Concept of management

Defining the term management precisely is not so simple because the term
management is used in a variety of ways. Being a new discipline, it has
drawn concepts and principles from a number of disciplines such as
economics, sociology, psychology, anthropology, and statistics and so on.
Each group of contributors has treated management differently. For
example, economists have treated management as a factor of production;
sociologists have treated it as a class or group of persons; practitioners have
treated it as a process comprising different activities.

Functions of Management:-
To achieve the organisational objectives managers at all levels of
organization should perform different functions. A function is a group of
similar activities.
The list of management functions varies from author to author with the
number of functions varying from three to eight.
Different authors presented different variations. By combining some of
functions, these are broadly grouped into Planning, Organising, Staffing,
Directing, and Controlling.
1) Planning: Planning is the conscious determination of future course of
action. This involves why an action, what action, how to take action,
and when to take action. Thus, planning includes determination of
specific objectives, determining projects and programs, setting policies
and strategies, setting rules and procedures and preparing budgets.
2) Organising: Organising is the process of dividing work into
convenient tasks or duties, grouping of such duties in the form of
positions, grouping of various positions into departments and sections,
assigning duties to individual positions, and delegating authority to
each positions so that the work is carried out as planned. It is viewed
as a bridge connecting the conceptual idea developed in creating and
planning to the specific means for accomplishment these ideas.
3) Staffing: Staffing involves manning the various positions created by
the organizing process. It includes preparing inventory of personal
available and identifying the sources of people, selecting people,
training and developing them, fixing financial compensation,
appraising them periodically etc.
4) Directing: when people are available in the organization, they must
know what they are expected to do in the organization. Superior
managers fulfill this requirement by communicating to subordinates
about their expected behavior. Once subordinates are oriented, the
superiors have continuous responsibility of guiding and leading them
for better work performance and motivating them to work with zeal
and enthusiasm. Thus, directing includes communicating, motivating
and leading.
5) Controlling: Controlling involves identification of actual results,
comparison of actual results with expected results as set by planning
process, identification of deviations between the two, if any, and
taking of corrective action so that actual results match with expected
results.

FAYOL’S PRINCIPLES OF MANAGEMENT:

Fayol has given 14 principles of management. He has made distinction
between management principles and management elements. While
management principles is a fundamental truth and establishes cause effect
relationship, elements of management denotes the function performed by a
manager.
While giving the management principles, Fayol has emphasized two things.
1. The list of management principles is not exhaustive but suggestive and
has discussed only those principles which he followed on most
occasions.
2. principles of management are not rigid but flexible
Principles:-
1. Division of work: It is helpful to take the advantage of specialization.
Here, the work is divided among the members of the group based on the
employees skills and talents. It can be applied at all levels of the
organization.
2. Authority and Responsibility: Fayol finds authority as a continuation of
official and personal factors. Official authority is derived from the
manager‘s position and personal authority is derived from personal
qualities such as intelligence, experience, moral worth, past services,
etc., Responsibility arises out of assignment of activity. In order to
discharge the responsibility properly, there should be parity between
authority and responsibility.
3. Discipline: All the personal serving in an organization should be
disciplined. Discipline is obedience, application, behavior and outward
mark of respect shown by employees.
4. Unity of Command: Unity of command means that a person should get
orders from only one superior. Fayol has considered unity of command as
an important aspect in managing an organization. He says that ―should it
be violated, authority is undermined, discipline is in jeopardy, order
disturbed, and stability threatened.‖
5. Unity of Direction: According to this principle, each group of activities
with the same objective must have one head and one plan. It is
concerned with functioning of the organization I respect of grouping of
activities or planning. Unity of direction provides better coordination
among various activities to be undertaken by an organization.
6. Subordination of individual interest to general interest: Individual
interest must be subordinate to general interest when there is conflict
between the two. However factors like ambition, laziness, weakness, etc.,
tend to reduce the importance of general interest. Therefore, superiors
should set an example in fairness and goodness.
7. Remuneration to Personnel: Remuneration to employees should be
fair and provide maximum possible satisfaction to employees and
employers. Fayol did not favor profit sharing plan for workers but
advocated it for managers. He was also in favor of non-financial benefits.
8. Centralization: Everything which goes to increase the importance of
subordinate‘s role is decentralization; every thing which goes to reduce it
is centralization. The degree of centralization or decentralization is
determined by the needs of the company.
9. Scalar Chain: There should be a scalar chain of authority and of
communication ranging from the highest to the lowest. It suggests that
each communication going up or coming down must flow through each
position in the line of authority. It can be short-circuited only in special
circumstances. For this purpose, Fayol has suggested ‗gang plank‘
Scalar chain and gang plank can be presented as follows
10. Order: This is a principle relating to the arrangement of things and
people. In material order, there should be a place for everything and
everything should be in its place. Similarly, in social order, there should
be the right man in the right place.
11. Equity: Equity is the combination of justice and kindness. Equity in
treatment and behavior is liked by everyone and it brings loyalty in the
organization. The application of equity requires good sense, experience
and good nature.
12. Stability of tenure: No employee should be removed within short
time. There should be reasonable security of jobs. Stability of tenure is
essential to get an employee accustomed to new work and succeeding in
doing it well
13. Initiative: Within the limits of authority and discipline, managers
should encourage their employees for taking initiative. Initiative is
concerned with thinking out and execution of a plan. Initiative increases
zeal and energy on the part of human beings.
14. Esprit de corps: It is the principle of union is strength‘ and extension
of unity of command for establishing team work. The manager should
encourage esprit de corps among his employees.

