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FUNDEMENTALS OF MANAGEMENT

S. Ramakrishna Chary
M.Com (Marketing), MBA (Finance), MBA (HR),
M.A (Journalism), M.Sc (Psychology), Mphil, UGC-JRF, M.D (Accu), PhD.
Asst Professor, MGIT

UNIT-1

THE CONCEPTS OF MANAGEMENT, ADMINISTRATION AND ORGANISATION

INTRODUCTION

Management is as old as man himself. As civilisation grew, human life became more and
more organised. As industrialisation picked up, business activity increased globally by
leaps and bounds.

It had been a common site that all those who were in business were not successful.
Similarly those who were on the top ones, are today nowhere.

On the other hand, those who were novice once upon a time or today on the pinnacles
up success. Why does this happen? One right decision will push you up in life, more so
in business, and vice versa. Also, we find that certain business houses, as old as a
century, continue to be successful irrespective of the changes in their business
environment.

How could they ensure to be successful? Perhaps they managed their inter prices better.
Their management skills and practices ensure their success.

This chapter outlines the concepts of management, administrations, and organisations


and their importance.

CONCEPT OF MANAGEMENT

Management is that managers do. It also refers to people at the top level, in the
organisation, concerned with decision-making. Though it also implies trickery or deceit,
this connotation should not be considered in the __________

A comparison of the two least of Fortune 500 Companies in 2017 and 1955 shows that
there are only 60 companies that appear in both the least. In other words even the well
managed and leading companies vanish over a period of time because of the heightened
volatility in business and economic environment. Present context. It is often viewed as
manoeuvring, that is, doing something cleverly to change a situation and make thinks
happened way you want them to. However, this statements do not clearly expand the
nature are the concept of management.

Definition

Different experts have expressed their views on what management is. The following
explain the concept and nature of management:

Henry Fayol1 (1916) “To manage is to forecast and plane, to organise, to command,
to coordinate and control.”

Peter F Drucker2 (1955) “Management is concerned with the systematic


organisation of economic resources and its task is to make this resources productive.”

E F L Brech3 (1957) “Management is a social process ... the process consist of ...
planning, control, coordination and motivation.”

W F Glueck4 (1977) “Management effective utilisation of human and material


resources to achieve the enterprice objectives.”

Koontz and O’ Donnel5 (1984) “Management is an operational process that can be


dissected into five essential managerial functions. They are :planning, oraganising,
staffing, directing and leading, and controlling.”

Koontz and Weihrich6 (1988) “Management is the process of designing and


maintaining an environment in which individuals, working together in groups,
accomplish efficiently selected aims.”

Peters, T7 (1988) He feels that management holds a solution to the day-to-day


problems in our chaotic world. According to tom peters, management explains:

a) How effectively managers can respond to customers’ requirements

b) How innovation can be constantly pursued in all areas of the firm

c) How the people in an organisation can participate as partners in progress

d) How leaders adopt better to changes than fighting against them, instil, and share an
inspiring vision

e) How activities in an organisation can be controlled trough simple support systems

Inferences

An analysis of the above views reveals that:


a) The view of Fayol has been comprehensive and outlines all the functions of
management.

b) There is only in the emphasis in the definations given by Brech, and Koontz and
O’Donnel.There is no change in the principles of management as such.The word
‘command’ is replaced by motivation (Brech) or directing and leading (Koontz and
O’Donnel).

c) Tom Peters does not define management here. On the other hand, he attempts to
prescribe what a manager should do to get out of the stress and strain of management.
Participation, Leadership, and control are the strategies that he suggests to deal with
chaos and to get more ‘competitive’.

d) The definitions proposed by Gluek and Koontz and Weihrich focus on achieving the
given results.

e) Drucker’s definition highlights that the task of a manager is to use the economic
resources productively.

Against this background, management cam be considered as a social process of


planning, organising coordinating, commanding and controlling for the purpose of
achieving organisational goals, by using limited resources effectively and efficiently, and
by working with and through people.

This definition covers four important aspects of management. They are:

Management is a social process of functions---planning, organising, commanding,


coordinating and controlling (as defined by Fayol), Its ultimate purpose is to achieve
organisational goals. These goals are achieved using limited resources efficiently and
effectively and by working with and through people

Nature and Features of Manageent:

The following describe the nature and features of management:

a) Management is a social process: Social process refers to the series of activities


that are performed in the society. These activities are carried out by administrators,
politicians, economist, housewives, parents, doctors, lawyers and so on. Management is
an integral part of social process. Management helps everyone to carry out the activities
in the society effectively. To refer to an institution which is very well run, it is said that,
the management of this institution is said to be very good. Here management viewed as
a function. In other words, management is a process of certain managerial functions in
every organisation. It is a social process in particular because managers, at all levels,
work with and through people.

b) Management also denotes a ‘body of people’ involves in decision-making:


When an institution is very well run, it is said that the management of that institution
take personal interest in the institution. Here, management denotes a body of people
involved in decision-making.

c) Management is omnipresent and universal: Successful organisations shows that


management principles apply to every kind of organisation and also to every level in it.
Hence, it is called omnipresent and universal.

d) It is an inexact science management principles are not like those in science or maths
where things are fairly clear or exact. Hence, they cannot be generalised precisely.

e) It is complex Management functions are complex. They called for a fairly


professional approach to manage a given situation or organisation.

f) Management is situational in nature : The same size of management cannot work


for the same situation every time. The change with the situation may call for a change in
the style of functioning of the manager. Similarly, a different points of time also comma
the style of functioning can be different.

g) Management is an art and also a science: There are considerable discussions on


whether management is an art or science. An art is personal speech diftful handing of
business affair. Art is characterized by practical knowledge, personal creativity, and
skills. The more one practices an art, the more professional one becomes. Management
can be considered as an art because it satisfies all this criteria of an art. The
management skills are highly individual-oriented and can be sharpened with more
training and practice. There is a lot of scope to apply creativity in contest of managing in
the affairs of a business organisation. Thus, management is an art.

