Principles and Practices of Management

2009
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The term Management can be interpreted in a variety of ways Noun : Management refers to individuals (i. e, manager ) who are concerned with getting things done from others. Discipline : Management implies a branch of knowledge which is concerned with the study of principles and practices of management. Process : Management refers to the functions like planning , organizing , staffing , leading and controlling etc., which are performed by manager to make productive use of man and materials.

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Importance of Management
With increasing global competition, changes in the world of technology, changing business practices and increasing social responsibility of organizations, the role of management has become all the more significant. In the present era, it is of utmost importance to utilize economically and efficiently the resources of all kindshuman, physical, financial and technological. No organization can achieve its objectives without the optimum use of these resources.

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 To gain a better insight into the nature of management, let us look at some definitions of management.

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MANAGEMENT
Management is the co-ordination of all resources through the process of planning, organizing , directing and controlling in order to attain stated objectives.

G.R. Terry
According to G.R. Terry , Management is a distinct process consisting of planning , organizing , staffing and controlling performed to determine and accomplish stated objectives by the use of human beings and other resources.

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KOONTZ & WEIHRICH

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

Louis E.Boone and David L Kurtz

Louis E.Boone and David L Kurtz define Management as The use of people and other resources to accomplish objectives

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Mary Parker Follet

termed management as the art of getting things done thru people.

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Dalton E McFarland
Dalton E McFarland defines Management as a process by which managers create, direct, maintain and operate purposive organizations thru systematic, coordinated co-operative human effort.

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NATURE OF MANAGEMENT
Some thinkers take management as an art, other as an science and also as a profession to some. Whether Management is a science or art ?

Management as a science
It helps to understand Systematic body of knowledge. Principles have been developed through experimentation. Universally applicable Verifiable principles.

Management as Art
Art is defined as the use of skill to attain predetermined objectives . It helps to understand Existence of knowledge Personalized application of knowledge

MANAGEMENT IS BOTH SCIENCE AND ART

Management is both a combination of science & art . As science it is a systematic body of knowledge which use certain principles and it is an art as it involves skillful application of knowledge & where a manager constantly practice to become perfect.

MANAGEMENT SKILLS
 Managers need certain Skills to perform the functions associated with their jobs.  Human Skills  Conceptual Skills  Technical Skills  Design skills.

MANAGEMENT PROCESS

Planning

Organizing Labour Capital Materials Machinery Information Attainment Of Organizational Goals

Staffing Leading

Controlling

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Key Aspects of the Management process

 Henry Fayol was the First management Thinker to outline the 5 basic functions carried out by managers  Planning  Organizing  Staffing  Leading  Controlling

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Functions of managers
Planning

Evaluating

Organizing

Directing

Staffing

Management
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functions

Planning
It can be defined as a process , by which Managers decide the mission and objectives of the firm and take necessary steps to achieve the desired objectives.

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Organizing
is the process of assigning the tasks and allocating resources to individuals to enable them to accomplish the organizational goals. Organizing is a continuous process of determining 1.Which tasks has to be performed 2.How task can best be combined into specific jobs
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Organizing

3.How jobs can be grouped into various units. 4.The authority and reporting relationships within the corporate hierarchy.

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Staffing
Is better known as Human Resource management. It involves maintaining and filling various positions in an organization.

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Leading
Is defined as the management function of influencing ,motivating and directing people towards the achievement or organizational goals. It involves 1.Communicating with others 2.leadership styles and approaches 3.Motivating people to put forth the effort required to achieve organizational goals.
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Controlling
It is continuous measurement and analysis of actual operations against the established standards developed during planning process and corrections of deviations. Comparing performance with standards Determination negative deviations Developing remedial measures to correct deviations.
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Types Of Manager
Jack Welch in his book Straight from the Gut speaks about 4 types of Managers depending on their ability to achieve set targets, while maintaining the companys value

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 Type1: Managers live up to the expectations of the company. They are able to deliver commitments and share the companys value. Type2: Managers neither share the companys value nor do they achieve their targets.

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 Type3: Manager shares value of the company but their performance is dismal. They generally not able to deliver the nos. Type4: Managers are the most troublesome. These are the managers, who fulfills all commitments and give results but do not share the companys value.
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Areas of Management
Marketing Finance Production/Operations Human Resources Administration Others

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Levels of Management
It is a normal practice to categorize into 3 basic levels 1. Top Level Management 2. Middle level Management 3. Lower level Management

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Levels of Management
The number of managerial positions at each level varies from organization to organization. In most of the organization there are more position at lower level ;fewer in the middle and the very few at the top.

