UNIT I-EVOLUTION OF MANAGEMENT

According to Harold Koontz,

"Management is the art of getting things done through and with people in formally organized
groups."
"The Management Theory Jungle".

According to Henri Fayol,

"To manage is to forecast and to plan, to organise, to command, to co-ordinate and to control."
"Industrial and General Administration".

According to Peter Drucker,

"Management is a multi-purpose organ that manages business and manages managers and
manages workers and work."
"The Principles of Management".

According to Mary Parker Follet,

"Management is the art of getting things done through people."

Meaning of Management

According to Theo Heimann, management has three different meanings, viz.,

1. Management as a Noun : refers to a Group of Managers.
2. Management as a Process : refers to the Functions of Management i.e. Planning, Organising,
Directing, Controlling, etc.
3. Management as a Discipline : refers to the Subject of Management.

Management is an individual or a group of individuals that accept responsibilities to run an

organisation. They Plan, Organise, Direct and Control all the essential activities of the
organisation. Management does not do the work themselves. They motivate others to do the
work and co-ordinate (i.e. bring together) all the work for achieving the objectives of the
organisation.
Management brings together all Six Ms i.e. Men and Women, Money, Machines, Materials,
Methods and Markets. They use these resources for achieving the objectives of the organisation
such as high sales, maximum profits, business expansion, etc.

Features of Management
1. Continuous and never ending process

Management is a Process. It includes four main functions, viz., Planning, Organising, Directing and
Controlling. The manager has to Plan and Organise all the activities. He had to give proper
Directions to his subordinates. He also has to Control all the activities. The manager has to
perform these functions continuously. Therefore, management is a continuous and never ending
process.
2. Getting things done through people

The managers do not do the work themselves. They get the work done through the workers. The
workers should not be treated like slaves. They should not be tricked, threatened or forced to do
the work. A favourable work environment should be created and maintained.

3. Result oriented science and art

Management is result oriented because it gives a lot of importance to "Results". Examples of
Results like, increase in market share, increase in profits, etc. Management always wants to get
the best results at all times.

4. Multidisciplinary in nature
Management has to get the work done through people. It has to manage people. This is a very
difficult job because different people have different emotions, feelings, aspirations, etc. Similarly,
the same person may have different emotions at different times. So, management is a very
complex job. Therefore, management uses knowledge from many different subjects such as
Economics, Information Technology, Psychology, Sociology, etc. Therefore, it is multidisciplinary
in nature.

5. A group and not an individual activity

Management is not an individual activity. It is a group activity. It uses group (employees) efforts
to achieve group (owners) objectives. It tries to satisfy the needs and wants of a group
(consumers). Nowadays, importance is given to the team (group) and not to individuals.

6. Follows established principles or rules

Management follows established principles, such as division of work, discipline, unity of
command, etc. These principles help to prevent and solve the problems in the organisation.

7. Aided but not replaced by computers

Now-a-days, all managers use computers. Computers help the managers to take accurate
decisions. However, computers can only help management. Computers cannot replace
management. This is because management takes the final responsibility. Thus Management is
aided (helped) but not replaced by computers.

8. Situational in nature

Management makes plans, policies and decisions according to the situation. It changes its style
according to the situation. It uses different plans, policies, decisions and styles for different
situations.
The manager first studies the full present situation. Then he draws conclusions about the
situation. Then he makes plans, decisions, etc., which are best for the present situation. This is
called Situational Management.
9. Need not be an ownership

In small organisations, management and ownership are one and the same. However, in large
organisations, management is separate from ownership. The managers are highly qualified
professionals who are hired from outside. The owners are the shareholders of the company.

10. Both an art and science

Management is result-oriented. Therefore, it is an Art. Management conducts continuous

research. Thus, it is also a Science.

11. Management is all pervasive

Management is necessary for running a business. It is also essential for running business,
educational, charitable and religious institutions. Management is a must for all activities, and
therefore, it is all pervasive.

12. Management is intangible

Management is intangible, i.e. it cannot be seen and touched, but it can be felt and realised by its
results. The success or failure of management can be judged only by its results. If there is good
discipline, good productivity, good profits, etc., then the management is successful and vice-
versa.

