Big Picture in Focus: ULOb.

Describe the nature and concept of

management

Metalanguage
For you to demonstrate ULOb, you will need to have an operational understanding
of the following terms below. Please note that you will also be required to refer to
the previous definitions found in ULOa section.
1. Management.It is a distinct process of planning, organizing, staffing,
directing, and controlling (POSDICON), performed to determine and
accomplish stated objectives by the use of human being and other business
resources.

Essential Knowledge
1. SIGNIFICANCE OF STUDYING MANAGEMENT
The study of management provides future business leaders with a sound
working knowledge of policies, procedures and practices that govern business and
social operations and, in turn, allows them to understand and control organizational
growth. Management study includes an exploration of policies and practices as they
relate to corporate growth. Academic studies of management also explore business
development and introduce students to theories of leadership and management.
Our study of management begins with presenting the basic principles and
concepts which give a common reference outline within which management is
normally applied.
Substance is placed on the meaning of management, its historical'
development in the country, the influence of the manager's philosophy and values,
and the effect of both internal and external factors. Accepted current management
trends and practices are taken up and the importance of accomplishments in modem
management is clearly explained.
Management is the most important subject in business because it deals with
people, establishing and achieving objectives. It is consequently used in almost every
human activity. Management exists to some degree in the factory, office, school,
bank,store, labor union, hotel, church, armed forces, hospital, or home.

2. FUNCTIONS OF MANAGEMENT
Planning
Planning refers to the formulation of objectives, programs, policies,
procedures, rules and regulations, in order to achieve the goals of the business.
Planning is related to decision-making. It involves selecting the best course of action
that a business or other enterprises and every department will follow. There are
various types of plans, ranging from the company purpose and objective to the most
detailed individual action plan, e.g., when ordering special spare parts for a certain
product, or hiring and training workers needed for production, the first thing to do is
to plan a study, an analysis, or a proposal, but not a real plan. Planning involves
forecasting, that is, making decisions in advance. Planning is used to further
accomplish the objectives today and its relationship in the future. Although a future
business condition can seldom be predicted with accuracy, unforeseen events may
disrupt the best-laid plans. Furthermore, planning is thinking before doing.

Figure 4. The Management Function

Organizing

Organizing is the grouping together of people, establishing relationship among

them, and defining the authority and responsibility that the personnel have in the use
of the company's material resources to attain predetermined goals and objectives. It
is the process of bringing together physical, financial and human resources and
developing productive relationship among them for achievement of organizational
goals. According to Henry Fayol, “To organize a business is to provide it with
everything useful or its functioning i.e. raw material, tools, capital and personnel’s”. To
organize a business involves determining & providing human and non-human
resources to the organizational structure. Organizing as a process involves:

1. Identification of activities.
 2. Classification of grouping of activities.
3. Assignment of duties.
4. Delegation of authority and creation of responsibility.
5. Coordinating authority and responsibility relationships.

Staffing
It is the function of manning the organization structure and keeping it manned.
Staffing has assumed greater importance in the recent years due to advancement of
technology, increase in size of business, complexity of human behavior etc. The main
purpose of staffing is to put right man on right job. According to Kootz&O’Donell,
“Managerial function of staffing involves manning the organization structure through
proper and effective selection, appraisal & development of personnel to fill the roles
designed un the structure”.
Staffing involves:
1. Manpower Planning (estimating man power in terms of searching, choose the
person and giving the right place).
2. Recruitment, Selection & Placement.
3. Training & Development.
4. Remuneration.
5. Performance Appraisal.
6. Promotions & Transfer.

Staffing involves filling and keeping filled the positions provided in the
organization structure. It delineates manpower requirements for the job to be done,
which includes recruiting and selecting candidates for position, compensation, and
training or otherwise developing both candidates and current job holders to accomplish
their tasks effectively.

