• HRM

Human Resource Management

100% Theory
• What is human resource management?
• What is meant by organization?
• The group of people working together to attain the predetermined goal is called
organization. To achieve the predetermined goal of the organization, number of staff
are appointed in different level. The entire work of the organization is divided in the
available employees of the organization. Employees of the organization are very
important resource of the organization. Other resources are operated and run by
employees. The human resource management is concerned with the people working in
the organization. The selection of the right staff in the right time, giving them right
tasks, motivating staff to achieve the better performance, recording the activities of
staff, pay, salary, allowance, incentive, reward, punishment, evaluating the performance
of the staff, promotion, training, leave, giving right and responsibility to the staff, solving
any misunderstands and disputes regarding staff, transfer etc are the basic functions of
human resource management. A separate department is established in big
organizations called human resource department to conduct all above mentioned
functions. The head of this department is called human resource manager.

Meaning of Management
“Management is art of getting things done through people.” To achieve the
predetermined goal of the organization various activities like planning, staffing, leading,
controlling etc are performed. In simple word, management is the process of
performing such activities of the organization in a effective and efficient way .
Management is that field of human behavior in which managers plan, organize, staff,
direct, and control human and financial resources in an organized group effort in order
to achieve desired individual and group objectives with optimum efficiency and
effectiveness.
What is effective and efficient in management?
Modern concept of management says that employees must be effective as well as
efficient. Effectiveness refers to completion of work or achievement of target on time.
Efficiency refers to optimum utilization of resources or no wastage of resources, both
are must for every organization; for example, if the annual target of a worker is to
produce 1000 units of output, the employee achieves this target by wasting various

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resources and by mishandling the machinery then the organization will have no benefit
so only effectiveness is not required. It must be accompanied by efficiency.

• Functions of management
1. Planning
Planning is setting goals and deciding how best to achieve them. Planning is
predetermining future. Planning is deciding in advance about what to do, how to do it,
when to do it and who is to do it.
2. Organizing
Organizing is establishing structure. It includes grouping tasks, producing authority –
responsibility structures, creating channel of communication and creating coordinating
mechanism.
3. Staffing
Staffing is hiring and assigning people to carry out tasks. It is filling and keeping filled
positions in the organization structure. It is human resource management.
4. Leading
Leading is influencing, communicating and motivating people to perform tasks for goal
achievement.
5. Controlling
Controlling is maintaining, comparing and correcting organizational performance
toward goal achievement

• Importance of management
1) Acquisition and utilization of resources

Management performs efficient acquisition effective development and utilization and

proper coordination of resources.
2) Environmental adaptation.

Management adopts organization in changing environmental forces.

3) Goal achievement

Management achieves goals by balancing the requirement of jobs and people.

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 Importance of management
4) Problem solving.

Management solves organizational problems. It identifies and evaluates various

alternatives and choose appropriate course of action.
5) Performance control.
Management measures and evaluates the actual performance.
6) Social responsibility

Employment opportunities
• Features of Management
1. management is goal oriented
Management is a means to achieve predetermined goals. All managerial activities are
systematically directed in the accomplishment of such goals. Management has no
justification to exist without goals. Effective management is always management by
objective. The basic goal of management is to maximize effectiveness and efficient of
human efforts. The success of management is measured by the extent to which the
established goals are achieved. Hence, management is goal oriented.
2. management is a group activity
Management cannot be done in isolation. It always refers to group efforts. Whenever
there is an organized group of people working towards a common goal, some type of
management become essential. A group can easily and effectively attain the goal or
objectives of an organization rather than individuals.
3.It is a distinct process
Management is a distinct process performed to accomplish organizational goals by the
use of human and material resource. The chief function of manager is not to do but to
get things done through others. Mary Parker Follet has said, management is the art of
getting things done through people.
4. Management is a universal activity
Management is required in all types of organization. Wherever there is a human activity
there is a management. The basic principle of management is applicable in business as
well in other organizations. These principles are flexible and are modified according to
needs and environment of the organization.
5. Management is an integrating process

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 The essence of management is integration of human and other resources for effective
performance. It integrates men, machines, and materials for carrying out the operations
for achieving the stated goals. The responsibility of management is welding the three
factor men, methods and machinery into a single working factor.
6. Management is a social process
Management is a social process because it consists of getting things done through
others. This involves dealing with people. The efforts of human being have to be
directed, coordinated and regulated by management. Moreover, management has a
social obligation to make optimum use of scare resources for the benefit of the
community as a whole.
7. Management is both science and art.
Management is a science because it has developed certain principles there are universal
application, it is also an art because the results of management depend upon the
personal skill of managers. The art of manager is essential to make the best use of
management sciences. Hence, it is both science and art.
8. Management is a profession
Management is now regarded as a profession. It has a systematic and specialized body
of knowledge, principles and techniques, which can be taught well as applied in
practice. With the increase in joint stock companies, and multinational companies, the
management is entrusted in the hands of profession managers.
9.Management is multidisciplinary discipline
Management draws knowledge and concepts from other disciplines such as economics,
psychology, sociology, statistics; operation research etc. management integrates the
ideas and concepts taken from other disciplines and uses them in managing the
organization.
10. Management is intangible
Management is unseen forces but its results are apparent. The effectiveness of
management is judged on the basis of the end result through operations cannot be
observed.
11. management is dynamic
Management is a dynamic function and it has to be performed continuously. it operates
in an ever changing environment. Management adapts itself to environmental changes
and also introduces innovation in methodology.

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• Management Thought
• In the past, management was not considered as an important part of development. With
industrial revolution during 17th and 18th century, several economists expressed their concepts
and function of management. Only in 19th century, management became the separate field of
study because business organization faced various problems regarding labor efficiency and wage
payment system. In search of solution of these problems, people began to recognize
management as a separate field of study.

• Management is as old as the human civilization. The concept of management has been in
practice since ancient times. However, the study of management as a science began only after
the industrial revolution. The development of sciences and technology has forced the
emergence of a new concept in management. At present management has become a complex
function, therefore, it attract the attention of psychologists, sociologists, anthropologists,
scientists, economists and so on.