13. Uses a professional approach in work

Managers use a professional approach for getting the work done from their subordinates. They
delegate (i.e. give) authority to their subordinates. They ask their subordinates to give
suggestions for improving their work. They also encourage subordinates to take the initiative.
Initiative means to do the right thing at the right time without being guided or helped by the
superior.

14. Dynamic in nature

Management is dynamic in nature. That is, management is creative and innovative. An

organisation will survive and succeed only if it is dynamic. It must continuously bring in new and
creative ideas, new products, new product features, new ads, new marketing techniques, etc.
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Scope of Management

Although it is difficult to precisely define the scope of management, yet the following areas are
included in it:

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.
 Functions of Management

Management has been described as a social process involving responsibility for economical
and effective planning & regulation of operation of an enterprise in the fulfillment of given
purposes. It is a dynamic process consisting of various elements and activities. These activities are
different from operative functions like marketing, finance, purchase etc. Rather these activities are
common to each and every manger irrespective of his level or status.
Different experts have classified functions of management. According to George & Jerry, “There
are four fundamental functions of management i.e. planning, organizing, actuating and
controlling”.
According to Henry Fayol, “To manage is to forecast and plan, to organize, to command, &
to control”. Whereas Luther Gullick has given a keyword ’POSDCORB’ where P stands for
Planning, O for Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for reporting
& B for Budgeting. But the most widely accepted are functions of management given by
KOONTZ and O’DONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling.
For theoretical purposes, it may be convenient to separate the function of management but
practically these functions are overlapping in nature i.e. they are highly inseparable. Each function
blends into the other & each affects the performance of others.

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:

a. Establishment of standard performance.

b. Measurement of actual performance.
c. Comparison of actual performance with the standards and finding out deviation if any.
d. Corrective action.

Managerial skill

The ability to make business decisions and lead subordinates within a company. Three most
common skills include: 1) human skills - the ability to interact and motivate; 2) technical skills -
the knowledge and proficiency in the trade; and 3) conceptual skills - the ability to understand
concepts, develop ideas and implement strategies. Competencies include communication ability,
response behavior and negotiation tactics.

managerial skills are the knowledge and ability of the individuals in a managerial position to fulfill
some specific managerial activities or tasks. This knowledge and ability can be learned and
practiced. However, they also can be acquired through practical implementation of required
activities and tasks. Therefore, each skill can be developed through learning and practical
experience of the individuals.
 There are many definitions about skills that talk about talent. Talent is something personal related
to an individual and presents a native gift from the nature about that something inside that talented
person. All persons cannot be artists. Usually, artists are born with the gift of art, but despite their
talent they continue to develop their talent to improve their art skills.
When we talk about managerial skills, we talk about skills of a manager to maintain high
efficiency in the way how his or her employees complete their everyday working tasks. Because of
that, managers will need skills that will help them to manage people and technology to ensure an
effective and efficient realization of their working tasks.

Three Types of Managerial Skills

Robert Katz identifies three types of skills that are essential for a successful management process:

• Technical,
• Conceptual and
• Human or interpersonal management skills.

Technical Skills

As the name of these skills tells us, they give the manager’s knowledge and ability to use different
techniques to achieve what they want to achieve. Technical skills are not related only for
machines, production tools or other equipment, but also they are skills that will be required to
increase sales, design different types of products and services, market the products and services…
For example, let’s take an individual who works in the sales department and have high developed
sales skills obtained through education and experience in his department or the same departments
in different organizations. Because of these skills that he possesses, this person can be a perfect
solution to become sales manager. This is the best solution because he has great technical skills
related to the sales department.
On the other hand, the person who becomes sales manager will start to build his next type of
required skills. It is because if his task until now was only to work with the customers as sales
representative, now he will need to work with employees in the sales department as addition to the
work with customers.
Technical skills are most important for the first-level managers. Whet it comes to the top
managers, these skills are not something with high significance level. As we go through a
hierarchy from the bottom to higher levels, the technical skills lose their importance.

