Principles of

Management
Definition
What is Management?

 "Management is a process of designing and maintaining an

environment in which individuals working together in groups,

efficiently accomplish selected aims".

 Management is the process of achieving goals and objectives

effectively and efficiently through and with the people.

Management defined…

 As managers, people carry out the managerial

functions of planning, organizing, staffing,
leading and controlling.
 Management applies to any kind of
organization.
 Organization: a group of people working
together to create a surplus.
 Profit making / business organization
 Nonprofit / service organization
Management defined…

 Management applies to managers at all

organizational levels.
 The aim of all managers is the same: to create
a surplus.
 Managing is concerned with productivity,
which implies effectiveness and efficiency.
Management is…

Efficiency
Getting work
done through
others Effectiveness
Productivity.

 The output-input ratio within a time period with

due consideration for quality.

 Is a function of effectiveness and efficiency.

 Effectiveness: the achievement of objectives.

 Efficiency: the achievement of the ends with

least amount of resources.
Levels of management
Organizational hierarchy

Top
Management
President, CEO,
Executive
Vice Presidents

Middle Management
Plant Managers, Division Managers,
Department Managers

First-Line Management
Foreman, Supervisors, Office Managers

Non- Managerial Employees

 Levels of management

 Top Level: Top management sets the mission and goals,

develops policies, evaluates the overall performance of
various departments, responsible for the business as a whole
and is concerned mainly with long-term planning

 Middle Level: Middle level management develops

departmental goals, executes the policies, plans and
strategies determined by top management, develops
medium- term plans and supervises and coordinate lower-
level managers’ activities
Levels of management

 Lower (Supervisory, frontline) Level: Lower level

management takes charge of day-to-day operations, is
involved in preparing detailed short-range plans, is
responsible for smaller segments of the business, executes
plans of middle management , guides staff in their own
subsections and keep close control over their activities.
Importance of management functions to
managers in each level
Managerial skills

 Robert L Katz identified three kinds of skills for

managers.
 Technical skills
 Human skills
 Conceptual skills

 Design skills
 Managerial skills Cont’d

Technical skills:

 These skills include the knowledge, abilities of and proficiency

in activities involving methods, processes and procedures in
the relevant fields as accounting, engineering, manufacturing
etc.

Or in short:

 The ability to use the knowledge or techniques of a particular

discipline to attain ends
 Managerial skills Cont’d

Human skills:

 This includes the ability to understand other people and

interact effectively with them. The human skills are also
important in creation of an environment in which people feel
secure and free to express their opinions.

In short it is:

 The ability to work with other people in teams

 Managerial skills Cont’d

Conceptual skills:

 This refers to the ability to think and conceptualize abstract

situations. These abilities are required for making complex
decisions.

In short it is:

 The mental capacity to develop plans, strategies and vision

 Managerial skills Cont’d

Design skills:

 These skills enable a manager to handle and solve any kind of

unforeseen or actual problems, that may crop up in the
organization. Such problems could arise due to internal factors
or external factors and/or both.

In short it is:

 The problem solving skill

Skill distribution at various
management levels
Characteristics of Excellent
Companies

 “In Search of Excellence” – Thomas peters &

Robert Waterman.
1. Were oriented toward action.
2. Learned about the needs of their customer.
3. Promoted managerial autonomy and
entrepreneurship.
4. Achieved productivity by paying close
attention to the needs of their people.
Characteristics of Excellent
Companies

5. Were driven by a company philosophy often

based on the values of their leaders.
6. Focused on the business they knew best.
7. Had a simple organization structure with a
lean staff.
8. Were centralized as well as decentralized,
depending on appropriateness.
Management: Science or Art?

 Science is a collection of systematic knowledge, collection of

truths and inferences after continuous study and experiments. It
has fundamental principles discovered.

 Art uses the known rules and principles and uses the skill,
expertise, wisdom, experience to achieve the desired result.

Management has got two faces like a coin; on one side it is art
and on the other it is science. Management has got scientific
principles which constitute the elements of Science and Skills
and talent which are attributes of Art.

Management is both art and science.

 Evolution of Modern
Management
1. Classical management approaches focus on developing universal
principles for use in management situations.

2. Behavioural (or human resource) management approaches focus on

human needs, the work group and the role of social factors in the
workplace.

3. Quantitative management approaches focus on applying mathematical

techniques to assist managerial decision making and problem solving.

