LECTURE NOTES: PRINCIPLE OF MANAGEMENT

UNIT 1

INTRODUCTION
Every human being has several needs and desires. But no individual can satisfy all his wants. Therefore,
people work together to meet their mutual needs which they cannot fulfil individually. Moreover, man is a
social being as he likes to live together with other people. It is by working and living together in
organised groups and institutions that people satisfy their economic and social needs. As a result there are
several types of groups, eg., family, school, government, army, a business firm, a cricket team and the
like. Such formal groups can achieve their goals effectively only when the efforts of the people working
in these groups are properly coordinated and controlled. The task of getting results through others by
coordinating their efforts is known as management. Just as the mind coordinates and regulates all the
activities of a person, management coordinates and regulates the
activities of various members of an organisation.

DEFINITION OF MANAGEMENT
It is very difficult to give a precise definition of the term ‘management’. Different scholars from different
disciplines view and interpret management from their own angles. The economists consider man-agement
as a resource like land, labour, capital and organisation. The bureaucrats look upon it as a system of
authority to achieve business goals.
“Management is the process of designing and maintaining an environment in which individual working
together in a group efficiently accomplish the selected item.”
The sociologists consider managers as a part of the class elite in the society.
The definitions by some of the leading management thinkers and practitioners are given below:

Management consists in guiding human and physical resources into dynamic, hard-hitting organisation
unit that attains its objectives to the satisfaction of those served and with a high degree of morale and
sense of attainment on the part of those rendering the service. –Lawrence A. Appley
Management is the coordination of all resources through the process of planning, organizing ,directing
and controlling in order to attain stated objective. – Henry L.Sisk
Management is principally the task of planning,coordinating motivating and controlling the efforts of
others towards a specific objective. – James L. Lundy
Management is the art and science of organising and directing human efforts applied to control the forces
and utilise the materials of nature for the benefit of man.
Management is the art of knowing what you want to do and then seeing that it is done in the best and
cheapest way.- F.W.Taylor

To manage is to forecast and to plan, to organise to command, to coordinate and to control.- Henry Fayol

Management is the function of executive leadership anywhere.- Ralph C. Davis

Management is concerned with seeing that the job gets done; its tasks all centre on planning and
guiding the operations that are going on in the enterprise. - E.F.L. Breach

Management is a distinct process consisting of planning, organising, actuating and controlling performed
to determine and accomplish the objectives by the use of people and resources.-George R. Terry
Management is a multipurpose organ that manage a business and manages Managers and manages
Workers and work.- Peter Drucker
FEATURES OF MANAGEMENT:
Organized activity
Existence of objective
Relationship among resources
Working with an through the people
Decision making

CHARACTERISTICS OF MANAGEMENT
Management is a distinct activity having the following salient features:

Economic Resource : Management is one of the factors of production together with land, labour and
capital. As industrialization increases, the need for managers also increases. Efficient management is the
most critical input in the success of any organized group activity as it is the force which assembles and
integrates other factors of production, namely, labour, capital and materials. Inputs of labour, capital and
materials do not by themselves ensure production, they require the catalyst of management to produce
goods and services required by the society. Thus, management is an essential ingredient of an
organization.

Goal Oriented : Management is a purposeful activity. It coordinates the efforts of workers to achieve the
goals of the organization. The success of management is measured by the extent to which the
organizational goals are achieved. It is imperative that the organizational goals must be well-defined and
properly understood by the management at various levels.

Distinct Process : Management is a distinct process consisting of such functions as planning, organizing,
staffing, directing and controlling. These functions are so interwoven that it is not possible to lay down
exactly the sequence of various functions or their relative significance.

Integrative Force : The essence of management is integration of human and other resources to achieve the
desired objectives. All these resources are made available to those who manage. Managers apply
knowledge, experience and management principles for getting the results from the workers by the use of
non-human resources. Managers also seek to harmonize the individuals' goals with the organizational
goals for the smooth working of the organization.

System of Authority : Management as a team of managers represents a system of authority, a hierarchy of

command and control. Managers at different levels possess varying degree of authority. Generally, as we
move down in the managerial hierarchy, the degree of authority gets gradually reduced. Authority enables
the managers to perform their functions effectively.

Multi-disciplinary Subject : Management has grown as a field of study (i.e. discipline) taking the help of
so many other disciplines such as engineering, anthropology, sociology and psychology. Much of the
management literature is the result of the association of these disciplines. For instance, productivity
orientation drew its inspiration from industrial engineering and human relations orientation from
psychology. Similarly, sociology and operations research have also contributed to the development of
management science.

Universal Application : Management is universal in character. The principles and techniques of

management are equally applicable in the fields of business, education, military, government and hospital.
Henri Fayol suggested that principles of management would apply more or less in every situation. The
principles are working guidelines which are flexible and capable of adaptation to every organization
where the efforts of human beings are to be coordinated.