Conceptual Skills

Conceptual skills present knowledge or ability of a manager for more abstract thinking. That
means he can easily see the whole through analysis and diagnosis of different states. In such a way
they can predict the future of the business or department as a whole.
Why managers need these skills?
As a first, companies contain more business elements or functions as selling, marketing, finance,
production… All these business elements have different goals even completely opposed goals.
Think about marketing and production as a business function and their specific goals. You’ll see
 the essential difference. The conceptual skills will help managers to look outside their
department’s goals. So, they will make decisions that will satisfy overall business goals.
Conceptual skills are vital for top managers, less important for mid-level managers, and not
required for first-level managers. As we go from a bottom of the managerial hierarchy to the top,
the importance of these skills will rise.

Human or Interpersonal Managerial Skills

Human or interpersonal managerial skills present a manager’s knowledge and ability to work with
people. One of the most important management tasks is to work with people. Without people, there
will not be a need for existence of management and managers.
These skills will enable managers to become leaders and motivate employees for better
accomplishments. Also, they will help them to make more effective use of human potential in the
company. Simply, they are the most important skills for managers.
Interpersonal management skills are important for all hierarchical levels in the company.

Are There More Management Skills

Let’s take an example with controlling skills. The controlling can’t be a skill, but rather a process,
or one of the managerial functions. Managers are controlling their employees through their
interpersonal managerial skills that we already described. Other additional skills that I find in the
theory are decision making skills. Again, decision making is a process and not the skill. When we
have conceptual skills, we will make a better decision. Furthermore, when we have technical skills,
we will make a better technical decision. I think that the basic skills all managers will need are
skills explained as technical, conceptual, and interpersonal managerial skills.
At the end, I want to note something about managerial skills and business potential energy. Better
management skills in your company will produce larger business potential energy. So, these 3
types of skills are in the category of business elements that can increase your business potential
energy.

The three levels of management typically found in an organization are low-level management,
middle-level management, and top-level management. Top-level managers are responsible for
controlling and overseeing the entire organization.

Levels of Management

The term “Levels of Management’ refers to a line of demarcation between various managerial
positions in an organization. The number of levels in management increases when the size of the
business and work force increases and vice versa. The level of management determines a chain of
command, the amount of authority & status enjoyed by any managerial position. The levels of
management can be classified in three broad categories:

1. Top level / Administrative level

2. Middle level / Executory
3. Low level / Supervisory / Operative / First-line managers
 Managers at all these levels perform different functions. The role of managers at all the three levels
is discussed below:

LEVELS OF MANAGEMENT

1. Top Level of Management

It consists of board of directors, chief executive or managing director. The top management is the
ultimate source of authority and it manages goals and policies for an enterprise. It devotes more
time on planning and coordinating functions.
The role of the top management can be summarized as follows -

a. Top management lays down the objectives and broad policies of the enterprise.
b. It issues necessary instructions for preparation of department budgets, procedures, schedules
etc.
c. It prepares strategic plans & policies for the enterprise.
d. It appoints the executive for middle level i.e. departmental managers.
e. It controls & coordinates the activities of all the departments.
f. It is also responsible for maintaining a contact with the outside world.
g. It provides guidance and direction.
h. The top management is also responsible towards the shareholders for the performance of the
enterprise.

2. Middle Level of Management

The branch managers and departmental managers constitute middle level. They are responsible to
the top management for the functioning of their department. They devote more time to
organizational and directional functions. In small organization, there is only one layer of middle
level of management but in big enterprises, there may be senior and junior middle level
management. Their role can be emphasized as -
a. They execute the plans of the organization in accordance with the policies and directives of the
top management.
b. They make plans for the sub-units of the organization.
c. They participate in employment & training of lower level management.
d. They interpret and explain policies from top level management to lower level.
e. They are responsible for coordinating the activities within the division or department.
f. It also sends important reports and other important data to top level management.
g. They evaluate performance of junior managers.
h. They are also responsible for inspiring lower level managers towards better performance.