Douglas McGregor’s Theory: He divides leadership is two styles labeled

theory “X” and theory “Y”. The traditional styles of leadership and controls
stated in theory ‘X’ by McGregor, is exercised to managers on the basis of
his assumptions about human beings.
These assumptions as laid down or observed by McGregor for theory ‘X’ are
Theory “X”:
1. An average human being does not like to work and he tries to avoid it as
far as possible.
2. He avoids accepting responsible and challenging tasks, has no ambition
but wants security above all.
3. Because of this, the employees are to be forced, concerned and
threatened with punishments to make them put their best efforts.
These people would not work sincerely and honestly under democratic
conditions. However the above assumptions are not based on research
finding. The autocratic style basically presumes that workers are generally
lazy, avoid work and shrink responsibilities. It is believed that workers are
more interested in money and security based on these assumptions the
leadership styles developed, insists on tighter control and supervision.

Theory of “Y”: It focuses a totally different set of assumptions about the

employees
1. Some employees consider work as natural as play or rest.
2. These employees are capable of directing and controlling performance on
their own
3. They are much committed to the objectives of the organization
4. Higher rewards make these employees more committed to organization.
5. Given an opportunity they not only accept responsibility but also look for
opportunities to out perform others.
6. Most of them highly imaginative, creative and display ingenuity in
handling organizational issues.

Hawthorne experiments and human relations:

The human relations approach was born out of a reaction to classical
approach. A lot of literature on human relations has been developed. For
the first time, an intensive and systematic analysis of human factor in
organisations was made in the form of Hawthorne experiments.
To investigate the relationship between productivity and physical
working conditions, a team of four members Elton mayo, White head,
Roethlisberger and William Dickson was introduced by the company in
Hawthorne plant. They conducted various researches in four phases with
each phase attempting to answer the question raised at the previous
phase.
The phases are ---
1. Experiments to determine the effects of changes in illuminations on
productivity. Illumination experiments (1924-27)
2. Experiments to determine the effects of changes in hours and other
working conditions on productivity. (Relay assembly test room
experiments 1927-28)
3. mass interviewing programme (1928-1930)
4. determination and analysis of social organization at work (Bank
MS

wiring
observation room experiments 1931-32)
Conclusions:
 Individual workers must be seen as members of a group
 The sense of belongingness and effective management were the
two secrets unfolded by the Hawthorne experiments.
 Informal or personal groups influenced the behaviour of workers
on the job.
 Need for status and belongingness to a group were viewed as
more important than monetary incentives or good physical
working conditions
 To seek workers cooperation, the management should be aware
of their social needs and cater to them. Otherwise, there is every
danger that the workers ignore and turn against the interests of
the organisation.

Herzberg’s Two-factors Theory: Maslow’s theory has been modified by

Herzberg and he called in two-factors theory of motivation. According to him
the first group of needs are such things are such things as company policy
and administration, supervision, working conditions, interpersonal relations,
salary, status, job security and personal life. “Herzberg called these factors
as ‘dissatisfiers’ and not motivators, by this he means their presence or
existence does not motivate in the sense of yielding satisfaction, but their
absence would result in dissatisfaction. These are also referred to as
‘hygiene’ factors. In the second group are the ‘satisfiers’ in the sense that
they are motivators, which are related to ‘Job content’. He included the
factors of achievement, recognition, challenge work, advancement and
growth in the job. He says that their presence will yield feelings of
satisfactory or no satisfaction, but not dissatisfaction.

Maintenance factors or dissatisfier Motivational factor or satisfier

Job context Job content
Company policy and Administration Achievement
Quality of supervision Recognition
Relations with supervision Advancement
Relations with subordinates Possibility of growth
Pay Responsibility
MASLOW’S HIERARCHY OF HUMAN NEEDS

Human behavior is goal-directed. Motivation cause goal-directed

behavior. It is through motivation that needs can be handled and
tackled purposely. This can be understood by understanding the
hierarchy of needs by manager. The needs of individual serve as a
driving force in human behavior. Therefore, a manager must
understand the “hierarchy of needs”. Maslow has proposed “The
Need Hierarchy Model”.

