UNIT I

PRINCIPLES OF MANAGEMENT

Management

According to Harold Koontz, Management is the art of getting things

done through and with people in formally organized groups.

According to Peter Drucker Management is a multi-purpose organ that

manages business , managers, workers and work.

Management Definitions Contd..

• Management is the process of designing and maintaining an environment in which individuals, working in groups, efficiently accomplish selected aims - koontz and Weihrich.

• Management is the effective utilization of human and material resources to achieve the enterprise objectives - Willian F.Glueck.

Management as an Activity

• Management is an activity just like playing, studying, teaching etc.

• As an activity management has been defined as the art of getting things done through the efforts of other people.

• Management is a group activity wherein managers do to achieve the objectives of the group.

The activities of management are:• Interpersonal activities• Decisional activities• Informative activities

Management as a Process

Management is considered a process because• It involves a series of interrelated functions.• It consists of getting the objectives of an

organisation and taking steps to achieve objectives.

• The management process includes planning, organising, staffing, directing and controllingfunctions.

Management as a process has the following implications:

(i) Social Process: Interactions among people.(ii) Integrated Process: Management bring

human, physical and financial resources together to put into effort.

(iii) Continuous Process: Management involves continuous identifying and solving problems

(iv) Interactive process: Managerial functions are contained within each other.

Management as a Team

As a group of persons, management consists of all those who have the responsibility of guiding and coordinating the efforts of other persons.

These persons are called as managers who operate at different levels of authority (top, middle, operating).

Management as an Economic Resource

• Like land, labour and capital, management is an important factor of production. Management occupies the central place among productive factors as it combines and coordinates all other resources.

Management as an Academic Discipline

• Management has emerged as a specialised branch of knowledge. It comprises principles and practices for effective management of organisations. Management has become as very popular field of study in institutes and offers a very rewarding and challenging career.

Management as a Group

Management means the group of persons occupying managerial positions. It refers to all those individuals who perform managerial functions. All the managers, e.g., chief executive (managing director),departmental heads, supervisors and so on are collectively known as management.

Organisation

• An organisation a social arrangement, which pursues collective goals, controls its own performance, and has a boundary separating it from its environment.

• Qrganisations consist of individuals who work together and are dependent on one another,

what brings them together is the common goal that they are striving to achieve.

Nature of Organization

• It allocates tasks and responsibilities to its employees.• It educates and notifies its employees about the rules

and regulations and procedures, of the organisation, expectation of the company from them in respect of their jobs and performance.

• It makes the optimum use of technology and other resources required to run an organisation.

• It collects relevant information essential for problem solving and decision-making and also makes an attempt to efficiently convey the information to its employees.

• It exerts power and control on the employees so that they make maximum effort to meet their shared common goals.

Nature of Management

Management is goal-oriented: • It is a means to achieve certain goals. • Management has no justification to exist without

goals. Management goals are called group goals or organizational goals.

• The basic goal of management is to ensure efficiency and economy in the utilization of human, physical and financial resources.

• The success of management is measured by the extent to which the established goals one achieved.

Nature of Management Contd..

• Management is a Social Process: Management is done by people , through people and for people. It is a social process because it is concerned with interpersonal relations.

• Management is a Continuous Process Management is an unending process as past

decisions always carry their impact for the future course of action.

Nature of Management Contd..

• Universal in Nature: Management is universal in nature i.e. it exists everywhere in universe wherever there is a human activity. The basic principles of management can be applied any where whether they are business or non-business organization.

• Multidisciplinary: Management is basically multidisciplinary. Though management has developed as a separate discipline it draws knowledge and concepts of various other streams like sociology, psychology, economics, statistics etc.

Nature of Management Contd..

• Dynamic: Management is dynamic in nature i.e. techniques to mange business changes itself over a period of time.

• System of authority: Authority is power to get the work done by others and compel them to work systematically. Management can not perform in absence of authority. Authority and responsibility depends upon position of manager in organization.

Conclusion from Nature of Management

On the basis of these characteristics, management may be defined as a continuous social process involving the coordination of human and material resources in order to accomplish desired objectives. It involves both the determination and the accomplishment of organisational goals.

Management as an Art or Science

• Management is an Art: Management is considered as art as both requires skills, knowledge, experience and creativity for achievement of desired results.

• Management is Science: Management is considered as science. Science tells about the causes and effects of applications and is based on some specific principles and procedures. Management also uses some principles and specific methods. These are formed by continuous observations.

Management as an Art

• Art involves practical application of personal skills and knowledge to achieve concrete results.