A science is a systematised body of knowledge of facts. It can establish cause-and-effect


relationships among various factors. It involves basic principles, which are capable of
universal application. It also helps to predict the future events. Management satisfy all
these criteria to be considered as ‘science’. It is a systematic body of knowledge, its
principles are universally acceptable, its stands for logical reasoning scientific testing
and inquiry. It is also establishes cause-and-effect relationship between given factors. It
explains what happen if the employees are not paid salaries on time.

Thus, science and art are not mutually exclusive but are complementary to each other.
Science and art are two sides of the same coin. Those who learn management principles
and contemporary practices in an organised by, will have a far better opportunity to
design a feasible solution to a given managerial problem.

More knowledge of science will not assure results because one must know how to play
them. Here comes the role of art or skills. Hence, management is considered more as
both an art and a science.
h) Management is a profession: Profession refers to a vocation or a branch of
advanced learning such as engineering or medicine. Management helps to carry out
every profession in a scientific manner. The managers are professional in their
approach are governed by code of ethics. If the manager violates the code of conduct, he
can be dismissed from the organisation.

i) Management is inter-disciplinary: The subject of management is heavily


dependent on the other disciplines, and the techniques of management are built around
the techniques drawn from these subjects. The manager uses extensively for instance,
the theories of consumption and production from Economics; linear programming,
PERT and CPM from Operations Research; probability theories, correlation and
regression techniques from Statistics; theories of group behaviour from Sociology;
theories of individual behaviour from Psychology; the tools of decision-making such as
matrices calculus, integration and differentiation from Mathematics.

j) Manager has four types of resources—the Four M’s Men, money, materials, and
machines are the four types of resources the manager has to manage. However, this list
is only inclusive.

Importance of management:

Management is viewed as a very significant tool for the following reasons:

a) It facilitates the achievement of goals through limited resources an


organisation, if well managed, can accomplish its goals even though it resources are
limited. The resources are scares, and hence, they have to be effectively allocated and
utilised in an optimum manner. This is possible only through management.

b) It ensures smooth sailing in case of difficulties Management guides the


organisation, especially in trouble. As long as things go normal, that is, everybody is
doing his/her own function diligently; they may not feel the need for a manager. In case
of a crisis, it is the manager who ensures a smooth sailing. How does he do this? He
anticipates and makes necessary changes in the organisation to achieve the targeted
results.

c) It ensures continuity in the organisation Continuity is very important in the


organisations. Where there are no proper guidelines for decision-making continuity
cannot be guaranteed. It is quite natural that new people join while some others retire
or leave the organisation. It is only management that keeps the organisation continuing.
Modern organisations are based on systems and procedures. Thus, continuity is insured
. Organisations do not just collapse when some key people leave them. Yes, nthere could
be a change in the focus or priorities in the organisation.

d) It ensures economy and efficiency Without managers, it may be difficult to get the
job performed efficiently. It is the manager who plans, coordinates, and monitors the
progress of work and suggests whether the work is satisfactorily done or not. In case of
shortfall, it is the manager who helps the employees to perform better. Thus,
organisational coasts can be minimised through sound management practices.

e) It focuses on group efforts If each individual is allowed to plan and organise


independently of what others are doing, there will be nothing but chaos. Therefore,
management is needed to guide and direct group efforts.

f) It is the key to the economic growth Efficient management is equally important


for the nation in terms of social and economic development. The economic development
of a country largely depends on the quality of management of its resources. Capital
investment or latest technology alone cannot lead the nation to economic growth. The
wealth and production resources in the country also have to be managed efficiently. By
producing wealth, managers facilitate the increase in national income, and thus, the
living standard of the people. Management is, thus, the key to the economic growth.

Challenges to management

Managers may have to face many challenges in the years to come in doing their job.
These challenges involve complex issues to deal with. The following is an inclusive list
of the challenges the manager has to face.

 Increasing opportunities as a result of all round globalisation, privatisation, and


liberalisation
 The changing lifestyles and changing values
 Increasing life expectancy
 More expectations of customers and employees, in particular, and society as a
whole, in general
 Conflicting interests among different segments of the society
 Eroding business ethics
 Depleting financial and non-financial resources
 Changing technology
 Bottlenecks in the basic infrastructure
 Environmental degradation, through pollution
 All these challenges directly and indirectly point out that the manager has to be
creative and content to continue to be more effective in his job. In fact, these
enhance the relevance of a manager in the work front.

Is Management an Important Subject?

The lectures in management are often told by former students who are professional
managers now; ‘When I was studying my engineering, I considered management as a
relatively unimportant subject; but when I started working, I released that it is
management that comes first than anything else; Such feedback holds the answer to
this question.
Concept of administration

There are three schools of thought to explain what administration means in relation to
management.