Directing

It is that part of managerial function which actuates the organizational methods

to work efficiently for achievement of organizational purposes. It is considered life-
spark of the enterprise which sets it in motion the action of people because planning,
organizing and staffing are the mere preparations for doing the work. Direction is that
inert-personnel aspect of management which deals directly with influencing, guiding,
supervising, motivating sub-ordinate for the achievement of organizational goals.
Direction has following elements:
1. Supervision
2. Motivation
3. Leadership
4. Communication
 • Supervision- implies overseeing the work of subordinates by their superiors. It
is the act of watching & directing work & workers.

• Motivation- means inspiring, stimulating or encouraging the sub-ordinates with

zeal to work. Positive, negative, monetary, non-monetary incentives may be
used for this purpose.

• Leadership- may be defined as a process by which manager guides and

influences the work of subordinates in desired direction.

• Communications- is the process of passing information, experience, opinion

etcfrom one person to another. It is a bridge of understanding.

Controlling
Controlling is the process of measuring and correcting the activities of
subordinates and the company itself to assure conformity to plans. Thus, it measures
performance against goals and plans, shows where negative deviations exist, and, by
actions to correct deviations and help assure the success of plans. Although planning
must precede controlling, plans are not self-achieving. The plans guide managers in
the use of resources to accomplish specific goals. Activities are then checked to
determine whether they conform to planned action. Control activities generally relate
to the measurement of achievement. Such control devices as the budget for expense,
inspection records, and the record of labor hours lost are generally familiar. Each has
the characteristics of measuring; each showing whether or not plans are working out.
If abnormal deviations persist, correction is indicated. Compelling events to conform
to plans mean locating the person who is responsible for negative deviations from
planned action and then taking the necessary steps to improve performance.
Controlling implies measurement of accomplishment against the standards and
correction of deviation if any to ensure achievement of organizational goals. The
purpose of controlling is to ensure that everything occurs in conformities with the
standards. An efficient system of control helps to predict deviations before they
actually occur. According to Theo Haimann, “Controlling is the process of checking
whether or not proper progress is being made towards the objectives and goals and
acting if necessary, to correct any deviation”. According to Koontz &O’Donell
“Controlling is the measurement & correction of performance activities of subordinates
in order to make sure that the enterprise objectives and plans desired to obtain them
as being accomplished”.
Therefore controlling has following steps:
1. Establishment of standard performance.
2. Measurement of actual performance.
3. Comparison of actual performance with the standards and finding out deviation
if any.
4. Corrective action.
3. MANAGEMENT AS A SCIENCE AND ART
Management is both art and science. It is an art because it results in the
accomplishment of objectives through the use of human efforts. It requires skill and
careful study in the management of any endeavor.
Management is a science because it is a systematic body of knowledge. It
gathers and analyzes facts and formulates general laws or principles from these facts.
As an art and as a science, therefore, management seeks to integrate into a
unified, coordinated whole the essential factors that make up an organization.
Management is a broad field of knowledge with its own areas of specialization -
personnel, finance, production, sales or marketing, purchasing and procurement,
administration, and advertising.

4. EVOLUTION OF MANAGEMENT THEORIES

You may be wondering how the different organizations exist and grow. Their
existence and growth as well as the modernity can be explained by some theories or
school of thought. But management is very broad in nature that studying is just like
going in the jungle to search for something on it. That’s why several theories came out
but none of these theories is considered acceptable and complete. Each theory has
its limitations and the field of management theory is in the process of evolving.
However, the various thoughts and views discussed can be included in four schools
of thought or theories. They are:
1. The Classical or Traditional School
2. The Human Relations School
3. The Management Science or Quantitative School
4. Modem Management

Classical or Traditional School

Management principles suggested through theories as presented by:
1. Mooney 5. Fayol
2. Reiley 6. Emerson
3. Urwick 7. Taylor
4. Guillick