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Top level Managers

Are usually appointed, elected or designated by the organizations governing body. They are few in numbers as they include job classifications such as Chief Executive Officer (CEO), President, Vice President ,Senior Vice President, Chairman, Executive Director. They are responsible for overall activities of the business and are accountable for his impact on the society at large.

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Middle Level Managers

Deal with the actual operation of various departments in an organization. They are directly responsible for the performance of managers at lower levels. Titles include manager, director, chief, Department head and divisional head.

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First level managers

Directly responsible for the performance of employees involved in operations. Usually called Supervisors. Implement the operational plans developed by the middle managers and take corrective actions.

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Evolution of Management Thought

Many Theorists and practitioners in the mid and late 1800s (pre-classical period) contributed valuable ideas that laid the foundation for subsequent, broader inquiries into the nature of Management An understanding of important historical developments and theories propounded by early thinkers is important for todays managers.

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Early approaches to Management:

The industrial revolution, which began in Europe in mid 1700s, was the starting point for the development of management concepts and theories. The rapid growth in the number of factories during this period and the need to coordinate the efforts of large number of people in the production process necessitated the development of management theories and principles. Five principle contributors can be identified in the early period of management thought.

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Evolution of Management Thought

Pre classical contributors to management thought:
Name Robert owen Period 1771-1858 Contribution Proposed legislative reforms to improve working conditions of Labor

Charles Babbage

1792-1871

Advocated the concept of division of labour, devised a profit sharing plan

Andrew ure Charles Dupin Henry R Towne

1778-1857 1784-1873 1844-1924

Advocated the study of management Advocated the study of management Emphasized the need to consider management as a separate field of study and the importance of business skills for running a business.

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Assessing pre classical contributors

Pre classical theorists generally tried to find solutions to contemporary managerial problems. The early pioneers, with their technical backgrounds, did not regard management as a separate field of study. However, their ideas did lay the foundation for the management theorists of the 1900s.
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Classical Approaches
Classical Management thought can be divided into three.
 Scientific Management- Frederick .w. Taylor  Administrative Theory Henry Fayol  Bureaucratic Management- Max Weber.  Classical Theories formulated principles for setting up and managing organizations.

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Classical contributors to Management thought

Name Period Approach Rationale Focus

Frederick W Taylor Henry Fayol

18561915 18411925

Scientific Management

One best way to do each job

Job level

Administrativ One best e principles way to put an organizatio n together Bureaucratic Organization Rational and impersonal organizatio nal arrangeme nts

Organiza tional level

Max Weber

18641920

Organiza tional Level

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Scientific Management
Taylor, considered father of scientific management, wrote the principle of scientific management in 1911. An engineer and inventor, Taylor first began to experiment with new managerial concepts in 1878 while employed at the midvale steel Co. At Midvale Steel Company, his rise from labourer to chief engineer within 6 years gave him the opportunity to tackle a grave issue faced by the organization-the soldiering problem. Soldiering refers to the practice of employees deliberately working at a pace slower than their capabilities.

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According to Taylor, workers indulge in soldiering for three main reasons: 1. Workers feared that if they increased their productivity, other workers would lose their jobs. 2.Faulty wage system employed by the organization encouraged them to work at a slow pace. 3. Outdated methods of working handed down from generation to generation led to a great deal of wasted efforts.

Taylor felt that the soldering problem could be eliminated by developing a science of management.
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Table presents the four steps in scientific management

STEP
Step1 Step 2

Description
Develop a science for each element of the job to replace old rule. Scientifically select employees and then train them to do the job as described in step 1

Step 3

Supervise employees to make sure they follow the prescribed methods for performing their jobs. Continue to plan the work but use workers to actually to get the work done.

Step 4

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Scientific Management- F.W.Taylor

In essence, scientific management as propounded by Taylor emphasizes: I. Need for developing a scientific way of performing each job. ii. Training and preparing workers to perform the particular job. iii. Establishing harmonious relations b/w management and workers so that the job is performed in the desired way.