The first school of thought (pioneered by Oliver Sheldon, Florence and Tead, Spreigel
and Lands burgh) says that administration and management are two different functions.

According to this school of thought, administration is concerned with:

(a) Formulation of corporate policy

(b) The coordination of other functional areas such as finance, production, and so on

(c) Placing organisation under the ultimate control of the chief executive.

And, management is concerned with:

(a) The execution of a policy, within the limits set up by the administration

(b) Creating an organisation to achieve the given objectives.

In other words, administration is here viewed as a broader function and management is


a subset of administration.

The second school of thought (led by Brech) says that management is broader and it
includes administration. According to Brech, management constitutes the entire
executive control. Administration is that part of management which deals with (a)
formulation of policies and procedures (b) carrying out this procedures and (c)
Measurement of performance as aganist the plans.

In other words, management is here viewed as a broader function to include


administration as its sub-system.

The third school of thought let by (led by Henri Fayol) explains that the terms
management and administration are both one and the same, and hence, are
interchangeable. When Fayol’s work was 89547translated, the French word
‘administration’ was translated into English as ‘management’.

It is common to find that the term ‘administration’ is used to refer to higher educative
function in Government circles, while the term ‘management’ is used for the same
functions in the business world. For the last fifty years, the term ‘management’ is
understood as encompassing much more than ‘administration’. Administration was
indentified with the narrower process performance of or carrying out the assigned
duties. Developing and maintaining procedures is an incidental activity that
supplements the management process. Administration is similar to ‘organising’ in
management function.
Concept of Organisation:

‘Organisation’ refers to a social group designed certain goals. Organisation involves


creating a structure of relationships among people working for the desired results.

The following definitions give more insight into the concept of organisation.

Argyris (1960) : “Organisations are intricate human strategies designed to achieve


certain objectives.”

Brech (1965) : “Organisation is the framework of the management process.”

Simon (1976) : “Organisations are systems of behaviour created for better results. So,
organisation form must be a joint function of human characteristics and the nature of
the task environment.”

Pugh11 (1990) “Organisations are interdependent human beings.”

Stewart12(1994) Organisations facilitate cohesive performance directed towards


achievement of goals. Organisations are more known for their complexity.

Organisation can be viewed in different ways. It can be seen as a social entity or as a


process is discussed later. Here, the concept of organisation as a social entity is
discussed.

These views reveal that:

a) Organisation is a social group designed to achieve certain goals

b) People form the backbone of the organisation. The human needs must be considered
first before the organisational issues such as structure, authority levels, and so on

c) It is run through a defined structure, supported by organisation charts and


organisation manuals

d) Organisations have to consider a wide variety of both internal and external factors to
strike a balanced strategy to achieve their goals. The internal factors include formal and
informal organisations, span of control, degree of centralisation or decentralisation, and
so on. The external factors include competitors, government, creditors, impact of
technology, and others.

Significance of Organisation

a) It facilitates administration: when organisation structures are created,


organisational procedures are developed, lines of communications are established, the
task of administration is made easier. In other words, the top management decisions are
put into practice with ease.
b) It facilitates growth and diversification: The business house can grow and
diversify only when their internal organisation it strong and result-oriented

c) It ensures effective utilisation of man power: The organisation structure forms the
basis to identify, recruit and effectively utilise the man power at different levels in the
organisation.

d) It stimulates creativity: One of the main features of organisation is flexibility.


Progressive organisations do not block the creativity of their managers through
organisation structure. On the other hand they grant full freedom to be more creative an
enterprising. Organisations emerged stronger with their people are highly productive,
independent and empowered. The leading Infotech companies such as Infosys, Wipro,
Satyam computers, Visual soft and others, stand a monumental Evidence for this.

e) It ensures optimum utilisation of resources: Organisations are ell thought outfits


which deploy resources, strategically to achieve the given goals in optimum manner.

MANAGERIAL ROLES

Managerial roles explain what a manager do at workplace and refers to specific


categories of managerial behavior. Like we perform different roles in family (such as
family head, brother, sister, son or daughter, etc.) and office (trainer, counsellor, coach
or mentor, etc.), similarly, managers also perform several roles though officially they are
given one job title. They need to be good Public Relations Officer, spokesperson and
strong at maintaining good interpersonal relations. For instance, as a production
manager, one needs to be a trainer, monitor, leader, counsellor, mentor, coach, advisor,
controller, etc. Dr. Henry Mintzberg in his research report on “Managerial Work:
Analysis From Observation” submitted at the Sloan School of management,
Massachusetts institute of technology (MIT), USA observed that what managers do can
best be explained by looking at the roles they play at work.

Mintzberg identified 10 roles a manager plays in an organisation and classified them


into three categories-interpersonal roles, information roles and decisional roles. Each of
these is defined in detailed.

Interpersonal Category

The managerial roles in this category involve providing information and ideas.
1. Figurehead – As a manager, you have social, ceremonial and legal responsibilities.
You're expected to be a source of inspiration. People look up to you as a person with
authority, and as a figurehead.
2. Leader – This is where you provide leadership for your team, your department or
perhaps your entire organization; and it's where you manage the performance and
responsibilities of everyone in the group.
3. Liaison – Managers must communicate with internal and external contacts. You
need to be able to network effectively on behalf of your organization.

Informational Category

The managerial roles in this category involve processing information.