• The evolution of management thought can be studied into six categories ie classical theory,
human relation theory, decision theory, management science theory, system theory and
contingency theory.

The classical theory

• It is initial stage of the development of management thought. It focuses on efficiency and
recommends that managers continuously try to increase three different approaches to
management.

1. Scientific management theory

2. Administrative theory
3. Bureaucratic theory
All these three theories were propounded on almost similar assumption and the practical effort
of them is basically the same. They were developed at almost the same period of time and are
complementary to each other.

Frederick W Taylor’s Scientific Management Theory

About Frederick Winslow Taylor
Mr. Taylor was born at Philadelphia, on March 20, 1856, and was graduated from
Stevens Institute of Technology in 1883. He won the doubles championship of the
United States at tennis at Newport in 1881. He entered the employ of the Midvale Steel
Company at Philadelphia in 1878 and was successively gang boss, assistant foreman,
foreman of the machine shop, master mechanic, and chief engineer.
He was President of the American Society of Mechanical Engineers in 1905 and 1906. He
was the author of technical books and articles, but is best known by "The Principles of
Scientific Management" and "Shop Management," both published in 1911.

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• At Midvale, he observed that employees were working at a slower pace than their
capabilities which he called soldering. He determined what each worker would be
producing and then the designed the most efficient way of doing each part of the
overall job. He invented high speed steel cutting tools and spent most of this time as a
consulting engineer. Rather than paying all employees the same wages, he implemented
a piecework pay system.
• Later, Taylor left Midvale and worked as a consultant for several companies including
Symonds Rolling Machine Company and Bethlehem Steel Company. In both these
companies he found that production and pays was poor. He found that the problem of
productivity was a matter of ignorance on the part of both management and workers.
Part of this ignorance arose from the fact that neither management nor workers knew
what constituted a fair days work and fair days pay. he believed that the application of
scientific methods, instead of custom and rule of thumb, could yield productivity
without incurring more human energy.
• He was convinced that there is a science for doing each job. He made all efforts to
replace the primitive rule of thumb method by modern scientific methods based on
investigation, analysis and measurement. Taylors philosophies and ideas are in his book,
Principles of Scientific Management published in 1911.

The philosophy of scientific management is based upon the following principles

Development of a science for each element of an individual's work

This principle suggests that the work assigned to each employee should be observed and
analyzed in order to replace the old rule of thumb approach. This can be developed through
scientific investigation. Development of science for each element of an individual's job requires
that decisions should be made on the basis of facts rather than on opinions and beliefs.

Scientific selection, training and development of workers:

• this principle suggests that workers should be selected and trained in accordance with the
requirements of the job to be entrusted to them. The physical, mental and other requirements
should be specified for each job and workers should be selected and trained to make them fit
for the job. The management has to design systematic training to improve their skills and
efficiency making efforts to develop each employee's greatest efficiency.

Close cooperation between management and workers

The interest of the employer and employees should be fully harmonized so as to create a
mutually beneficial relationship. Workers should understand that they cannot perform their
work without the existence of the management and the management should understand that it
has no identify without the existence of labour. Maximum prosperity for both cannot be
achieved in the absence of cooperation between management and workers.

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 Equal division of work and responsibility between management and workers:
• the task and related responsibility should be clearly divided among management and workers.
Each group should be assigned work, which it can perform more effectively. The management
should decide the time required for doing a particular work, while the responsibility for actually
doing the work should be given to the workers. If the time required for doing the work is not
properly determined, the manager would be accountable and if the work has not been
performed properly the workers would be responsible.

Maximum output
• This principle is necessary for the prosperity of workers, owners and also to the society at large.
Maximum production ensures more wages to workers because of piece rate system of wages. It
also ensures maximum profit to owners because more volume of production minimizes cost per
unit of output. It is also helpful to the society as it upgrades the living standard of the people.

• Taylor is known as the father of scientific management. His pioneering works on production and
efficiency provide the foundation to modern management. Initially, he worked for the Midvale
Steel Company in 1878. Later, he joined the Bethlehem steel Company in Pennsylvania. In these
two factories, he observed that production and pay were poor. Inefficiency and waste were very
high. These companies had tremendous unused potential. Taylor estimated that worker output
was only about one third of what was possible. Workers purposely restricted output by idling
away time. They worked at a slow pace. In addition, there were no standardized tools, tasks,
and work processes. Virtually, no effective work standards existed. These had caused
inefficiency in the work system. Taylor has to face difficulties to solve these problems.

• Using his engineering background, Taylor studied work standards and the relationship of output
to wages in these steel companies. To overcome the problems of inefficiency, he emphasized on
the application of scientific management techniques at the shop floor. Taylor used techniques
such as time and motion studies. He stressed the need for hiring and training workers. He
advocated standardization of tools and enough rest to reduce fatigue.

• Another significant element of Taylors approach was the use of the differential piece rate
system. He assumed providing monetary incentives could motivate workers. Hence, workers
exceeding a standard level of output were paid additional wages. Taylor's argument was that
both workers and management would benefit from such an approach.

• Another significant element of Taylors approach was the use of the differential piece rate
system. He assumed providing monetary incentives could motivate workers. Hence, workers
exceeding a standard level of output were paid additional wages. Taylor's argument was that
both workers and management would benefit from such an approach.

• The industrialists and managers of that time in the USA welcomed Taylor's views. His ideas
became the standards of practice. By applying his principles, many US organizations achieved
major gains in their efficiency and productivity.

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 Contributions of Taylor
• Taylor made several important contributions. While working as a manager of Midvale steel
company, Taylor observed men producing far less than their capacities. He believed this waste
was due to ignorance. At that time, there were no studies to determine expected daily output
per worker and the relationship between work standard and wage system. Hence, Taylor
conducted various experiments at his work places to find out how the workers efficiency could
be increased by standardizing the work and using better methods of doing. By these
experiments

1.Scientific task setting

• Taylor found from his experience that no one knew exactly how much work was reasonable to
expect from a worker. Under scientific management the management is responsible for
determining task for every worker. Scientific task is the amount of work, which an average
worker under proper working conditions can perform during a working day. Taylor called it ' a
fair day's work'. Proper care should be taken in setting the task. The process of tasks setting
requires careful application of scientific study to determine the one best way of doing a job. This
replaced the old rule of thumb knowledge.

