UNIT I

MEANING OF MANAGEMENT

Management is the organization and coordination of the activities of a business in order to

achieve defined objectives. Management consists of the interlocking functions of creating corporate
policy and organizing, planning, controlling, and directing an organization's resources in order to
achieve the objectives of that policy.

Business Management is the act of getting together of human beings to accomplish desired
goals and objectives effectively by doing activities like planning, organizing, directing, controlling,
leading, monitoring etc.

DEFINITIONS OF MANAGEMENT

According to F.W. Taylor “Management is the art of knowing what you want to do and then
seeing that they do it in the best and the cheapest manner.”

According to Peter Drucker “Management is a multipurpose organ that manage a business and
manages managers and manages workers and work.”

CONCEPT OF MANAGEMENT

Management is a universal phenomenon. It is a very popular and widely used term.

All organizations - business, political, cultural or social are involved in management because i t i s t h e
management which helps and directs the various efforts towards a
d e f i n i t e  purpose. According to Harold Koontz, “Management is an art of getting things donet h r o u g
h and with the people in formally organized groups. It is an art of creating
anenvironment in which people can perform and individuals can co-operate 
towardsa t t a i n m e n t   o f   g r o u p   g o a l s ” .   A c c o r d i n g   t o   " F . W . T a y l o r , “ M a n a g e
m e n t   i s   a n   a r t   o f knowing what to do, when to do and see that it is done in the best and cheapest
way”. Management is a purposive activity. It is something that directs group efforts towards the
attainment of certain pre - determined goals. It is the process of working with and through others to
effectively achieve the goals of the organization, by efficiently using limited resources in
the changing world. & of course, these goals may vary from one enterprise to another. One
enterprise may launch new products by conducting market surveys and other may maximize
profit by minimizing cost.
 
Management involves creating an internal environment. It is the management which puts
into use the various factors of production. Therefore, it is the responsi
b i l i t y   o f management to create such conditions which are conducive to maximum
efforts so
that people are able to perform their task efficiently and effectively. It includes ensuringavailability of
raw materials, determination of wages and salaries, formulation of rules & regulations etc. Therefore,
we can say that good management includes both being effective and efficient. Being effective means
doing the appropriate task i.e., fitting the square pegs in square holes and round pegs in
round holes. Being efficient means doing the task correctly, within a possible cost with
minimum wastage of resources.
NATURE OF MANAGEMENT

Universal process: Wherever there is human activity, there is management. Without efficient

management, objectives of the company cannot be achieved.

Factor of production: Qualified and efficient managers are essential to utilization of labor and capital.

Goal oriented: The most important goal of all management activity is to accomplish the objectives of
an enterprise. The goals should be realistic and attainable.

Supreme in thought and action: Managers set realizable objectives and then mastermind action on all
fronts to accomplish them. For this, they require full support form middle and lower levels of
management.

Group activity: All human and physical resources should be efficiently coordinated to attain
maximum levels of combined productivity. Without coordination, no work would accomplish and there
would be chaos and retention.

Dynamic function: Management should be equipped to face the changes in business environment

brought about by economic, social, political, technological or human factors. They must be adequate
training so that can enable them to perform well even in critical situations.

Social science: All individuals that a manager deals with, have different levels of sensitivity,
understanding and dynamism.

Important organ of society: Society influences managerial action and managerial actions influence
society. Its managers responsibility that they should also contribute towards the society by organizing
charity functions, sports competition, donation to NGO’s etc.

System of authority: Well-defined lines of command, delegation of suitable authority and

responsibility at all levels of decision-making. This is necessary so that each individual should what is
expected from him and to whom he need to report to.

Profession: Managers need to possess managerial knowledge and training, and have to conform to a
recognized code of conduct and remain conscious of their social and human obligations.

Process: The management process comprises a series of actions or operations conducted towards an

end.

SCOPE OF MANAGEMENT

1. Subject-matter of management: Planning, organizing, directing, coordinating and controlling are

the activities included in the subject matter of management.

2.  Functional areas of management: These include:

 Financial management includes accounting, budgetary control, quality control, financial
planning and managing the overall finances of an organization.

Personnel management includes recruitment, training, transfer promotion, demotion,

retirement, termination, labor-welfare and social security industrial relations.