IMPORTANCE OF MANAGEMENT:
“No ideology, no ism, or political the greater output with less efforts from a given complex of human and
materials resource only sound management And it is on such greater output that a higher standard of
life, more leisure, more amenities for all mus

Effective utilization of resources: Management tries to make effective utilization of various resources.
The resources are scarce in nature and to meet the demand of the society, their contribution should be
maximum for the general interests of the society. Management not only decides in which particular
alternative a particular resource be used but also takes actions to utilize it in that particular alternative in
the best way.

Development of resources: Management develops various resources. This is true with human as well as
non-human factors. Most of the researches for resource development are carried on in an organization
way and management is involved in those activities.

To incorporate innovations: Today changes are occurring at a very fast rate in both technology and social
process and structure these changes need to be incorporated to keep the organizations alive and efficient.
Therefore, they require high degree of specialization, high level of competence, and complex technology.
All these require efficient management so that organizations work in the most efficient way.

Integrating various interest groups: In the organized efforts, there are various interest groups and they put
pressure over other groups for maximum share in the combined output. For example, in the case of
business organization, there are various pressure groups such as shareholders, employees, government etc.
These interest groups have pressure on an organization.

Stability in the society: Management provides stability in the society by changing and modifying the resources in
accordance with the changing environment of the society. In the modern age, more emphasis is on new inventions
for the betterment of human beings. These inventions make old systems and factors mostly obsolete and
inefficient. Management provides integration between traditions and new inventions and safeguards, society from
the unfavorable impact of these inventions so that continuity in social process is maintained.

MANAGEMENT FUNCTIONS
There is enough disagreement among management writers on the classification of managerial functions.
Newman and Summer recognize only four functions, namely, organizing, planning, leading and
controlling.
Henri Fayol identifies five functions of management, viz. planning, organizing, commanding,
coordinating and controlling. Luther Gulick states seven such functions under the catch word
"POSDCORB' which stands for planning, organizing, staffing, directing, coordinating, reporting and
budgeting. Warren Haynes and Joseph Massie classify management functions into decision-making,
organizing, staffing, planning, controlling, communicating and directing. Koontz and O'Donnell divide
these functions into planning organizing, staffing, directing and controlling.

For our purpose, we shall designate the following six as the functions of a manager: planning, organizing,
staffing, directing, coordinating and controlling.

Planning : Planning is the most fundamental and the most pervasive of all management functions. If
people working in groups have to perform effectively, they should know in advance what is to be done,
what activities they have to perform in order to do what is to be done, and when it is to be done. Planning
is concerned with 'what', 'how, and 'when' of performance. It is deciding in the present about the future
objectives and the courses of action for their achievement. It thus involves:

 determination of long and short-range objectives;

  development of strategies and courses of actions to be followed for the achievement of these
objectives; and

 formulation of policies, procedures, and rules, etc., for the implementation of strategies, and
plans.

The organizational objectives are set by top management in the context of its basic purpose and mission,
environmental factors, business forecasts, and available and potential resources. These objectives are both
long-range as well as short-range. They are divided into divisional, departmental, sectional and individual
objectives or goals. This is followed by the development of strategies and courses of action to be followed
at various levels of management and in various segments of the organization. Policies, procedures and
rules provide the framework of decision making, and the method and order for the making and
implementation of these decisions.

Every manager performs all these planning functions, or contributes to their performance. In some
organizations, particularly those which are traditionally managed and the small ones, planning are often
not done deliberately and systematically but it is still done. The plans may be in the minds of their
managers rather than explicitly and precisely spelt out: they may be fuzzy rather than clear but they are
always there. Planning is thus the most basic function of management. It is performed in all kinds of
organizations by all managers at all levels of hierarchy.

Organizing : Organizing involves identification of activities required for the achievement of enterprise
objectives and implementation of plans; grouping of activities into jobs; assignment of these jobs and
activities to departments and individuals; delegation of responsibility and authority for performance, and
provision for vertical and horizontal coordination of activities. Every manager has to decide what
activities have to be undertaken in his department or section for the achievement of the goals entrusted to
him. Having identified the activities, he has to group identical or similar activities in order to make jobs,
assign these jobs or groups of activities to his subordinates, delegate authority to them so as to enable
them to make decisions and initiate action for undertaking these activities, and provide for coordination
between himself and his subordinates, and among his subordinates. Organizing thus involves the
following sub-functions :

 Identification of activities required for the achievement of objectives and implementation of

plans.

 Grouping the activities so as to create self-contained jobs.

 Assignment of jobs to employees.

 Delegation of authority so as to enable them to perform their jobs and to command the resources
needed for their performance.

 Establishment of a network of coordinating relationships.

Organizing process results in a structure of the organization. It comprises organizational positions,

accompanying tasks and responsibilities, and a network of roles and authority-responsibility relationships.

Organizing is thus the basic process of combining and integrating human, physical and financial resources
in productive interrelationships for the achievement of enterprise objectives. It aims at combining
employees and interrelated tasks in an orderly manner so that organizational work is performed in a
coordinated manner, and all efforts and activities pull together in the direction of organizational goals.