4. Monitor – In this role, you regularly seek out information related to your
organization and industry, looking for relevant changes in the environment. You also
monitor your team, in terms of both their productivity, and their well-being.
5. Disseminator – This is where you communicate potentially useful information to
your colleagues and your team.
6. Spokesperson – Managers represent and speak for their organization. In this role,
you're responsible for transmitting information about your organization and its
goals to the people outside it.

Decisional Category

The managerial roles in this category involve using information.


7. Entrepreneur – As a manager, you create and control change within the
organization. This means solving problems, generating new ideas, and implementing
them.
8. Disturbance Handler – When an organization or team hits an unexpected
roadblock, it's the manager who must take charge. You also need to help mediate
disputes within it.
9. Resource Allocator – You'll also need to determine where organizational resources
are best applied. This involves allocating funding, as well as assigning staff and other
organizational resources.
10. Negotiator – You may be needed to take part in, and direct, important negotiations
within your team, department, or organization.

Evolution of Management Thoughts:

Management is studied in business academics since earlier times and it is considered as


an integral part to understand business operations. People have been changing and
redesigning organizations for centuries. Though the 20th century is noticeable in
history as an 'Era of scientific management', still it does not indicate that management
tactics were not used in yester years. Many studies indicated that Management theory
evolved with "scientific" and "bureaucratic" management that used measurement,
procedures and routines as the basis for operations. Firms developed hierarchies to
apply standardized rules to the place of work and penalized labour for violating rules.
With the "human relations" movement, companies emphasized individual workers.
Modern management theories, including system theory, contingency theory and chaos
theory, focus on the whole organization, with employees as a key part of the system.
The evaluation of management can be categorized in to different parts:

o Pre-Scientific Management Era (before 1880),


o Classical management Era (1880-1930),
o Neo-classical Management Era (1930-1950),
o Modern Management era (1950-on word).

Classical Management includes Scientific Management School, Administration


Management School, and Bureaucracy Management. Neo- classical Management
includes Human relation school and Behavioural Management School. Modern
Management includes Social system school, Decision theory school, Quantitative
Management School, System Management School, and Contingency Management School.

Early Management Thought

The period of 1700 to 1800 emphasizes the industrial revolution and the factory system
highlights the industrial revolution and the importance of direction as a managerial
purpose. Thus, the development of management theory can be recognized as the way
people have struggled with relationships at particular times in olden periods. Many
economic theorists during this period described the notion of management. Adam
Smith and James Watt have been recognized as two theorists who launched the world
toward industrialization. Adam Smith brought about the revolution in financial thought
and James Watt's steam engine provided cheaper power that revolutionized English
commerce and industry. Both provided the base for modern concepts of business
management theory and practice. Adam Smith explicated the concept of division of
labour and Jacques Turgot described the importance of direction and control. Smith
stated that market and competition should be the controllers of economic activity and
that tax policies were destructive. The specialization of labour was the basis of Smith's
market system. According to Smith, division of labour provided managers with the
maximum opportunity for improved output.
In the period of 1771–1858, Robert Owens studied for concern for the workers. He was
repulsed by the working conditions and poor treatment of the workers in the factories
across Scotland. Owen became a reformer. He reduced the use of child labour and used
ethical influence rather than physical punishment in his factories. He reproached his
fellow factory owners for treating their equipment better than they treated their
workers.
In quantitative approach of early management thought, Charles Babbage (1792–
1871) is recognized as the supporter of operations research and management science.
Babbage's scientific innovations are mechanical calculator, a versatile computer, and a
punch-card machine. His projects never became a commercial reality. However,
Babbage is considered the creator of the concepts behind the present day computer.
The most popular book of Babbage, On the Economy of Machinery and Manufacturers,
described the tools and machinery used in English factories. It discussed the economic
principles of manufacturing, and analysed the operations and the skills used and
suggested improved practices. Babbage considered in the benefits of division of labour
and was a supporter of profit sharing. He developed a method of observing
manufacturing that is the same approach utilized today by operations analysts and
consultants analysing manufacturing operations. Other theorists who contributed in
quantitative approach of early management thought were Robert Owen, Andrew Ure
and Charles Dupin, Henry Robinson Towne.
Another theorist Baptiste, explained the significance of planning. But management is
appeared as a different discipline in the second half of 19th century with the beginning
of Joint Stock Company. This type of enterprises separated management of business
from their ownership and gave emphasis to labour incompetence and improper systems
of wage payments. To resolve such problem, people began to identify management as a
separate field of study. During 20th century, Management has become more scientific
discipline with standard principles and practices.