Purchasing management includes inviting tenders for raw materials, placing orders, entering
into contracts and materials control.

Production management includes production planning, production control techniques, quality

control and inspection and time and motion studies.

Maintenance management involves proper care and maintenance of the buildings, plant and
machinery.

Transport management includes packing, warehousing and transportation by rail, road and air.

Distribution management includes marketing, market research, price-determination, taking

market risk and advertising, publicity and sales promotion.

Office Management includes activities to properly manage the layout, staffing and equipment
of the office.

Development management involves experimentation and research of production techniques,

markets, etc.

3. Management is an inter-disciplinary approach: For the correct implementation of the

management, it is important to have knowledge of commerce, economics, sociology, psychology and
mathematics.

4. Universal application: The principles of management can be applied to all types of organizations

irrespective of the nature of tasks that they perform.

5. Essentials of management: Three essentials of management are:

 Scientific method
 Human relations
 Quantitative technique

6. Modern management is an agent of change: The management techniques can be modified by

proper research and development to improve the performance of an organization.

SIGNIFICANCE OF MANAGEMENT

 Optimum utilization of resources: Management facilitates optimum utilization of available

human and physical resources, which leads to progress and prosperity of a business enterprise.
Even wastages of all types are eliminated or minimized.
 Competitive strength: Management develops competitive strength in an enterprise. This
enables an enterprise to develop and expand its assets and profits.
 Cordial industrial relation: Management develops cordial industrial relations, ensures better
life and welfare to employees and raises their morale through suitable incentives.
 Motivation of employees: It motivates employees to take more interest and initiatives in the
work assigned and contribute for raising productivity and profitability of the enterprise.
 Introduction of new techniques: Management facilitates the introduction of new machines and
new methods in the conduct of business activities. It also brings useful technological
developments and innovations in the management of business activities.
 Effective management: Society gets the benefits of efficient management in terms of industrial
development, justice to different social groups, consumer satisfaction and welfare and proper
discharge of social responsibilities.
 Expansion of business: Expansion, growth and diversification of a business unit are possible
through efficient management.
 Brings stability and prosperity: Efficient management brings success, stability and prosperity
to a business enterprise through cooperation among employees.
 Develops team spirit: Management develops team spirit and raises overall efficiency of a
business enterprise.
 Ensures effective use of managers: Management ensures effective use of managers so that the
benefits of their experience, skills and maturity are available to the enterprise.
 Ensures smooth functioning: Management ensures smooth, orderly and continues functioning
of an enterprise over a long period. It also raises the efficiency, productivity and profitability of
an enterprise.
 Reduces turnover and absenteeism: Efficient management reduces labor turnover and
absenteeism and ensures continuity in the business activities and operations.
 Creates sound organization: A dynamic and progressive management guarantees development
of sound Organization, which can face any situation - favorable or unfavorable with ease and
confidence.

PROCESS OF MANAGEMENT
1. Planning

It is the basic function of management. It deals with chalking out a future course of
action & deciding in advance the most appropriate course of actions for achievement of pre-
determined goals. According to KOONTZ, “Planning is deciding in advance - what to do, when
to do & how to do. It bridges the gap from where we are & where we want to be”. A plan is a
future course of actions. It is an exercise in problem solving & decision making. Planning is
determination of courses of action to achieve desired goals. Thus, planning is a systematic
thinking about ways & means for accomplishment of pre-determined goals. Planning is
necessary to ensure proper utilization of human & non-human resources. It is all pervasive, it is
an intellectual activity and it also helps in avoiding confusion, uncertainties, risks, wastages etc.
2. Organizing

It is the process of bringing together physical, financial and human resources and
developing productive relationship amongst them for achievement of organizational goals.
According to Henry Fayol, “To organize a business is to provide it with everything useful or its
functioning i.e. raw material, tools, capital and personnel’s”. To organize a business involves
determining & providing human and non-human resources to the organizational structure.
Organizing as a process involves:

 Identification of activities.
 Classification of grouping of activities.
 Assignment of duties.
 Delegation of authority and creation of responsibility.
 Coordinating authority and responsibility relationships.