Staffing : Staffing is a continuous and vital function of management. After the objectives have been
determined, strategies, policies, programmes, procedures and rules formulated for their achievement,
activities for the implementation of strategies, policies, programmes, etc. identified and grouped into jobs,
the next logical step in the management process is to procure suitable personnel for manning the jobs.
Since the efficiency and effectiveness of an organization significantly depends on the quality of its
personnel and since it is one of the primary functions of management to achieve qualified and trained
people to fill various positions, staffing has been recognized as a distinct function of management. It
comprises several sub-functions :

 Manpower planning involving determination of the number and the kind of personnel required.

 Recruitment for attracting adequate number of potential employees to seek jobs in the enterprise.

 Selection of the most suitable persons for the jobs under consideration.

 Placement, induction and orientation.

 Transfers, promotions, termination and layoff.

 Training and development of employees.

As the importance of human factor in organizational effectiveness is being increasingly recognized,

staffing is gaining acceptance as a distinct function of management. It need hardly any emphasize that no
organization can ever be better than its people, and managers must perform the staffing function with as
much concern as any other function.

Directing : Directing is the function of leading the employees to perform efficiently, and contribute their
optimum to the achievement of organizational objectives. Jobs assigned to subordinates have to be
explained and clarified, they have to be provided guidance in job performance and they are to be
motivated to contribute their optimum performance with zeal and enthusiasm. The function of directing
thus involves the following sub-functions :

 Communication

 Motivation

 Leadership

Coordination : Coordinating is the function of establishing such relationships among various parts of the
organization that they all together pull in the direction of organizational objectives. It is thus the process
of tying together all the organizational decisions, operations, activities and efforts so as to achieve unity
of action for the accomplishment of organizational objectives.

The significance of the coordinating process has been aptly highlighted by Mary Parker Follet. The
manager, in her view, should ensure that he has an organization "with all its parts coordinated, so moving
together in their closely knit and adjusting activities, so linking, interlocking and interrelation, that they
make a working unit, which is not a congeries of separate pieces, but what I have called a functional
whole or integrative unity". Coordination, as a management function, involves the following sub-
functions:

 Clear definition of authority-responsibility relationships

 Unity of direction

 Unity of command

 Effective communication
 Effective leadership
Controlling : Controlling is the function of ensuring that the divisional,
departmental, sectional and individual performances are consistent with
the predetermined objectives and goals. Deviations from objectives and
plans have to be identified and investigated, and correction action taken.
Deviations from plans and objectives provide feedback to managers, and
all other management processes including planning, organizing, staffing,
directing and coordinating are continuously reviewed and modified,
where necessary.

Controlling implies that objectives, goals and standards of performance

exist and are known to employees and their superiors. It also implies a
flexible and dynamic organization which will permit changes in
objectives, plans, programmes, strategies, policies, organizational design,
staffing policies and practices, leadership style, communication system,
etc., for it is not uncommon that employees failure to achieve
predetermined standards is due to defects or shortcomings in any one or
more of the above dimensions of management.

Thus, controlling involves the following process :

 Measurement of performance against predetermined goals.

 Identification of deviations from these goals.

 Corrective action to rectify deviations.

It may be pointed out that although management functions have been

discussed in a particular sequence-planning, organizing, staffing,
directing, coordinating and controlling – they are not performed in a
sequential order. Management is an integral process and it is difficult to
put its functions neatly in separate boxes. Management functions tend to
coalesce, and it sometimes becomes difficult to separate one from the
other. For example, when a production manager is discussing work
problems with one of his subordinates, it is difficult to say whether he is
guiding, developing or communicating, or doing all these things
simultaneously. Moreover, managers often perform more than one
function simultaneously. traditions and new inventions and safeguards,
society from the unfavorable impact of these inventions so that
continuity in social process is maintained.

NATURE OF MANAGEMENT:

Management as a Science
Science means a systematic body of knowledge pertaining to a specific field
of study. It contains general principles and facts which explains a
phenomenon. These principles establish cause-and-effect relationship
16 t Management—Principles and Practices

between two or more factors. These principles and theories help to explain
past events and may be used to predict the outcome of actions. Scientific
methods of observations, and experiments are used to develop principles of
science. The principles of science have universal application and validity.

Thus, the essential features of science are as follows:

(i) Basic facts or general principles capable of universal application
(ii) Developed through scientific enquiry or experiments
(iii) Establish cause and effect relationships between various factors.
(iv) Their Validity can be verified and they serve as reliable guide for
predicting future events.
Let us now examine as to what extent management satisfies the above
conditions:
(i) Systematic body of knowledge: Management has a systematic body of
knowledge consisting of general principles and techniques. These
help to explain events and serve as guidelines for manag-ers in
different types of organisations.
(ii) Universal principles: Scientific principles represent basic facts about
a particular field enquiry. These are objective and represent best
thinking on the subject. These principles may be applied in all
situations and at all times. Exceptions, if any, can be logically
explained. For example, the Law of Gravitation states that if you
throw an object in the air it will fall on the ground due to the
gravitational force of the earth. This law can be applied in all
countries and at all points of time. It is as applicable to a football as it
is to an apple falling from tree. Management contains sound
fundamental principles which can be universally applied. For
instance, the principle of unity of command states that at a time one
employee should be answerable to only one boss. This principle can
be applied in all types of organisation-business or non business.
However, principles of management are not exactly like those of
physics or chemistry. They are flexible and need to be modified in
different situations.
(iii) Scientific enquiry and experiments: Scientific principles are derived
through scientific investigation and reasoning. It means that there is
an objective or unbiased assessment of the problem situation and the
action chosen to solve it can be explained logically. Sci-entific
principles do not reflect the opinion of an individual or of a religious
guru. Rather these can be scientifically proved at any time. They are
critically tested. For example, the principle that the earth revolves
around the sun has been scientifically proved.
 Nature and Scope of Management t 17