Principles of management by Henri Fayol

Henri Fayolis a French industrialist who was the first to issue a complete
statement of general management, used until present. Hegraduated as mining
engineer.In1860 he worked as a janitor, and eventually became the executive of a
coal mining and iron foundry company.
14 Principles of Management by Henri Fayol
1. Division of work
This is the assignment of specialized jobs to various departments and/or
positions. It has been shown in many cases that when work is specialized,
people learn the task more easily and perform them more effectively. This is
the specialization which the economists consider necessary to efficiency in the
use of labor. Fayol applies the principle to all kinds of work, managerial or
technical.
2. Authority & responsibility
Henri Fayol finds authority and responsibility to be related and
inseparable. Fie sees authority as the power or the right entrusted to make the
work possible and responsibility as the duty or work assigned to a particular
position.
3. Unity of command
This means that employees should receive orders from one
superior/manager only.
4. Subordinate of individual interest to General Interest
The interest of one employee or group of employees should not prevail
over the interest of the business.
5. Remuneration
Remuneration and method of payment should be fair and afford the
maximum possible satisfaction to employees and employer. It is sometimes
called compensation. This principle is based on "equal pay for equal work."
6. Centralization
Without using the term centralization of authority, Fayol calls it the extent
to which authority is concentrated. It is a system of management wherein major
policies are made only by the top management. This is the opposite of
decentralization.
7. Scalar Chain
Fayol thinks of it as a "chain of superiors" from the highest to the lowest
ranks. This can be properly described by the use of the pyramid of organization
consisting of top management (president, vice-president, etc.); middle
management (department managers, supervisors, chiefs, etc.). (see figure 5)
8. "Esprit de Corps"
 This principle explains that "in union there is strength," as well as an
extension of the principle of unit of command. It emphasizes the need for
teamwork and the importance of communication in obtaining it.

Figure 5. The Organization Pyramid

9. Span of control
It refers to the specific and limited number of subordinates that a
manager can effectively handle and control. It is 48 Management for Filipinos
determined by the optimum level of effective supervision.
10. Simplicity
Unnecessary elements should be eliminated from all activities as well as
from the process and procedures established for carrying them.
11. Unity of direction
One boss and one plan for a group of activities having the same
objective.
12. Order
Ensures a place for everything.
13. Equity
Results from kindness and justice.
Fayolwas able to develop his own principles from his personal experiences and the
practices that he applied inhis own work. He used them as a broad and general
guidelines for effective management. His real contribution was not the 14 principles
themselves, but his formal recognition and synthesis of these principles.

Scientific Management by Frederick Taylor

Frederick Taylor writes the book “Principles of Scientific Management”. His first
job was an apprentice with Enterprise Hydraulic Works. After finishing his
apprenticeship he joined Midvale Steel Company as a common labourer. In just six (6)
short years, he became a chief engineer. There he found out that workers didn’t exert
more efforts in their work. He also found out that the wage control for wage system
was poor and standards are weak.Taylor believed a piece-rate system would work if
the workers believed that the standard had been fairly set and the management would
stick to it rather than to tradition and custom for setting work standards. Taylor's efforts
became the true beginning of scientific management. Taylor relied primarily on the
stopwatch, since he focused on the amount of time required to complete a particular
job. Thus, he is usually called the "father of time study." In his writings, Taylor
presented a balanced view of scientific management. He believed that a "mental
revolution" would have to take place before management and workers could see that
their positions were compatible. He pointed out that as productivity rose, the Nature
and Concept of Management 49 salaries of both managers and employees would also
arise. At the same time, he emphasized that managers must avoid such practices as
rates cutting, because they lead to employee hostility toward management. Taylor
even advocated the concept of units, a worker would be paid a. higher rate per unit for
any additional units he proceeds and the rate per piece would increase after each
succeeding level had been reached.

Taylor's Four Principles of Scientific Management:

1. Develop a science for each element of a man's work, to replace the old rule-of-
thumb method.
2. Scientifically select and then train the worker. (In the past the worker had
chosen his own work and trained himself as best he could).
3. Heartily cooperate with the men to ensure that all the work done is in
accordance with the principles of the science develop for the work.
4. Divide the work and the responsibility equally between management and the
workers. Management should take over from the workmen all work for which it
is better fitted. (In the past almost all of the work and the greater part of the
responsibility had been thrown upon the workers.)