3. Staffing

It is the function of manning the organization structure and keeping it manned. Staffing
has assumed greater importance in the recent years due to advancement of technology, increase
in size of business, complexity of human behavior etc. The main purpose o staffing is to put
right man on right job i.e. square pegs in square holes and round pegs in round holes. According
to Kootz & O’Donell, “Managerial function of staffing involves manning the organization
structure through proper and effective selection, appraisal & development of personnel to fill
the roles designed un the structure”. Staffing involves:

 Manpower Planning (estimating man power in terms of searching, choose the

person and giving the right place).
 Recruitment, Selection & Placement.
  Training & Development.
 Remuneration.
 Performance Appraisal.
 Promotions & Transfer.
4. Directing

It is that part of managerial function which actuates the organizational methods to work
efficiently for achievement of organizational purposes. It is considered life-spark of the
enterprise which sets it in motion the action of people because planning, organizing and staffing
are the mere preparations for doing the work. Direction is that inert-personnel aspect of
management which deals directly with influencing, guiding, supervising, motivating sub-
ordinate for the achievement of organizational goals. Direction has following elements:

 Supervision
 Motivation
 Leadership
 Communication

Supervision- implies overseeing the work of subordinates by their superiors. It is the act of

watching & directing work & workers.

Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work.

Positive, negative, monetary, non-monetary incentives may be used for this purpose.

Leadership- may be defined as a process by which manager guides and influences the work of
subordinates in desired direction.

Communications- is the process of passing information, experience, opinion etc from one
person to another. It is a bridge of understanding.

5. Controlling

It implies measurement of accomplishment against the standards and correction of deviation if

any to ensure achievement of organizational goals. The purpose of controlling is to ensure that
everything occurs in conformities with the standards. An efficient system of control helps to
predict deviations before they actually occur. According to Theo Haimann, “Controlling is the
process of checking whether or not proper progress is being made towards the objectives and
goals and acting if necessary, to correct any deviation”. According to Koontz & O’Donell
“Controlling is the measurement & correction of performance activities of subordinates in order
to make sure that the enterprise objectives and plans desired to obtain them as being
accomplished”. Therefore controlling has following steps:

i. Establishment of standard performance.

ii. Measurement of actual performance.
iii. Comparison of actual performance with the standards and finding out deviation
if any.
iv. Corrective action.
 MANAGER

A manager is a person responsible for controlling or administering an organization or group of

staff.

ROLES OF A MANAGER

1. Figurehead
Role of Manager
Managers perform the duties of a ceremonial and
symbolic in nature such as welcoming official visitors,
signing legal documents etc. as head of the organization
or strategic business unit or department.

2. Leadership Role of Manager

All managers have a leadership role. The manager,
as in charge of the organization / department, coordinates
the work of others and leads his subordinates. This role
includes hiring, training, motivating and disciplining
employees.

3. Liaison Role of Manager

As the leader of the organization or unit, the
manager has to perform the functions of motivation,
communication, encouraging team spirit and the like.
Further, he has to coordinate the activities of all his
subordinates, which involves the activity of liaison.

4. Monitor Role of Manager

As a result of the network of contacts, the manager
gets the information by scanning his environment,
subordinates, peers and superiors. The manager seeks and
receives information concerning internal and external
events so as to gain understanding of the organization and
its environment. Typically this is done through reading
magazines and talking with others to learn the changes in
the public’s tastes, what competitors may be planning, and
the like.

5. Disseminator Role of Manager

Manager disseminates the information; he collects from different sources and through various
means. He passes some of the privileged information directly to his subordinates, peers and superiors
who otherwise have no access to it. This information is gathered by him from his environments and
from his own equals in the organization.
6. Spokesman Role of Manager
Managers also perform a spokesperson role when they represent the organization to outsiders.
Manager is required to speak on behalf of the organization and transmit information on organization’s
plan, policies and actions.

7. Entrepreneurial Role of Manager

As an entrepreneur, the manager is a creator and innovator. He initiates and oversee new
products that will improve their organization’s performance. He seeks to improve his department and
adapt to the changing environmental factors. The manager would like to have new ideas, initiates new
projects and initiates the developmental projects.
8. Disturbance Handler Role of Manager
As a disturbance handler, managers take corrective action to response to previously unforeseen
problems. Disturbance handler role presents the manager as the involuntarily responder to pressures.
Pressures of the situation are severe and highly demand the attention of the manager and as such the
manager cannot ignore the situation. For example, worker strike, declining sales, bankruptcy of a major
customer etc. 