The Classical Approach

The classical approach is the earliest thought of management .The classical approach
was associated with the ways to manage work and organizations more efficiently. The
classical approach are categorized into three groups namely, scientific management,
administrative management, and bureaucratic management.
I. Scientific Management: Scientific management which is also referred to Taylorism
or the Taylor system is a theory of management that evaluates and synthesizes
workflows, with the aim of improving labour productivity. In other words, conventional
rules of thumb are substituted by accurate procedures developed after careful study of
an individual at work. Universal approaches of Scientific management are developed for
Efficiency of workers, Standardization of job roles/activities and Discipline - the role of
managers and the business hierarchy. The scientific management theory had an
enormous impact on the business industry at the beginning of the 20th century. Many
big and victorious organizations, such as McDonalds hamburger chain or call centres,
utilised a modern version of scientific management. Among famous theorist, Taylor's
contribution in the area of scientific management is invaluable. The components of
scientific management are determination of the task, planning, proper selection and
training of workers improvement in methods, modification of organization and mental
revolution such as 'job specialization'. As a result, it became more concerned with
physical things than towards the people even though increased the output. Scientific
Management focuses on worker and machine relationships. Organizational productivity
can be increased by enhancing the competence of production processes. The
competence viewpoint is concerned with creating job that economizes on time, human
energy, and other productive resources. Jobs are planned so that each worker has a
specified, well controlled task that can be performed as instructed. Principle of scientific
management are replacement of old rule of thumb method, scientific selecting and
training, labour management co-operation, maximizes output, equal division of
responsibility. There are four scientific management systems such as develop a science
for each element of the job to replace old rule of thumb method, Scientifically select
employees and then train them to do the job as described in step, supervise employees
to make sure they follow the prescribed method for performing their job and continue
to plan the work but use worker to actually get the work done.
Taylor's Scientific Management: Academic records indicated that F.W. Taylor and his
colleagues developed the first systematic study in management. He initiated an
innovative movement in 1910 which is identified as scientific management. Frederick
Taylor is known as the father of Scientific Management and he published Principals of
Scientific Management in which he proposed work methods designed to boost worker
productivity. Taylor asserted that to succeed in these principles, it is necessary to
transform completely the part of management and labour. His philosophy was based on
some basic principles. The first principle is separation of planning and doing. In the pre-
Taylor era, an employee himself used to choose or plan how he had to do his work and
what machines and equipment would be necessary to perform the work. But Taylor
divided the two functions of planning and doing, he stressed that planning should be
delegated to specialists. Second principle of Taylor's management approach is
functional foremanship. Taylor launched functional foremanship for administration and
direction. Under eight-boss-scheme of functional foremanship, four persons like route
clerk, instruction card clerk, time and cost clerk and disciplinarian are associated with
planning function, and the remaining four speed boss, inspector, maintenance foreman,
and gang boss are concerned with operating function. Third principle is elements of
scientific management. The main constituents of scientific management are work study
involving work important and work measurement using method and time study,
standardization of tools and equipment for workmen and improving working
conditions, scientific Selection, placement and training of workers by a centralized
personal department. Fourth principle is bilateral mental revolution. Scientific
management involves a complete mental change of employees towards their work,
toward their fellow-men and toward their employers. Mental revolution is also
necessary on the part of management's side, the foreman, the superintendent, the
owners and board of directions. Fifth principle is financial incentives. In order to
encourage workers to give better performance, Taylor introduced differential piece-rate
system. According to Taylor, the wage should be based on individual performance and
on the position which a worker occupies. Economy is other principle of management
devised by Taylor. According to him, maximum output is achieved through division of
labour and specialization. Scientific Management concentrates on technical aspects as
well as on profit and economy. For this purpose, techniques of cost estimates and
control should be adopted. Taylor concluded that science, not rule of thumb, Harmony,
not discord, Cooperation and not individualism, Maximum output, in place of restricted
output.
(ii) Administrative Management: Administrative Management emphasizes the
manager and the functions of management. The main objective of Administrative
management is to describe the management process and philosophy of management. In
contradiction of scientific management, which deals mainly with jobs and work at
individual level of scrutiny, administrative management gives a more universal theory
of management.
Henry Fayol's Administrative Management (1841–1925): Henri fayol is known as
the father of modern Management. He was popular industrialist and victorious
manager. Fayol considered that good management practice falls into certain patterns
that can be recognized and analysed. From this basic perspective, he devised a blueprint
for a consistent policy of managers one that retains much of its force to this day. Fayol
provided a broad analytical framework of the process of management. He used the
word Administration for Management. Foyal categorized activities of business
enterprise into six groups such as:
Technical, Financial, Accounting, Security, and Administrative or Managerial. He
stressed constantly that these managerial functions are the same at every level of an
organization and is common to all firms. He wrote General and Industrial Management.
His five function of managers were plan, organize, command, co-ordinate, and control.
Principal of administrative management: 1.Division of labour, 2.Authority &
responsibility, 3.Discipline, 4.Unity of command, 5.Unity of direction, 6.Subordination of
individual interests to general interest, 7.Remuneration of personnel, 8.Centralization,
9.Scalar chain, 10.Order, 11.Equity, 12.Stability of tenure, 13.Initiative and14 .Esprit de
corps (union of strength). These 14 principles of management serve as general
guidelines to the management process and management practice. His principles of
management are described below.