4. Modern (or systems/contingency) approaches to management view

organisations as a collection of interrelated parts, requiring management
practices to adapt to situational demands.
 Classical Approaches to
Management
 There are three main branches within the classical management
approach:

 Scientific management (Taylorism)

 Administrative principles (Fayolism)

 Bureaucratic organisation

 Each of these approaches shares a common assumption that

employees in the workplace act in a rational manner, and are primarily
driven by economic concerns. That is, employees rationally consider
opportunities made available to them and then do whatever is
necessary to achieve the greatest personal and financial gain.
Classical Approaches to
Management

 Prominent classical management theorists of the late 19th and

early 20th centuries included Frederick Taylor, Frank and Lillian
Gilbreth, Henry Fayol, Mary Parker Follett and Max Weber.
Frederick Taylor –
Scientific Management

 Known as father of scientific management

(Taylorism).
 Published “Principles of Scientific Management” –
1911.
 Focus heavily on individual worker productivity.
 Contributions:
 Time and Motion Studies
 (Time study- Taylor; Motion study- Frank & Lillian Gilbreth)
 Scientific selection of workers
 One best way of doing a job
Frederick Taylor –
Scientific Management

 Fundamental principles:
 Replacing rules of thumb with science (organized
knowledge).
 Obtaining harmony, rather than discord, in group action.
 Achieving cooperation of human beings, rather than
chaotic individualism.
 Working for maximum output, rather than restricted output.
 Developing all workers to the fullest extent possible for their
own and their company’s highest prosperity.
Fayol’s Principles of
Management

 Father of Modern Management Theory

 He has proposed that there are six primary functions

of management and 14 principles of management,
Forecasting, Planning, Organizing, Commanding,
Coordinating, controlling Henri Fayol
(1841-1925)
 There are 14 Principles of Management (Fayolism)
described by Henri Fayol.
14 Principles of Henri Fayol

 Division of Labor

 Work of all kinds must be divided & subdivided and allotted to

various persons according to their expertise in a particular area.

 Authority & Responsibility

 Authority refers to the right of superiors to get exactness from their

sub-ordinates.

 A manager may exercise formal authority and also personal power.

 A manager must be prepared to bear responsibility to perform the

work in the manner desired.
14 Principles of Henri Fayol Cont’d

 Unity of Command

 A sub-ordinate should receive orders and be accountable to one and

only one boss at a time.

 He should not receive instructions from more than one person

 Unity of Direction

 People engaged in the same kind of business or same kind of activities

must have the same objectives in a single plan.

 Without unity of direction, unity of action cannot be achieved.

14 Principles of Henri Fayol
Cont’d

 Equity

 Equity means combination of fairness, kindness & justice.

 The employees should be treated with kindness & equity if devotion is

expected of them.

 Order

 This principle is concerned with proper & systematic arrangement of

things and people.

 Arrangement of things is called material order and placement of

people is called social order.
14 Principles of Henri Fayol Cont’d

 Discipline

 Discipline means sincerity, obedience, respect of authority & observance

of rules and regulations of the enterprise.

 Subordinate should respect their superiors and obey their order.

 Initiative

 Initiative means eagerness to initiate actions without being asked to do

so.

 Management should provide opportunity to its employees to suggest

ideas, experiences & new method of work.
14 Principles of Henri Fayol Cont’d

 Remuneration

 Remuneration to be paid to the workers should be fair, reasonable,

satisfactory & rewarding of the efforts.

 It should accord satisfaction to both employer and the employees.

 Stability of Tenure

 Employees should not be moved frequently from one job position to

another i.e. the period of service in a job should be fixed.
 14 Principles of Henri Fayol
Cont’d
 Scalar Chain

 Scalar chain is the chain of superiors ranging from the ultimate authority to the
lowest.

 Communications should follow this chain. However, if following the chain

creates delays, cross-communications can be allowed if agreed by all parties
and superiors are kept informed.

 Sub-ordination of Individual Interest to common goal

 An organization is much bigger than the individual it constitutes, therefore

interest of the undertaking should prevail in all circumstances.

 The interests of any one employee or group of employees should not take
precedence over the interests of the organization as a whole.
14 Principles of Henri Fayol
Cont’d

 Espirit De’ Corps

 It refers to team spirit i.e. harmony in the work groups and mutual
understanding among the members.

 Espirit De’ Corps inspires workers to work harder.

 Centralization

 Centralization refers to the degree to which subordinates are involved

in decision making. Whether decision making is centralized (to
management) or decentralized (to subordinates) is a question of
proper proportion. The task is to find the optimum degree of
centralization for each situation.
 Bureaucratic Organizations

 Suggested by Max Weber

 Bureaucratic organisation approaches can be described as an organisation

striving for maximum efficiency based on the following principles:

 A clear division of labour with jobs being well defined and done by people
who are (or can become) highly skilled at performing the tasks of the
particular job

 A clear hierarchy of authority

 Formal rules and procedures that are impartially and universally applied to
guide staff behaviour and performance

 Employee selection and promotion based on merit.