9. Resource Allocator Role of Manager

The most important resource that a manager allocates to his subordinates is his time. As a
resource allocator, managers are responsible for allocating human, physical and monetary resources.
Accordingly, setting up of a time schedule for the completion of an operation or approval of
expenditure on a particular project, etc., are the functions which the managers perform in the role of a
resource allocator.

10. Negotiator Role of Manager

In this role, the manager represents the organization in bargaining and negotiations with
outsiders and insiders, in order to gain advantages for his own unit. He negotiates with the subordinates
for improved commitment and loyalty, with the peers for cooperation, coordination and integration,
with workers and their unions regarding conditions of employment, commitment, productivity, with the
government about providing facilities for business expansion etc.

FUNCTIONS OF A MANAGER

 Planning − The basic step required for any project, big or small, is the planning stage. The
manager needs to plan the schedule and give the blueprint of how the task is to be done with all
the necessary details, and also the manager should have a backup plan that if this doesn’t work
then what next. Example − There is a new project, how to start, human resource required,
resources required, etc., everything should be planned.
 Organizing − Next comes the organizing part, where the manager needs to synchronize and
have to make sure everything is going according to the plan. Everything should work as per the
plan, and if not then the manager needs to look into the issue and make it work as
 planned. Example − A software tester is required, so organize the venue, date and time to
interview those eligible for the post.
 Staffing − In simple words, staffing means grouping of people into different teams and
allotting different tasks to them. If the team members have some disputes then the team
member needs to report to the team leader who will forward it to the manager and the issue
will be taken care of. Example − Assembling a new team for a new project.
 Directing/Leading − It is a manager’s responsibility to guide the employees in all situations in
order to avoid conflicts and delay in the task. Manager has to lead the employees so that they
can get a clear idea about what is to be done and how to do it. Example − a team needs a team
leader to look after each task that is accomplished, in-process, or aborted.
 Coordinating − It means bringing all the employees together by forming an efficient
relationship and making them feel comfortable to share their views and issues
freely. Example − Coordinating the schedule for a project.
 Reporting − The manager has to keep updated information about all the ongoing tasks, and it is
the sole responsibility of the manager to report the updated status to the higher authorities;
while all the employees are bound to report to the manager. Example − Keeping the respective
directors informed about the progress on their respective projects.
 Budgeting − A task has to be completed within the given time frame as well as it should be
cost efficient. The manager needs to be double sure that all the amount invested in the project
doesn’t exceed the budget given and in case of imbalance, the budgeting manager has to report
to the management. Example − If budget allows to place three employees then five employees
cannot be assigned for the task.
 Controlling − Last but of course not the least role played by the manager is having everything
under control. Whether it is the budget, or resource allocation, everything should be in
order. Example − All members of a team cannot be granted leave on the same day, as it affects
work delivery.

LEVELS OF MANAGEMENT

1. Managerial or the Top Level Management:

This level consists of the board of directors and managing director. It is the supreme source of
power since it manages the policies and procedures of an entity. Their main responsibility lies in
planning and coordinating. The roles and responsibilities of this ‘creamy’ level can be summed up as
follows:
 It is at this level that all the objectives and major policies are laid down.
 Instructions are given for preparing the necessary budgets for various
departments, schedules and policies.
 Preparation of premeditated plans and policies are done at this level.
 Appointment of executives at central level or departmental heads.
 Since it consists of Board of Director the top administration is accountable
towards the shareholders for performance of the organization.
 Harmonization and control are the two major roles played by the top
management.
 It guides the organization in the right direction towards achieving the goals and
objectives.
2. Executive or Middle Level Management:
The line and departmental managers form this level of management. These people are directly
accountable to the top management for functioning of their respective departments. Their main role
comes under the directional and managerial functions of an organization. The roles of managers at this
level are as follows:
 The main role lies in the implementation of policies and plans as per the
directives of the top management.
 Preparing plans for the sub units of their respective departments.
 Actively contribute in guidance and employment of supervisory level of
management.
 Their duty is to understand and elucidate the policies of the top management to
the lower management.
 Bringing together the activities within the department is another role at this level
of management.
 Assessment of performance of junior managers.
 Timely and important reports or data to be sent to the top management.
 Motivation of supervisory managers is a vital role of this level of management.