3. Lower Level of Management

Lower level is also known as supervisory / operative level of management. It consists of

supervisors, foreman, section officers, superintendent etc. According to R.C. Davis, “Supervisory
management refers to those executives whose work has to be largely with personal oversight and
direction of operative employees”. In other words, they are concerned with direction and
controlling function of management. Their activities include -

a. Assigning of jobs and tasks to various workers.

b. They guide and instruct workers for day to day activities.
c. They are responsible for the quality as well as quantity of production.
d. They are also entrusted with the responsibility of maintaining good relation in the organization.
e. They communicate workers problems, suggestions, and recommendatory appeals etc to the
higher level and higher level goals and objectives to the workers.
f. They help to solve the grievances of the workers.
g. They supervise & guide the sub-ordinates.
h. They are responsible for providing training to the workers.
i. They arrange necessary materials, machines, tools etc for getting the things done.
j. They prepare periodical reports about the performance of the workers.
k. They ensure discipline in the enterprise.
l. They motivate workers.
m. They are the image builders of the enterprise because they are in direct contact with the workers.

Roles of Manager:
A manager’s role is very crucial in an organization. The success of organization depends upon
manager’s ability in utilizing the resources for achieving the pre determined goals. Henry
Mintzberg suggested three areas where a manger has to work.
• Interpersonal Role
• Informational Role
• Decisional Role

Interpersonal Role:
Interpersonal roles of a manger are concerned with his interacting with people both inside the
organization and outsiders. There are three types of interpersonal roles.
1. Figure Head: In figure head role manager performs activities which are ceremonial and symbolic
nature. These include greeting the visitors attending the social functions involving employees,
handing out merit certificates and other awards to outstanding employees.
2. Leader: Manager’s leader role involves leading his subordinates and motivating them for willing
contributions. Manager is responsible for activities of his subordinates. He has to set example of
hard work and dedication so that subordinate follow his directions with respect.
3. Liaison Role: In liaison role manager serves as a connecting link between his and outsiders or
between his unit and other organizational units.

Informational Role:
Informational role involves receiving collecting of information and distributing them as required. It
is of three types

1. Monitor: In monitoring role manager collects the information which can affect the organizational
activities by reading magazines and periodicals, reports from the departments, talking with
others to learn changes in the public’s taste.
2. Disseminator: In disseminator role manger distribute the information to his subordinates and
superiors by sending circulars, holding meetings and making phone calls.
3. Spokesperson: In spokesperson role the manager represents his organization or unit with
interacting with outsiders. These may customer, financier, govt. suppliers or other agencies in
society. It can be done by attending press conferences, meetings and by issuing notices.

Decisional Role:
It is very important role. Manager has to take decisions daily. In decisional role he performs four
roles.

1. Entrepreneur: As an entrepreneur the manger assumes certain risks which can affect the
organization. He has to take decisions like expansion or diversification, initiation of new projects,
development of older procedures etc.
2. As a Conflict Handler: As a conflict handler he has to take care of certain disturbance in
organization such as resolving employee disputes and strikes etc.
3. Resource Allocator: As a resource allocator managers fulfill the demand of various units in terms
of human physical and financial. He tries to utilize these resources in such way that no
department suffers for their inadequacy.
4. Negotiator: As negotiator manager has to take decisions regarding prices with suppliers and
customers. He also deals with trade unions and negotiates with them regarding working
conditions and wage fixation.

Various Approaches to Management

This school of thought is actually divided into two different approaches—the scientific school and
the administrative school. These theorists laid certain principles for managing an organization.
Exhibit 2.1 highlights their contributions in a nutshell.
Classical thoughts

Scientific School
Frederick W. Taylor – Development of scientific management
Frank B. and Lilian M. Gibreth – Time and motion studies
Henry L. Gantt – The Gantt chart

Administrative School
Henry Fayol – General theory of management
Max Weber – Rules

Scientific Management:
This is the most pioneering classical approach, and it places emphasis on the scientific study of
work methods to improve efficiency of the workers. Among all the contributors to this school of
thought, we consider the contribution of F.W. Taylor as the most important. By developing
specific principles of scientific management in 1911, he became the father of scientific
management.
He had started his experiments with the concept in 1878 at the Midvale Steel Company. During his
days at Midvale, he saw that employees were ‘soldiering’, which means ‘deliberately working at a
pace slower than their capabilities’?

He identified that workers indulge in soldering primarily for the following three reasons:
1. Fear of losing jobs if they increase their output
2. Faulty wage systems
3. Out-dated methods of working
For eliminating this problem, Taylor developed the principles of scientific management, mainly
emphasizing on the five important issues shown in Exhibit 2.2.

