Summary Sheet - General Management Part 1 Lyst5939

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Important Points
1. This Summary Sheet shall only be used for Quick Revision after you have
read the Complete Notes
2. For Building Concepts along with examples/concept checks you should
rely only on Complete Notes
3. It would be useful to go through this Summary sheet just before the
exam or before any Mock Test
4. Questions in the exam are concept based and reading only summary
sheets shall not be sufficient to answer all the questions

1. Introduction
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 organization
2. Functions of Management
Thus, according to Henry Fayol, management consist of 5 functions namely planning,
organizing, commanding, coordinating, and controlling.
However, modern authors do not view coordination as a separate function of management.

As per modern view, management consist of 5 functions -> Planning, Organizing, Staffing,
Directing and Controlling. Koontz and O’Donnell have adopted the same classification.
1. Planning: It means determining the objectives of the organization. It also involves as in

what needs to be done, how and when.
2. Organizing: Organizing: 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 involves manpower planning, recruitment, Training, performance appraisal,

appraisal, remuneration and Promotions etc.
4. Directing: It is concerned with interpersonal relationships. Direction has following

elements: Supervision, Motivation, Leadership and Communication
5. Controlling: It implies measurement of accomplishment against the standards and correction

of deviation if any to ensure achievement of organizational goals.

Nature of Management Functions
1. Interrelated and no sequence of performing functions: Management is an integrated
process consisting of 5 functions. There is no rigid sequence of performance of these
functions. A manager must perform these activities simultaneously
2. Universal: These functions are universal in the sense that a manager must perform all
these functions in the organization irrespective of his level.
3. Iterative Quality: These functions have iterative quality in the sense that they are
contained with in each other. For example, planning, organizing, directing, and controlling
may occur within the staffing function.
4. Equal Importance: Almost all management functions are equally important though the
mix of functions may vary from level to level of management.
3. Concepts of Management
Management has been defined in different ways and different views. Let us discuss some of
them
Management as a Process: Management is considered a process because it involves a series

of interrelated functions to obtain the objectives of the organization. It is a continuous
process consisting of planning, organizing, staffing, directing, and controlling functions.
Management as an Economic Resource: Like land, labor and capital, management is an

important factor of production. Management occupies the central place among productive
factors as it combines and coordinates all other resources.
Management as a Team or Group of Managers: As a group of persons, management consists

of all those who have the responsibility of guiding and coordinating the efforts of other
persons. These persons are called as managers who operate at different levels of authority
(top, middle, operating). As a group manager have become an elite class in society occupying
positions with enormous power and prestige
Management as Discipline : Management has emerged as field of study or specialized branch

of knowledge which is taught in various business schools and universities.

4. Features of Management
1. Management is goal-oriented: Management is not an end in itself. It is a means to achieve
certain goals.
2. Management is universal: Management is an essential element of every organized activity
irrespective of the size or type of activity.
3. Management is an Integrative Force: The essence of management lies in the coordination
of human and other resources to achieve desired objectives. As unifying force,
management creates a whole that is more than the sum of individual parts.
4. System of Authority: Managers at different level process varying degrees of authority. As
we move down in managerial level, the degree of authority decreases gradually
5. Results from others: Managers cannot do everything on their own. They must have
necessary skills and ability to get work accomplished through effort of others.
6. Dynamic process: Managers will have to make changes in their plans as per environmental
changes
7. Group Activity: Management is group activity because it comes into existence only when
there are 2 types of people - managers and workers (operatives)
8. Management is Intangible: It cannot be seen but its presence can be felt everywhere in the
form of results.
5. Objectives of Management
The objectives of Management can be categorized into 3 categories

6. Administration and Management
There has been constant debate whether administration and management are different or
same. Earlier they use to be same but then Oliver Sheldon made the distinction between
management and administration in 1923. As a result, three views have emerged regarding
the same
1. Administration is a higher-level Function and Management is lower level function:

According to this view Administration involves policy formulation and is concerned with
top level management whereas management involves execution and is concerned with
lower levels of management. Thus, administration is above management
Administration Management
It is concerned with formulation of policies, It means getting work done through others
plans and objectives
It relates to decision making. It is a It relates to executions of decisions. It is a doing
determinative or thinking function function
It has extremely broad scope. Administrators It is mainly narrow as they are just concerned
are mainly concerned with planning and control about implementation and execution
It is not directly concerned with directing human It is actively concerned with leading, motivating
resources or just directing middle level of operational workforce at lower level for
managers execution of plans
Concerned with what is to be done and when is Concerned with who shall implement decisions
to be done made by administration
It is a top-level function It is a middle and low-level function
Administration has direct interaction with the Management is mainly concerned with internal
external environment and their decisions are forces i.e. objectives, policies of the
influenced by the external environmental forces organization
This term is usually used in government offices Mainly used in business organizations
2. Administration as part of Management: Some management thinkers believe that

management is broader concept and administration is its part. Administration is that part
of management which is concerned with the carrying out of procedures related to
execution of the plans.
3. Administration and Management are same: According to this view, both management
and administration are same. The difference lies in usage of terms in different countries
and different type of organizations. For example, the term administration is used in
government organizations whereas management is used in business organizations.
Practically, there is no difference between management and administration. Every manager is

concerned with both – administrative management function and operative management
function as shown in the figure. However, the managers who are higher up in the hierarchy
denote more time on administrative function and the lower level denote more time on
directing and controlling worker ‘s performance i.e. operative management.
7. Levels of Management
Top Level Management