Management principles are also based on scientific enquiry and

investigation. These have been developed through experi-ments and
practical experience of a large number of managers. For example, it
has been observed that wherever one employee has two or more
bosses simultaneously, confusion and indisci-pline are likely to arise,
with regard to following the instruc-tions.

(iv) Cause and effect relationship: Principles of science lay down a cause
and effect relationship between related factors. For example, when
water is heated up to 100ºC, it starts boiling and turns into vapour.
Similarly, the principles of management establish cause and effect
relationship between different vari-ables. For instance lack of balance
between authority and responsibility will cause management to
become ineffective.
(v) Tests of validity and predictability: Validity of scientific principles
can be tested at any time and any number of times. Every time the
test will give the same result. Moreover, the future events can be
predicted with reasonable accuracy by using scientific principles. For
example, the Law of Gravitation can be tested by throwing various
things in the air and every time the object will fall on the ground.
Principles of management can also be tested for their validity. For
example, the principle of unity of com-mand can be tested by
comparing two persons, one having a single boss and other having
two bosses. The performance of the first person will be higher than
that of the second.
Thus, management is undoubtedly a science. It contains a systematic
body of knowledge in the form of general principles which enjoy universal
applicability. However, management is not as exact a science—Physics,
Chemistry, Biology and other Physical sciences. This is because
management deals with people and it is very difficult to predict accurately
the behaviour of living human beings. Management principles are universal
but they cannot be expected to give exactly the same results in every
situation. That is why management is known as a soft science. Management
is a social science. It is still growing, with the growing needs of human
organisations.

Management as an Art
Art implies the application of knowledge and skills to bring about the
desired results. The essential elements of arts are:
(i) Practical knowledge
(ii) Personal skill
(iii) Result oriented approach
18 t Management—Principles and Practices

(iv) Creativity
(v) Improvement through continuous practice
Let us judge how far management fulfils these requirements:
(i) Practical knowledge: Every art signifies practical knowledge. An
artist not only learn the theory but also its application in practice. For
example, a person may have adequate technical knowledge of
painting but he cannot become a good painter unless he knows how
to make use of the brush and colours. Similarly, a person cannot
become a successful manager simply by reading the theory and
getting a degree or diploma in management. He must also learn to
apply his knowledge in solving managerial problems in practical life.
A manager is judged not just by his technical knowledge but by his
efficiency in applying this knowledge.

(ii) Personal skill: Every artist has his own style and approach to his job.
The success of different artists differ even when all of them possess
the same technical knowledge or qualifications. This is due to the
level of their personal skills. For example, there are several qualified
singers but Lata Mangeshkar has achieved the highest degree of
success. Similarly, management is personalised. Every manager has
his individual approach and style in solving managerial problems.
The success of a manager depends on his personality in addition to
his technical knowledge.
(iii) Result-oriented approach: Arts seeks to achieve concrete results. The
process of management is also directed towards the accom-plishment
of desirable goals. Every manager applies certain knowledge and
skills to achieve the desired results. He uses men, money, materials
and machinery to promote the growth of the organisation.

(iv) Creativity: Art is basically creative and an artist aims at produc-ing

something that had not existed before. Therefore, every piece of art
requires imagination and intelligence to create. Like any other art,
management is creative. A manager effectively com-bines and
coordinates the factors of production to create goods and services.
Moulding the attitudes and behaviour of people at work, towards the
achievement of the desired goals is an art of the highest order.

(v) Improvement through people: Practice makes one perfect. Every

artist become more and more efficient through constant practice. A
dancer, for example, learns to perform better by con-tinuously
practicing a dance. Similarly, manager gains experi-ence through
regular practice and becomes more effective.
 Nature and Scope of Management t 19

Thus, “management is both a science as well as an art”. It is a science

because it has an organised body of knowledge consisting of certain
universal facts. It is known as an art because it involves creat-ing results
through practical application of knowledge and skills. How-ever, art and
science are complementary to each other. They are not mutually exclusive.
Science teaches one to know and art to do. Art without science has no guide
and science without art is knowledge wasted.

For example, a person cannot be a good surgeon unless he has scientific

knowledge of human anatomy and the practical skill of applying that
knowledge in conducting an operation.
Similarly, a successful manager must know the principles of
management and also acquire the skill of applying those principles for
solving managerial problems in different situations. Knowledge of principles
and theory is essential, but practical application is required to make this
knowledge fruitful. One cannot become an effective manager simply by
learning management principles by heart. Science (theory) and art (practice)
are both essential for the success of management.