Principles of Scientific Management

The five important issues of the theories of scientific management formalized by Taylor:
1. Emphasize on organized knowledge rather than relying on the rule of thumb
2. Obtain harmony in group action
3. Achieve cooperation
4. Work for maximum output rather than restricted output
5. Develop all workers for their self-development as well as for organizational policy.

In essence, Taylor emphasized on the following points to achieve organizational efficiency:

1. Develop a scientific way to perform jobs.
2. Train and develop workers to perform the job.
3. Establish harmonious relations between the management and the workers.

In order to ensure that such objectives are achieved, Taylor suggested two important
managerial practices—the piece-rate incentive system and the time and motion study. The piece-
rate incentive system rewards the worker who produces maximum output. The existence of such
incentive systems obviously motivates workers to work more to maximize their earnings.
This system requires the workers to perform at some pre-decided standard rate to earn their base
wages. Standards are decided using the time and motion study. If workers are able to produce
more, then in addition to their base rate, they get incentives on the number of extra units produced
over and above the standard minimum units. This serves the interest of the workers as well as the
management, as the workers feel motivated to maximize their earnings, while the management gets
the benefit of increased productivity.
The time and motion study facilitates the determination of a standard time for performing a
job. Time study helps in the determination of time required, duly defining the art of recording,
analysing, and synthesizing the time elements of each operation. Motion study, on other hand
involves the study of movements while doing a job, in parts, and eliminates the wasteful move-
ments and retains only the necessary movements. It makes a job simpler, easier, and better.

In fact, the time and motion study concept was developed by Taylor in association with Frank and
Lillian Gilbreth. Like Taylor, Frank Gilbreth is also known as the father of motion study. Lillian
Gilbreth conducted research on motion studies. Both of them explored the ways of reducing
fatigue.
They classified seventeen basic hand motions like search, select, position; hold, etc., which
they called therbligs (spelling the word Gilbreth backward with t and h mutually transposed and
retaining s at the end). Their research has helped to analyse the exact elements of a worker’s hand
movements. A simple modification of the bricklaying movements, following Gilbreth’s approach,
helped to increase the hourly output from 120 to 350 bricks.
Henry Laurence Gantt also worked as a close associate of Taylor at Midvale and
subsequently at Bethlehem Steel. His contributions to the scientific management school of thought
are the introduction of the task and bonus system and a chart commonly known as the Gantt chart.
As per his incentive plan, workers receive their day wages even when they do not perform their
jobs completely, but they get bonus when they complete the work earlier than the normal standard
time. Gantt and Taylor also recommended payment of bonus to foremen, based on the incremental
improvements in the performance of workers under them.
The Gantt chart is used for production planning and to compare the planned and actual
performances. It is a visual device used for production control, indicating the progress of
production in terms of time rather than quantity. In fact, the programme evaluation and review
technique (PERT) concept was subsequently developed and is based on the Gantt chart.

Gantt or Bar Charts Illustration:

Introduced in 1917, the Gantt chart is the oldest and most extensively used method for planning,
scheduling, and controlling the production. It shows the relationships between different activities
over a given time frame. The time frame, expressed either in hours, days, weeks, or months, is
shown on the horizontal or x-axis and activities are plotted against the y- axis. The time frame or
time scale would depend on the nature of the operations and activities, which may be determined
by past experiences or by an approximation based on which activities may be scheduled and
monitored.
The charts may be in the form of any of the following:
(a) Scheduling or progress charts, which show the sequence of job progress
(b) Load charts, which show the work assigned to a work group or allocated to machines
(c) Record charts, which track the actual time spent and delays, if any.
Gantt charts need to be updated at regular intervals—for instance, when the work is delayed at the
start, or when it continues beyond its time schedule, or when the progress of work is not as per the
actual plan. If unforeseen eventualities occur, corrective action would have to be taken along with
making the corresponding changes in the Gantt charts.