The top-level management is generally occupied by board of directors, CEO’s and General
managers etc.
The area of scope is
1. To make a corporate plan and long-term strategies for the entire organisation covering all
areas of operations
2. To decide upon the matters which are vital for the survival, profitability, and growth of
the organisation such as introduction of new product, shifting to new technology and
opening new plant
3. To liaison with outside parties having a stake in business such as government, trade union,
shareholders, and trade associations etc.
4. Provide guidance and direction to Departmental heads, Coordinating the operations of
different departments, Review and Control of organizational Performance through reports
etc.
5. Appointment of key middle level managers in the organization
Middle Level Management

Middle level management consists of departmental managers, divisional managers, deputy
managers, foreman and administrative officers etc. These executives are mainly concerned
with the overall functioning of their respective departments.
1. To establish departmental goals and plans for their respective department

2. Allocating resources to different activities and coordinating them within the
department
3. Recruiting supervisory personnel, providing guidance and direction to supervisory
personnel and Reviewing and Controlling Departmental Functioning
Lower Level Management or Supervisory Management

Lower-level management consists of factory supervisors, superintendents, 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
Comparison of three Management Levels

Characteristic Top Management Middle Management Supervisory
Management
Number of Person Very few Moderate Many
Role Strategic Tactical Operational
Nature of Functions Broad and Creative Somewhat broad and Routine and detailed
creative
Level of complexity Extremely high Moderate Very Low
Job Measurement Exceedingly difficult Less Difficult Easy
Time dimension Long term Medium Term Day to Day
8. Effective Management (Efficiency Vs. Effectiveness).

Efficiency refers to relationship between input and output. This efficiency denotes how
much inputs have been used to produce a given level of outputs or with a given level of
inputs how much outputs have been produced.
Effectiveness on other hand refers to the extent to which an organization achieves its
objectives. This effectiveness is externally focused because the achievement of organizational
objectives depends on environment in which the organization operates
Basis of Difference Efficiency Effectiveness

Orientation Input-Output Goal achievement orientation
Focus Means Ends
Emphasis Doing things right Doing right things
Determining factors Internal External

McKinney 7-S framework for effective management
The model was developed in the late 1970s by Tom Peters and Robert Waterman, former
consultants at McKinsey & Company. They identified seven internal elements of an
organization that need to align for it to be effective.
The model categorizes the seven elements as either "hard" or "soft":

Hard Elements: The three "hard" elements are strategy, structures (such as organization
charts and reporting lines), and systems (such as formal processes and IT systems.) These are
relatively easy to identify, and management can influence them directly.
Soft Elements: The four "soft" elements – Skills, Staff, Style, and Shared Values, on the other
hand, can be harder to describe, less tangible, and more influenced by your company culture.
But they are just as important as the hard elements if the organization is going to be
successful.
9. Nature of Management
There are conflicting views about whether management is a science or an art. Let us evaluate
these statements through the below discussion
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Management as Science
Science is a body of systemized knowledge generated through logic and experiments. Science
has following features
1. Systematic body of knowledge: Science is systemized body of knowledge. Principles of
science are based on cause-effect relationship. In management there is lack of such cause-
effect relationship. If an employee is not feeling motivated, we cannot explain a single
sure shot reason for the same. So, Management is not true science
2. Universal principles: Scientific principles represent basic facts about a particular field
enquiry. These principles may always be applied in all situations. A management principle
which works well in one country may not work in other country because of the situational
and cultural differences between two countries. This management is not true science
3. Scientific enquiry and experiments: Scientific principles are tested rigorously before
being approved. This is not the case in management principles. In management the
principles are not tested like science. Thus, management is not true science.
In line with above discussion management is not a perfect science. It is called pseudo-
science or inexact science. It is also called soft science
Management as Art
Art implies the application of knowledge and skills to bring about the desired results.
Management is Art because it fulfills the following criteria
1. Practical knowledge: Every art signifies practical knowledge. An artist not only learns the
theory but also its application in practice. Similarly, a person cannot become a successful
manager simply by reading the theory, he must also learn to apply his knowledge in
solving managerial problems in practical life. Thus, management is an art
2. Personal skill or Personalized Application of Knowledge: The success of different artists
differs even when all of them possess the same technical knowledge or qualifications. This
is due to the level of their personal skills. Similarly, the success of a manager depends on
his personality in addition to his technical knowledge. Thus, management is an art
3. Improvement through Continuous Practice: In art, improvement is made through
continuous practice. In this way person engaged in art move towards perfection. This is
also done in management. Thus, management is an art.
4. Creativity: Art is basically creative, and an artist aims at producing something that had not
existed before. A manager effectively combines and coordinates the factors of production
to create goods and services.

