You are on page 1of 51

Principles of Management

Definition
Management is the process of reaching organizational goals by working with and through people and other organizational resources. Management is the process of designing & maintaining an environment in which individuals working together in groups efficiently accomplish selected aims. Management is the art of getting things done by a group of people with the effective utilization of available resources.

Characteristics

Management Art as well as science Management is an activity Management is a continuous process Management achieving pre-determined objectives. Management is a factor of production Management as a system of activity Management is a discipline Management is a purposeful activity Management is a distinct entity

Nature

Management aims at maximizing profit Management is a profession Management has universal application Management is getting things done Management as a career Management is needed at all levels

Importance

Management meets the challenge of change. Helps in accomplishment of group goals. Provides effective utilization resource. Helps in developing a sound organization. Directs the organization. Integrates various interests. Brings in Innovation. Builds up stability, co-ordination and team spirit. Provides knowledge to tackling problems. A tool for personality development.

Functions

Planning Organizing Staffing Directing Co-coordinating Motivating Controlling Innovation Representation Decision Making Communication

Levels of management

Managerial Skills
Technical skills Human skills Conceptual skills Design skills Analytical skills Administrative skills

Interpersonal roles Figurehead Leader Liaison

Mintzberg's Management Roles

Informational roles Monitor Disseminator Spokesperson Decisional roles Entrepreneur Disturbance Handler Resource Allocator Negotiator

Figurehead - A manager has the quality of inspiring. The manager has authority. Leader Manager leads the team and manages the performance and responsibilities of everyone in the group. Liaison - Managers is responsible for communicating with internal and external contacts. Monitor Manager is responsible for monitoring internal and external environment (functioning) of the organization. Disseminator - This is where you communicate potentially useful information to your colleagues and your team. Spokesperson - Managers represent and speak for their organization to the people outside it Entrepreneur - As a manager you involve in solving problems, generating new ideas, and implementing them. Disturbance Handler Handles disputes and problems. Resource Allocator Manager allocates funding, as well as assigning staff and other organizational resources. Negotiator - You may be needed to take part in, and direct, important negotiations within your team, department, or organization.

Scientific Management: F.W. Taylor


Taylor's Scientific Management (USA 1856-1915): Frederick Taylor was called as the father of Scientific management. His book The Principles of Scientific management was published in 1911. Immediately, its contents became widely accepted by managers throughout the world. The scientific method consists essentially of (a) Observation (b) Measurement (c) Experimentation (d) Inference

Elements of Scientific Management:


Scientific Task and Rate-setting, work study- methods study, time study, fatigue study and motion study, Scientific Selection and Training, Standardization (of working conditions, material equipment etc.), Specialization through functional foremanship .

Taylors Principles:
1. 2. 3. 4.

Science, not rule of the thumb Harmony in group action, not discord Cooperation, not individualism Maximum output

functional foremanship

The Route Clerk:

To lay down the sequence of operations and instruct the workers concerned about it.

The Instruction Card Clerk:


regarding different aspects of work.

To prepare detailed instructions

The Time and Cost Clerk: is concerned with setting a time table
for doing a job & specifying the material and labor cost involved in it.

The Shop Disciplinarian:

To deal with cases of breach . To send all information relating to their pay to the workers and to secure proper returns of work from them. Looks into discipline and absenteeism of workers.

The Gang Boss: To assemble and set up tools and machines and to
teach the workers to make all their personal motions in the quickest and best way.

The Speed Boss: To ensure that machines are run at their best
speeds and proper tools are used by the workers.

The Repair Boss: To ensure that each worker keeps his machine in
good order and maintains cleanliness around him and his machines.

The Inspector:

To show to the worker how to do the work

Criticism:
Worker's Criticism: Loss of individual worker's initiative Problem of monotony Weakening of Trade Unions Exploitation of workers Employer's Criticism: Heavy Investment Loss due to re-organization Unsuitable for small scale firms .