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FRANK AND LILLIAN GILBRETH

After Taylor , Frank and Lillian Gilbreth made numerous contributions to the concept of Scientific Management. Frank Gilbreth (1868- 1924) is considered the father of motion study. Lillian Gilbreth (1878- 1972) was associated with the research pertaining to motion studies. Motion study involves finding out the best sequence and minimum number of motions needed to complete a task. They were mainly involved in exploring new ways for eliminating unnecessary motions and reducing work fatique.

HENRY LAURENCE GANTT (1861-1919)

Henry L. Gantt was a close associate of Taylor at Midvale and Bethlehem steel . Gantt later became an independent consultant and made several contributions to the field of Management . He probably best remembered for his work on the task and bonus system and the Gantt chart.

HENRY LAURENCE GANTT (1861-1919)

Under Gantts incentive plan , If the worker completed the work fast , i.e, in less than the standard time , he received a bonus . He also introduced an incentive plan for foreman , who would be paid a bonus for every worker who reached the daily standard . If all the workers under a foreman reached the daily standard , he would receive an extra bonus.

HENRY LAURENCE GANTT (1861-1919)

Gantt felt that this system would motivate foreman to train workers to perform their tasks efficiently. The Gantt chart is still used today by many organization . It is a simple chart that compares actual and planned performances.

ADMINISTRATIVE THEORY
Another classical theory is Administrative theory focused on the principles that could be used the internal activities of organizations. The most prominent of the administrative theorists was Henry Fayol.

Administrative Theory- Henry Fayol

He was French Industrialist, a prominent management theorist. He focused on principles that could be used by managers to coordinate the internal activities of organizations He identified 5 major functions: Planning, organizing, Commanding, Coordinating and Controlling. Fayols 5 management functions are clearly similar to modern management functions- planning, organizing, Staffing, Leading, and Controlling.

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14 Principles of management- Henry Fayol

1. Division of work: Work specialization results in improving efficiency of operations, the concept of division of work can be applied to both managerial and technical functions. Authority and Responsibility: Authority is defined as the right to give orders and the power to exact obedience Discipline: Discipline is vital for running an organization smoothly, It involves obedience to authority, adherence to rules, respect for superiors and dedication to ones job. Unity of command: Each employee should receive orders or instructions from one superior only.

2.

3.

4.

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14 Principles of management- Henry Fayol

5. Unity of Direction: activities should be organized in such a way that they all come under one plan and supervised by only one person. Subordination of the individual interest to the general Interest: Individual interest should not take precedence over the goals of the organization. Remuneration: The compensation paid to employees should be fair and based on the factors like business conditions, cost of living, productivity of employees and the ability of the firm to pay. Centralization: Depending on the situation, an organisation should adopt a centralized or decentralised approach to make optimum use of its personnel.

6.

7.

8.

14 Principles of management- Henry Fayol

9. Scalar chain: this refers to the chain of authority that extends from the top to the bottom of an organization. The scalar chain defines the communication path in an organization.

10. Order: This refers to both material and social order in organizations. Material order indicates that every thing is kept in the right place to facilitate the smooth coordination of work activities . Similarly,Social order implies that the right person is placed in the right job. 11. Equity: all employees should be treated fairly. A manager should treat all employees in the same manner.

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14 Principles of management- Henry Fayol

12. Stability of tenure of personnel:a high labour turn over should be prevented and managers should motivate their employees to do a better job. 13. Initiative: Employees should be encouraged to give suggestions and develop new and better work practices. 14. Espirit de corps: This means a Sense of Union management must inculcate a team spirit in its employees.
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BUREAUCRATIC MANAGEMENT-Max Weber

Bureaucratic Management , one of the schools of classical management , emphasizes the need for organizations to function on a rational basis. He observed that nepotism (Hiring of relatives regardless of their competence) was prevalent in the most organizations. He felt that nepotism was grossly unjust and hindered the progress of individuals. According to Weber, A bureaucracy is highly structured, formalized and impersonal organizations, in other words, it is a formal organization structure with a set of rules and regulations.

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Major characteristics of Webers Ideal Bureaucracy

Characteristics
Work Specialization and division of labour

Description
The duties and responsibilities of all the employees are clearly defined. Each employee is given a particular task to perform repeatedly so that he acquires expertise in that task. The rules and regulations that are to be followed by employees are well defined to instill discipline in them and to ensure that they work in a coordinated manner to achieve the goals of the organisations Managers make rational decisions and Judgments based purely on facts. They try to be immune to feelings like affection, enthusiam, hatred, and passion so that to remain unattached and unbiased towards their subordinates. The activities of employees at each level are monitored by employees at higher level. Subordinates do not take any decision on their own and always look up to their superiors for approval of their ideas and opinions.