5. Situational Approach. Art has situational application. This is true for management too; a
particular management practice may be effective in one organization but may not be
effective in other.
Management is Combination of Art and Science

If we combine the above discussion, we find that management has some features of science
through though not exactly in the same was as science and it has all features of an art. Thus,
management is both science and an art.
Management as Profession
There is controversy whether management is a profession or not. Let us discuss the following
points related to profession and evaluate whether management is a profession or not.
1. Specialized body of knowledge: All professions have well-defined knowledge that can be
acquired by the person who wishes to enter a profession. In management, we have a
systematic body of knowledge that can be used for development for managers.
Management is taught across universities as a discipline
2. Restricted entry (Formal Education): Only those people are eligible to enter a profession
those who have eligible degrees. For example, a doctor must have degree as prescribed
by Medical Council of India. In managements, MBAs are preferred but MBA degree is not
necessary to enter this profession. This there are no standard qualification for managers
3. Professional Body: For regulation of any profession, the existence of professional
representative body is must. For example, ICAI lays down rules and regulations with
respect to chartered accountants. In area of management also, there are professional
bodies such as All India Management association (AIMA), but these are not having
authority to frame rules and regulations or professional qualifications to take up
managerial posts
4. Service motive: A profession is a source of livelihood, but professionals are primarily
motivated by the desire to serve the community. Service motive is also emphasized in
management. 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
5. Code of conduct: Every profession must have a code of conduct for its members.
Members of one profession must abide by a code of conduct which contains rules and
regulations providing the norms of honesty, integrity and professional. Though All India
Management Association has framed code of conduct for managers, but it has no right to
act against any manager who does not follow this code

From the above discussion, it seems that on some points management fulfills the condition of
profession and on some points it does not. So, the professionalism of management has
started but it is far from complete. However, since it is moving towards professionalism, we
can say management in India is an emerging profession
10.Skills Required by Managers
To perform management functions and assume multiple roles, managers must be skilled.
Robert Katz identified three managerial skills essential to successful management: technical,
human, and conceptual
11.Competencies of Quality Manager

1. Education: Well educated with special education in business management
2. Training: Management skills are not in-born. They are to be acquired through training.
Manager must undergo proper training
3. Good analytical skills and Intelligence: High level of Intelligence is required
4. High on creativity and Leadership qualities
5. Maturity
6. Foresightedness
7. Self-confidence, Human Relations Attitude and Decisive
8. Excellent communication skills, Leading from the front
9. High on integrity and Team based approach
12.Scope of Management
The operational areas of business management may be classified into the following branches
– Production Management, Financial Management, Marketing Management and Human
Resource Management.
1. Production Management:
Production means creation of utilities. This creation of utilities takes place when raw
materials are converted into finished products. Plant location and layout, production
policy, type of production, plant facilities, material handling, production planning and
control, repair and maintenance, research and development, simplification and
standardization, quality control and value analysis, etc., are the main problems involved in
production management
2. Marketing Management:
Some of the area under marketing management are
I. Product decisions: what to produce and how the product should look like?
II. Pricing Decisions: What should be the price of the product in the market
III. Promotion decisions: Brand name, Advertising etc.
IV. Place or Physical Distribution decisions: What all channels such a kirana stores, malls
etc. where the product should be available
V. Others such as after sales service, market research, etc. are the problems of marketing
management.
3. Financial Management:
Financial management is concerned with the managerial activities pertaining to the
procurement and utilization of funds or finance for business purposes. The main functions
of financial management include:
1. Estimation of capital requirements.
2. Ensuring a fair return to investors.
3. Determining the suitable sources of funds.
4. Laying down the optimum and suitable capital
5. Preparation, analysis, and interpretation of financial statements.

6. Laying down a proper dividend policy
7. Negotiating for outside financing.
4. Personnel Management:
Personnel Management is that phase of management which deals with the effective control
and use of manpower. Managerial functions of personnel management include:
a. Personnel planning.
b. Organizing by setting up the structure of relationship among jobs, personnel, and physical
factors to contribute towards organization goals.
c. Procurement of right kind and number of persons.
d. Training and development of employees.
e. Determination of adequate and equitable compensation of employees.
f. Integration of the interests of the personnel with that of the enterprise; and
g. Providing good working conditions and welfare services to the employees.
Apart from Production Management, Human Resource Management, Marketing

Management, and financial management, there are some other areas under Management
1. Materials Management which is mainly concerned with purchase of materials at right
price and in right quantity and at right time
2. Legal Function: Legal function may aid the organization in compliance with the rules and
regulations laid down by the government
3. Public Relations Function: This department organizes publicity campaigns to increase the
image and goodwill of the business in the society
13.Ethics and Management

In this era of globalization and multinational competition, ethical decision taking assumes
importance in today's corporate world
We will discuss three models of Ethics in Management.
1. Joseph son institute Ethical decision-making model: This model is widely used in
taking ethical decisions. It consists of 3 Steps:
I. All decisions must consider and reflect a concern for the interest and wellbeing of
all stakeholders.
II. Ethical values and principles always take precedence over non ethical ones.