Differential payment

• Taylor introduced a new payment plan called the differential piece work, in which he linked
incentives with productions. Under this system a worker received the piece rate if the number
of pieces produced by him was below the predetermined standard and a higher rate if he
surpassed the standard. Taylor thought that the attraction of high piece rate would motivate
worker to increase the production.

Re organization of supervision

• Taylor suggested two new concepts i.e. separation of planning and doing, and functional
foremanship. Before the concept of scientific management the worker himself had to plan his
work and select necessary tools. Taylor emphasized that worker should emphasize only to
operational work where as planning function should be left to foreman or supervisor. Hence
Taylor has suggested work organization based on functional foremanship. In this system there
should be as many foremen as there are special functions involved in doing a job.

Scientific selection and training

Taylor has emphasized on the scientific selection of employees. The management should
develop and train worker to provide proper knowledge of the job and to make him more
efficient. Job should be assigned to a person who is most suitable for the job.

Mental revolution

• The techniques of scientific management cannot be applied properly unless workers are willing
to cooperate with the management. This leads to complete mental revolution of the part of

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 workers and management. Both should try to increase production rather than quarrel than
profits. By doing so profits would be increased to such an extent that workers and management
would no longer have to compete for them.

• Win win situation

• Replace rule-of-thumb work methods with methods based on a scientific study of the tasks.

• Scientifically select, train, and develop each employee rather than passively leaving them to
train themselves.

• Provide detailed instruction and supervision of each worker in the performance of that worker's
discrete task.

• Divide work nearly equally between managers and workers, so that the managers apply
scientific management principles to planning the work and the workers actually perform the
tasks.

Advantages of Scientific Management

Organization Workers Society

Higher efficiency Higher Consumers satisfaction

wages
Lower costs Standard of living
Better
Wider market Economic progress
working
Industrial peace condition
Proper
Scientific selection and training of training
workers

Criticism of Scientific Management

Scientific management provides innumerable advantages but it has been criticized loads. It has
been severely criticized by the workers, employers, and psychologists as well.

• Criticism by workers

Workers and trade unions have been the strongest opponents of scientific management. They
have criticized this theory on the following grounds.

• Unemployment: workers feel that scientific management reduces employment opportunity for
them through labor saving devices and replacement of men by machines. In any case
productivity and efficiency leads to reduction in the number of workers.

• Exploitation: workers feel that scientific management is nothing but a device to force workers
to work at a greater speed. They are reduced to the position of machine and there is an

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 exploitation of workers. The gains of increased productivity are not shared with the worker.
Wage does not rise in the same proportion in which productivity of labour increases.

• Monotony: scientific management reduces the scope for initiative on the part of workers due to
standardization and specialization of the work method. The worker has to act in accordance
with the instructions of the foreman. Jobs become dull and monotonous.

• Speeding up: according to workers, scientific management is responsible for speeding up

workers, forcing them to work up to their maximum capacity. Changes in work routine and
techniques may result in over speeding affecting physical and mental strain on them.

Weakens trade union:

scientific management determines the standards of output, wages and working conditions on
scientific basis for which workers are not consulted. This weakens the role of trade unions. The
wages of the workers are not increased in direct proportion to productivity increases. This
weakens the process of collective bargaining and formation of trade union. The differential
piece wage system divides workers between efficient and inefficient categories

Criticism By Employers

• Expensive: scientific management is very expensive and costly system. This system requires a
huge investment for establishing planning department and standardization of materials,
equipment, tools and machinery. It also undertakes work, time motion, and studies, which are
expense techniques it may be an expensive affair for small firms.

• Time consuming: in order to introduce scientific management, the old set up has to be changed.
A lot of time is required for work study, standardization and specialization. The work has to be
suspended due to reorganization. Thus, it is both time consuming and expensive.

• Over production: the techniques of scientific management are followed by all firms in one
industry may lead to over production in the market. Recession is bound to talk place, which is
not in the best interest of the business firms.

Criticism by Psychologist

• One sided view: scientific management is based on the assumption that workers are economic
beings and will work always for economic reward. It placed too much emphasis on the so called
rational and economic nature of man overstating mans desire for money. There is no thought in
it for the human approach towards the workers. Thus this presents only one side view.

• Separation of planning and doing: under scientific management, planning and doing are treated
as two different functions. People in the planning department plan but do not execute, and
those on the shop floor only execute but do not have anything to do with planning. But planning
and performance are interdependent and it is neither possible nor desirable to separate the
two.

• Frustration: under scientific management, everything to be done by a worker is decided by his

manager. He has no scope to display his initiative or originality. This causes frustration among
the really competent workers.

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• Monotony: specialization and repetition of jobs under scientific management makes the jobs
monotonous. It reduces the efficiency of workers. The systematized methods of scientific
management were applicable mainly in stable work environment and have less application in
dynamic and complex organizations.

Fayol's administrative management

• In the development of the principles of management, the contribution of Hennery Fayol is very
important. First of all, he focused on the development of broad administrative principles
applicable to general and higher managerial levels. Therefore, he is considered to be the father
of administrative management theory. He was a French mining engineer and became managing
director and successful industrialist. In 1916 he published his famous book in French language
administration industrial general which was translated into English in 1929 under the title
general and industrial management.

• Fayol provided a broad analytical framework of the process of administration. He used the word
administration for management. A contemporary of Taylor, Fayol for the first time attempted a
systematic analysis of the overall management process. He looked at the problem of managing
organization with the management point of view. Fayol’s contributions are generally termed as
administrative management.

• Henri Fayol was born in Istanbul in 1841. When he was 19, he began working as an engineer at a
large mining company in France. He eventually became the director, at a time when the mining
company employed more than 1,000 people.

• Through the years, Fayol began to develop what he considered to be the 14 most important
principles of management. Essentially, these explained how managers should organize and
interact with staff.

• In 1916, he published his "14 Principles of Management" in the book "Administration

Industrielle et Generale." Fayol also created a list of the six primary functions of management,
which go hand in hand with the Principles.