Henry Fayol ( 1841-1925) He argued that management was an activity common to all human undertakings in business, in government, and even in the home. He stated 14 principles of managementfundamental or universal truths. 1. Division of labour 2. Authority and responsibility 3. Discipline 4. Unity of command 5. Unity of direction 6. Subordination of individual interest to common good 7. Remuneration 8. Centralization 9. Hierarchy (Scalar Chain) 10. Order 11. Equity 12. Stability of tenure 13. Initiative 14. Esprit De Corps

Fayol - industrial activates divided into six groups


Technical (Production) Commercial (buying, Selling and exchanging). Financial (Search for, and optimum use of capital). Security (Protection of property and persons). Accounting (including Statistics). Managerial (Planning, organization, command, contribution and control).

Max Weber , 1864-1920


Weber developed a theory of authority structures and described organizational activity on the basis of authority relations. He described an ideal type of organization that he called a bureaucracy, characterized by: Hierarchy Division of Labor Consistency Formal selection Formal rules and regulations Impersonality Career orientation

Other classical theory


1. 2. 3. 4. 5. 6.

Charles Babbage Specialization Work measurement/ methods Utilization of machines and tools Division of labor Science and mathematics Cost reduction Frank and Lillian Gilberth (1868-1924 & 1878-1972) Time and motion study Worker welfare Potential of workers Henry Gantt (1861-1919) Gantt Chart (It illustrate the start and finish dates of the terminal
elements and summary elements of a project)

1.
2. 3. 1. 2. 3.

Bonuses for Workers and Supervisors Good understanding of IR

Hawthorne Studies Human Relation approach


Time: 1924the early 1930s Place: Hawthorne plant in the Western Electric Company Designer: Western Electric industrial engineers Elton Mayo and

his associates

Experiments conductedIllumination Studies 1924-1927 Relay Assembly Test Experiments 1927-1929 Plant Interview Program 1925-1932 Bank Wiring Observation Group 1931-1932

Mayos Finding: Behavior and sentiments are closely related. Group influences significantly affect individual behavior. Group standards establish individual worker output. Money is less a factor in determining output than are group standards, group sentiments, and security.

Behavioral Approach- Theory X and Theory Y


Douglas McGregor proposed the two different sets of assumptions about workers. Theory X assumes the average worker is lazy, dislikes work and will do as little as possible. Workers have little ambition and wish to avoid responsibility Managers must closely supervise and control through reward and punishment.
Theory Y assumes workers are not lazy, want to do a good job and the job itself will determine if the worker likes the work. Managers should allow workers greater latitude, and create an organization to stimulate the workers.
223

Management Science Theory


Quantitative management The quantitative approach to management, sometimes referred to as operations research (OR) or management science. It includes applications of statistics, optimization models, information models, and computer simulations, linear programming, and so on, which can be used to solve management problems. Operations management techniques used to analyze any aspect of the organizations production system. Total Quality Management (TQM) focuses on analyzing input, conversion, and output activities to increase product quality. Management Information Systems (MIS) provides information vital for effective decision making.
225

Organizational Environment Theory


Organizational Environment The set of forces and conditions that operate beyond an organizations boundaries but affect a managers ability to acquire and utilize resources Open System A system that takes resources for its external environment and transforms them into goods and services that are then sent back to that environment where they are bought by customers.

226

227

The Open-Systems View


Inputs: the acquisition of external resources to produce goods and services Conversion: transforms the inputs into outputs of finished goods and services. Output: the release of finished goods and services to its external environment.

228

Closed System
A self-contained system that is not affected by changes in its external environment. Likely to experience entropy and lose its ability to control itself

229

Systems

Synergy the performance gains that result from the combined actions of individuals and departments
Possible only in an organized system

230

Contingency Theory

There is no one best way to organize The idea that the organizational structures and control systems manager choose depend onare contingent oncharacteristics of the external environment in which the organization operates. The environment impacts the organization and managers must be flexible to react to environmental changes. The way the organization is designed, control systems selected, depend on the environment. Technological environments change rapidly, so must managers.
231

Structures

Mechanistic: Authority is centralized at the top. (Theory X) Employees are closely monitored and managed. Very efficient in a stable environment. Organic: Authority is decentralized throughout employees. (Theory Y) Much looser control than mechanistic. Managers can react quickly to changing environment.

Contingency Theory

233

Other theories

McKinsey 7-S

Maslows need hierarchy theory.

Hezbergs Two Factor Theory.