III. It is proper to violate an ethical principle only when it is clearly necessary to
advance another true ethical principle, which according to the decision maker's
conscience will produce the greatest balance of good in the long run
2. The Plus Decision –Making Model: To make it easy to understand and apply these
ethics filters, let us adapt to mnemonic word "PLUS"
I. P = Policies (It is consistent with my organizations Policies, Procedures and

Guidelines?)
II. L = Legal (Is it Acceptable under the applicable laws and Regulations?)
III. U = Universal (Does it conform to the universal principles values my
organizations has adopted?)
IV. S = Self (Does it satisfy my personal definition of Right, Good and Fair?)
3. Taylor Four Way test: Herbert J. Taylor was a business executive, civic leader and
sponsor of Christian organizations who belonged to the United States of America. His
Ethical Model was based on these 4 questions
I. Is it the truth?
II. Is it fair to all concerned?
III. Will it build goodwill and better friendships?
IV. Will it be beneficial to all concerned?
In 1940s, when Taylor was an international director of Rotary, he offered the Four
Way Test to the organization, and it was adopted by Rotary for its internal and
promotional use.
14.Schools of Management
Different Schools of Management Thought are as follows
Different schools of management have evolved over a period. Harold Koontz, called this
development as the management theory Jungle because of so many management thoughts .
Below is the list of Management Thoughts which we shall discuss one by one
Management Thoughts or Schools of Management

Classical Theory
1) Scientific Management
2) Management Process or Administrative Management Approach
3) Bureaucratic Organization Approach
Human Relations approach

Social System Approach
System Approach
15.1 Classical Theory

Classical theory is one of the oldest schools of management. It is also called as traditional
theory and can be traced to military organizations. Several authors contributed to this theory.
Features of Classical Theory
1. Emphasis on division of labor and specialization

2. Emphasized on organization hierarchical structure for coordination. They ignored role
human element. For this reason classical theory is also called Structural theory
3. It ignored the impact of external environment on the organization
4. Integration of organization is achieved through authority and control. Thus, it is based on
centralization of authority
5. It assumes no conflict between individual and organization. In case of conflict the interest
of organization shall prevail
6. People at work are rational and they should be motivated by economic rewards
They can be studied under 3 streams
1. Scientific Management (Taylor)

2. Administrative Management (Fayol)
3. Bureaucracy (Weber)
Criticism of Classical Theory
1. Assumption of Closed System. Classical theorists viewed organisation as a closed system

to having no interaction with environment. This assumption is totally unrealistic
2. Assumption about Human Behaviour. The human beings were treated like any other
factor of production. They were supposed to obey their superiors.
3. Economic Rewards as Main Motivators. The assumption that people at work can be
motivated solely through economic rewards is also wrong. Non-monetary factors like
better status and job enrichment can also motivate the workers

15.2Scientific Management Approach
15.2.1 Principles of Scientific Management
1. Science, Not Rule of Thumb: Replace working by "rule of thumb," or simple habit and
common sense, and instead use the scientific method to study work and determine the
most efficient way to perform specific tasks.
2. Harmony, Not Discord (Max Output): The principles involves maintaining harmony
between management and workers in place of conflict.
3. Cooperation, not individualism: Management should encourage constructive suggestion

form workers and management should take workers into confidence before taking
important decisions which affect the worker. There needs to be change of mental
attitude. This is called mental revolution
4. Development of each person (Scientific selection and Training of workers): There should
be scientific selection of workers and work should be assigned to them should suit their
physical, mental, and intellectual capabilities. Workers should be trained as per the needs
of work and they will perform that work only. This is basically called Division of labor and
Specialization

5. Equal division of work and reponsbility: There should also be equal division of work
between workers and management and both should work side by side. Managers should
be responsible for planning and organizing whereas workers should be responsible for
execution
15.2.2 Techniques of Scientific Management

Taylor has devised the following techniques for implementing the principles of scientific
management
1. Functional Foremanship (Specialization): Taylor has proposed functional foremanship

technique for supervising workers. In this technique there is supervision of each worker
by 8 supervisors, four supervisors supervising planning aspect and other 4 supervisors
supervising production work. In other words, there should be specialized person for
supervising each task