• Fayol's "14 Principles" was one of the earliest theories of management to be created, and
remains one of the most comprehensive. He's considered to be among the most influential
contributors to the modern concept of management, even though people don't refer to "The 14
Principles" often today.

• Fayol observed the organizational functioning from manager's point of view. He found that all
activities of the industrial enterprise could be divided into the following six groups

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• Technical (production or manufacturing )

• Commercial (buying and selling and exchange.)

• Financial (search for capital and its optimum use)

• Security (protection of property and persons)

• Accounting ( preparation of various statements, accounts etc)

• Managerial ( planning, organization, command, coordination and control)

All these activities exist in every organization.

Fayol also emphasized the managerial quality and training

• Fayol has enumerated certain managerial qualities of managers. He emphasized that

managers should posses these qualities to be effective in their job. These qualities are given
below.

• Physical (health, vigor and dress)

• Mental (ability to understand and learn, judgment,and adaptability)

• Moral( energy, willingness to accept responsibility, initiative, loyalty, tact and dignity)

• Educational qualification

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• technical

• experience(arising from the work )

• Hennery Fayol was not satisfied with what he described as managerial qualities. He
emphasized that no one is born with all the qualities. He was of the view that those qualities
are a necessity. Key for success in managerial job is training and experience.

Principles of management
• Fayol has given a conceptual framework for analyzing the process of management.
Fayols contribution to management is perhaps the most revolutionary and constructive
which have ever been made in the field of management . He emphasized that
management principles are universal. Fayol has developed fourteen principles of
management which are based on his long experience.
1. Division of work
This principle implies that every employee should be assigned only one type of work. The
object of division of work is to derive benefits from the principle of specialization. It adds
efficiency in the use of labour. By the use of this principal, much more production is possible
with the same amount of human efforts. Division of work applies to all kinds of work,
management as well as technical and at all levels of organization.
2. Authority and responsibility
The right to give order and power is called authority. On the other hand, responsibility
means obligation to perform the work in the manner desired and directed by superior
authorities. In any management process delegation of power, utilization of authority, and
fixation of responsibility are the key to success. Authority without responsibility leads to
irresponsible behavior while responsibility without authority will make a person ineffective.
The success of management depends on balance of authority and responsibility.
3. Discipline
In simple sense, discipline means obedience to the superiors and their guidelines. It is also
concerned to follow the rules, regulations and procedures of the organization. This principle
is applicable both in management and subordinates because all are within the rules of the
organization. In Fayol’s view, superior can responsibly expect discipline of subordinates only
when they are disciplined. Rules and regulation of the organization must be clear and fair,
penalties and punishment for non observance of discipline must be impartial and equal. In
every organization, discipline is a must for the development of the feeling of self
responsibility among the personnel and for smooth functions of the organization.
4. Unity of command
According to this principle, an employee should get orders and instructions only from one
superior. He should be responsible only to one superior and not to so many bosses as

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described by Taylor in his functional foremanship. If a subordinate has more than one
superior, it will undermine authority, weaken discipline, dived loyalty, and lead to delays.
5. Unity of direction
According to Fayol, there should be one head and one plan for a group of activities having
the same objective. Unity of direction signifies that each group of activities having the same
objective must have one head and one plan. In other words, similar activities must be
guided in similar ways. The purpose is to have better coordination among various activities
to be undertaken by an organization. Unity of direction is essential for achieving unity of
action.
6. Subordination of Individual Interest to General Interests
Individual interest means fulfillment of employee’s objectives whereas general interest
means attainment of organizational objectives. This principle concentrates on basic
management philosophy that individual objective of workers are subordinate to the
common organizational objective. Further, this principle emphasizes that the achievement
of organizational objectives in the long run contributes to fulfill individual objectives of the
employees. As far as possible, it is essential to reconcile individual objectives with that of
organizational objectives. However, it is essential to provide first emphasis on group
objectives. So management has to take necessary actions for the achievement of
organizational objective.
7. Remuneration of personnel
Remuneration of personnel is the price payable to the employees for their services towards
the achievement of organizational objectives. Fayol has recommended that the
remuneration to the personnel must be such that it is acceptable for both to the
management and employees. Fair wage is essential for smooth performance of the
organization. Personnel wages should be determined by considering employees
responsibilities, cost of living and financial status of the organization. Basic wage is to be
fixed on the basis of work done, and besides, there should be the provision of allowances
on the bases of cost of living, skill, efficiency, experience and accountability of the
employees. At the same time, management has to consider financial soundness,
productivity and profitability of the organization. However, this principle must be taken into
high consideration, otherwise it might create the problem of strike, lock out and other
disturbance in operations. Hence, as far as possible management has to provide reasonable
remuneration to the personnel.
8. Centralization:
Centralization reduces subordinates role whereas decentralization increases it. According to Fayol,
managers should retain final responsibility but the subordinates should be given enough authority
to do their jobs properly. Hence, there must be a good balance between centralization and
decentralization of authority and power. It depends upon so many factors such as size of
undertaking, type of activities and the nature of organizational structure.

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9. Scalar chain
In an organization there may be various levels of authority, from top level ot subordinate
levels. The scalar chain refers to the unbroken chain of relation ranking form superior to the
lowest rank of authority in an organization. This principle is significant for systematic and
orderly commutation from the top level to the lowest level and vice versa. It means each
level of information is communicated through successive level of the chain either from
lower level to top level or vice versa. According to Foyal, the scalar chain of communication
must be strictly followed, except in emergency situations of the organization. Foyal has
suggested the concept of Gang Plank illustrated as follows.

•
In the above figure information is communicated successively from A to B, B to C, C to D or from
A to M, M to N, N to O and so on or vice versa. However, if D has to communicate with O, the
information from D will go up to A through C and B and again it will go down to O through M
and N. it needs more time to reach information to the concerned authority. To avoid such type
of delay in communication, Fayol has suggested the concept of Gang Plank, a Gang Plank allows
that two employees of the same level of an organization can deal directly with each other
without breaking the scalar chain. It means, in the above figure, D and O can communicate
message with each other directly without interrupting other lines of authorities.