1. Division of work: This is the principle of specialization which is detailed by


economists as an important to efficiency in the utilization of labour. Fayol goes
beyond shop labour to apply the principle to all kinds of work, managerial as
well as technical.
2. Authority and responsibility: In this principle, Fayol discovers authority and
responsibility to be linked with the letter, the consequence of the former and
arising from the latter.
3. Discipline: This discipline denotes "respect for agreements which are directed
at achieving obedience, application, energy and the outward marks of respect".
Fayol declares that discipline requires good superiors at all levels, clear and fair
agreement, and judicious application of penalties.
4. Unity of command: This is the principle that an employee should receive orders
from one superior only.
5. Unity of direction: Fayol asserted that unity of direction is the principle that
each group of activities having the same objective must have one head and one
plan. As distinguished from the principle of unity of command, Fayol observes
unity of direction as related to the functioning of personnel.
6. Subordination of individual interest to general interest: In any group the
interest of the group should supersede that of the individual. When these are
found to differ, it is the function of management to reconcile them.
7. Remuneration of personnel: Fayol recognizes that salary and methods of
payment should be fair and give the utmost satisfaction to worker and boss.
8. Centralization: Fayol principle of centralization refers to the extent to which
authority is concentrated or dispersed in an enterprise. Individual circumstances
will determine the degree of centralization that will give the best overall yield.
9. Scalar chair: Fayol believe of the scalar chair as a line of authority, a 'Chain of
Superiors" from the highest to the lowest ranks and held that, while it is an error
of subordinate to depart 'needlessly' from lines of authority, the chain should be
short-circuited when scrupulous following of it would be detrimental.
10. Order: Breaking this principle into 'Material order' and 'Social Order', Fayol
thinks of it as the simple edge of "a place for everything (everyone), and
everything (everyone) in its (his) place". This is basically a principle of
organization in the arrangement of things and persons.
11. Equity: Fayol perceives this principle as one of eliciting loyalty and devotion
from personnel by a combination of kindliness and justice in managers dealing
with subordinates.
12. Stability of tenure of personnel: Finding that such instability is both the cause
and effect of bad management, Fayol indicated the dangers and costs of
unnecessary turnover.
13. Initiative: Initiative is envisaged as the thinking out and execution of a plan.
Since it is one of the "Keenest satisfactions for an intelligent man to experience",
Fayol exhorts managers to "Sacrifice Personal Vanity" in order to permit
subordinates to exercise it.
14. Esprit de corps: This is the principle that 'union is strength' an extension of the
principle of unity of command. Fayol here emphasizes the need for teamwork
and the importance of communication in obtaining it.

(iii) Bureaucratic Management:.

Bureaucratic management denotes to the perfect type of organization. Principal of


Bureaucracy include clearly defined and specialized functions, use of legal authority,
hierarchical form, written rules and procedures, technically trained bureaucrats,
appointment to positions based on technical expertise, promotions based on
competence and clearly defined career paths. The German sociologist, Max Weber
recognized as father of modern Sociology who appraised bureaucracy as the most
logical and structure for big organization. With his observation in business world,
Weber summarized that earlier business firms were unproductively managed, with
decisions based on personal relationships and faithfulness. He proposed that a form of
organization, called a bureaucracy, characterized by division of labour, hierarchy,
formalized rules, impersonality, and the selection and promotion of employees based on
ability, would lead to more well-organized management. Weber also argued that
authoritative position of managers in an organization should be based not on tradition
or personality but on the position held by managers in the organizational hierarchy.
Max Weber (1864-1920) devised a theory of bureaucratic management that
emphasized the need for a firmly defined hierarchy governed by clearly defined
regulations and lines of authority. He considered the perfect organization to be a
bureaucracy whose activities and objectives were reasonably thought out and whose
divisions of labour were clearly defined. Weber also believed that technical capability
should be emphasized and that performance evaluations should be made completely on
the basis of merit. Presently, it is considered that bureaucracies are huge, impersonal
organizations that put impersonal competence ahead of human needs. Like the scientific
management theorists, Weber sought to advance the performance of socially important
organizations by making their operations predictable and productive. Although we now
value innovation and flexibility as much as efficiency and predictability, Weber's model
of bureaucratic management evidently advanced the development of vast corporations
such as Ford. Bureaucracy was a particular pattern of relationships for which Weber
saw great promise. Although bureaucracy has been successful for many companies, in
the competitive global market of the 1990s organizations such as General Electric and
Xerox have adopted bureaucracy, throwing away the organization chart and replacing it
with ever-changing constellations of teams, projects, and alliances with the goal of
unleashing employee creativeness.
Chester I. Barnard: Chester Barnard (1886-1961) also devised components to classical
theory such as Follett that would be further developed in later schools. Barnard, who
became president of New Jersey Bell in 1927, used his work experience and his wide
reading in sociology and philosophy to devise theories about organizations. Barnard
stated that people join in formal organizations to accomplish such goals that cannot be
fulfilled by working alone. But as they follow the organization's goals, they must also
gratify their individual needs. Barnard came to conclusion that an enterprise can
operate efficiently and survive only when the organization's goals are kept in balance
with the aims and needs of the individuals working for it. Barnard denotes a principle
by which people can work in stable and mutually constructive relationships over time.
Barnard believed that individual and organizations purposes must be in balance if
managers understood an employee's zone of indifference that is, what the employee
would do without questioning the manager's authority. Apparently, the more activities
that fell within an employee's zone of indifference the smoother and more cooperative
an organization would be. Barnard also believed that managers had a duty to inspire a
sense of moral purpose in their employees. To do this, they would have to learn to think
beyond their narrow self-interest and make an ethical promise to society. Although
Barnard emphasized the work of administrative managers, he also focused substantial
attention on the role of the individual employee as the basic strategic factor in
organization.

