BAC1 – PRINCIPLES OF MANAGEMENT

MODULE I – OVERVIEW OF MANAGEMENT

CHAPTER I: Evolution of Management

Learning Objectives:

After reading and studying this chapter, the student should be able to:

1. Define Management
2. Identify the levels of management
3. Determine the skills needed to be an effective manager
4. Identify the different roles of management
5. Describe the basic management functions
6. Explain the important contribution of evolution of management
7. Identify and explain the five (5) Ms of management

WHAT IS MANAGEMENT?

Management is the process of managing the resources effectively and

efficiently. The process represents the continuous on ongoing activities of a manager
(Robbins & Coulter, 2004). To be efficient means minimal waste of resources or inputs
in achieving the goal (Bateman & Snell, 2008). It is often referred as doing things right.
Effectively refers to accomplishing a task or achieving a goal. It is often describe as
doing the right things. A manager is responsible to achieving organizations goals and
objectives and responsible in utilizing the firms’ resources. (Lussier, 2006). An
Organization is a group of people working together towards a common goal.

There are the different types of resources that a firm has; these are physical
resources (e.g., equipment, machinery, building), human resources (e.g.,
managers, employees) financial resources (e.g., cash, accounts receivables) and
informational resources (e.g., customers information, survey data results, financial
statements.) A firm’s resources can be sources of competitive advantage if it is rare,
valuable, and difficult to imitate. Competitive Advantage is an advantage over
competitors gained by offering greater customer value (Armstrong & Kotler, 2010).
LEVELS OF MANAGEMENT

TOP LEVEL MANAGEMENT

MIDDLE LEVEL MANAGEMENT

FRONT LINE MANAGEMENT

As the organization is evolving the nature of a manager’s task also changes. It also
adapts to the demand of different forces of the work environment. There are three (3)
levels of management: (1) The top-level management also known as the executive level
is the highest level of management, people who occupy this level are the senior
executive such as the (CEO) Chief Executive Officers, (COO) Chief Operation Officer,
(CIO) Chief Information Officer, president and the vice president. Top managers are
responsible for the overall direction of the organization. They are often called strategic
managers.

The people in the middle level management are the (2) middle managers. They hold
positions like Division Manager, Sales Manager and Area Manager. They are often called
tactical managers. They are responsible for translating the general goals and plans that
are developed by strategic managers into more specific objectives and activities
(Bateman & Snell, 2008).

(3) The frontline managers are the lower-level managers they are also called first line
managers they are responsible in training and motivating employees. Part of being at
the lower-level management they supervise and monitor the operational activities of the
firms and they report directly to the middle managers. They hold positions like store
supervisor, office manager and head waiter.

MANAGEMENT SKILLS

A skill is an ability or capacity that one possesses which may translate knowledge into
action that result in desired performances (Schermerhorn, 1999).
Management skills can be divided into (4) four: First, a technical skill it is an ability
which involves expertise performing a specialized task. Architects, engineers and
accountants are examples of people that have specialized expertise. Second, an
interpersonal skill also known as people skills is an ability to lead, motivate,
encourage, inspire, understand and communication directly with individuals or groups.
This skill is important in all levels of management. Third are the conceptual skills.
This is the ability which includes identifying, thinking in abstract, conceptualizing
analytical situations and solving complex problems with a broader scope. A manager
who has a strong conceptual skill is able to see the big picture (Griffin & Moorhead,
2012). Lastly, are the decisional skills. It involves an ability of making decisions or
resolving problems. All managers are expected to possess these skills most especially
the top-level management.

MANAGEMENT ROLES

A role is a set of behaviors that people are expected to perform because they hold
certain positions in an organization (McShane & Glinow, 2008).

INFORMATIONAL ROLES

MANAGER
INTERPERSONAL ROLES

DECISIONAL ROLES
Managers have (3) three different roles:

Informational roles involve managing information from receiving, collecting

and analyzing the information. The three informational roles include a monitor (e.g.
observes and gather information), a disseminator (e.g. circulate news and new
information) and a spokesperson (e.g. represent company in media, conferences &
convention).

Interpersonal roles involve interacting within and outside the organization.

The three interpersonal roles include being a figurehead (e.g. attend awarding
ceremony) a leader (e.g. motivates workers to work hard) and a liaison (e.g. coordinate
information and activities with other department or groups).

Decisional role involves in making use of the information in arriving to a better

solution to the problem or opportunity. The four decisional roles include an
entrepreneur (e.g. create new ideas), a disturbance handler (e.g. handles conflict and
arguments), a resource allocator (e.g. decides distribution of resources), and a
negotiator (e.g. deals with labor contracts).