 Bureaucratic Organizations

Board of
Directors

Chief Executive

Production Marketing & Accounting & Personnel Quality Health &

Department Sales Finance Department Department Safety
Department Department
BEHAVIORAL MANAGEMENT

 Emerged because the classical approach did not

achieve the productivity.
 Human relations
 Employees- the backbone of the company
 Employees participated in taking the key decision.
 Training and counseling were provided
 Workers treated as like humans not as machines
 Behavior is defined as the way a person conducts
themselves towards others
 If all management had to do was spend time,
express interest in workers' personal well-being, and
reward them for a job well done, workers would feel
motivation to work harder
 Human needs are never completely satisfied.
 Human behavior is purposeful and is motivated by
the need for satisfaction.
 Needs can be classified according to a hierarchical
structure of importance, from the lowest to highest.
Hawthorne Studies

 By Elton Mayo & F.J. Reothlisberger during1924-1927

 Conducted by The National Research Council (NRC) of the
National Academy of Sciences with engineers from MIT
 Measured Light Intensity Vs. Worker Output
 Result :
 Higher worker productivity and satisfaction at all light
levels
 Conclusions:
 Light intensity has no conclusive effect on output
 Productivity has a psychological component
 Concept of “Hawthorne Effect” was created
Hawthorne Effects

 The major finding was that almost regardless of the experimental

manipulation (brightness of lights, humidity, breaks, group
pressure, working hours, managerial leadership), the production
of the workers seemed to improve.

 One reasonable conclusion is that the workers were pleased to

receive attention from the researchers who expressed an
interest in them.

 Work-group norms affect productivity.

 The workplace is also a social system.

Management science theory

 Started at the beginning of world war II in Britain.

 Formation of OR – Mathematical techniques for the
modeling, analysis, and solution of management
problems.
 To solve the complex problems in the war field.
 Definition- Management science approach, also
known as mathematical or quantitative
measurement approach, visualizes management as
a logical entity, the action of which can be
expressed in terms of mathematical symbols,
relationships, and measurement data
 Features-
 Management is regarded as the problem-solving
mechanism with the help of mathematical tools and
techniques.
 This approach covers decision-making, systems
analysis, and some aspects of human behaviour.
 Various mathematical tools like sampling, linear
programming, game theory, regression analysis,
simulation, waiting line theory, network diagrams like
CPM, PERT are using for decision making.
Approaches to Management

 Empirical or Case Approach

 Managerial Roles Approach
 Contingency or Situational Approach
 Mathematical or Management Science
Approach
 Decision Theory Approach
 Reengineering Approach
 Systems Approach
Approaches to Management

 Socio-technical Systems Approach

 Cooperative Social Systems Approach
 Group Behavior Approach
 Interpersonal Behavior Approach
 McKinsey’s 7-s Framework
 Total Quality Management Approach
 Management Process or Operational
Approach
 Empirical or Case Approach

 Studies experience through cases.

 Identifies successes and failures.
 No principles are identified.

Case
situation

Failure Success

Why?
Managerial Roles Approach

 Henry Mintzberg studied the activities of five CEOs in

a variety of organizations.
 Observed what managers actually do and from
such observations came to conclusions as to what
managerial activities (roles) are.
 Executives do not perform the classical managerial
functions.
 10 managerial roles.
 Managerial Roles Approach

 Interpersonal roles
1. The figurehead role
2. The leader role
3. The liaison role
 Informational roles
4. The recipient role
5. The disseminator role
6. The spokes person role
 Decision roles
7. The entrepreneurial role
8. The disturbance-handler role
9. The resource-allocator role
10. The negotiator role
 Roles of manager

 Role: a set of expectation for one’s behavior

Roles of Manager

Interpersonal Decisional Informational

• Figurehead • Entrepreneur • Recipient
• Leader • Disturbance handler • Disseminator
• Liaison • Resource allocator • Spokesperson
• Negotiator
 Roles of manager Cont’d

 Inter-personal Role

 Figurehead: Represents the company on social occasions. Attending the flag

hosting ceremony, receiving visitors or taking visitors for dinner etc.

 Leader: In the role of a leader, the manager motivates, encourages, and

builds enthusiasm among the employees. Training subordinates to work under
pressure, forms part of the responsibilities of a manager.