Modern Management Approaches

Behavioural Approach: Numerous theorists developed the behavioural approach of


management thought as they observed weaknesses in the assumptions of the classical
approach. The classical approach emphasized efficiency, process, and principles. Some
management scholars considered that this thought ignored important aspects of
organizational life, particularly as it related to human behaviour. Therefore the
behavioural approach concentrated on the understanding of the factors that affect
human behaviour at work. This is an improved and more matured description of human
relations approach. The various theorists who have great contribution in developing
principles of management in this are Douglas Mc Gregor, Abraham Maslow, Curt
Levin, Mary Porker Follelt, Rensis Likert. Behavioural Scientists hold the classical
approach as highly mechanistic, which finds to degrade the human spirit. They choose
more flexible organization structures and jobs built around the capabilities and talent of
average employees. The behavioural approach has based the numerous principles.

1. Decision-making is done in a sub-optimal manner, because of practical and


situational constraints on human rationality of decision-making. The
behaviourists attach great weight age on participative and group decision-
making.
2. Behavioural Scientists promote self-direction and control instead of imposed
control.
3. Behavioural Scientists believe the organization as a group of individuals with
certain goals.
4. Behavioural scientists perceive that the democratic-participative styles of
leadership are enviable, the autocratic, task oriented styles may also be
appropriate in certain situation.
5. Behavioural scientists propose that different people react differently to the same
situation. No two people are exactly similar and manager should tailor his
attempts to influence his people according to their needs.
6. Behavioural scientists identify that organizational variance and change are
predictable.
Approach of Mary parker follett: Mary Parker Follett (1868-1933) developed classic
structure of the classical school. However, she initiated many new elements particularly
in the area of human relations and organizational structure. In this, she introduced
trends that would be further developed by the talented behavioural and management
science schools. Follett was persuaded that no one could become a whole person except
as a member of a group. Human beings grew through their relationships with others in
organizations. In fact, she explained management as "the art of getting things done
through people." She took for granted Taylor's statement that labour and management
shared a common purpose as members of the same organization, but she considered
that the artificial difference between managers and subordinates is vague in this natural
partnership. She believed in the power of the group, where individuals could combine
their diverse talents into something bigger. Moreover, Follett's "holistic" model of
control took into account not just individuals and groups, but the effects of such
environmental factors as politics, economics, and biology. Follett's model was
significant precursor of the idea that management meant more than just what was
happening inside a particular organization.
Maslow's theory of self-actualisation:
His theory is recognized as Hierarchy of Needs. It is illustrated in a pyramid and
elucidates the different levels and importance of human's psychological and physical
needs. It can be used in business by managers to better understand employee
motivation. The general needs in Maslow's hierarchy include:
physiological needs (food and clothing), safety needs (job security), social needs
(friendship), self-esteem, and self-fulfilment or actualisation. Maslow's Hierarchy of
Needs relates to organizational theory and behaviour because it explores a worker's
motivation. Some people are prepared to work just for money, because of friends, or the
fact that they are respected by others and recognized for their good work. The final level
of psychological development that can be achieved when all basic and mental needs are
fulfilled and the "actualization" of the full personal potential takes place. In the
organizational situation, if an employee's lower need on the hierarchy is not met, then
the higher ones are ignored. For example, if employees are worried that they will be
fired, and have no job security, they will be concerned about friendship and respect.
Douglas McGregor theory of management suggested that there is need to motivate
employees through authoritative direction and employee self-control and he introduced
the concept of Theory X and Y. Theory X is a management theory focused more on
classical management theory and assumes that workforce need a high amount of
supervision because they are inherently lazy. It presupposes that managers need to
motivate through coercion and punishment. Theory Y is a management theory that
assumes employees are determined, self-motivated, exercise self-control, and generally
enjoy mental and physical work duties. Theory Y is in line with behavioural
management theories. Theory X and Theory Y relates to Maslow's hierarchy of needs in
how human behaviour and motivation is the main priority in the workplace in order to
maximize output.
Theory X: The theory that employees are inherently lazy and irresponsible and will
tend to avoid works unless closely supervised and given incentives, contrasted with
Theory Y.
Theory Y: The theory that employees are capable of being ambitious and self-motivated
under suitable conditions, contrasted with Theory X.
An influential theorist in behaviour approach of management thought was Likert. His
principles based on four System such as supportive relationships between
organizational members, multiple overlapping structures, with groups consisting of
superiors and their subordinates, group problem solving by consensus within groups
and overlapping memberships between groups by members who serve as linking pins.
Human Relations Approach: The human rationalists which is also denotes to neo-
classicists, focused as human aspect of business. These theorists emphasize that
organization is a social system and the human factor is the most vital element within it.
There are numerous basic principles of the human relations approach that are
mentioned below:

1. Decentralization: The concept of hierarchy employed by classical management


theorists is replaced with the idea that individual workers and functional areas
(i.e., departments) should be given greater autonomy and decision-making
power. This needs greater emphasis on lateral communication so that
coordination of efforts and resources can occur. This communication occurs via
informal communication channels rather than the formal, hierarchical ones.
2. Participatory Decision-Making: Decision-making is participatory in the sense
that those making decisions on a day-to-day basis include line workers not
normally considered to be "management." The greater sovereignty afforded
individual employees and the subsequent reduction in "height" and increase in
span of control of the organizational structure requires that they have the
knowledge and ability to make their own decisions and the communication skill
to coordinate their efforts with others without a nearby supervisor.
3. Concern for Developing Self-Motivated Employees: The importance on a
system of decentralized and autonomous decision-making by members of the
organization necessitates that those members be extremely "self-motivated".
Goal of managers in such an organization is to design and implement
organizational structures that reward such self-motivation and autonomy.
Another is to negotiate working relationships with subordinates that foster
effective communication in both directions.