3. Supervisory or Operative Level Management:

This level constitutes mostly of supervisors, foremen and first line managers. The main role of
these people is:
 Handing over jobs or responsibilities to a variety of workers.
  Guidance towards day to day activities of the organization.
 These managers are directly responsible for quality and amount of production.
 They act as mediators in communicating the problems of workers and also
undertake recommending solutions to higher level of organization.
 They take stock of the machines and material required for the work to be done.
 They are the role models for the workers as they are directly and constantly in
touch them.

DEVELOPMENT OF SCIENTIFIC MANAGEMENT

F.W.Taylor is known as the ‘Father of Scientific Management”. He was employed in a small

machine shop in U.S. and picked up the trades of a pattern maker and machinist. Later he worked at
Midvale Steel works and worked his way to the top position. He was disappointed with the
unsystematic practice of the industry.

He was concerned with certain matters like:

 Employing workers without concern of skills.

 Poor training and lack of apprentice systems.
 The tasks were not standardized.
 The managers ignored the managerial functions like planning and organizing.

Taylor’s ideas are concept of Scientific Management and it later became a movement.

MEANING OF SCIENTIFIC MANAGEMENT

Scientific Management implies a science for each job and one best way of doing the work. The
old rule of thumb method of doing jobs is replaced by scientific principles. Scientific management is
often called as “Taylorism”. The scientific management theory focused on improving the efficiency of
each individual in the organization. It is about the scientific selection and training of workers, close co-
operation between management and workers.

PRINCIPLES OF SCIENTIFIC MANAGEMENT

 Development of Science for each part of men’s job (replacement of rule of thumb)
 Scientific Selection, Training & Development of Workers
 Co-operation between Management & workers or Harmony not discord
 Division of Responsibility
 Mental Revolution
 Maximum Prosperity for Employer & Employees
.

TECHNIQUES OF SCIENTIFIC MANAGEMENT

1. Time Study
 a. It is a technique which enables the manager to ascertain standard time taken for
performing a specified job.
b. This technique is based on the study of an average worker having reasonable skill and
ability.
c. Average worker is selected and assigned the job and then with the help of a stop watch,
time is ascertained for performing that particular job.
d. Taylor maintained that Fair day’s work should be determined through observations,
experiment and analysis by keeping in view an average worker.

Standard Time × Working Hours = Fair Day’s Work

2. Motion Study
a. In this study, movement of body and limbs required to perform a job are closely
observed.
b. In other words, it refers to the study of movement of an operator on machine involved in
a particular task.
c. The purpose of motion study is to eliminate useless motions and determine the bet way
of doing the job.
d. Motion study increases the efficiency and productivity of workers by cutting down all
wasteful motions.
3. Functional Foremanship

a. Taylor advocated functional foremanship for achieving ultimate specification.

b. This technique was developed to improve the quality of work as single supervisor may
not be an expert in all the aspects of the work.
c. Therefore workers are to be supervised by specialist foreman.
d. The scheme of functional foremanship is an extension of principle of specialization at
the supervisory level.

4. Standardization
 It implies the physical attitude of products should be such that it meets the
requirements & needs of customers.
  Taylor advocated that tools & equipments as well as working conditions should
be standardized to achieve standard output from workers.
 Standardization is a means of achieving economics of production.
5. Differential Piece Wage Plan
 This tech of wage payment is based on efficiency of worker.
 The efficient workers are paid more wages than inefficient one.
 On the other hand, those workers who produce less than standard no. of pieces
are paid wages at lower rate than prevailing rate i.e. worker is penalized for his
inefficiency.
 This system is a source of incentive to workers who improving their efficiency in
order to get more wages.

Benefits of scientific management

 Initiated the careful study of tasks and jobs.

 Introduction of piece rate system was facilitated. Piece rate system ensured that workers were
paid according to their productivity.
 It enabled accurate planning, timely delivery and minimum wages.

Criticism of Scientific Management

 No small firm can afford to comply with the requisites of Scientific Management.
 Co-operation of the staff— which is considered as one of the important conditions for the
implementation of scientific management principles is not available in many firms to the
desirable extent.