What Is an Objective?
objective are goals, aims or purposes that organisation wish over varying periods of time

Management By Objectives (MBO)


A method whereby managers and employees define objectives for every department, project, and person and use them to monitor subsequent performance.

THE NATURE & PURPOSE OF MBO


MBO is concerned with goal setting and planning for

individual managers and their units. The essence of MBO is a process of joint goal setting between a supervisor and a subordinate. Managers work with their subordinates to establish performance goals that are consistent with higher organizational objectives. MBO helps clarify the hierarchy of objectives as a series of well-defined means-ends chains.

Essential Steps for MBO


Set

Goals The most difficult step. Concrete Specific target and timeframe Assign responsibility

Develop

Action Plan Course of action For both workgroups and individuals

Review

Progress Periodicity? Course corrections

Appraise

Overall Performance. How are we doing? Do we need to restate our goals?

MAKING MBO PROCESS EFFECTIVE


If MBO is to be successful, it must start at the top of the

organization Employees must be educated about what MBO is and what their role in it will be. Managers must implement MBO in a way that is consistent with overall organizational goals. Goals are refined to be as verifiable as possible and achievable within a specified period of time. Goals must be written and very clearly stated. Managers must play the role of counselors in the goalsetting and planning meeting. Conducting periodic reviews The employee is rewarded on goal attainment.

MBO - STRENGTHS
Organizations create a powerful motivational system

for their employees by adopting MBO. Through the process of discussion and collaboration, communication is greatly enhanced. With MBO performance appraisal may be done more objectively. MBO helps identify superior managerial talent for future promotion. MBO provides a systematic management philosophy. MBO facilitates control through the periodic development and subsequent evaluation of individual goals and plans.

MBO - WEAKNESSES

The major reason for MBO failure is lack of top management support Some firms may overemphasize quantitative goals Some managers will not or cannot sit down and work out goals with their subordinates

MBE.
Management by Exception (MBE) is a "policy by which management devotes its time to investigating only those situations in which actual results differ significantly from planned results. The concept of MBE was propounded by: Frederick Winslow Taylor. Attention and priority is given only to material deviations requiring investigation and correction. It is a part of motivational and control techniques. Its objective is to facilitate managements focus on really important tactical and strategic tasks.

Significance of MBE:
Proper and timely decision making and appropriate flow of action and employees activities. Better utilization of managers time by bringing their attention only to those conditions that appear to need managerial action. Easy identification of discrepancies. Benefit to customers since MBE makes it easier for the business to grow and improve its service rather than use valuable resources on routine tasks.

Process of MBE
Identifying and specifying Key Result Areas (K.R.A.s) Setting standards and outlining permissible deviations, especially for K.R.A.s Comparing actual results with the standards Computing and analyzing deviations Identifying non - permissible, that is, critical deviations in K.R.A.s Strategizing and taking corrective actions

Management By Crisis
Crisis management includes the development of plans to reduce the risk of a crisis occurring and to deal with any crisis that do arise, and the implementation of these plans so as to minimize the impact of crisis and assist the organization to recover from them. Crisis situations may occur as result of external factors such as the development of a new product by a competitor or internal factors such as a product failure or faulty decision-making, and often involve the need to make quick decisions.

TYPES OF CRISIS
Industrial Crisis Natural Crisis Professional Crisis Social Crisis Financial Crisis Technological crises Confrontation (boycott or disobeying or resisting policies) Organizational Misdeeds (misrepresentation of information's, disregarding interest of of stakeholders, customers, society, etc)

Stages in crisis management


Pre-Crisis Phase The pre-crisis phase is concerned with prevention and preparation. Prevention involves seeking to reduce known risks that could lead to a crisis. This is a part of an organizations risk management program. Preparation involves creating the crisis management - Plan, selecting and training the crisis management team, and conducting exercises to test the Crisis management

Continued..
Crisis Response The crisis response is what management does and says after the crisis hits. Public relations plays a critical role in the crisis response by helping to develop the messages that are sent to various publics. A great deal of research has examined the crisis response. That research has been divided into two sections: (1) the initial crisis response and (2) Reputation repair and behavioral intentions

Continued.
Post-Crisis Phase In the post-crisis phase, the organization is returning to business as usual. The crisis is no longer existing

Process of management