• Art is a personalised process and every artist has its own style.

• Art is creative and the success of artist is measured by the results he achieves.

• Art is practice based to achieve perfection

Main element of an Art

The main element of art are• Personal Skills• Practical Know how• Result Orientation’• Creativity• Constant practice aimed perfection.

Management is an Art because• Like an artist ,a manager applies his knowledge and skills to

coordinate the efforts of his people.• Management seek to achieve concrete practical results like

profits, growth ,social service etc.• Like art ,management is creative .It brings out new situations and

converts resources into output. The success of manager is measured by the results he achieves.

• Management is a personalised process. Every manager adopts his own approach towards problems depending upon his perception and environmental conditions.

• Mastery in management requires a sufficiently long period of experience in ,managing.

Science`

• Science is a systematised body of knowledge pertaining to particular field of inquiry. Systematised means it establishes cause and effect relationship between different variables.

• It contains principles and theories developed through continuous observation,experimentation and research

• The principles have universal applicability.• Science can be taught and learn in the classroom

and outside.

Management is a Science• Universally acceptance principles - Scientific principles represents basic

truth about a particular field of enquiry. These principles may be applied in all situations, at all time & at all places. E.g. - law of gravitation which can be applied in all countries irrespective of the time.

• Management also contains some fundamental principles which can be applied universally like the Principle of Unity of Command i.e. one man, one boss. This principle is applicable to all type of organization - business or non business.

• Experimentation & Observation - Scientific principles are derived through scientific investigation & researching i.e. they are based on logic. E.g. the principle that earth goes round the sun has been scientifically proved.

• Management principles are also based on scientific enquiry & observation They have been developed through experiments & practical experiences of large no. of managers. E.g. it is observed that fair remuneration to personal helps in creating a satisfied work force.

Management is a Science• Cause & Effect Relationship - Principles of science lay down cause and effect

relationship between various variables. E.g. when metals are heated, they are expanded. The cause is heating & result is expansion.

• The same is true for management, therefore it also establishes cause and effect relationship. E.g. lack of parity (balance) between authority & responsibility will lead to ineffectiveness. If you know the cause i.e. lack of balance, the effect can be ascertained easily i.e. in effectiveness. Similarly if workers are given bonuses, fair wages they will work hard but when not treated in fair and just manner, reduces productivity of organization.

• Test of Validity & Predictability - Validity of scientific principles can be tested at any time or any number of times i.e. they stand the test of time. Each time these tests will give same result. Moreover future events can be predicted with reasonable accuracy by using scientific principles. E.g. H2 & O2 will always give H2O.

• Principles of management can also be tested for validity. E.g. principle of unity of command can be tested by comparing two persons - one having single boss and one having 2 bosses. The performance of 1st person will be better than 2nd.

Objectives of Management

• Organizational objectives: Management is expected to work for the achievement of the objectives of the particular organization in which it exists.

Organizational objectives include:(a) Reasonable profits so as to give a fair return on the

capital invested in business(b) Survival and solvency of the business, i.e., continuity.(c) Growth and expansion of the enterprise(d) Improving the goodwill or reputation of the

enterprise.

Objectives of Management Contd..

• Personal objectives: An organization consists of several persons who have their own objectives. These objectives are as follows:

(a) Fair remuneration for work performed(b) Reasonable working conditions(c) Opportunities for training and development(d) Participation in management and prosperity of

the enterprise(e) Reasonable security of service.

Objectives of Management Contd..

• Social objectives: Management is not only a representative of the owners and workers, but is also responsible to the various groups outside the organisation.

(a) Quality of goods and services at fair price to consumers.(b) Honest and prompt payment of taxes to the Government.(c) Conservation of environment and natural resources.(d) Fair dealings with suppliers, dealers and competitors.(e) Preservation of ethical values of the society. Avoidance of

anti-social practices such as black marketing, smuggling, overcharging etc., to earn profit.

Management and Administration

• “Administration means overall determination of policies, setting of major objectives, the identification of general purposes and laying down of broad programmes and projects”

On the other hand,• “Management is concerned with the execution of

the policy, within the limits setup by administration and the employment of the organization for the particular objects before it.

• Sheldon declares Administration as a thinking process and management as doing process.

Management and Administration are different

• Administration is function concerned with determination of corporate policies while Management is concerned with execution of those policies.

Management and Administration on the basis of Function

Basis Management Administration

Meaning Management is an art of getting things done through others by directing their efforts towards achievement of pre-determined goals.

It is concerned with formulation of broad objectives, plans & policies

Nature Management is an executing function. Administration is a decision making function.