Abstract rules and regulations

Impersonality of Managers

Hierarchy of organization structure

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Limitation of bureaucratic management The principal characteristics of bureaucracy- strict division of labor, adherence to formal rules and regulations, and impersonal application of rules and controlsdestroy individual creativity and the flexibility to respond to complex changes in the global environment.

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Behavioral Approach
The behavioral school of management emphasized what the classical theorists ignoredthe human element. While classical theorists viewed the organization from a production point of view, the behavioral theorist viewed it from the individuals point of view. The behavioral approach to management emphasized individuals attitudes and behaviors and group processes, and recognized the significance of behavioral processes in the work place.
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Contributions of Behavioural Thinkers to Management Thought Name

Mary Parker Follet

Period
1868-1933

Contribution
Emphasized group influence and advocated the concept of Power Sharing and integration Laid the foundation for the human relations movement, recognized the influence of group and work culture on job performance. Advocated that humans are essentially motivated by hierarchy of needs, Differentiated employees and managers into theory x and theory Y personalities.

Elton Mayo

1880-1949

Abraham Maslow

1908-1970

Douglas Mc Gregor
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1906-1964

CONTRIBUTIONS OF HAWTHORNE EXPERIMENTS

The Hawthrone experiments , which laid the foundations for the human relation movement , made significant contribution to the evolution of management theory.

CONTRIBUTIONS OF HAWTHORNE EXPERIMENTS

PRE-JUDGEMENTS Job performance depends on the individual worker Fatique is the main factor affecting output Management set production standards FINDINGS The group is the key factor in job performance. Perceived meaning and importance of the work determine output. Work place culture sets its own production standard.

CONTRIBUTIONS OF HAWTHORNE EXPERIMENTS

Criticism of Hawthrone studies 1. The relationship made between the satisfaction or happiness of workers and their productivity was too simplistic . 2. These studies failed to focus attention on the attitudes of employees at the workplace.

Abraham Maslow: Focusing on Human needs

In 1943 Abraham Maslow(1908-1970) a psychologist professor theorised that people were motivated by a hierarchy of needs. His theory rested on three assumptions 1. All of us, have needs which are never completely fulfilled. 2. Through our actions we try to fulfill our unsatisfied needs. 3. Human needs occur in the following hierarchical manner. (I) Physiological needs (ii) Safety needs or security needs (iii) Belongingness or social needs (iv) Esteem or status needs (v) Self actualization or self fulfillment needs Contd

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 According to Maslow, once needs at a specific level have been satisfied, they no longer act as motivators of behavior. Then the individual strives to fulfill needs at the next level. Managers who accepted Maslows hierarchy of needs attempted to change their management practices so that employees needs could be satisfied.
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Douglas Mc Gregor: challenging Traditional Assumptions about Employees. Douglas Mc Gregor (1906-1964) developed two assumptions about human behavior, which he labeled theory x and theory Y. According to Mc Gregor, these two theories reflect the two extremes sets of belief that different managers have about their workers. Theory x presents an essentially negative view of people, Theory x managers assumes that workers are lazy, have little ambition, dislike work, want to avoid responsibility and need to be closely directed to make them work effectively.

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Douglas Mc Gregor: challenging Traditional Assumptions about Employees

Theory Y is more positive and presumes that workers can be creative and innovative, are willing to take responsibility, can exercise self-control and can enjoy their work. They generally have higher-level needs which have not been satisfied by the job. Like maslows theory, McGregors theory X and theory Y influenced many practicing managers. These theories helped managers develop new ways of managing the workers.

QUANTITATIVE APPROACH
The Quantitative Management Perspective emerged during World War II. During the war , the army (US & UK ) brought together Managers, Government Officials and Scientists to help it deploy its resources more efficiently and effectively. These experts used some of the Mathematical approaches to management devised earlier by Taylor & Gantt to solve the logistical problems encountered by the army during the war.

QUANTITATIVE APPROACH
After the war , Many organizations started applying the same techniques to solve business problems. The Quantitative approach to Management includes the application of statistics , optimization models , information models and computer simulations .