Maslow's hierarchy of needs is a motivational theory in psychology

comprising a five-tier model of human needs, often represented as
hierarchical levels within a pyramid.

Needs lower down in the hierarchy must be satisfied before individuals

can attend to needs higher up. From the bottom of the hierarchy
upwards, the needs are: physiological, safety, love and belonging,
esteem and self-actualization.

This five-stage model can be divided into deficiency needs and growth
needs. First four needs are often referred as deficiency needs (D-
needs) and top level is known as growth or Being needs (B-needs).
The D-needs are to be tackled first. Ex: A person who is not having
food for longer time, will be hungry and won’t work until it is fulfilled.

Physiological needs - these are biological requirements for human

survival, e.g. air, food, drink, shelter, clothing, warmth, sleep. If these
needs are not satisfied the human body cannot function optimally.
Maslow considered physiological needs the most important as all the
other needs become secondary until these needs are met.

Safety needs - These needs are also important for human beings.
Everybody wants job security, protection against danger, safety of
property, etc.

Love and belongingness needs - After physiological and safety needs have
been fulfilled, the third level of human needs is social and involves feelings of
belongingness. The need for interpersonal relationships motivates behavior
Ex: Friendship, intimacy, trust, and acceptance, receiving and giving
affection and love. Affiliating, being part of a group (family, friends,
work).

Esteem needs - which Maslow classified into two categories: (i)

Esteem for oneself (dignity, achievement, mastery, independence) and
(ii) The desire for reputation or respect from others (e.g., status,
prestige).

Maslow indicated that the need for respect or reputation is most

important for children and adolescents and precedes real self-esteem
or dignity.

Self-actualization needs- These are the needs of the highest order

and these needs are found in those person whose previous four needs
are satisfied. This deals with the desire to become the most that one
can be. This will include need for social service, meditation.
DEPARTMENTATION AND THEIR MERITS AND DEMERITS
Departmentation is the process of breaking down a company into various
departments so that organizational objectives can be easily achieved. The
departmentation can be obtained based on the following
 Specialization: Departmentation allows to take benefit of specialization
 Expansion: One manager can supervise only few subordinates. Grouping of
activities and personal into department makes it possible for enterprise to grow
and expand
 Responsibility Fixation: Departmentation allows fixation of responsibility
 Departmentation facilitates communication, coordination and control. It makes
training and development of executives simple.
 Through departmentation, large and complex organization is divided into small
and flexible and managerial departments. These enables easy administration
control

Decentralization and their merits and demerits.

Centralization and Decentralization are the two sides of the coin. In Centralization all
the authority is lies with the top management where as in Decentralization the
authority is distributed to low level management.
Factors deciding decentralization
Size of Organization: The size of the organization in terms of volume of sales,
number of plants and number of employees plays an important role in determining
the extent of decentralization.
Ability of low level Management: Certain talented low level executives are willing
to work in the department with their own abilities. They will handle the projects
effectively. When there is such executives in the departments, decentralization can
be done.
Strategy of the Organization: The strategy of the organization depends on the
type of market, the technology environment and its competitors. These factors
influence the amount of decentralization.
Nature of Management functions: In large organizations, management functions
like purchasing, quality control, plant engineering, cost accounting, personal etc., are
to be decentralized whereas financial planning may be reserved to highest level for
decision making and control.
Degree of diversification: In a company having diversified product line,
decentralization is beneficial whereas for standard products centralization is
beneficial.
Dispersal of Operation: When the operations of the company are diversified to
different locations then it needs decentralization because operating from one location
is difficult. If the activities of the company are local, then centralization is needed.
Advantages:
Relieve top managements from work: Decentralization reduce the work load on
the top management. Hence they can spend greater time for policy making decisions
than routine decisions.
Reduces the problem of Communication: In big organizations transferring of the
decision taken takes more time to reach bottom people whereas in decentralization it
reaches very fast
Speeds up Decisions: In decentralization, as the managers are nearer to the
problems, they will take the decisions fast for the development of their department
rather than the top management who is not in touch with the problem at all.
Provide competitiveness spirit in the organization: In decentralization, each
department is independent and every head wants to make his department profitable.
Hence every body works hard to make their department efficient.
Develops new managers: The young managers will be trained with the
decentralization
Provides Diversification: With the growth of the company, various number of
departments are to be added which may be difficult for the single manager to
handle. Hence decentralization will improve the efficiency and diversification in the
product design, marketing etc.,
Motivation: With the decentralization the manager feel that they are motivated and
satisfied in their jobs.
LIMITATIONS:
Expensive: Each division or department need physical facilities, staff and trained
personals. There may be duplication of works or staff. Hence this may be costlier
Coordination is Difficult: As each department is independent, coordination among
them is difficult
Non-Uniformity: As each department is independent, they may form their own
policies and procedures. So there may not be uniformity in all departments
Incompetent: If managers are incompetent then decentralization is difficult