Process Management decides who should and how should he do it

Administration decides what is to be done and when it is to be done.

Functions Management is a doing function because managers get work done under their supervision

Administration is a thinking function because the plans and policies are determined under it.

Skills Technical and human skills Conceptual and Human skills

Level Middle and Lower level function Top level function

Management and Administration on the basis of usage

Basis Management Administration

Applicability It is applicable to business concerns i.e profit making organization

It is applicable to non business concerns i.e clubs, schools,hospitals etc

Influence The management decisions are influenced by the values , opinions, beliefs and decisions of the managers

The administration is influenced by public opinion, govt policies,religious organizations, customs etc.

Status Management constitutes the employee of the organization paid remuneration(in the form of wages and salaries)

Administration represents owners of the enterprise who earn return on their capital invested and profits in the form of dividend

Distinction between Administration and Management

Point of distinction Administration Management

Nature It is a determinative or thinking function

It is an executive or doing function

Type of Work It is concerned with thedetermination of majorobjectives and policies

It is concerned with the implementation of policies

Level of Authority It is mainly a topauthority level function

It is largely a middle andlower level function

Influence Administrative decisions are influenced by public opinion and outside forces

Managerial decisions are influenced by objectives and policies of the organization

Administration and Management

Direction of Human effort

It is not directly concerned with direction of human effort

It is actively concerned with direction of human efforts

Main Functions Planing and Controling are the main functions

Directing and Organizing are the main functions

Usage Government and Public Sectors Business Organizations

Examples Commissioner,Vice Chancellor,Governor etc

Managing Directors,General Managers etc

Administration and Management are Same expressed by Henry Fayol

• Management & administration are synonymous; the difference between the two terms lies mostly in their usage in different countries or different fields of human organizations.

• Administration is more popular in Government and other public organisations while the word management is more commonly used in the business world, where economic performance is of primary importance.

Management and Administration are same contd..

• Practically there is no difference between management & administration. Every manager is concerned with both - administrative management function and operative management function.

• the managers who are higher up in the hierarchy denote more time on administrative function & the lower level denote more time on directing and controlling worker’s performance i.e. management.

Management as Profession

Profession may be defined as an occupation that requires specialized knowledge and intensive academic preparations to which entry is regulated by a representative body.

The essentials of a profession are: Specialized Knowledge - A profession must have a

systematic body of knowledge that can be used for development of professionals. Every profession has a well defined body of knowledge relevant to the area of specialization.

• In order to practice a profession, a person requires specialized knowledge of its principles and techniques.

• A manager must have intensive devotion and involvement to acquire expertise in the science of management.

Profession Contd..

Formal Education & Training – • There are no. of institutes and universities to

impart education & training for a profession. • No one can practice a profession without

going through a prescribed course.• For example, a CA cannot audit the A/C’s

unless he has acquired a degree or diploma for the same

Profession contd…

• Code of Conduct – • Every profession formulates its ethical codes for

conduct of its members but there is no uniform code of conduct for practicing managers.

• Members of a profession have to abide by a code of conduct which contains certain rules and regulations, norms of honesty, integrity and special ethics.

• Any member violating the code of conduct can be punished and his membership can be withdrawn.

• The AIMA has prescribed a code of conduct for managers but it has no right to take legal action against any manager who violates it.

profession

Social Obligations – • Profession is a source of livelihood but professionals are

primarily motivated by the desire to serve the society. • Their actions are influenced by social norms and values.

For example, a doctor earns his living from his medical practice. But he does not treat his patients only for the sake of money.

• Similarly a manager is responsible not only to its owners but also to the society and therefore he is expected to provide quality goods at reasonable prices to the society.

Profession Contd..

• Representative Association – • In every profession there is a statutory association or institution

which regulates that profession• For example, an institute of Charted Accountants of India

establishes and administers standards of competence for the auditors but the AIMA however does not have any statuary powers to regulate the activities of managers.

• In management there is AIMA for the regular exchange of knowledge and experience. However, this association does not have the statutory power to regulate the activities of managers. Membership of this association is not compulsory in order to become a manager.

Management as a Profession

The essential features of profession are as follows:

(i) Well defined body of knowledge(ii) Restricted entry(iii) Service motive(iv) Code of Conduct(v) Representative professional association

Difference

• Few managers have uniform background in terms of education and experience.

• The management associations have no legal right to enforce their code of conduct.

• There is no single group to which the majority of the managers belong and whose authority is recognised by law as a sanction.

• Managers are known by their performance and not mere degrees.