 Liaison: Consists of relating to others outside the group or organization. Serves

as a link between people, groups or organization. The negotiation of prices
with the suppliers regarding raw materials is an example for the role of liaison.
 Roles of manager Cont’d

 Decisional Role:

 Entrepreneur: Act as an initiator and designer and encourage changes

and innovation, identify new ideas, delegate idea and responsibility to
others.

 Disturbance handler: Take corrective action during disputes or crises;

resolves conflicts among subordinates; adapt to environmental crisis.

 Resource allocator: Decides distribution of resources among various

individuals and groups in the organization.

 Negotiator: Negotiates with subordinates, groups or organizations- both

internal and external. Represents department during negotiation of union
contracts, sales, purchases, budgets; represent departmental interests.
 Roles of manager Cont’d

 Informational role:

 Recipient: Receives information from the external environment.

 Disseminator: Transmits information received from other employees

to members of the organization.

 Spokesperson: Transmits information to the people who are external

to the organization, i.e., government, media etc. For instance, a
manager addresses a press conference announcing a new product
launch or other major deal.
Contingency or Situational
Approach
 Contingency approach to management views organisations as a
collection of interrelated parts requiring management practices to
adapt to situational demands.

 Contingency thinking tries to match managerial responses with

problems and opportunities unique to different situations, with the
underlying principle that there is no one best way to manage; the
appropriate way to manage depends on the situation.

 An appreciation of how management thinking has evolved over

time provides a useful framework for managers to apply a
contingency approach.
Mathematical or Management Science
Approach

 Purely logical analysis.

 Expressed in mathematical symbols and relationships.
 Quantitative Management approaches focus on applying
mathematical techniques and analysis to assist
managerial decision making and problem solving.
 Today, these quantitative applications are increasingly
driven by computer technology and software programs.
 Many aspects can not be modeled.
Decision Theory Approach

 Decisions decide the future.

 Manager – Decision maker.
 Organization – Decision making unit
 Focuses on decision making and people
involved in it.
 Features
 Management is decision making.
 Members of Organization - decision makers and
problem solvers.
 Decision making - control point in management
 Increasing efficiency - the quality of decision

 Focuses only on one aspect.

Reengineering Approach

 "the fundamental rethinking and radical redesign of

business processes to achieve dramatic
improvements in critical, contemporary measures of
performance, such as cost, quality, service and
speed.“- Hammer & Champy

James Champy

Michael Hammer
 Organizational Environment
Theory (System Approach to
Management)

 An organized enterprise depend on its external

environment – economic system, society
 Enterprise receives input and transforms them in to
output to the environment.
 The transformation process are the managerial
functions like planning, organizing, staffing, leading
and controlling.
 Open system includes interactions between the
enterprise and its external environment.

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Systems Approach

 Organizations are open systems.

 Recognizes the importance of studying the interrelations
of the managerial functions in an organization.

Reenergizing the
system

Inputs Transformation Outputs

process

External
environment
  Inputs
 Human, capital(Land, equipment, building),
technology, information.
 Goals
1. Employees
2. Consumers
3. Suppliers
4. Stockholders
5. Governments

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  Managerial transformation process
 Transforms the input into output
1. Basis of global management theories
2. Planning
3. Organizing
4. Staffing
5. Leading
6. Controlling

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  Outputs
 Vary with the enterprise
1. Products
2. Services
3. Profits
4. Satisfaction
5. Goal Integration

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  The communication System
1. Integrates the managerial functions
 Objectives set in planning are communicated
 Essential in the selection, appraisal, and training
 Ensure the events and performance confirm to
plans
2. Link enterprise with the external environment

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  Reenergizing the system
 Some of the outputs becomes inputs again
1. New knowledge of employees
2. Profits, surplus reinvest

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www.themegallery.com
Sociotechnical Systems
Approach

 Relates technical systems and social systems.

 Focuses on production systems.

 Ignores other managerial functions.

Cooperative Social Systems
Approach

 Concerned with both interpersonal and group

behavioral aspects leading to a system of co-
operation.
Group Behavior Approach

 Focuses on behavior of people in group.

 Studies group behavior patterns.
 Study of large groups is called as organizational
behavior

Limitations
 Not integrated with management theories,
principles and techniques.
 Need for closer integration with organizational
structure design, staffing, planning and controlling.
Interpersonal Behavior
Approach

 Focuses on interpersonal behavior, Human

Relations, Leadership and motivation
 Based on individual psychology.