2. Standardization and Simplification of work: Taylor advocated standardization of tools and
equipment’s, material to be used in production, methods used in production to increase
the output
3. Work Study: Work study refers to systematic and critical evaluation of a work with the aim
of identifying how the work can be performed in the most desirable way by standardizing
and simplifying it. In a work study, 4 types of studies are undertaken
I. Method study: It refers to identify the most suitable way to do a particular activity
II. Motion study: It refers to conduct the study of motions being performed by
workers and machines while doing the job. The moving camera is used to conduct
this study. The main objective of this study is to eliminate the unnecessary
motions.
III. Time study or measurement: It refers to determine the standard time required to
complete a particular activity. The standard time is determined based on average
time taken by the several experiences of the same work
IV. Fatigue study: It refers to determine the duration and frequency of rest intervals
to complete a particular job. The rest refreshes the workers. They work again with
their full capacity
4. Differential Piece Wage Plan: It is a system of wage payment in which a worker who
achieves or exceeds production target get wage at a higher price while a worker who does
not achieve the target will get wage at lower price.
5. Mental Revolution: The basic idea behind concept of mental revolution is that there
should be change in mindset of managers, owners and workers resulting in understanding
needs of each other. According to Taylor, instead of fighting over division of profits, both
the parties should make efforts for increasing the profits.
15.2.3 Pros and Cons of Taylor’s way of thinking

Pros Cons
Establishment of harmonious relationship Scientific Management was applicable only to
between managers and workers production management but not much applicable in
finance or marketing management
Proper selection and training of workers The principle of Functional foremanship violated
and equal division of work between principle of unity of command as one person must take
managers and workers order from various people
Incentive for higher production to workers Scientific management made the work monotonous
and workers tried to overspeed due to differential
wage rate system

Standardization of tools, equipment’s, Scientific management just thought people as
materials etc. and elimination of wastage resources and their other needs such as social needs
and higher order needs were ignored. This led to lower
morale
15.2.4 Other Thinkers in Scientific Management

1. Henry L Grant
Henry Gantt's legacy to project management is the following:
• The Gantt chart: Still accepted as an important management tool today, it provides a
graphic schedule for the planning and controlling of work and recording progress
towards stages of a project.
2. Frank and Lillian Gilbert

Frank and Lillian Gilbert made following contributions
I. The motion study and fatigue study that we discussed under techniques of
scientific management was developed by these 2 people
II. Humanistic approach: Taylor aimed at standardizing the work timing using a
stopwatch whereas Frank and Lillian aimed at studying motions required for work
and removing unnecessary motions thereby standardizing the work through
innovation. Their fatigue study was also aimed at giving proper rest to workers. So,
they worked for betterment of workers as they believed in human relations
15.2.5 Productivity
It can be defined as ratio of output to input. High productivity means efficient use of
resources.

As per International office – the ratio of output and one of the factors of input is generally
known as productivity of the factor considered. Thus, for different factors of production
productivity can be measured as follows:
Productivity in general Terms Output/Input

Productivity of Labor Output/Number of Man hours
Productivity of Machine Output/Number of machine hours worked
Productivity of Capital Output/Net capital employed
Productivity of Material Output/Weight and Volume of material used
Productivity of Land Output/area of land
Productivity is often misconstrued with production, but there exists a difference, in the sense
that production indicates the volume of output, whereas productivity is the output generated
from the resources employed by the company.
Factors influencing productivity
1. Technological advancement: Use of right technology can help increase productivity

2. Quality of workforce: Able and willing workers can help increase productivity as
compared to lazy and incompetent workers
3. Managerial Talent: The way managers handle their employees also impacts productivity
4. Government Policy: Government policies can also impact productivity. For example,
government should follow taxation policy which encourages the growth and expansion of
business
15.3 Fayol Administrative Management

Fayol is also called the father of modern operational management or administrative
management. Fayol looked at problems of managing an organization form top management
point of view. He was the first one to show concern for efficiency at higher level. This school
is also called Management process school of thought or Universalist school of thought.
15.3.1 Principles of Management as per Fayol

Henri Fayol, a French mining engineer, developed 14 principles of management based on his
management experiences.
1. Division of work: Division of work involves dividing work into relevant number of tasks
and assigning task or unit to single person

2. Authority and responsibility: Authority is the right to give orders and the power to exact
obedience. Responsibility is the duty of the person to complete the work. Authority
creates responsibility.
3. Discipline: Workers must work in discipline. Adoption of this principle leads to systematic
working in the organization and violation leads to chaos
4. Unity of command: An employee should receive orders from only one superior, otherwise
it will lead to conflict as subordinate will never know whom to obey. This principle is
against the Taylor’s functional foremanship where multiple superiors oversee the
subordinate.
5. Unity of direction: Unity of direction means one plan, one boss. Organizational activities
must have one central authority and one plan of action.
Difference between Unity of Command and Unity of Direction
Unity of Command Unity of Direction

It implies that subordinate should receive It means one unit, one plan for the group of
order from one boss only activities having the same objective
This principle is related to functioning of This principle is related to functioning of a
personnel department or organization as a whole
Unity of command is necessary to fix Unity of direction is necessary for sound
responsibility of each subordinate organization
Unity of Command avoids conflicts in the Unity of Direction avoids duplication of
undertaking efforts and wastage of resources
6. Subordination of individual interest to general interest: The interests of one employee or

group of employees are subordinate to the interests and goals of the organization.
7. Remuneration of personnel: Salaries to employees should be fair and provide satisfaction
both to the employee and employer.
8. Centralization and Decentralization: Fayol believed there should be balance between the
two with a little leaning towards decentralization.
9. Scalar chain: A chain of authority exists from the highest organizational authority to the
lowest ranks. Any communication going up or coming down must follow this chain.
However, this system results in delays. Therefore, Fayol suggested gang plank which is
system of direct communication between two employees not in the same chain but
related horizontally