FOUR FUNCTIONS OF MANAGEMENT

1. Planning is the process of determining objectives and organizational goals,

establishing strategies and integrating coordinated activities in the organizational to
achieve the goals and objectives. Planning provides a clear direction to the
organization, it requires decision-making with the purpose of anticipating the future.
Top-level management is often responsible in handling or creating a plan for their
company.

2. Organizing is the process of establishing a structure by assigning tasks, assembling

and allocating resources to achieve the organizational goals and objectives. Part of
organizing is staffing, this is the process of selecting, training and evaluating
employees (Lussier, 2006).
3. Leading is the process of influencing people to work in achieving the organization
goal (Weihrich & Koontz, 2004). Managers must inspire and motivate its employees
through constant interaction in order to stimulate their performance.

4. Controlling is the process of monitoring performance and taking a corrective action

when necessary to ensure that the objective of the organization will be achieved.

EVOLUTION OF MANAGEMENT
Management is not a new concept. It already existed even in the early times. The
Great wall of China, The Egyptian Pyramid, and including the Rice Terraces
(Philippines) are concrete evidence that people in different parts of the world were
already applying the functions of management in building different projects. One of
the primary reasons why managers or management students need to learn the
history of management is to learn from the past and be able to avoid committing the
same mistakes.

CLASSICAL APPROACHES TO MANAGEMENT

The classical approach to focus in developing principles to manage the organization.
Known approaches that emerged during the classical period were the Scientific
Management, Administrative Management, Bureaucracy and Human Relation
Management.

SCIENTIFIC MANAGEMENT
The Scientific Management Era was spearheaded by Frederick Winslow Taylor (1856-
1915) a young engineer who started his working career at Midvale Steel Company.
He is also known as the Father of Scientific Management. In the year 1911, he
published a book entitled “The Principles of Scientific Management”. He focused on
analyzing the work and how to complete a task efficiently. Taylor used scientific
techniques in improving the performance of the people in production, emphasizing in
maximizing the output.

Taylor’s ideas and experiences led him to define guidelines in quest for efficiency in
production. First, management should develop a precise, scientific approach for each
element of one’s work to replace general guidelines. Second, management should
 scientifically select, train, teach, and develop each worker so that the right person
has the right job. Third, management should cooperate with workers to ensure an
appropriate division of work and responsibility between managers and workers
(Bateman & Snell 2008).

MOTION STUDIES

Frank Gilberth and his wife Lillian Gilberth use motion studies to simplify and
develop more efficient work procedures. They applied efficiency methods in home with
12 children. Frank Gilberth was known as the “Father of Motion Study” while Lilian is
commonly referred as First Lady of Management.

Motion study is the reducing or breaking a task to its basic physical motions
and eliminating unnecessary or reluctant motions. Frederick W. Taylor emphasized in
managing in work through efficiency while Frank and Lillian emphasized in managing
motion. The Gilbreths also devised a classification scheme to label 17 basic hand motion
(such as grasp, hold) which they called therbligs (Gilbreth spelled backward with th
transposed) (Robbins & Coulter, 2004).

Henry Gantt (1861-1919) also made an important contribution to scientific

management. He recognized the values of non-monetary rewards to motivate workers.
He also developed a system for scheduling called Gant Charts (Stevenson & Chuong,
2010). Gantt charts are considered as one of the most important management tools
that is widely used by managers to this day. It provides a mechanism in controlling and
monitoring work progress of employees or workers.

Henry Ford (1863-1947) is known to be one of the great industrialists who use
Scientific Management tehniques in his factories. The major contribution of Henry Ford
is the introduction of the moving assembly line which has a tremendous impact on
production methods in many industries (Stevenson & Chuong, 2010).

Henry Ford also introduced the mass production method. It is a method of

production in which large volumes of standardized goods are produced by workers
using highly advance equipment. The other concept used by Ford was the Division of
Labor. It is the breaking-up of jobs into small tasks. The tasks were so narrow that
virtually no skill was required.
ADMINISTRATIVE MANAGEMENT
The administrative management approach emphasized the perspective of senior
managers within the organization. It also argues that management is a profession and
could be taught (Bateman & Snell, 2008).

HENRY FAYOL is a French mining Engineer. He also known as the Father of

Modern Management. He published a book summarizing his management experiences
wherein he identified five (5) management functions: planning, organizing,
commanding, coordinating and controlling. He also developed 14 Principles of
Management.