Limitation
 Ignores planning, organizing and controlling.
 Psychological training is not enough for becoming
an effective manager.
McKinsey’s 7-s Framework

1. Strategy
2. Structure Hard elements
3. Systems
4. Style
5. Staff
Soft elements
6. Shared values
7. Skills
 1980s by Tom Peters and Robert Waterman
 Ensure that all parts of the organization work in harmony.
 Takes the company from current position to next higher level.
McKinsey’s 7-s Framework
Shared Values

 Involves creating economic value in a way

that also creates value for society by
advertising its needs and challenges.
 Business should reconnect company success
with social progress.
 Adidas low cost shoes
 BMW mobile laboratory
 Micronutrient campaign
Total Quality Management
Approach

 Quality = features and attributes

= absence of deficiencies
 People committed to employ organizational resources to
provide value to the customer by doing the right things, right
at the first time, every time.
 management approach to long–term success through
customer satisfaction.
 US Navy in 1984,to improve the operational effectiveness.
 Philip B Crosby, W Edwards Deming, Joseph M Juran
 all members of an organization participate in improving
processes, products, services, and the culture in which they
work.
Total Quality Management
Approach
 Depends on feedback system
 Performance superiority in delighting customers
Management Process or Operational
Approach

 Management is a process.
 Emphasizes on management functions and various
concepts and principles involved in performing these
functions.
 Management functions are universal irrespective of the
type of organizational or level of management in an
organization, though there may be differences on
emphasis on a particular function in a particular
organization or at particular level.
 central core of managing - planning, organizing, staffing,
directing and controlling
 Characteristics of
Management
 Management as a continuous process

 It consists of planning, organizing, activating and controlling the

resources (personnel and capital) of an organization.

 None of the managerial functions would produce the ultimate

results in the absence of all other basic functions.

 Management as a discipline

 Its status as a discipline increases because it continuously discovers

many aspects of business enterprises and also passes on the
verified knowledge to the practitioners of the managerial process.
Characteristics of
Management
 Management as a career:

 Management itself can be regarded as a career, but it also presents a

variety of interesting and challenging careers focused on specialized
occupations in the fields such as marketing, finance and personnel.

 Management as an Applied Science:

 It possesses a systematized body of knowledge and uses scientific

methods of research

 Universal Application:

 Management is a universal activity, applied to any form of activity,

economic or otherwise.
Characteristics of
Management

 Goal Oriented:

 Management has the task of attaining certain objectives. The success or

failure of the management depends on how far it is able to attain the
desired goals. It is judged by the extent to which it achieves its targets.

 Guidance:

 The main task of the management is guidance in the utilization of material

and human resources in the best possible way.

 The essential element of management is that it gets the work done by

coordinating the performance of those who actually perform diverse and
specific jobs.
Characteristics of
Management
 Divorced from proprietorship(Single Owner):

 Management does not signify proprietorship. It refers to a specialized

group of people who have acquired the ability to carry out a project.

 An activating factor:

 A manager's skill lies in motivating his workers through guidance,

training, incentives, rewards, status, security, control, etc.

 Management is a human activity:

 Management functions are discharged only by individuals. No

corporate body or an artificial being can perform the work of a
management
 Characteristics of
Management
 Management signifies authority:

 Authority is the power to compel others to work and behave in a

particular manner. Management cannot discharge its function
without authority. It is the foundation of management.

 Leadership:

 The management has to lead a team of workers. It must be

capable of inspiring, motivating and winning their confidence.
Manager

 A manager is someone whose primary

responsibility is to carry out the management
process within an organization to achieve the
organizational goals.
 Functions of management

1
Planning is the process of setting goals, and charting the
Planning
best way of action for achieving the goals. This function
also includes, considering the various steps to be taken to
encourage the necessary levels of change and
innovation.

2 Organizing is the process of allocating and arranging

Organizing
work, authority and resources, to the members of the
organization so that they can successfully execute the
plans.
 Functions of management
3
A: Staffing is the process of filling the positions in the
Staffing organization and keeping them filled.
B: Staffing is the process of recruiting and selecting the
right person for the right job at the right time in the right
place.
4
Leading involves directing, influencing and motivating
Leading
employees to perform essential tasks. This function
involves display of leadership qualities, different
leadership styles, different influencing powers, with
excellent abilities of communication and motivation.
 Functions of management
5
Controlling is the process of devising various checks to
Controlling ensure that planned performance is actually achieved. It

involves ensuring that actual activities conform to the

planned activities. Monitoring the financial statements,
checking the cash registers to avoid overdraft etc., form
part of this process.