Difference between Management and Profession

• management does not restrict the entry into managerial jobs to people with a special academic degree.

• No minimum qualifications have been prescribed for managerial personnel.

• No management association has the authority to grant certificates of practice or to regulate entry into management careers.

Management Skills In modern business the job management has

become very difficult therefore several skills are required to manage successfully a large organization in a dynamic environment.

Four Categories of Skills• Technical, • Human, • Diagnostic and• Conceptual skills.

Managerial Skills

Technical Skills

• Technical skills refer to the ability and knowledge in using the equipment, technique and procedures involved in performing specific tasks.

• These skills require specialized knowledge and proficiency in the mechanics of particular job.

• For example Ability in programming and operating computers, for instance, a technical skill.

Diagnostic Skills

• The ability to visualize most appropriate response to a situation . Diagnostic skills include the ability to determine by analysis and examination the nature and circumstances of particular conditions.

• Used for investigating problems and having a solution. Managers should determine and know the cause of a certain problem.

• It is the ability to cut through unimportant aspects and quickly get to the heart of the problem.

• Diagnostic skills are probably the most difficult ones to develop because they require the proper blend of common sense and intelligence.

Human Skills

• Human skills consists of the ability to work effectively with other people both as individual and as members of a group.

• These are required to win cooperation of others and to build effective work teams.

• Human skills are reflected in the way a manager perceives his superiors, subordinates and peers.

• the ability to communicate with, understand, and motivate both individuals and groups.

Conceptual Skills

• Conceptual skills are used to analyze complex situations.• Conceptual skill is the cognitive ability to see the

organization as a whole and the relationship among its parts. • Managers need the mental capacity to understand how �

various functions of the organization complement one another, how the organization relates to its environment, and how changes in one part of the organization affect the rest of the organization

• Conceptual skills are mostly required by the top-level management because they spend more time in planning, organising and problem solving.

Levels of Management

Decision Making

Levels of ManagementTop Level of Management• It consists of board of directors, chief executive or managing director. • Top management lays down the objectives and broad policies of the

enterprise. • It devotes more time on planning and coordinating functions.The role of the top management can be summarized as follows -• It issues necessary instructions for preparation of department

budgets, procedures, schedules etc. • It prepares strategic plans & policies for the enterprise. • It is also responsible for maintaining a contact with the outside world. • The top management is also responsible towards the shareholders for

the performance of the enterprise.

Middle Level Management

• The branch managers and departmental managers constitute middle level. • They are responsible to the top management for the functioning of their

department. • They devote more time to organizational and directional functions. • They execute the plans of the organization in accordance with the policies and

directives of the top management. • They make plans for the sub-units of the organization. • They participate in employment & training of lower level management. • They interpret and explain policies from top level management to lower level. • They are responsible for coordinating the activities within the division or

department. • It also sends important reports and other important data to top level

management. • They evaluate performance of junior managers. • They are also responsible for inspiring lower level managers towards better

performance.

Lower Level Management

• Lower level is also known as supervisory / operative level of management. • It consists of supervisors, foreman, section officers, superintendent etc. • They are concerned with direction and controlling function of

management. • Assigning of jobs and tasks to various workers. • They guide and instruct workers for day to day activities. • They are responsible for the quality as well as quantity of production. • They help to solve the grievances of the workers. • They supervise & guide the sub-ordinates. • They are responsible for providing training to the workers. • They arrange necessary materials, machines, tools etc for getting the things

done. • They prepare periodical reports about the performance of the workers. • They ensure discipline in the enterprise. • They motivate workers.

Characteristics of a Quality manager

• Competent-Extremely competent in his or profession, very knowledgeable and up to date with the new programs of regulating the every day affairs of a business.

• Self-motivation- the ability to get yourself going, and take charge of what’s next for you. Manager should also be highly motivated, self driven, and have a strong desire to help the company become highly profitable and successful.

• High quality manager should be very independent, but also humble and willing to seek the advice and instructions from people of higher positions.

• Excellent Communication Skills-The best leaders can effectively communicate in all forms, whether it is written or verbal.

• Public Speaking-As a good manager, you should know how to speak publicly, annunciating your words, and concisely communicating your ideas, whether in an interview, or addressing workers.

• Power of Creativity- If a manager has the skill of being creative and coming up with new ideas, they will have a greater impact on the growth of the company and will be more self-driven to help the entire need of the business.

• Active Listening- One of the most important communication skills is listening. Make sure you are listening to your workers, superiors and customers, and that you acknowledge them.

• Dependability/Reliability: A good manager should be dependable and reliable.