FAYOL’s 14 PRINCIPLES OF MANAGEMENT

1. DIVISION OF WORK – divide work into specialized tasks and assign
responsibilities to specific individuals.
2. AUTHORITY – delegate authority along with responsibility
3. DISCIPLINE – make expectations clear an punish violations
4. UNITY OF COMMAND – each employee should be assigned to only one
supervisor
5. UNITY OF DIRECTION – employee’s efforts should be focused on achieving
organizational objectives
6. SUBORDINATION OF INDIVIDUAL – interest to the general interest – the
general interest must predominate
7. REMUNERATION – systematically rewards efforts that support the
organization’s direction
8. CENTRALIZATION – determines the relative importance of superior and
subordinates’ roles
9. SCALAR CHAIN – keep communication within the chain of command
10.ORDER – order jobs and materials so they support the organization’s direction
11.EQUITY – fair discipline and order enhance employee commitment
12.STABILITY AND TENURE OF PERSONNEL – promote employee loyalty and
longevity
13.INITIATIVE – encourage employees to act on their own in support of the
organization’s direction
 14.ESPRIT DE CORPS – promote a unity of interests between employees and
management

BUREAUCRACY

MAX WEBER (1864-1920) is a German sociologist who introduces the idea of a

bureaucratic organization. The aim of this concept is to create an organization that has
authority structures with a clear procedure of rules and regulations. Bureaucracy can be
defined as a rational and efficient form of organization founded on logic, order, and
legitimate authority (Schermerthon, 1999).

Bureaucracy is characterized with a high degree of division of labor and has

principles of rationality and impersonal relationships. Promotions are based on technical
competence or qualifications wherein loyalty and commitment are not considered.
Bureaucracy management is more suitable in government organizations but not in a
business organization but not in a business organization where management can be
more dynamic and flexible in terms of decision-making avoiding delay that may result in
a lot wastage of money, time and effort due to the formal structures.

BEHAVIORAL THEORY

HUMAN RELATIONS MANAGEMENT

Human Relations Management is an approach in management that emphasizes

the understanding the importance of human elements in a workplace. In today’s
settings this is known as Organizational Behavior which can be defined as the study
of human behavior in organizational settings, of the interface between human behavior
and the organization and of the organization itself (Griffin & Moorehead, 2012).

ELTON MAYO (1880-1949) is a researcher who conducted studies at

Hawthorne Works Plant of Western Electric in Chicago. He led a team who developed a
research project known as Hawthorne Studies. It is a series of experiments in which the
initial studies failed because the team proposed that better lightning would improve the
performance of the workers but it is reasonable that better lightning will have a positive
effect in the increase of production.
 The researchers concluded that workers performed well when the know that they
are part of the experiment and when they are being observed by the researchers. This
effect is known as the “Hawthorne Effect”. the team also concluded that
psychological and social factors are more important than physical condition of the
workplace and financial incentives in motivating workers.

ABRAHAM MASLOW (1908 - 1970) is a professor and psychological who

developed a motivational theory in which it is considered to be the best-known theory
of motivation. Motivation is the inner desire to satisfy an unsatisfied need (Lussier,
2006, p.428). this theory is known as “Maslow’s Hierarchy of Needs”. it consists of five
basic categories of needs. Need refer to the deficiencies that energize or triggger
behaviors to satisfy those needs (McShane & Glinow, 2008 p.135).

1. Physiological Needs - It is also known as the basics needs. (food, water, and air)

2. Safety Needs - A need which involves need for security and protection, from
physical and emotional needs.

3. Social Needs - This level is also known as Belongingness needs. It includes need for
love and affection, acceptance and friendship.

4. Esteem Needs - It involves self-respect, recognition and achievement.

5. Self-Actualization Needs - The highest level in the hierarchy. It is also known as

self-fulfillment; it involves a person realizing his/her full potential
and abilities.

SELF-ACTUALIZATION NEEDS

ESTEEM NEEDS

SOCIAL NEEDS

SAFETY NEEDS

PHYSIOLOGICAL NEEDS
MASLOW HIERARCHY OF NEEDS

Maslow suggests that we must satisfy each level of the hierarchy before we
move to the next level because once we satisfied the need, it will no longer create
motivation. He separated the five needs into two; the first four sets of needs in the
bottom are called D-needs or Deficiency needs because they must be satisfied to be
deactivated. The self-actualization needs are called growth needs because it
continues to develop even when satisfied.

FREDERICK HERZBERG (1923-2000) is a psychologist who conducted a

research where he started interviewing 200 accountants and engineers in Pittsburgh the
result led him to develop the Two-Factor Theory or better known as Motivation-Hygiene
Theory.