MANAGEMENT BY OBJECTIVES (MBO)

The concept of MBO was pioneered by Peter Drucker in the year 1954. It focuses on achieving
well defined objectives. The superior and subordinate discuss and decide the objectives to be achieved
by the subordinates. MBO is also termed as management by results.

DEFINITION OF MBO

According to Harold Koontz and Heinz Weilrich, “MBO is a comprehensive managerial system that
integrates many key managerial activities in a systematic manner consciously directed towards the
effective and efficient achievement of organizational and individual objectives.”

FEATURES OF MBO

1. Goal Orientation:
 MBO focuses on the determination of unit and individual goals in line with the organizational
goals. These goals define responsibilities of different parts of the organisation and help to integrate the
organisation with its parts and with its environment.

2. Participation:

The MBO process is characterized by a high degree of participation of the concerned people in
goal setting and performance appraisal. Such participation provides the opportunity to influence
decisions and clarify job relationships with superiors, subordinates and peers.

3. Key Result Areas:

The emphasis in MBO is on performance improvement in the areas which are of critical importance to
the organisation as a whole.

4. Systems Approach:

MBO is a systems approach of managing an organisation. It attempts to integrate the individual with
the organisation and the organisation with its environment.

5. Optimization of Resources:

The ultimate aim of MBO is to secure the optimum utilization of physical and human resources of the
organisation. MBO sets an evaluative mechanism through which the contribution of each individual can
be measured.

6. Simplicity and Dynamism:

MBO is a non-specialist technique and it can be used by all types of managers. At the same time it is
capable of being adopted by both business and social welfare organizations.

7. Operational:

MBO is an operational process which helps to translate concepts into practice. MBO is made
operational through periodic reviews of performance which are future-oriented and which involve self-
control.

8. Multiple Accountability:

Under MBO, accountability for results is not centralized at particular points. Rather every member of
the organisation is accountable for accomplishing the goals set for him.

STEPS INVOLVED IN MBO

1. Define Organizational Goals
Goals are critical issues to organizational effectiveness, and they serve a number of
purposes. Organizations can also have several different kinds of goals, all of which must be
appropriately managed. And a number of different kinds of managers must be involved in
setting goals. The goals set by the superiors are preliminary, based on an analysis and judgment
as to what can and what should be accomplished by the organization within a certain period.

2. Define Employees Objectives

After making sure that employees’ managers have informed of pertinent general
objectives, strategies and planning premises, the manager can then proceed to work with
employees in setting their objectives. The manager asks what goals the employees believe they
can accomplish in what time period, and with what resources. They will then discuss some
preliminary thoughts about what goals seem feasible for the company or department.

3. Continuous Monitoring Performance and Progress

MBO process is not only essential for making line managers in business organizations
more effective but also equally important for monitoring the performance and progress of
employees. For monitoring performance and progress the followings are required;

 Identifying ineffective programs by comparing performance with pre-established

objectives,
 Using zero-based budgeting,
 Applying MBO concepts for measuring individual and plans,
 Preparing long and short range objectives and plans,

4. Performance Evaluation
 Under this MBO process performance review are made by the participation of the
concerned managers.

5. Providing Feedback
The filial ingredients in an MBO program are continuous feedback on performance and
goals that allow individuals to monitor and correct their own actions. This continuous feedback
is supplemented by periodic formal appraisal meetings which superiors and subordinates can
review progress toward goals, which lead to further feedback.

6. Performance Appraisal
Performance appraisals are a regular review of employee performance within
organizations. It is done at the last stage of MBO process.

ADVANTGES OF MBO
 The need to clarify objectives is stressed and suggestion for improvement is obtained from all
levels of management.
 All managers have a clear idea of the important areas of their work and of the standards
required.
 The performance of staff can be assumed and their needs for improvement highlighted.

 Greater participation may improve morale and communication.

 It makes individuals more aware of organizational goal.

DISADVANTAGES OF MBO

 It takes a few years to be effective.

 Some companies always tend to raise goals. If these are too high, employees become frustrated.
 Appraisals are sometimes made on personality traits rather than on performance.
 Some employees do not want to be held responsible and goals forced upon them may lead to ill-
feeling.