10. Order: The right materials and the right employees are necessary for each organizational
function and activity. The right employees should be there at right place. It basically
indicates orderliness
11. Equity: Equity is a combination of kindliness and justice. Both should be considered when
dealing with employees.
12. Stability of tenure of personnel: Employees need job security. They should be kept at
their positions at least for a minimum fixed period and no employee should be removed
within a short period of time.
13. Initiative: Employees should be encouraged to come forward and give suggestions
regarding new efficient methods of doing work.
14. Esprit de corps: Esprit de corps means ‘union is strength’ or ‘group spirit’. As per this
principle management should promote teamwork and group spirit among employees.
Importance or Advantages of Administrative Management
1. Healthy Financial Situation: Administrative management is a management strategy that

focuses on maintaining all expenses within the decided budget. It supervises all finances
of company and ensures that there is no wastage of money.
2. Higher Productivity: It aims at attaining the better coordination of all resources for
deriving maximum output.
3. Facilitates in Acquiring Goals: This efficient strategy of management assist in
accomplishing the primary goals of company.
4. Data-based Decisions: Administrative management theory avoids the basis of any
assumption or whim in decision-making process of organization. All decisions are taken on
the basis of information.
5. Improve Employees and Customer Satisfaction: It helps in enhancing the satisfaction
level of employees by properly allocating them work as per their skills.
Limitation or Disadvantages of Administrative management
1. Management Oriented- This theory does not give any attention to the issues of workers.
Ignoring the human behaviour will have adverse effects over the performance of
company.
2. Concepts Borrowed from Military Science- This strategy of management has borrowed
concepts from military science such as commanding.
3. Ignores Environmental Changes- Another major limitation of administrative management
strategy is that it does not consider the environment changes which have major impact
over the organization.
4. Mechanical Approach- This theory of management is mechanistic in nature. It cannot be
applied with key aspects of management. Administrative management theory has a

limited utility in a modern management concept such as communication, leadership and
motivation.
5. Deals with Formal Structure- Another major limitation with administrative management
theory is that it completely ignores the informal structure of organization. It does not give
any attention to non-formal groups and organizations.
15.3.2 Comparison between work of Taylor and Fayol

The work of Taylor and Fayol was to an extent but there were some dissimilarities also.
Taylor Fayol
He worked from bottom to top. His study was He worked from top to bottom His study was
related to Shop floor level related to Higher management level laying stress
on unity of command, unity of direction etc.
Narrow perspective. Advocated Efficiency Wider perspective. Advocated Efficiency through
through simplification and standardization observing certain management principles
Production and Engineering Managerial functions
Scientific observation and measurement Personal experiences translated into universal
truth
Basis for accomplishment on the production line Systematic theory of management
He gave stress on increasing productivity than on He showed regard for human element by
human resources advocating principles such as initiative, stability
of service and esprit de corps
15.4 Bureaucracy - Max Weber Contribution

Max weber was the one who contributed to this Bureaucracy school of thought.
Weber believed that All bureaucracies would have following characteristics
• A well‐defined hierarchy. All positions within a bureaucracy are structured in a way

that permits the higher positions to supervise and control the lower positions. This
clear chain of command facilitates control and order throughout the organization.
• Division of work and specialization. All responsibilities in an organization are

specialized so that each employee has the necessary expertise to do a particular task.
• Rules and regulations. Standard operating procedures govern all organizational

activities to provide certainty and facilitate coordination.
• Impersonal relationships between managers and employees. Managers should

maintain an impersonal relationship with employees so that favoritism and personal
prejudice do not influence decisions. Managers and employees must not be emotional
and sentimental towards each other

• Competence. Competence, not “who you know,” should be the basis for all decisions
made in hiring, job assignments, and promotions in order to foster ability and merit as
the primary characteristics of a bureaucratic organization.
• Official Records. A bureaucracy needs to maintain complete files regarding all its
activities. All the decisions and activities are recorded and preserved for future
reference
When a bureaucracy is implemented, it can provide accountability, responsibility, control,

and consistency. The hiring of employees will be an impersonal and equal system.
Reason for Efficiency in bureaucracy
The following factors are reasons for higher efficiency in bureaucratic organizations
1. Extensive rules and regulations give clarity regarding what is expected of employees
2. Decision making is rational and not by personal factors or personal bias
3. There is proper maintenance of official records, so employees refrain from doing anything
wrong
15.4.1 Merits and Demerits of Bureaucracy

Cons of Bureaucracy Pros of Bureaucracy
Rigidity in Operations: The rules which act source of Competence: Competence is given
efficiency can sometimes lead to rigidity killing innovation importance while doing appraisals and
and creativity personal bias not there
Lack of Human Touch: Bureaucratic organizations are Rules and Regulations lead to
inhuman which works like a machine in which there is np efficiency
importance of human beings because of too much
emphasis on rules
Delay and Red Tapism: Rules become source of delays and Rational behaviour: All decisions are
inefficiency as we see in government organizations logic based rather than on emotions
and personal bias
Gola Displacement: The bureaucrats may forget about Predictability: The behaviour of
primary goal and may just focus on rules and regulations employees is predictable; it is known
how they must react
Ineffective Communication No partiality happens as everything is
driven by rules and regulations
Compartmentalization of activities: Jobs are divided into
watertight categories and people are prevented from
performing jobs they are capable of
15.5 Human Relations Approach (Neo-classical Theory)

Elton Mayo is generally considered father of Human Relations school.