Exhibit 2.3 shows that machine A has been loaded till week 5 for a given job, and machine B has
been loaded till the first half of week 4, and so on.
Critical Path Analysis and PERT Chart:
The critical path analysis (also known as critical path method) or the PERT chart helps to schedule
and manage complex projects. This chart was developed in the 1950s to control large-scale
defence projects. The underlying assumption is that any given task has one or more predecessor
tasks and also one or more successor tasks, except in the start and finish nodes.
Figure 2.1 shows a simple PERT chart:

A circle (here, a rectangle) represents a node, that is, an event. An arc (here, an arrow) represents
an activity. The total network represents relationships between activities.
Drawbacks of Scientific Management School of Thought:
1. Basic scientific management principles revolve around operation-level problems and do not
focus on managerial issues, essential for managing an organization. That is why it is often said that
it relates more to engineering than to management.
2. The principles are based on the assumption that people are rational and are primarily driven by
their desire to fulfil material gains. Therefore, only the economic and physical needs of the people
are emphasized and not their social needs.
3. This theory also ignores the human desire for job satisfaction.

Administrative Theory—the General Theory of Management:

Administrative theory, the other part of the classical school of thought, focuses on identifying
basic principles to coordinate the internal activities of an organization. Henri Fayol, a French
industrialist, through his pioneering work on general and industrial management, explained that
satisfactory results could be achieved through scientific forecasting and proper methods of
management. Fayol, at the outset, classified business operations of an organization into six
activities, and then outlined 14 principles of management. The 14 principles are as shown in
Exhibit 2.4.

Bureaucratic Organization:
Max Weber pioneered the theory of the bureaucratic organization, which places emphasis on the
authority structures and the authority relations. According to Weber ‘a bureaucracy is a highly
structured, formalized, and impersonal organization.’ In fact, he has advocated the necessity of a
formal organizational structure with set rules and regulations. The characteristics of a bureaucratic
organization, as described by Weber, have been presented in Table 2.2.

Bureaucracy is often criticized for its red tapism and profligacy of rules. However, Weber’s
concept is intended to remove ambiguity, inefficiencies, and patronage.

Limitations of Administrative Theory:

Behavioural theorists of the neo-classical approach have criticized the classical theorists on a
number of grounds, the first being that management principles are not universally applicable in
today’s complex business situations. Some principles of Fayol are also contradictory, namely, the
principle of specialization, which contradicts the principle of unity of command.
Similarly, Weber’s bureaucracy also takes away the individual’s creativity and flexibility, which
dissuades the individual from responding to complex situations in global environments. Further,
classical theorists also ignore important aspects of organizational behaviour.
They do not deal with the problems of leadership, motivation, power, or informal relations. They
also fail to consider the influences of internal and external environmental forces affecting an
organization and only lay stress on achieving higher productivity, more than anything else.
Modern Management approaches

A worker does not work for money only. Non-financial rewards such as affection and respect for
co-workers are also important factors. The emphasis was on employee-centered, democratic and
participative style of supervisory leadership as this is more effective than task centered leadership.
This approach was however criticized for its emphasis on the importance of symbolic rewards and
not on material rewards. The belief of this approach that an organization can turn into one big
happy family where it is always possible to find solutions which satisfies everybody has also been
questioned.
Behavioral Approach:
An approach that recognizes the practical and situational constraints on human rationality for
making decisions>
Behavioral scientists attach great importance to participative and group decision making. They are
highly critical of the classical organization structures built on traditional concepts and prefer more
flexible organization structures.
Two major theorists, Abraham Maslow and Douglas Mcgregor, came forward with ideas that
managers found helpful.
Abraham Maslow:
He developed the theory of motivation that was based on three assumptions. First, human beings
have needs that are never completely satisfied. Second, human action is aimed at fulfilling the
needs that are satisfied at a given point in time. Third, needs fit into a hierarchy, ranging from
basic and lower level needs at the bottom to higher level needs at the top.
Douglas McGregor:
He developed a concept of Theory X versus Theory Y dealing with possible assumptions that
managers make about workers. Theory X managers tend to assume that workers are lazy, need to
be coerced, have little ambition and are focused mainly on security needs. Theory Y managers
assume that workers do not inherently dislike work, are capable of self control, have capacity to be
creative and innovative and generally have higher level needs. This approach helped managers
develop a broader perspective on the nature of workers and new alternatives for interacting with
them.
Quantitative Approach:
An approach that focuses on the use of quantitative tools for managerial decision making.
The quantitative management viewpoint focuses on the use of mathematics, statistics and
information aids to supports managerial decision making and organizational effectiveness. Three
main branches have evolved: operations research, operations management and management
information systems.
Operations Research:
Operations Research is an approach aimed at increasing decision effectiveness through the use of
sophisticated mathematical models and possibilities as they can accomplish extensive calculation.
Some operations research tools are linear programming, querying, waiting line, routing and
distribution models.
Operations management:
Operation management is a field that is responsible for managing the production and delivery
function of an organization’s products and services. Operations management is generally applied
to manufacturing industries and uses tools such as inventory analysis, statistical quality control,
networking etc.
 Management Information System:
Management Information System refers to the designing and implementing computer based
information systems for use by the management. Such systems turn raw data into information that
is required and useful to various levels of management.
Contingency Approach:
A view point which believes that appropriate managerial action depends on the peculiar nature of
every situation.
This approach is a viewpoint which argues that there is no best way to handle problems.
Managerial action depends on the particular situation. Hence, rather than seeking universal
principles that apply to every situation, this theory attempts to identify contingency principles that
prescribe actions to take depending on the situation.
Systems Approach to management:
Systems theory is an approach based on the notion that organizations can be visualized as systems.
A system is a set of interrelated parts that operate as a whole in pursuit of common goals. Every
system has four major components:
1. Inputs are the various resources required to produce goods and services.
2. Transformation processes are the organization managerial and technological abilities that are
applied to convert inputs into outputs.
3. Outputs are the products, services and other outcomes produced by the organization.
4. Feedback is information about results and organizational status relative to the environment.
Resources: (1) Human (2) Materials (3) Equipment (4) Financial (5) Informational
Managerial and Technological Abilities: (1) Planning (2) Organizing (3) Leading (4) Controlling
(5) Technology
Outcomes: (1) product and services (2) Profits and losses (3) Employee growth and satisfaction.