In essence, Taylor's scientific management stresses the need for developing the best
way of performing each job; training and preparing workers to perform that job; and
establishing harmonious cooperation between management and workers so that the
job is performed in the desired way. Taylor's ideas have led to two managerial
practices: piecerate incentive system and time-and-motion study.
Human Relation School
This emphasizes what was ignored by the classical
theory. Classical approach doesn’t account for individual needs
of employees, non-financial reward and social interaction. In
short it ignored the human element. This school of thought
founded by George Elton Mayo together with his associates
from Harvard University. They conducted the Hawton Studies
from 1924 to 1932 at the Hawton Plant of Western Electric
Company in United States. The primary objective of Hawton
studies is to figure out the determinant factors that influence
productivity and work performance of workers. And then, they
found out that employees are not motivated merely by money, but
other factors such as the social network in which every individual can interact with others in “a fun
working” environment

“Supervisor-employee human relations” influence the quality of employees’

productivity. The effective and supportive supervisors can bring about the workers’
satisfaction and also their better performance.
Finally, it is undeniable that informal work groups make a significant effect on every
employee’s attitude and the development of the organization. Therefore, to create “a win-
win situation” for both the managers and workers, the former need to make the latter have
fun because “a happy worker is a productive worker”
Human relation was pioneered by Elton Mayo and his two colleague researchers
F.J Roethlisberger and William J. Dickson. According to these scientists, inter-
relationships among members in the organization are the role of the manager with the
intention to successfully accomplish the organization’s objectives. Thus, they believed
that fulfillment of psychological needs will be the prime necessity of the management. The
purpose of the human relations movement was not to replace the classical school but to
reorient it’s thinking, from financial to human factor. This approach underlines on
teamwork and interactive communication between supervisors and employees. What was
the expected outcome was a conflict-free inter-relationships as possible among members
of the organizationanticipated the manager to be a leader and supervisor of a rather
democratic and participative style where managers empathize their subordinates’ feelings
and behaviors.
In human relation school of thought, Mayo concluded that workers are best
motivated by better communication between managers and workers, greater manager
involvement in employees working lives, and working in groups or teams.The school also
let people understand more clearly that the workplace is not just a place to earn money,
but a complex social system which affects their satisfaction and productivity. Employees
now recognize that they have a right to be treated well and they deserve to have it.
Therefore, businesses will reach high levels of success if they take Google as a model to
learn about human relationships, which give support and productivity in the workplace.
Some critics stated that the human relations school as just a more indirect and
covert attempt at manipulation and exploitation. Worker's legitimate economic interests
were being subverted and emphasized, conflict was denied and "managed", and the new
manager roles were just another form of elitism. Furthermore, business organization are
not social welfare organization and to survive in a highly competitive environment, they
have to consider many other factors besides human factor.

Management Science or Quantitative School of Thought

This school of thought stresses the use of quantitative techniques and methods in
decision making.It advocates a logical sequence of problem formulation, gathering
information and data, constructing mathematical models, exploring tentative solutions,
testing the suggested solutions, and executing them.
Quantitative tools commonly used:
a. Waiting line theory or Queueing theory
b. Linear Programming
c. Program Evaluation Review Technique(PERT)
d. Critical Path Method(CPM)
e. Monte Carlo Method
f. Decision Theory
g. Simulation Theory
h. Probability Theory

Queueing Theory
It is the mathematical study of waiting lines, or queues.Queueing model is constructed so
that queue lengths and waiting time can be predicted.Generally considered branch of
operations research because the results are often used when making decisions about the
resources needed to provide a service.

Linear Programming
It is a method to achieve the best outcome in a mathematical model whose
requirements are presented by linear relationships.A special case of mathematical
programming(also known as Mathematical Optimization).