The classical writers such as weber and Taylor neglected the human relations aspect. The
neoclassicists focused on the human aspect of industry. They modified the classical theory by
emphasizing the fact that organization is a social system and the human factor is the most
important element within it.
15.5.1 Factors affecting Human Relations.

Four Factors Influencing Human Relations in an Organisations are:
(I) work environment: In general, when employee needs are satisfied, the work environment
is termed positive and when employee needs are not satisfied, the work environment is
termed negative.
(II) workgroup: The Hawthorne studies showed that the informal groups exert tremendous
influence over the Behaviour patterns of workers.
(III) individual: The human being is an important segment of the organization. Behaviour of
an individual is affected by his feeling’s sentiments and attitudes.
(Iv) leader: The leader must ensure full and effective utilization of all organizational resources
to achieve organizational goals.
15.5.2 Hawthorne Studies

A group of researchers led by John Elton Mayo and Fritz J. Roethlisberger were invited to
conducted studies at Hawthrone works of western electric company in USA.
Findings of Hawthorne Experiments:
1. Social Factors in Output (Social System): Organization is a social system where informal
relations exist. Therefore, while motivating workers, social factors shall be considered.
2. Social Environment: The social environment on the job affects the workers and is also
affected by them. Management is not the only variable.
3. Group Influence: Workers create informal social groups, and they behave more by the
norms of informal group to which they are adhered to.
4. Informal Organization: Informal organization does also exist within the framework of
formal organization and it affects and is affected by the formal organization.
5. Leadership: There is an emergence of informal leader and sometimes he becomes
important in directing the behavior of the group. He helps the group function as a social
group and achieve its objectives.
6. Supervision: Supervisors must be friendly to the workers, genuinely concerned about
their needs and such an attitude from supervisor impacts the productivity favorably.

7. Two-way Communication: Two-way communication is necessary as it is not only the
supervisors who need to order but workers must also be given opportunity to express
their feelings to the supervisors.
8. Non-Economic Reward: Money is only one of the motivators, but not the sole motivator
of human behaviour.
Criticism of Human Relation Approach
The human relations approach has been criticized on the following grounds:
1. Lack of Scientific Validity: The human relation drew conclusions from Hawthorne studies.
These conclusions are based on clinical insight rather than on scientific evidence.
2. Over-Emphasis on Group: The human relations approach over-emphasizes the group and
group decision-making. But, in practice, groups may create problems for the management
and collective decision-making may not be possible.
3. Over-Stretching of Human Relations: It is assumed that all organizational problems are

amenable to solutions through human relations. This assumption does not hold good in
practice.
4. Limited Focus on Work: It puts all the emphasis on interpersonal relations and on the
informal group. It tends to overemphasize the psychological aspects at the cost of the
structural and technical aspects.
5. Over-Stress on Socio-Psychological Factors: The human relations approach undermines

the role of economic incentives in motivation and gives excessive stress on social and
psychological factors.
6. Negative View of Conflict between Organizational and Individual Goals: It views conflict
between the goals of the organization and those of individuals as destructive. The positive
aspects of conflicts such as overcoming weaknesses and generation of innovative ideas are
ignored.
Difference between Human Relations Approach and Scientific Management:
Scientific Management Human Relations

Founded by F.W. Taylor Founded by Elton Mayo
It suggested engineering and scientific It suggested human relations as an approach
approach to doing things to achieve higher productivity
It focused on problem of productivity It focused on study of individual, his needs
and behavior
The main concepts are scientific selection and The main concepts are job satisfaction,

training of people, specialization of work motivation, and morale
It originated form experience of Taylor and Originated from Hawthorne studies
others in dealing with problem in factories
Part of classical theory school of thought Part of Human relations school of thought
15.6 Social System Approach

Social System approach has extended the implications of human relations approach further.
There is not much difference between the two. This approach was introduced by Vilfredo
Pareto and his ideas were later developed by Chester Barnard. Chester Barnard is seen as
founding father of this approach. Main Features of this approach are
1. An organization is social system consisting of people and their culture

2. Relationships exist among external as well as internal environment of the organization
3. Cooperation among group members is necessary for the achievement of Organizational
Objectives
4. Efforts should be made to establish harmony between the goals of the organization and
goals of various groups in the organizations.
15.7 Systems Approach

In the 1960, an approach to management appeared which try to unify the prior schools of
thought. This approach is commonly known as ‘Systems Approach’.
Features of Systems Approach
1. Interdependent subsystem: System is composed of interacting and interdependent

parts, called subsystems. These subsystems are related and dependent which when in
interaction make a unitary whole. There are 4 types of subsystems
a. Technical Subsystem: it refers to knowledge required to complete the work.
b. Social Subsystem: It refers to Individuals and groups in the organization.
c. Power Subsystem: Power is one’s ability to influence other into action in an
organization.
d. Managerial Subsystem: It refers to managing organizational activities. It consists of
operation and control.
2. Hierarchy of subsystems: System is composed of hierarchy of sub-systems. For example,
the world can be considered-to be a system in which various national economies are sub-
systems.