Management by Objective

An effective management goes a long way in extracting the best out of employees and make
them work as a single unit towards a common goal. The term Management by Objectives was
coined by Peter Drucker in 1954.

The process of setting objectives in the organization to give a sense of direction to the
employees is called as Management by Objectives.

It refers to the process of setting goals for the employees so that they know what they are supposed
to do at the workplace.
Management by Objectives defines roles and responsibilities for the employees and help them
chalk out their future course of action in the organization.
Management by objectives guides the employees to deliver their level best and achieve the targets
within the stipulated time frame.

Need for Management by Objectives (MBO)

▪ The Management by Objectives process helps the employees to understand their duties at the
workplace.
▪ KRAs are designed for each employee as per their interest, specialization and educational
qualification.
▪ The employees are clear as to what is expected out of them.
▪ Management by Objectives process leads to satisfied employees. It avoids job mismatch and
unnecessary confusions later on.
▪ Employees in their own way contribute to the achievement of the goals and objectives of the
organization. Every employee has his own role at the workplace. Each one feels indispensable for
the organization and eventually develops a feeling of loyalty towards the organization. They tend
to stick to the organization for a longer span of time and contribute effectively. They enjoy at the
workplace and do not treat work as a burden.
▪ Management by Objectives ensures effective communication amongst the employees. It leads to
a positive ambience at the workplace.
▪ Management by Objectives leads to well defined hierarchies at the workplace. It ensures
transparency at all levels. A supervisor of any organization would never directly interact with the
Managing Director in case of queries. He would first meet his reporting boss who would then
pass on the message to his senior and so on. Every one is clear about his position in the
organization.
▪ The MBO Process leads to highly motivated and committed employees.
▪ The MBO Process sets a benchmark for every employee. The superiors set targets for each of the
team members. Each employee is given a list of specific tasks.

Limitations of Management by objectives Process

▪ It sometimes ignores the prevailing culture and working conditions of the organization.
▪ More emphasis is being laid on targets and objectives. It just expects the employees to achieve
their targets and meet the objectives of the organization without bothering much about the
existing circumstances at the workplace. Employees are just expected to perform and meet the
deadlines. The MBO Process sometimes do treat individuals as mere machines.
▪ The MBO process increases comparisons between individuals at the workplace. Employees tend
to depend on nasty politics and other unproductive tasks to outshine their fellow workers.
Employees do only what their superiors ask them to do. Their work lacks innovation, creativity
and sometimes also becomes monotonous.