10. Order
This principle is related to arrangement of material and people. Material order implies a proper
place for every thing and every thing in its right place. Similarly, every man in the organization
should be properly placed. The right man in the right job is very important for the successful
functioning of an organization

11. Equity
Equity is the combination of kindness and justice. Employees expect equity from the
management. It ensures healthily industrial relations between management and labour
which is essential for the successful working of an organization.

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12. Stability of tenure
This principle is concerned to job security or long term existence of workers in the
organization. It is most significant that employees must work in the organization for long
period of time. This also is essential to maintain and develop working efficiency of the
organization and to reflect managerial capability. And, workers should not be frequently
transferred from one position to another, because, it needs some time for a worker to
become familiar with his work. The long term functioning of an employee in a job helps to
develop experience and efficiency in performance. Otherwise, the feelings of job insecurity
among the workers create the problems of high labour turnover, increaser cost of selection,
training, supervision and there is also the possibility of wastage materials and break down
of machines and equipments. This stability of tenure principle ensures workers to develop
working efficiency and, in the long run, successful operation of the organization.
13. Initiate:
This principle emphasizes to provide freedom and preference to subordinates to think out a
plan and its execution. In fact, one of the most expected willingness of an intelligent and
skilled employee is to get initiation in his work. He does not expect any king of interruption
or guideline from superior for minor technical work. Instead, he wants to accomplish his
responsibility in his own risk and knowledge. In such cases, management has to sacrifice
some of this authority and has to inspire the subordinates to complete their work and
improve their working efficiency. This initiative principle of management, in some cases,
provides the sense of self motivation among the workers and makes them more dedicated
and loyal towards the organization. Thus, the top level management has to provide reliable
freedom to the subordinates with timely guidance and suggestion enabling them to
perform their work efficiency.
14. Esprit de corps
This is the principle of union is strength and the strength of an organization lies in the
cooperation and harmony in individual efforts. The management should not follow the
policy of divide and rule. If there are any differences or misunderstanding or should take
timely steps to eliminate them.

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•
The above principles of management as pointed out by Fayol, are not final, principles
are working hypothesis that is reasonably well established, accepted, and used in many
successful applicability. However, they cannot be applied blindly even in similar
situations. They are to be used carefully and intelligent. As more research is conducted,
new principles will emerge, other, principles will be modified and some will be
discarded.
• FOYOLS principles are very important in the concept of management. It has been rightly
stated that Fayols theory of management is the first complete theory to be presented it
Incorporates proven principles, elements, procedures and techniques all based on his
practical experience. He had also emphasized the need for teaching management in
school and colleges.

Contributions of administrative management theory

• This theory focuses on efficiency of organizations. It identified management functions for the
first time.

• This theory lays down universal principles of management. They serve as guides for
management behavior.

• This theory identified skills needed for management.

• This theory regarded management as a profession.

• This theory laid the foundation for the study of management functions of planning,
organizing, staffing, directing and controlling.

• This theory has isolated and analyzed management as a separate discipline.

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Limitation of administrative management theory
• This theory has limited application in the complex and dynamic environments of modern
organizations.

• This principles of management are not applicable in all situations. They are mechanistic in
nature.

• The importance of behavior in organization is ignored. Emphasis is placed on job design, work
performance and the processes of management. People in organization are regarded as tools
rather than resources.

• In spite of the above criticisms, the administrative theory remains important because it is still in
practices. The administrative theory lays more emphasis on the power and authority structure
of an organization. The elements and principles of management provide valuable guidance in
management practices.

Comparison between Taylor and Fayol

• From the above discussion , it can be said that the contributing of Taylor and Fayol are
complementary to each other. They both were practicing executives in industry. The
works of both Taylor and Fayol are of practical nature. Both of them wanted to improve
the management practice. However, they have contributed to the development of
modern concepts of management in different styles and fashion. They developed their
ideas though practical experience. The two pioneers differ from each other in the
following aspects.
• Taylors scientific management has stressed and emphasized on tasks, tools, workers,
and employees, where as Fayols administrative work was concerned with efficiency of
administrators or managers.
• Taylor looked at management from the supervisory viewpoint. He tried to improve
efficiency at the operating level and them to move upward. Taylor paid greater
attention to standardization of work and tools. On the other hand, Fayol analyzed
management from top management and proceeded downward with emphasis on unity
of direction and coordination.
• Taylor focused his attention on factory management and his principles are directly
applicable at the shop floor. But Fayol concentrated on the principles of general
management and on the functions of managers. He argued that his principles would
have universal application.
• The main aim of Taylor was to improve productivity of labour and to eliminate all types
of waste through standardization of work and tools, Fayol attempted to develop
universal principles of management, which will help in better management. He also
emphasized the need for teaching the concepts and principles of management.

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Bureaucratic Theory of Management by MAX WEBER-:
BUREAUCRATIC theory was developed by a German sociologist and political economist
Max Weber (1864 -1920). According to him, bureaucracy is the most efficient form of
organization. The organization has a well defied line of authority. It has clear rules and
regulations which are strictly followed.
According to Max Weber there are three types of power in an organization.
1. Traditional power
2. Charismatic power and
3. Bureaucratic power or legal power
THE CHARACTERISTICS OR FEATURES OF BUREAUCRATIC ORGANIZATION ARE AS
FOLLOWS-:
Max Weber has introduced the principle of bureaucracy which is taken as a most
efficient management principle. This principle stresses upon hierarchy of well defined
line of authority from top level to subordinate level. The following are the principles of
bureaucracy theory of management.
1. Formal rules and procedures:- In every organization, there must be the system and
procedure for the completion of defined work. All the members of the organization from
top to subordinate level have to follow these rules and procedures in every stage of their
activities without breaching them.
2. Functional specialization:- work should be divided among the employees on the basis of
their functional specialization. In other words, the placement of right person to the right
job is the main theme of his principle. For, the division of labour on the basis of skill,
knowledge, efficiency and experience is helpful to develop working efficiency of the
workers. Such division contributes to utilize available resources in effective manner, and
ultimately helps to accomplish a goal on time at minimum cost.
3. Well defined hierarchy of authority:- it emphases scalar of chain of authority from top
level to subordinate level. The well defined hierarchy of authority from highest level to
the lowest level is essential to maintain unity in direction and in work. Thus, this
principle supports for division of labour to develop the feeling of responsibly among the
employees, and to bring uniformity in organization performance.
4. Supervision by a higher authority:- depending upon nature and size, an organization is
divided into different levels of management. The higher level management delegates
authority and responsibility to the subordinate levels essentially to solve the problems
on the spot and complete the work in definite time. Thus, from time to time, higher
level authority has to supervise the subordinates to know about their achievement and
problems.