Management as a Profession
A profession is calling that requires specialised knowledge and often, long
intensive academic preparation. The essential features of profes-sion are as
follows:
(i) Well defined body of knowledge
(ii) Restricted entry
(iii) Service motive
(iv) Code of Conduct
(v) Representative professional association
Let us examine to what extent management fulfils the above
requirements:
(i) Specialised body of knowledge: Every profession has a well defined
body of knowledge relevant to the area of specialisation. In order to
practice a profession, a person requires specialised knowledge of its
principles and techniques. Moreover, he must make deliberate efforts
to gain proficiency unit. There exists a substantial and rapidly
expanding body of knowledge in management. A manager must have
intensive devotion and involvement to acquire expertise in the
science of management. In addition, there should be competent
application or judicious utilisation of this knowledge in solving
complex problems. To-day, management is a separate discipline
having a specialised and organised body of knowledge.
(ii) Restricted entry: There exists institutions and universities to impart
education and training for a profession. No one can enter a profession
without going through the prescribed course of learning. For example
one must pass the Chartered Accountancy examination to practice
accountancy profession. Many institutes of management have been
set up in India and abroad which offer courses for specialised training
in management. Several management consultancy firms have also
come into existence to offer advise for solving managerial problems.
Formal education and training has become very helpful in getting
jobs as managers. But no minimum qualification or course of study
has been prescribed for managers by law.

(iii) Service motive: A profession is a source of livelihood but profes-

sionals are primarily motivated by the desire to serve the com-
munity. For example, a doctor earns his living from his medical
practice. But he does not treat his patients only for the sake of money.
He has a concern for the suffering of others and a desire to help the
community. Therefore, a profession enjoys high com-munity sanction
or respect. Similar is the case with managers. A manager of a factory
is responsible not only to its owners, but he is also expected to
produce quality goods at a reasonable cost and to contribute to the
well-being of the community.
(iv) Representative association: In every profession there is a statutory
association or institution which regulates that profession. For
example, the Institute of the Chartered Accountants of India
establishes and administers standards of competence for the auditors.
In management also associations have been established both in India
and abroad. Managers have formed associations for the regular
exchange of knowledge and experience. In India, there is the All
India Management Association. However, this association does not
have the statutory power to regulate the activities of managers. No
university accepted criteria or standard exists for their evaluation.
Membership of this association is not compulsory in order to become
a manager.
(v) Code of conduct: Members of one profession have to abide
by a code of conduct which contains rules and regulations providing
the norms of honesty, integrity and professional ethics. For example a
chartered accountant is not expected to commercially advertise his
firm. The code of conduct is by the representative association to
ensure self-discipline among its members. Any member violating the
code can be punished and his membership can be cancelled. The All
India Management Association has framed code of conduct for
managers. The code requires the managers to fulfil their social and
moral obligations. Members of the association are expected not to
disclose the trade secrets of their employers and to make personal
gain from the knowledge of internal working of the organisation. But
 this code does not have legal sanctions. However, observing business
ethics is always helpful in becoming a more effective manager.
The above discussion reveals that management fulfils several essentials
of profession. But like other professions, management does not restrict the
entry into managerial jobs to people with a special academic degree. No
minimum qualifications have been prescribed for managerial personnel. No
management association has the authority to grant certificates of practice or
to regulate entry into management careers. Few managers have uniform
background in terms of education and experience. The management
associations have no legal right to enforce their code of conduct. There is no
single group to which the majority of the managers belong and whose
authority is recognised by law as a sanction. Moreover, there is no single
client group to which managers owe complete loyalty. Doctors owe their
loyalty to patients. But managers are responsible to the owners as well as to
other social groups.

Thus, management is, not strictly speaking, a full-fledged profes-sion

like medicine, law or chartered accountancy. Some experts believe that there
should be no control over entry into management careers. According to Peter
F. Drucker, “Management is a practice rather than a science or profession
through containing elements of both. No greater damage could be done to
economy and society than to attempt to professionalise management by
licensing managers or by limiting access to management to people with
special academic degree”.

LEVELS OF MANAGEMENT

Every business organisation, irrespective of its size, has many mana-

gerial positions in its structure. These positions are created through the
process of delegation of authority from top to lower levels. Each position
is marked by authority, responsibility, functions, roles and relationships.
The contents and nature vary, depending in the level at which the
position lies. As one moves upward in the organisation, the managerial
position plays an important role, larger the contribution, greater the
authority and higher the responsibility. These managerial positions lying
in the chain of command may be classified into various groups or levels
of management. Broadly speaking, an organisation has two important
levels of management, namely functional and operative. The functional
level is concerned with the process of determining primary objectives,
formulating basic policies, making vital decisions and controlling and
coordinating activities of person-nel. The operative level of management
is related to implementation of plans and decisions, and pursuit of basic
policies for achieving the objectives of the organisation.

Generally, the levels of management consisting of various mana-gerial

positions in the structure of an organisation, differ from one organisation
to another, depending on the size of business activity, philosophy of
management, span of control and other related factors. But, in a joint
stock company, for conducting its business efficiently, managerial
personnel may be placed in three levels, that is, top, middle and lower or
supervisory level.