Therefore, the human relations approach implies modifications in the structure of the
organization itself, in the nature of work, and in the association between manager and
assistant. Each of these changes depends upon assumptions about the individual, the
organization, and communication, just like any other theory of organizations. Elton
Mayo and others conducted experiments that was known as Hawthorne experiments
and explored informal groupings, informal relationships, patterns of communication,
and patterns of internal leadership. Elton Mayo is usually popular as father of Human
Relations School. The human relationists, advocates the several factors after conducting
Hawthorne experiments which are mentioned below.

1. Social system: The organization in general is a social system consists of


numerous interacting parts. The social system established individual roles and
establishes norms that may differ from those of formal organization.
2. Social environment: The social climate of the job affects the workers and is also
affected.
3. Informal organization: The informal organization does also exist within the
frame work of formal organization and it affects and is affected by the formal
organization.
4. Group dynamics: At the place of work, the workers often do not act or react as
individuals but as members of group. The group plays an important role in
determining the attitudes and performance of individual workers.
5. Informal leader: There is an appearance of informal leadership as against
formal leadership and the informal leader sets and enforces group norms.
6. Non-economic reward: Money is an encouraging element but not the only
motivator of human behaviour. Man is diversely motivated and socio
psychological factors act as important motivators.

Behavioural Science: Behavioural science and the study of organizational behaviour


emanated during 1950s and1960s. The behavioural science approach was a natural
development of the human relations movement. It concentrated on applying conceptual
and analytical tools to the problem of understanding and foresees behaviour in the
place of work. The behavioural science approach has contributed to the study of
management through its elements of personality, attitudes, values, motivation, group
behaviour, leadership, communication, and conflict, among other issues.
Contingency Approach: This approach of management thought focuses on
management principles and concepts that have no general and universal application
under all conditions. Joan Woodward in the 1950s has contributed to develop this
approach in management. Contingency school states that management is situational and
the study of management recognize the important variables in the situation. It
distinguishes that all the subsystem of the environment are interconnected and
interrelated. By studying their interrelationship, the management can find resolution to
specific situation. Theorists stated that there is not effective way of doing things under
all business conditions. Methods and techniques which are extremely effective in one
situation may not give the same results in another situation. This approach proposes
that the role of managers is to recognize best technique in particular situation to
accomplish business goals. Managers have to develop situational understanding and
practical selectivity. Contingency visions are applicable in developing organizational
structure, in deciding degree of decentralization, in motivation and leadership
approach, in establishing communication and control systems, in managing conflicts
and in employee development and training. The contingency approach is associated
with applying management principles and processes as dictated by the sole
characteristics of each situation. It depends on various situational factors, such as the
external environment, technology, organizational characteristics, characteristics of the
manager, and characteristics of the subordinates. Contingency theorists often implicitly
or explicitly disapprove the classical approach as it focuses on the universality of
management principles.

The Quantitative Approach Of Management Thought

The quantitative approach aimed at enhancing the process of decision making through
the use of quantitative techniques. It is evolved from the principles of scientific
management.
1. Management Science (Operations Research): Management science which is
also known as operations research utilized mathematical and statistical
approaches to resolve management issues. It was developed during World War II
as strategists attempted to apply scientific knowledge and methods to the
intricate troubles of war. Industry started to apply management science after the
war. The introduction of the computer technology made many management
science tools and concepts more practical for industry
2. Production and Operations Management: This approach emphasizes the
operation and control of the production process that changes resources into
manufactures goods and services. This approach is emerged from scientific
management but became a specific area of management study after World War
II. It uses many of the devices of management science. Operations management
underlines productivity and quality of both manufacturing and service
organizations.

W. Edwards Deming exercised a great influence in developing contemporary


ideas to improve productivity and quality. Major areas of study within
operations management include capacity planning, facilities location, facilities
layout, materials requirement planning, scheduling, purchasing and inventory
control, quality control, computer integrated manufacturing, just-in-time
inventory systems, and flexible manufacturing systems.

Systems Approach of Management Thought

The systems approach deals with the thoroughly understanding the organization as an
open system that converts inputs into outputs. The systems approach has great impact
on management thought in the 1960s. During this period, thinking about managing
practices allowed managers to relate different specialties and parts of the company to
one another, as well as to external environmental factors. The system approach focuses
on the organization as a whole, its communication with the environment, and its need to
achieve equilibrium.
System approach

To summarize, there are important theories of Management and each theory has
distinct role to knowledge of what managers do. Management is an interdisciplinary
and global field that has been developed in parts over the years. Numerous approaches
to management theory developed that include the universal process approach, the
operational approach, the behavioural approach, the systems approach, the contingency
approach and others. F W Taylor, Adam Smith, Henry Fayol, Elton Mayo and others have
contributed to the development of Management concept. The classical management
approach had three major categories that include scientific management, administrative
theory and bureaucratic management. Scientific management highlighted the scientific
study of work methods to improve worker efficiency. Bureaucratic management dealt
with the characteristics of an perfect organization which operates on a rational basis.
Administrative theory explored principles that could be used by managers to
synchronise the internal activities of organizations. The behavioral approach emerged
mainly as an outcome of the Hawthorne studies. Mary Parker Follet, Elton Mayo and his
associates, Abraham Maslow, Douglas McGregor and Chris Argyris were main players of
this school.