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5. Technical competence for employment and promotion:- this is one of the important
features of bureaucracy theory. The recruitment, selection, appointment and placement
of employees are considered on the basis of their technical competence. Similarly, for
promotions of the employees, efficiency, knowledge, skill and experience are taken into
consideration, this is also essential to minimize wastage of resources and maintain close
relation among all the workers of the organization. The arbitrary dismissal of employees
must be avoided.
6. All decisions should be recorded:- management takes various types of decision in
different situations. Different acts are passed and actions are taken in various times.
Those acts, actions and decisions should b e recorded in a separate book for future
reference. It is helpful in future for taking valuable decisions.
7. Interpersonal relation:- in organization, interpersonal relation among employees should
be maintained on the basis of rules and regulations. Personal relations not taken into
account. Interpersonal relations are based on positions and not on personalities.

Criticism of bureaucratic organization

• Bureaucratic organization is a very rigid type of organization. It does not give importance to
human relations. it is suitable for government organizations. It is also suitable for organizations
where change is very slow. It is appropriate for static organization.

Bureaucratic organization is criticized because of the following reasons.

• Too much emphasis on rules and regulations. The rules and regulations are rigid and
inflexible.
• No importance is given to informal groups. Nowadays, informal groups play a important
role in all business organizations.
• Bureaucratic involves a lot of paper work. This result in lot of wastage of time, effort and
money.
• There will be unnecessary delay in decision making due to formalities and rules.
• Bureaucratic model may be suitable for government organizations. But it is not suitable
for business organization because business organization believe in quick decision
making and flexibility in procedure.
• Too much importance is given to the technical qualifications of the employee for
promotion and transfers. Dedication and commitment of the employee is not
considered.
• There is limited scope of human resource. HR

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Contribution of Bureaucracy Theory
• The bureaucratic model is useful to manage big and complex organizations like
government, army, global business and international organization.
• Decision making is rational based on clear cut objectives, rules, procedures and
authority.
• Technical competence in employees facilitates specialization and right person in right
job.
• Contemporary: belonging to the same period of time
• Comprehensive: large
• Enumerated: to ascertain the number
• Vigo : mental
• Firmness: not easily moved
• Acquaintance: some one who is known but not close friend
• Parity : equal
• Prevail : common
• Keenest : very strong

Management theory of Chester Barnard

• Chester Irving Barnard (November 7, 1886 – June 7, 1961) was
an American business executive, public administrator, and the author of pioneering
work in management theory and organizational studies. His book in 1938 , The
Functions of the Executive, sets out a theory of organization and of the functions of
executives in organizations. The book has been widely assigned in university courses
in management theory and organizational sociology. Barnard viewed organizations as
systems of cooperation of human activity, and noted that they are typically short-lived.
According to Barnard, organizations are generally not long-lived because they do not
meet the two criteria necessary for survival: effectiveness and efficiency.
• Barnard looked at organizations as systems of cooperation of human activity, and noted
that they are typically short-lived. It is rare for a firm to last more than a century. The
only organization that can claim a substantial age is the Roman Catholic Church.
According to Barnard, organizations are not long-lived because they do not meet the
two criteria necessary for survival: effectiveness and efficiency. Effectiveness is defined
the usual way: as being able to accomplish stated goals. He defined efficiency of an
organization as the degree to which that organization is able to satisfy the motives of

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 the individuals. If an organization satisfies the motives of its members while attaining its
goals, cooperation among its members will last.
Barnard summarized the functions of the executive as follows:
• Establishing and maintaining a system of communication;
• hiring key individuals and securing essential services from other members;
• Formulating organizational purposes and objectives.
Authority and Incentives
• Barnard formulated two interesting theories: one of authority and the other
of incentives. Both are seen in the context of a communication system grounded in
seven essential rules:
• The channels of communication should be definite;
• Everyone should know of the channels of communication;
• Everyone should have access to the formal channels of communication;
• Lines of communication should be as short and as direct as possible;
• Competence of persons serving as communication centers should be adequate;
• The line of communication should not be interrupted when the organization is
functioning;
• Every communication should be authenticated.
• As for incentives, he proposed two ways of convincing subordinates to cooperate:
tangible incentives and persuasion. He gives great importance to persuasion, much
more than to economic incentives. He described four general and four specific
incentives.
• Persuasion is an umbrella term of influence. Persuasion can attempt to influence a
person's beliefs, attitudes, intentions, motivations, or behaviors
The specific incentives were:
• Money and other material

• Personal non-material opportunities for distinction;

• Desirable physical conditions of work;

• Ideal benefactions, such as pride of workmanship etc.

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The general incentives were:
• Associated attractiveness (based upon compatibility with associates)
• Adaptation of working conditions to habitual methods and attitudes
• The opportunity for the feeling of enlarged participation in the course of events
• The condition of communing with others (personal comfort with social relations, )

Contingency Theory
• This theory is also called situational or practical approach to management. It is a
relatively new thinking among management scholars and related to system approach.
• According to this approach, the best way to lead, plan, organize and conduct managerial
activities varies with the situation. A particular method suitable in one organization at a
time may not necessarily be suitable to another organization at other time. Hence, there
are no plans, organization structures, and leadership styles or control technique that will
fit in all situations.
• Significant differences exist between one situation and other. Since every organization is
unique, management decision and structure must be unique. So, the manger must
understand the uniqueness and complexity of each situation. There should be a match
between situation and the manner of dealing.
There are four contingency variables that determine management practice.