QUANTITATIVE APPROACH
The three main branches of the quantitative approach are Management Science( MS) (Use of Mathematical model and statistical methods) Operations Management (Applied form MS) Management Information Systems (MIS) (computer based)

MANAGEMENT SCIENCE TECHNIQUES WIDELY USED

Capital budgeting and cash flow management Production scheduling Development of product strategies Planning for human resource development programs. Maintenance of optimal inventory levels Various mathematical tools like waiting line theory or queuing theory , linear programming , the program evaluation review technique (PERT), the critical path method (CPM) , the decision theory , the simulation theory , the probability theory , sampling , time series analysis etc.

OPERATIONS MANAGEMENT
1. 2. 3. 4. 5. Operations management is an applied form of management science . It deals with the effective management of the production process and the timely delivery of an organizations products and services. Operations Management is concerned with Inventory management Work Scheduling Production planning Facilities location and design Quality assurance.

MANAGEMENT INFORMATION SYSTEMS

Management information systems focuses on designing and implementing computer based information systems for business organizations . In simple terms , the MIS converts raw data into information and provides the needed information to each manager at the right time , in the needed form.

Modern Approaches to Management

Two of these approaches are the systems theory and the contingency theory, which have significantly shaped modern management thought. 1. Systems Theory 2. Contingency Theory
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SYSTEMS THEORY
Those who advocate a systems view contend that an organization cannot exist in isolation and that management cannot function effectively without considering external environmental factors. The systems approach gives , managers a new way of looking at an organization as a whole and as a part of the larger external environment.

A SYSTEMS VIEW OF ORGANIZATIONS (TRANSFORMATION PROCESS)

INPUTS Resources Labor Materials Capital Machinery Information Managerial & technological abilities Planning Organizing Staffing Leading Controlling technology OUTPUTS Goods Services Profits & losses Employee satisfaction

A SYSTEMS VIEW OF ORGANIZATIONS (TRANSFORMATION PROCESS) According to the theory , an organizational system has four major components : Inputs , transformation processes , output and feed back. INPUTS: Money , Materials ,Men , Machines and informational sources are required to produce goods and services.

A SYSTEMS VIEW OF ORGANIZATIONS (TRANSFORMATION PROCESS)

TRANSFORMATION PROCESS : Managerial and technological abilities are used to convert inputs into outputs. OUTPUTS: are the products , services , profits and other results produced by the organization. FEEDBACK: refers to the information about the outcomes and the position of the organization relative to the environment it operates in .

A SYSTEMS VIEW OF ORGANIZATIONS (TRANSFORMATION PROCESS) All organizations are open systems as they are dependent on interactions with their environment . Whether it is a new product decision or a decision related to the employees of the organization , the organization must consider the role and influence of environment factors.

CONTINGENCY THEORY
This is also known as the situational theory. This approach has been widely used in recent years to integrate management theory with the increasing complexity of organizations. The contingency approach was developed by managers , consultants , and researchers who tried to apply the concepts of the major schools of management thought to real life situations.

CONTINGENCY THEORY
Managers , who follow this approach , make business decisions or adopt a particular management style only after carefully considering all situational factors. According to this theory , there is no one best way to manage all situations . In other words there is no one best way to manage . The response it depends holds good for several management situations.

CONTINGENCY THEORY
According to the contingency approach , The task of managers is to identify which technique will , in particular situation , under particular circumstances and at a particular time , best contribute to the attainment of management goals

EMERGING APPROACHES IN MANAGEMENT THOUGHT

William ouchi , a management expert , conducted research on the both American and Japanese management approaches and outlined a new theory called THEORY Z. This theory combines the positive aspects of both American and Japanese management styles .

EMERGING APPROACHES IN MANAGEMENT THOUGHT

The theory Z approach involves providing job security to employees to ensure their loyalty and long- term association with the company , it also involves job rotation of employees to develop their cross functional skills. This approach advocates the participation of employees in the decision- making process and emphasizes the use of informal control in the organization along with explicit performance measures and also shows concern for its employees well-being and their training & development.

QUALITY MANAGEMENT
Another approach in the field of management thought that is gaining increasing importance is that of quality management . Quality management is a management approach that direct the efforts of management towards bringing about continuous improvement in product and service quality to achieve higher levels of customer satisfaction and build customer loyalty.

CONCLUSION
To be successful and effective , this approach needs to be integrated with an organizations strategy. All these views on management have contributed significantly to the development of management thought.