Program Evaluation Review Technique (PERT)

It offers a management tool which relies on narrow and node diagrams of activities
and events.
Critical Path Method (CPM)
It is an algorithm for scheduling a set of project activities.
Decision Theory
Some theorists attempted to describe the decision-making process, drawing
knowledge and skills heavily from economics and psychology.

Modern Management
There is no such theory as the modern management
theory since there is no one theory accepted by all theorists in the
field. It has taken different directions and it is still in the process of
evolving. The contributors to modern management theory come
from the behavioral sciences, operations research, management
science, and contingency or situational theory. No compromise has
been reached among these contributions as to what constitutes the
complete modern management theory.
Harold Koontz Harold Koontz contends that the development of modem
management theory has led to a kind of destructive jungle warfare and the management
theory looks like a jungle. Let us briefly look at some significant views taken by theorists
in developing the modern management theory and finally, examine the attempt made by
Scott to integrate all these views and theories into one theory.

Modern Management Can Be Classified Into Three Different Levels

The term ‘levels of management refers to a line of separation between different
positions held by different persons in an organization.
Level of management depends upon the nature, size and functions of an
organization. Levels of management also expand with the expansion of organization.
There is a limit to the number of subordinates a person can supervise. Levels of
management are increased so as to achieve effective supervision. The levels of
management of an organization may be broadly be divided in to three parts namely, top
management, middle management and lower level or first line management.

1. Top Level Management

Top level management of a company consists of the board of directors and the
chief executive or the managing director. Top management is the ultimate source of
authority and it establishes goals and policies for the enterprise. It devotes more time for
planning and co-ordination functions.
The role of top management will be further clear by studying its functions or activities:
1. It lays down the objectives of the enterprise.
2. It prepares strategic plans and policies for the enterprise.
3. Develops and reviews long range plans and strategies.
4. It controls the activities of all departments with the help of reports, memoranda etc.
It also involves in the selection of key personnel
5. It builds and maintains relations with the outside public.
6. Evaluates overall performance of various departments and ensures cooperation.
2. Middle Management
Middle level management generally consists of heads of functional departments
they are responsible to the top management for the functioning of their departments.
They devote more time to the organization and direction function of management.
The role played by the middle level executives is stated below:
1. They execute the plans of the organization in accordance with policies and
directives of the top management.
2. They make plans for the sub-units of the organization.
3. They participate in the employment and training of the lower-level management.
4. They attempt to achieve coordination between different departments.
5. Establishes departmental policies.
6. They evaluate the performance of junior managers.
7. They send the progress reports and other important data to the top management.
8. Selects and recruits personnel.
3. Lower Level Management or Supervisory Level
Lower level management is also known as supervisory management because it is
directly concerned with the control of performance of the operative employees. This level
includes supervisors, foremen, accounts officers, sales officers, and so on. They devote
more time on the supervision of workers.
The important functions of a supervisor or lowerlevel executive are listed below:
1. To plan and organize the activities of the group.
 2. To arrange for necessary materials, machines, tools etc. for the workers and to
provide them necessary working environment.
3. To provide training to the workers.
4. To supervise and guide subordinates.
5. To solve problems of workers.
6. To communicate workers problems to the higher level management.
7. To maintain good human relations in the organization.
8. To send periodical reports about performance.
9. Makes specific task assignments.
10. Maintains close contact with operative employees.

Major Components and Related Major Events of Management Movements

• U.S. Industrial Revolution(prior to 1875)
• Captains of Industry (1875-1920)
• Scientific Management era (1895-1920)
• Period of solidification (1920 to early 1930s)
• Human relations movement (1931 to late 1940s)
• Management process period (early 1950s to early 1960s)
• Management theory jungle (early to late 1960s)
• Systems approach (late 1960s to early 1970s)
• Contingency approach (1970s)
• International movement (1970s-1990s)