1. Organization size: the number of people in an organization is a major influence on what

managers do.
2. Routine of task technology: organizations apply technology to transform inputs into
outputs. Routine technologies require organizational structures, leadership styles and
control systems that differ from those required by non routine technologies.
3. Environmental uncertainty: the degree of uncertainty caused by political, technological,
socio cultural and economic change influences the management process. The best style
in a stable environment may be totally inappropriate in a rapidly changing and
unpredictable environment.
4. Individual differences: individuals differ in terms of their desire for growth, autonomy,
and tolerance of ambiguity and expectation. These and other individuals' difference are
particularly important when manager's select motivation techniques, leadership styles
and job design.
Hence, management cannot have readymade universally applicable and acceptable principles to
be applied to all situations as everlasting truth. Management needs to recognize the nature of
technology, the variations in human participants, and the wide diversity in environmental

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relationship. All managerial actions will depend upon particular prevailing circumstances and
managerial situational factors.

This approach rejects the universalistic nature of management principles. However, it may be
stated that the contingency viewpoint is more than a mere matter of common sense. It
requires managers to have a thorough understanding of the situation and the ways of tackling
situations. Based on the above explanation, the following features can be identified.

Organizations are open systems and interact regularly with the environment.

It is an integrative approach in a sense that it attempts to integrate in finding other

managerial perspectives.

It is applicable in intellectual dealings in which habits and customs cannot be taken for
granted.

It requires knowledge of various sets of situations and tools to work best.

It is based on practical research and has developed its tools on real findings in varied
situations.

Contributions of contingency theory

• Managers get help in innovating new and better approaches to meet complex situation.

• It gives them the capability to think in analytical, critical and multidimensional ways.

• Managers are given more freedom

• Managers become more sensitive and alert.

Limitations of contingency theory

• It ignores the universally applicable principles

• It fails to enlist all contingency variables.

• It focuses on mere situation but which tools should be used in what situation is not specified.

• It ignores human behavior aspects.

Neoclassical Theories of Management

• The neoclassical theory was an attempt at incorporating the behavioral sciences into
management thought in order to solve the problems caused by classical theory practices
• Rather than focus on production, structures, or technology, the neoclassical theory was
concerned with the employee. Neoclassical theorists concentrated on answering
questions related to the best way to motivate, structure, and support employees within
the organization.

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• Studies during this time, including the popular Hawthorne Studies, revealed that social
factors, such as employee relationships, were an important factor for managers to
consider. It was believed that any manager who failed to account for the social needs of
his or her employees could expect to deal with resistance and lower performance.
• It deals with the human side of organization. It focuses on people. It emphasizes social
context of the workplace and manager employee interactions. It stresses people aspect
of management. Group dynamics, participative management, communication,
personality, motivation and leadership are important aspect of neo classical theory. It
focuses on employee satisfaction and human capabilities.
Two Movements In The Neoclassical Theory
• Human relations theory

• Behavior science theory

Human relations theory

The term human relation is generally used to describe the ways in which managers interact
with their subordinates. Earlier, human beings were not considered as an important factor
for organizations. But during the great depression in the 1920s and 1930s, the importance
of people in organization was realized. Since then, the human relation movement was
concentrated on the effort of theorists and practitioners to make managers more sensitive
to employees' needs and attitudes. In this approach, workers should not be treated as only
factors of production but should be considered as human being.
Hawthorne studies(Elton Mayo)
• Workers attitudes, feelings and needs are extremely important on the job the famous
Hawthrone studies undertaken by Elton Mayo and his colleagues laid the foundation for
human dimension in organizations. Mayo was a professor at the Harvard Business
School. He conducted a series of experiments in 1924 to 1932 at the Howthrone plant of
Western Electric Company in Chicago. The study was conducted in four phases, which
can be summarized as follows.
Illumination experiment:
• This experiment was started in 1924 in the Hawthrone Plant and continued for three
years. The study was primarily conducted to measure the effects of lighting on the
productivity of the workers in different departments of the organization, illumination
was manipulated for one group of workers and held constant for another group but in
both, the conditions productivity increased. From the experiment it was observed that
improved productivity could be gained not only by improved working conditions but
also by promoting social relationships among workers as group members.

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Relay assembly test room experiment:
• in this experiment two groups of six female telephone relay assemblers were put in
separate rooms. In the process, frequent changes were made in their working condition
such as hours of work, hot lunches, rest periods, wage incentive, nature of supervision
etc in one where no change was made in the other room. In spite of the frequent
changes being made in working conditions over a period of several years, productivity
tended to increase, even though it rose and fell irrationally.
• Even when the improvements in physical working conditions were withdrawn, the
productivity and morale of the group stayed remained. Hence, the researchers
conducted that social psychological factors such as feeling of importance, recognition,
participation and non directive supervision are the key for high worker productivity. And
the high moral appeared to be responsible for increasing productivity.
Mass interviewing program
under this phase a group of 20000 workers were interviewed to know the information on
their perceptions on the working life. The focus on this interviewing program was on human
relations rather than on physical working conditions. After completing interviews, it was
confirmed that the importance of informal relations, social and psychological needs
influence the workers behavior and their productivity.
Bank wiring observation room experiment
under this experiment, 14 male workers were formed into a small work group and
intensively observed for seven months in the bank wiring room. The men were engaged in
the assembly of terminal banks for the use of telephone exchange. The purpose of the
research was to make a more detailed analysis of the social relations in a work group.
From the experiment, the researchers concluded that employees would labour hard if they
believe that the management was concerned about their welfare and supervisors paid
special attention and care to them. In it the workers were guided more by group production
norms than by official production norms. Finally, the productivity of employees can be
improved by social factors such as moral and satisfactory relationships between
management and workers.
Hawthorne studies found that,
• Fellowship and self-respect influence worker behavior. This is called Hawthorne effect.
• Productivity is not only a technical but also a social phenomenon. Workers attitudes
govern productivity. Workers are motivated by social needs. They respond to pressures
of informal work groups. Money is not the only motivator.

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• Group influences significantly influence individual behavior. Group standards, group
sentiments and security affect workers output. Workers respond to pressures of
informal work groups. Workers are social man. Management of group behavior is
important.
• Team work improves efficiency.
• Human element is important in management. People are different than machines.
Summary of Mayo's Beliefs
• Individual workers cannot be treated in isolation, but must be seen as members of a
group.
• Monetary incentives and good working conditions are less important to the individual
than the need to belong to a group.
• Informal or unofficial groups formed at work have a strong influence on the behavior of
those workers in a group.
• Managers must be aware of 'social needs'.
• Mayo's simple instructions to industrial interviewers.