This theory proposes that employees are motivated by intrinsic factors rather
than extrinsic factors. Intrinsic or Motivation factors are associated with job
dissatisfaction such as working conditions, company policies, pay and job security.

HERZBERG’S TWO FACTOR THEORY

Motivation Factors

Satisfaction No Satisfaction

Hygiene Factors

Dissatisfaction No Dissatisfaction
 DOUGLAS McGREGOR (1906-1964) is a psychologist who developed
philosophical view of human behavior with his Theory X and Theory Y; The two sets
of assumptions that represented how employees view work.
Theory X represents a negative end or view of people they avoid work
responsibility, relatively have little ambition and need to be controlled (reward and
punish) and supervised.
Theory Y represents a positive end or view of workers they usually accept and
seek responsibility. They enjoy the physical and mental aspect of work and more
committed to work. They can exercise self-control and self-direction towards
organization objectives.

QUANTITATIVE APPROACHES TO MANAGEMENT

MANAGEMENT SCIENCE
Management Science is an approach that emphasizes the use of mathematics or
quantitative techniques to analyze and support management decisions and problems.
After World War II the efforts to develop several quantitative techniques continues
which helps business managers make decisions in terms of solving problems. It includes
other areas of finance and operations management particularly in forecasting that will
help managers make future projections that are very useful for determining how
variables will change the future, Linear programming is used to calculate allocation of
scarce resources, it can also be used in inventory management.
Quantitative management allows for developing quantitative approaches such as
statistics and computer simulations to arrive at management decision. The two main
branches of quantitative management are management science and operations
management (Zarate, 2009)

MODERN APPROACHES TO MANAGEMENT

SYSTEM THEORY
The system theory focuses on viewing the organization as a whole and the
interrelationships of its parts. During the 1950s management scholars attempted to
integrate a holistic view of management process (Lussier, 2006).
System is a collection of interrelated elements that function as a whole. Subsystems are
small units of a larger system. Organizations are open system that process resources
(inputs) into a product or services (outputs) in which the environment reacts to the
output in the form of feedbacks.

EXTERNAL ENVIRONMENT

RAW PRODUCT OR
MATERIALS INPUT OUTPUT SERVICES
PROCESS

FEEDBACK

CONTIGENCY MANAGEMENT
In modern management it is difficult to identify one best way to manage and
organize firms in all circumstances because different factors may vary depends on the
situation. Understanding contingencies helps managers determine on how to react to
situation by choosing a proper strategy. Contingency thinking recognizing that what
may be a good structure for one organization may not work as well in another
organization. It also recognizes that what may work well at one time may not work as
well in the future as circumstances change (Schermerhorn, 1999).
FIVE (5) M’s of MANAGEMENT

MANMATERIAL
is the most important “M” of management. It refers to people or human
MAN
resource. The right people for the right position will contribute to the overall
organizational effectiveness and efficiency. Human resource activities involve proper
hiring, recruiting, training, selecting, development of skills, compensating and
dismissing personnel. Many businesses invest in people because this provides the
organization a valuable asset that when it is successfully processed, it can be a source
of competitive advantage. If the MANAGEMENT
organization will effectively use this first “M” of
management, it will directly affect the entire system which may also create a valuable
source of new ideas and innovation.

MATERIALS refers to the main component in producing a product which

commonly known as raw materials. Materials can create additional value for their
METHODS
MACHINES MONEY
product and can yield a competitive advantage for the firms. The advancement of
modern technology increases the variety of materials with the right selection of
materials. It can provide the firms cost-effective supply of materials which can generate
greater profits or savings for the company.

MONEY is defined as any good or token that functions as a medium of

exchange. It is socially and legally accepted in payment for goods and services and in
settlement of debts. In any businesses, money plays a vital role because it serves as
the lifeline of the business, it finances the operations and other expenses of the firm.
Businesses have different sources of funds like bank loans (short-term and long-term),
funds from investors and from the sales generated by the business.

MACHINES are the basic tools to produce goods or to generate services.

Selection of an appropriate machine not only enhances efficiency but also saves times
and increases revenue. Tailoring the requirement of the organization, selections of a
right technical machine and equipment, available of spare parts, evaluation of after
sales services, substitutes ad technology and the organization budget are the crucial
criteria while purchasing a machine.

METHODS everything has a right way to do and this right way is known as a
Method in management. In short it means, an art of doing. A set of procedures and
instructions is known as a method. The visible methods of a company include: Plans,
Policies, Procedures and Data.

Reference:

Manahan, Toribio, Viray. Principles of Management Simplified

Prepared by:

EnP FEMALYN M. TELERON, MPA

Instructor