Top Level Management

The top level management is generally occupied by the ownership group.

In a joint stock company, equity shareholders are the real own-ers of the
company. Thus, they elect their representatives as directors, form a
board, known as board of directors, which constitutes the top level of
management. Besides the board, other functionaries including managing
director, general manager or Chief executive to help direc-tors, are
included in this level. It is the highest level in the managerial hierarchy
and the ultimate source of authority in the organisation. The top level
managers are accountable to the owners and responsible for overall
management of the organisation. The major functions of the top level
management are as under:

To make a corporate plan for the entire organisation covering all areas of
operations.
To decide upon the matters which are vital for the survival, prof-itability
and growth of the organisation such as introduction of new product,
shifting to new technology and opening new plant etc.

To decide corporate goals.

To decide structure of organisation, creating various positions there in.
To exercise overall managerial control through the process of reviewing
over all financial and operating results.
To make decisions regarding disposal and distribution of profits.

To select key officials and executives for the company.

To coordinate various sub-systems of the organisation.

To maintain liaison with outside parties having a stake in busi-ness such

as government, trade union and trade associations etc.
To formulate basic policies and providing direction and leader-ship to the
organisation as a whole.

Middle Level Management

In order to fill up the gap which exists between functional and opera-tive
level, some managerial positions are created at the middle level of
management. Middle level management consists of departmental man-
agers, deputy managers, foreman and administrative officers etc. These
executives are mainly concerned with the over all functioning of their
respective departments. They act as a link between top and lower level
managers. The activities of middle level managers centres around
determining departmental goals and devising ways and means for
accomplishing them.

The main functions performed by these managers are as under:

To prepare departmental plan covering all activities of the department

within the basic framework of the corporate plan.
To establish departmental goals and to decide upon various ways and
means for achieving these goals to contribute to organ-isational goals.

To perform all other managerial functions with regard to departmental

activities for securing smooth functioning of the entire department.

To issue detailed orders and instructions to lower level manag-ers and

coordinate the activities of various work units at lower level.

Middle level managers explain and interpret policy decisions made at the
top level to lower level managers.

Lower Level or Supervisory Level Management

Lower-level management is known as supervisory management, because

it is concerned mainly with personal oversight and direction of operative
employees. It consists of factory supervisors, superin-tendents, foremen,
sales supervisors, accounts officers etc. They directly guide and control
the performance of rank and file workers. They issue orders and
instructions and guide day to-day activities. They also represent the
grievances of the workers to the higher levels of management.

Supervisory management performs the following functions:

Planning of day to day work

Assignment of jobs and issuing orders and instructions

Supervising and guiding workers

Maintaining close personal contacts with workers to ensure discipline

and team-work
Evaluating operating performance

Sending reports and statements to higher authorities

Communicating the grievances and suggestions of workers to higher

authorities.

MANAGERIAL SKILLS
In modern business the job management has become very difficult. Several
skills are required to manage successfully a large organisation in a dynamic
environment. These skills of managers have been classified into four
categories, namely technical, human, diagnostic and conceptual skills.

(i) Technical Skills

Technical skills refer to the ability and knowledge in using the equip-ment,
technique and procedures involved in performing specific tasks. These skills
require specialised knowledge and proficiency in the mechanics of particular
job. Ability in programming and operating com-puters is, for instance, a
technical skill. There are two things a manager should understand about
technical skills. In the first place, he must know which skills should be
employed in his particular enterprise and be familiar enough with their
potentiality to ask discerning questions of his technical advisors. Secondly a
manager must understand both the role of each skill employed and
interrelations between the skills.
 Nature and Scope of Management t 23

(ii) Human Skills

Human skills consists of the ability to work effectively with other people both as individual and as members of
a group. These are required to win cooperation of others and to build effective work teams. Such skills require
a sense of feeling for others and capacity to look at things from others point of view. Human skills are reflected
in the way a manager perceives his superiors, subordinates and peers. An awareness of the importance of
human skills should be part of a managers orientation and such skills should be developed throughout the
career. While tech-nical skills involve mastery of ‘things’ human skills are concerned with understanding of
‘People’.

(iii) Conceptual Skills

Conceptual skills comprise the ability to see the whole organisation and the interrelationships between its
parts. These skills refer to the ability to visualise the entire picture or to consider a situation in its totality. Such
skills help the manager to conceptualise the environment, to analyse the forces working in a situation and take
a broad and far-sighted view of the organisation. Conceptual skills also include the competence to understand a
problem in all its aspects and to use origi-nal thinking in solving the problem. Such competence is necessary
for rational decision-making.

Thus technical skills deal with jobs, human skills with persons and conceptual skills with ideas. These
types of skills are interrelated. But the proportion or relative significance of these skills varies with the level of
management as shown in the figure 1.4.