Contribution of human relations theories

• These theories shifted the focus of management to the human side of organization. The
rational man of scientific management became social man. Interpersonal processes got
emphasized.
• These theories stated that social setting and groups were important for productivity.
Worker responds to pressures of informal work groups. Social context of workplace is
important.
• These theories emphasized employee satisfaction as a key determinant of performance.
Limitation of human relations theories
• These theories gave overemphasis on human variable. They undermined task and
structure to keep employee happy. They restricted the scope of management.
• Financial rewards were ignored for symbolic rewards which may be always effective.
• Informal groups do not make the task pleasant. They only make a workers day pleasant.
These theories emphasized informal groups.

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Behavior science theory
• Behavior science theories apply the concepts of psychology, sociology and anthropology
to management. They deal with interpersonal relations and behavioral patterns of
employees they focus on employee behavior in organizational context. Behavioral
science theories consists of
• Theory of human needs(Abraham Maslow )

• Theory X and Theory Y (Douglas Mc Gregoer. )

Theory of human needs ((Abraham Maslow)

• In 1943, Abraham Maslow, a human psychologist, invented a theory of human needs.
This theory has widely influenced modern understanding of motivation. Maslow
believes that motivation is a matter of satisfying human needs. This theory is well
known theory of motivation.
• According to Maslow human needs can be classified into five categories. Maslow
further says that man is a wanting being, satisfied needs do not motive and needs have
a hierarchy. Five types of human needs are classified in the following way.
. Five types of human needs are classified in the following way.

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1. Physiological needs.
They include basic survival needs for food, water, clothing, shelter, sex etc. They are the
lowest order needs. They are bodily requirements.
In organizations, salary and work environment satisfies physiological needs.
2. Safety needs

They are the protection from physical and emotional harm.

In organizations, provident fund, pension plan, and health insurance satisfy safety
needs.
3. Social needs

They consist of needs for affection, friendship, social activities and support from others.
In organizations, informal groups, friends at work, employee clubs satisfy social needs
4. Ego needs

These needs include the needs for status, self respect, attention, and recognition from
others.
In organizations, position, title, luxury cars, satisfy such needs. A boss in Nepal expects,
Namaste, from subordinates.
5. Self actualization needs.
They consist of needs for achievements, growth, self development, creativity, talent
utilization etc. These needs can never be fully satisfied.
In organizations, challenging jobs and participative decision making satisfy needs. Teacher need to
write top text books, students need to top their class.

• Human beings seek satisfaction of these needs in order of importance. The first step is
physiological needs. Once this need is relatively satisfied, human beings move up the
hierarchy to satisfy their higher level needs. This works like the process of climbing up a
ladder.

• Maslow separated the five needs in two categories ie higher and lower order needs.
Physiological and safety needs were described, as a lower order needs. Social, ego and self
actualization as higher order needs. The higher order needs do not become importance until
the lower level needs have been satisfied. For example, the social needs do not become
important until the safety needs have been satisfied.

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Theory X and Theory Y
• Theory X and Theory Y are theories of human motivation created and developed
by Douglas McGregor in the 1960s that have been used in human resource management.

Theory X
• In this theory management assumes employees are automatically lazy and will avoid
work if they can and they instantly dislike work. As a result of this, management believes
that workers need to be closely supervised. According to this theory, employees will
show little ambition without attracting incentive program and will avoid responsibility
whenever they can
• . A theory X manager believes that his or her employees do not really want to work, that they
would rather avoid responsibility and that it the manager’s job is to structure the work and
energize the employees. A systematic control system is developed to control and supervise
the activities of the entire staff of the organization.

The assumptions of X theory are:

– Employees are lazy. They dislike work and tend to avoid it.

– Employees need to be controlled and threatened to get the job done.

– Employees avoid responsibility. They seek formal direction by superiors.

– Employees seek security above all. They display little ambition and initiative.

– Most employees have little capacity for creativity in solving organizational problems.

It is pessimistic, static, rigid and control oriented. It presents negative view of people.
Managers need to influence, reward, punish, control and direct employees.

Theory Y
• In this theory, management assumes employees are self-motivated and exercise self-control.
It is believed that employees enjoy their mental and physical work duties. According to them
work is as natural as play.

• theory Y managers believe that employees will learn to seek out and accept responsibility and
to exercise self-control and self-direction in accomplishing objectives to which they are
committed. A Theory Y manager believes that, given the right conditions, most people will
want to do well at work. They believe that the satisfaction of doing a good job is a strong
motivation.

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The assumptions of Y theory are-:

• Employees view work as a natural activity like play or rest.

• Employees exercise self directing and self control when committed to objectives. Self direction
is better than external control

• The average employee can learn to accept and seek responsibility. Employees want to learn
new thing for self development.

• Creativity is not the monopoly of managers. Employees also have capacity for creativity in
solving problems. Human being have unlimited potential.

• Greater freedom in doing work and challenging work provides long lasting incentives.

• The theory y is optimistic, dynamic and flexible. It emphasizes self control and direction. It
aims at integration of employees goals with organizational goals. It presents a positive view of
people.

• Theory X assumptions do not secure peoples commitment to work. Management should

adopt theory y assumptions to get peoples commitment to work.

Contributions of behavioral science theories

• These theories emphasize understanding of human behavior at work. They provide
insights into motivation, group dynamics and interpersonal processes.
• These theories gave importance to non financial rewards such as recognition and
appreciation for worker productivity. People were key resources for productivity
improvements.
• These theories advocated that needs influence behavior. Unfulfilled needs influence
productivity in organization.
• Theory y assumption is important to get people commitment

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Theory X and Theory Y in table

Limitations of behavioral science theories

• The findings of these theories need further investigation.

• No consideration was given to situational factors in behavioral theories. Human behavior is

complex and cannot be predicted. This limits the practical application of these theories.

• These theories take a partial view of organization. They lack systems perspective.

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