3. Synergy: The arrangement of subsystems in a system is more important. The whole
becomes greater than the total of individual parts.
4. Multidisciplinary: This theory of management is enriched by the contributions from
various disciplines like psychology, sociology, economics, anthropology, mathematics,
operations research and so on.
5. Multivariable: It considers so many variables which makes the process complex
6. Dynamic: Management as a system is dynamic. Even after reaching equilibrium there
would changes that would again make in unstable. So, it is a very dynamic system.
7. Organization as an Open Adaptive System: organizations cannot work like closed systems
as they have to constantly monitor the changes in external environment and adapt . This
theory views organization as an open system
Open System View of an Organization
Systems approach consider organization as open system in contract to classical theories

which saw organization as closed concept. Some characteristics of Open system are given
below:
1. Feedback mechanism: Feedback is given by the environment for improvement.
2. Equifinality: Equifinality means system can reach a final state from different initial
conditions. It implies not all organizations may not choose the same course of actions to
attain success.
The system approach has the following merits:

1. System approach provides a holistic view of the organisations and emphasises on their
adaptive nature. It increases organisation’s adaptability to environmental changes.
2. It analyses the system at different levels and inter-relates and integrates it into a unified
set of direction. Starting from individual goals, it focuses on overall organisational goals,
synthesizes the two and converges them into global economy.
3. System approach provides a framework for effective interaction of parts of the

organisation in a specific arrangement for attainment of its goals. It does not focus on one
part of the organisation.
4. It considers the impact of environment on the organisation and vice versa. Interaction of
external environment with the internal environment is the most significant contribution of
systems theory.
5. System approach synthesizes the classical and behavioural theories into a broader
framework to solve managerial problems.
Limitations of System Approach:
1. Abstract Analysis: Critics of this theory claim this as a theoretical approach to

management.
2. Limited View of Organization-Environment Interface: Relationship amongst parts of the

organization is emphasized upon but the exact nature of inter-dependence is not defined.
3. Lack of Unification: Management practices change with changes in environmental

variables. No standard set of principles apply to all types of organizations.
4. Limited Application: It fails to provide concepts that apply to all types of organizations.

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However, modern authors do not view coordination as a separate function of management.

1. Planning: It means determining the objectives of the organization. It also involves as in

3. Staffing: It involves manpower planning, recruitment, Training, performance appraisal,

4. Directing: It is concerned with interpersonal relationships. Direction has following

5. Controlling: It implies measurement of accomplishment against the standards and correction

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Management as a Process: Management is considered a process because it involves a series

Management as an Economic Resource: Like land, labor and capital, management is an

Management as a Team or Group of Managers: As a group of persons, management consists

Management as Discipline : Management has emerged as field of study or specialized branch

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1. Administration is a higher-level Function and Management is lower level function:

2. Administration as part of Management: Some management thinkers believe that

Practically, there is no difference between management and administration. Every manager is

Top Level Management

Middle Level Management

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1. To establish departmental goals and plans for their respective department

Lower Level Management or Supervisory Management

Comparison of three Management Levels

8. Effective Management (Efficiency Vs. Effectiveness).

Basis of Difference Efficiency Effectiveness

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The model categorizes the seven elements as either "hard" or "soft":

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Management is Combination of Art and Science

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10.Skills Required by Managers

11.Competencies of Quality Manager

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Apart from Production Management, Human Resource Management, Marketing

13.Ethics and Management

We will discuss three models of Ethics in Management.

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I. P = Policies (It is consistent with my organizations Policies, Procedures and

Management Thoughts or Schools of Management

Human Relations approach

15.1 Classical Theory

Features of Classical Theory

1. Emphasis on division of labor and specialization

They can be studied under 3 streams

1. Scientific Management (Taylor)

Criticism of Classical Theory

1. Assumption of Closed System. Classical theorists viewed organisation as a closed system

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15.2.1 Principles of Scientific Management

3. Cooperation, not individualism: Management should encourage constructive suggestion

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15.2.2 Techniques of Scientific Management

1. Functional Foremanship (Specialization): Taylor has proposed functional foremanship

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15.2.3 Pros and Cons of Taylor’s way of thinking

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15.2.4 Other Thinkers in Scientific Management

2. Frank and Lillian Gilbert

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Productivity in general Terms Output/Input

Factors influencing productivity

1. Technological advancement: Use of right technology can help increase productivity