In the relay assembly test room the work was boring and repetitive. It involved assembling
telephone relays by putting together a number of small parts. Six women workers were
transferred from their normal departments to a separate area. The researchers selected two
assemblers who were friends with each other. They then chose three other assemblers and
a layout operator. The experiment was divided into 13 periods during which the workers
were subjected to a series of planned and controlled changes to their conditions of work,
such as hours of work, rest pauses and provision of refreshments. The general
environmental conditions of the test room were similar to those of the normal assembly
line. During the experiment the observer adopted a friendly manner, consulting the
workers, listening to their complaints and keeping them informed of the experiment.
Following all but one of the changes (when operators complained too many breaks made
them lose their work rhythm) there was a continuous increase in the level of production.
The researchers formed the conclusion that the extra attention given to the workers, and
the apparent interest in them shown by management, were the main reasons for the higher
productivity. This has become famous as the ‘Hawthorne Effect’.

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The interviewing programme

Another significant phase of the experiments was the interviewing programme. The lighting
experiment and the relay assembly test room drew attention to the form of supervision as a
contributory factor to the workers’ level of production. In an attempt to find out more
about the workers’ feelings towards their supervisors and their general conditions of work,
a large interviewing programme was introduced. More than 20,000 interviews were
conducted before the work was ended because of the depression.
Initially, the interviewers approached their task with a set of prepared questions, relating
mainly to how the workers felt about their jobs. However, this method produced only
limited information. The workers regarded a number of the questions as irrelevant; also
they wanted to talk about issues other than just supervision and immediate working
conditions. As a result, the style of interviewing was changed to become more non-directive
and openended. There was no set list of questions and the workers were free to talk about
any aspect of their work. The interviewers set out to be friendly and sympathetic. They
adopted an impartial, non-judgemental approach and concentrated on listening.
Using this approach, the interviewers found out far more about the workers’ true feelings
and attitudes. They gained information not just about supervision and working conditions
but also about the company itself, management, work group relations and matters outside
of work such as family life and views on society in general. Many workers appeared to
welcome the opportunity to have someone to talk to about their feelings and problems and
to be able to ‘let off steam’ in a friendly atmosphere. The interviewing programme was
significant in giving an impetus to present-day human resource management and the use of
counselling interviews, and highlighting the need for management to listen to workers’
feelings and problems. Being a good listener is arguably even more important for managers
in today’s work organisations and it is a skill which needs to be encouraged and developed.
The bank wiring observation room
Another experiment involved the observation of a group of 14 men working in the bank
wiring room. It was noted that the men formed their own informal organisation with
subgroups or cliques, and with natural leaders emerging with the consent of the members.
The group developed its own pattern of informal social relations and ‘norms’ of what
constituted ‘proper’ behaviour. Despite a financial incentive scheme where the workers
could receive more money the more work produced, the group decided on a level of output
well below the level they were capable of producing. Group pressures on individual workers
were stronger than financial incentives offered by management. The group believed that if
they increased their output, management would raise the standard level of piece rates.
The systems approach to management indicates the fourth major theory of management
thought called modern theory. Modern theory considers an organization as an adaptive
system which has to adjust to changes in its environment. An organization is now defined as
a structured process in which individuals interact for attaining objectives.

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Meaning of "System": The word system is derived from the Greek word meaning to bring
together or to combine. A system is a set of interconnected and inter-related elements or
component parts to achieve certain goals. A system has three significant parts:
1. Every system is goal-oriented and it must have a purpose or objective to be attained.
2. In designing the system we must establish the necessary arrangement of
3. Inputs of information, material and energy are allocated for processing as per plan so
that the outputs can achieve the objective of the system.


•Objectives •Information •Conversion of •Information

•Policies •Energy inputs into •Energy
•Procedures •Raw Materials outputs Men - •Materials or
Machine System goods

Systems Approach Applied to an Organization: When systems approach is applied to

organization, we have the following features of an organization as an open adaptive
1. It is a sub-system of its broader environment.
2. It is a goal-oriented – people with a purpose.
3. It is a technical subsystem – using knowledge, techniques, equipment and facilities.
4. It is a structural subsystem – people working together on interrelated activities.
5. It is a psychosocial system – people in social relationships.
6. It is co-ordinate by a managerial sub system, creating, planning, organizing,
motivating, communicating and controlling the overall efforts directed towards set
Characteristics of Modern Management Thought:
1. The Systems Approach: An organization as a system has five basic parts -
a. Input
b. Process
c. Output
d. Feedback and
e. Environment.
It draws upon the environment for inputs to produce certain desirable outputs. The
success of these outputs can be judged by means of feedback. If necessary, we have
to modify out mix of inputs to produce as per changing demands.
2. Dynamic: We have a dynamic process of interaction occurring within the structure of
an organization. The equilibrium of an organization and its structure is itselfdynamic
or changing.

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3. Multilevel and Multidimensional: Systems approach points out complex multilevel

and multidimensional character. We have both a micro and macro approach. A
company is micro within a business system. It is macro with respect to its own
internal units. Within a company as a system we have:-
a. Production subsystem
b. Finance subsystem
c. Marketing subsystem
d. Personnel subsystem.
All parts or components are interrelated. Both parts as well as the whole are equally
important. At all levels, organizations interact in many ways.
4. Multimotivated: Classical theory assumed a single objective, for instance, profit.
Systems approach recognizes that there may be several motivations behind our
actions and behaviour. Management has to compromise these multiple objectives
eg: - economic objectives and social objectives.
5. Multidisciplinary: Systems approach integrates and uses with profit ideas emerging
from different schools of thought. Management freely draws concepts and
techniques from many fields of study such as psychology, social psychology,
sociology, ecology, economics, mathematics, etc.
6. Multivariable: It is assumed that there is no simple cause-effect phenomenon. An
event may be the result of so many factors which themselves are interrelated and
interdependent. Some factors are controllable, some uncontrollable. Intelligent
planning and control are necessary to face these variable factors.
7. Adaptive: The survival and growth of an organization in a dynamic environment
demands an adaptive system which can continuously adjust to changing conditions.
An organization is an open system adapting itself through the process of feedback.
8. Probabilistic: Management principles point out only probability and never the
certainty of performance and the consequent results. We have to face so many
variables simultaneously. Our forecasts are mere tendencies. Therefore, intelligent
forecasting and planning can reduce the degree of uncertainty to a considerable

Contingency Theory: Systems approach emphasizes that all sub- systems of an organization
along with the super system of environment are interconnected and interrelated.
Contingency approach analysis and understands these interrelationship so that managerial
actions can be adjusted to demands of specific situations or circumstances. Thus the
contingency approach enables us to evolve practical answers to problems demanding
solutions. Organization design and managerial actions most appropriate to specific
situations will have to be adopted to achieve the best possible result under the given
situation. There is no one best way (as advocated by Taylor) to organize and manage. Thus,
Contingency Approach to management emphasizes the fact that management is a highly
practice-oriented discipline. It is the basic function of managers to analyse and understand
the environments in which they function before adopting their techniques, processes and

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practices. The application of management principles and practices should therefore be

continent upon the existing circumstances.
Contingency approach guides the manager to be adaptive to environment. It tells the
manager to be pragmatic and open minded. The contingency approach is an improvement
over the systems approach. It not only examines the relationships between sub-systems of
the organization, but also the relationship between the organization and its environment.
However, the contingency approach suffers from two limitations:-
1. It does not recognize the influence of management concepts and techniques on
2. Literature on contingency management is yet not adequate.

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