Fig. 1.4 Managerial Skills of Various Skills

Technical skills are most important at the supervisory or operating level where a close understanding of job
techniques is necessary to guide workers. As one moves up the management hierarchy, technical skills become
less important. Higher level managers deal with subor-dinate managers and specialised technical knowledge is
comparatively less important for them. Conceptual skills are very important for top management in
formulating long-range plans, making broad policy decisions, and relating the business enterprise to its
industry and the economy. Thus, the relative importance of conceptual skills increases as we move to higher
levels of management. This would be self evi-dent as management is the process of getting things done
through people. Human skills are equally important at all levels of manage-ment because every manager has to
deal with people.

MANAGERIAL ROLES

1. Interpersonal Roles

Figurehead : In this role, every manager has to perform some duties

of a ceremonial nature, such as greeting the touring dignitaries,
 attending the wedding of an employee, taking an important customer
to lunch and so on.

Leader : As a leader, every manager must motivate and encourage

his employees. He must also try to reconcile their individual needs
with the goals of the organization.

Liaison : In this role of liaison, every manager must cultivate

contacts outside his vertical chain of command to collect information
useful for his organization.

2. Informational Roles

Monitor : As monitor, the manager has to perpetually scan his

environment for information, interrogate his liaison contacts and his
subordinates, and receive unsolicited information, much of it as
result of the network of personal contacts he has developed.

Disseminator: In the role of a disseminator, the manager passes

some of his privileged information directly to his subordinates who
would otherwise have no access to it.

33
 Spokesman : In this role, the manager informs and satisfies various
groups and people who influence his organization. Thus, he advises
shareholders about financial performance, assures consumer groups
that the organization is fulfilling its social responsibilities and
satisfies government that the origination is abiding by the law.

3. Decisional Roles

Entrepreneur : In this role, the manager constantly looks out for

new ideas and seeks to improve his unit by adapting it to changing
conditions in the environment.

Disturbance Handler : In this role, the manager has to work like a

fire fighter. He must seek solutions of various unanticipated
problems – a strike may loom large a major customer may go
bankrupt; a supplier may renege on his contract, and so on.

Resource Allocator : In this role, the manager must divide work

and delegate authority among his subordinates. He must decide who
will get what.

Negotiator : The manager has to spend considerable time in

negotiations. Thus, the chairman of a company may negotiate with
the union leaders a new strike issue, the foreman may negotiate with
the workers a grievance problem, and so on.

In addition, managers in any organization work with each other to

establish the organization’s long-range goals and to plan how to
achieve them. They also work together to provide one another with
the accurate information needed to perform tasks. Thus, managers
act as channels of communication with the organization.

THEORIES:
Scientific Management
 The impetus for the scientific management approach came from the first industrial
revolution. Because it brought about such an extraordinary mechanization of
industry, this revolution necessitated the development of new management
principles and practices. The concept of scientific management was introduced by
Frederick Winslow Taylor in USA in the beginning of 20th century. He defined
scientific management as,” Scientific management is concerned with knowing
exactly what you want men to do and then see in that they do it in the best and
cheapest way”.
The scientific management approach propounded by F.W. Taylor is based upon the following four
principles:
(1) Science, Not Rule of Thumb:
This principle says that we should not get stuck in a set routine with the old techniques of doing work,
rather we should be constantly experimenting to develop new techniques which make the work much
simpler, easier and quicker.
(2) Harmony, Not Discord:
As per this principle, such an atmosphere should be created in the organisation that labour (the major
factor of production) and management consider each other indispensable.
Taylor has referred to such a situation as a ‘Mental Revolution’. Taylor firmly believed that the
occurrence of a mental revolution would end all conflicts between the two parties and would be beneficial
to both of them.

(3) Cooperation, Not Individualism:

According to this principle, all the activities done by different people must be carried on with a spirit of
mutual cooperation. Taylor has suggested that the manager and the workers should jointly determine
standards. This increases involvement and thus, in turn, increases responsibility. In this way we can
expect miraculous results.
(4) Development of Each and Every Person to His / Her Greatest Efficiency and Prosperity:
According to this principle, the efficiency of each and every person should be taken care of right from his
selection. A proper arrangement of everybody’s training should be made.

It should also be taken care that each individual should be allotted work according to his ability and
interest. Such a caring attitude would create a sense of enthusiasm among the employees and a feeling of
belongingness too.

Elements and Tools of Scientific Management: The features of various

experiments conducted by Taylor are as follows:
• Separation of Planning and doing: Taylor emphasized the separation of
planning aspects from actual doing of the work. The planning should be
left to the supervisor and the workers should emphasize on operational
work.
• Functional Foremanship: Separation of planning from doing resulted into
development of supervision system that could take planning work
adequately besides keeping supervision on workers. Thus, Taylor evolved
the concept of functional foremanship based on specialization of
functions. This involve activities of workers as depicted in Figure-2.7:

75
 Workshop Manager

Planning Production
I h I h

Route Instruction Time and Disciplin Speed Inspector Maintenance Gang

Clerk card clerk cost clerk -arian boss foreman boss

Worker

Figure-2.7 FUNCTIONAL FOREMANSHIP

• Job Analysis: It is undertaken to find out the best way of doing things. The
best way of doing a job is one which requires the least movement
consequently less time and cost.
1. Motion study
2. Fatigue study
3.
4.
• Standardization and simplification: Standardization should be maintained
in respect of instruments and tools, period of work, amount of work,
working conditions, cost of production etc.
• Scientific Selection and Training of Workers: Taylor has suggested that the
workers should be selected on scientific basis taking into account their
education, work experience, aptitudes, physical strength etc.
• Financial Incentives: Financial incentives can motivate workers to put in
their maximum efforts. Thus, monetary (bonus, compensation) incentives
and non monetary (promotion, upgradation) incentives should be provided
to employees.
76
 Criticism of Scientific Management: The main grounds of criticism are given
below:
• Taylor advocated the concept of functional foremanship to bring about
specialization in the organization. But this is not feasible in practice as a worker
can’t carry out instructions from eight foremen.
• Workers were hired on a first-come, first-hired basis without due concern for
workers ability or skills.
• Scientific management is production oriented as it concentrates too much on the
technical aspects of work and undermines the human factors in industry. It
resulted in monotony of job, loss of initiative, over speeding workers, wage
reductions etc.
• Training was haphazard at best, with only minimal use of basic apprentice system.
• Tasks were accomplished by general rule of thumb without standard times,
methods or motion.
• Managers worked side-by-side with the workers, often ignoring such basic
managerial function of planning and organizing.

FAYOL’s
14 principles of Management are statements that are based on a fundamental truth.

These principles of management serve as a guideline for decision-making and management actions.

They are drawn up by means of observations and analyses of events that managers encounter in
practice.

Henri Fayol was able to synthesize 14 principles of management after years of study, namely:

Fayol’s General Principles of Management

• Division of Work: The object of division of work is to produce more and better
work with the same effort. It is accomplished through reduction in the number of
tasks to which attention and effort must be directed.
• Authority and Responsibility: Authority is defined as ‘the right to command and
the power to make oneself obeyed’. Responsibility coexists with authority and is
its other side. Fayol made a distinction between official authority and personal
authority, the latter stemming from the manager’s own intelligence, integrity,
experience, personality, knowledge and skills.
• Discipline: It implies respect for agreements designed to secure obedience. It must
prevail throughout an organization to ensure its smooth functioning. Discipline
requires clear and fair agreements, good supervision and judicious application of
penalties.
• Unity of Command: Every employee should receive orders and instruction from
only one superior and a subordinate should be accountable to only one superior.
• Unity of Direction: Each group of activities having one objective should be
unified by having one plan and one head.
• Subordination of Individual to General Interest: The interest of any one employee
or group of employees should not take precedence over the interests of the
organization as a whole.
• Remuneration of Personnel: The amount of remuneration and the methods of
payment should be just and fair and should provide maximum possible
satisfaction to both employees and employers.
• Centralisation: It refers to the degree to which subordinates are involved in
decision making. Whether decision making is centralized (to management) or
decentralized (to subordinates) is a question of proper proportion. The task is to
find the optimum degree of centralization for each situation.
• Scalar Chain: The scalar chain is the chain of superiors ranging from the ultimate
authority to the lowest ranks. Communication should follow this chain. However,
if following the chain creates delays, cross-communications can be followed if
agreed to by all parties and superiors are kept informed.

78
• Order: It is a rational arrangement for things and people. Fayol emphasized both
material order and human order. In material order, there should be a place for
everything and everything should be in its proper place. In human order, there
should be an appointed place for everyone and everyone should be in his and her
appointed place.
• Equity: Managers should be kind and fair to their subordinates. The application of
equity requires good sense, experience and humanistic attitude for soliciting
loyalty and devotion from subordinates.
• Stability of Tenure: High employee turnover is inefficient. Management should
provide orderly personnel planning and ensure that replacements are available to
fill vacancies.
• Initiative: Subordinates should be provided with an opportunity to show their
initiative as a way to increase their skills and to inculcate a sense of participation.
• Espirit de Corps: Union is strength, and it comes from the harmony and mutual
understanding of the personnel. Management should not follow the policy of
‘divide and rule’. Rather it should strive to maintain team spirit and co-operation
among employees so that they can work together as a team for the
accomplishment of common objectives.
Criticism: Fayol’s work has been criticized on the following grounds:
• His theory is said to be too formal. There is no single classification of
managerial functions acceptable to all the functional theorists. There is
also lack of unanimity about the various terms such as management,
administration etc.
• He did not pay adequate attention to workers.
• The fundamentalists considered their principles to be universal in nature.
But many of the principles have failed to deliver the desired results in
certain situations.
• There is a vagueness and superficiality about some of his terms and
definition.

79
 TABLE-2.5 DISSIMILARITY BETWEEN
CONTRIBUTION OF

Basis of Comparison Taylor Fayol

1. Perspective Shop floor level or the job of a Top Management
supervisor
thro
2. Focus Improving productivity ugh Improving overall
work simplification and through general principles
standardization
3. Personality Scientists Practitioner
4. Results Scientific observation and Universal Truths developed
measurement personal experiences
5. Major Contribution Science of industrial management A systematic
management
TAYLOR AND FAYOL
s