UNIT-1 PRINCIPLE OF MANAGEMENT

MEANING OF MANAGEMENT
1. “Management is the art of “knowing what you want to do” and then seeing that it is done in the
best and cheapest way. F. W. Taylor

2. Management as a process “consisting of planning, organizing, actuating and controlling,

performed to determine and accomplish the objective by the use of people and resources.”
George R. Terry

3. "To manage is to forecast and plan, to organise, to command, to co-ordinate and to control."
Henry Fayol

4. "Management is the art of getting things done through and with the people in formally organised
groups." Horold Kanontz

5. "Management is simply the process of decision making and control over the action of human
beings for the express purpose of attaining pre-determined goals."
- Stanley Vance

CONCEPT OF MANAGEMENT
Resources are very limited in supply. All resources are to be managed by human. However, human
have unlimited wants. Therefore, there are limited resources and unlimited wants and desire.
Complete satisfaction is very necessary for better functioning of every aspect of the society.
Therefore, for complete satisfaction in life resources are to be managed properly in such a way that
human achieve complete utility and benefit simultaneously. Thus, to manage all resources available
in such a way that it gives complete satisfaction to human beings is the theoretical meaning of
management.

• People learn business management automatically even before knowing what ‘Management’
is- Peter Drucker
• To many people management is synonymous with business management
• But business management is only a part of management
• Management is an important element in every organization. It is the element that coordinates
currents organizational activities and plans for the future.
5 BASIC CONCEPT OF MANAGEMENT
1. Functional concept
Management basically is the task of planning, coordinating, motivating and controlling the efforts
of other towards the goals and objectives of the organization. According to this concept,
management is what a manager does (planning, executing, and controlling)
2. Human relation concept
According to this concept, Management is the art o getting things done through and with people
in organized groups. It is the art of creating an environment in which people can perform and
individuals could cooperate towards attaining of group goals. It is an art of removing blanks to such
performance a way of optimizing efficiency in reaching goals.
3. Leadership and decision making concept
According to this concept, management is the art and science of preparing, organizing, directing
human efforts applied to control the forces and utilize the materials of nature for the benefits to man.
4. Productive concept

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 UNIT-1 PRINCIPLE OF MANAGEMENT

According to this concept, management may be defined as the art of securing maximum
prosperity with a minimum effort so as to secure maximum prosperity and happiness for both
employer n employee and provide best services thereby.
3. Integration concept
• According to this concept, management is the coordination of human and material resources
towards the achievement of organizational objectives as well as the organization of the
productive functions essential for achieving stated or accepted economic goal.
• These above definition of management, given by different writers and authorities, are found
giving different senses. Virtually, the five concepts are found developed by the authorities
emphasizing in different aspects. However, it has been realized by many that it will not be fair
to define management based upon any one aspect. Management can be taken as process-
managerial process or social process either engage in planning, organizing, staffing, directing
and controlling or mobilizing the group activities to achieve the corporate goals.

To overcome the limitations of the above concepts, Theo Haimann, the leading management expert
has explained three basic concepts of management as under:

. Management as a process:-
Management is a process. It includes the process of planning, controlling, coordinating, motivating,
and staffing. These processes are the series of interrelated sequential functions. Processes refer to
accomplish these mentioned activities. Management is the efforts of organizational members to
accomplish the organizer’s objectives. This concept is very simple because
i. It is very simple and very easy to understand
ii. It indicates functions of management as a process
iii. It recognizes management as a universal process
b. Management as a discipline
the term management is used as a subject of instructions. It is a specific branch of knowledge which
is studied in campuses and schools like economics, sociology, mathematics, political science etc.
the scholars of management have found that the information and management are used in practical
life for better functioning. The scope of managenent is being increased day to day as a discipline

c. Management as a noun:
The word management itself refers as a noun. There are many kinds of employees in an
organization . some people are involved in managerial function and some are involved in operating
functions. The individuals who manage the organization and departments are managers. As a noun,
the term management is used as single name of managers, board of directors, managing directors,
departmental managers etc are included in management.

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Thus, theo haiman the leading management expert expiained the meaning and concept of
management.

Nature and Characteristics of Management

The salient features which highlight the nature of management are as
follows:
(i) Management is goal-oriented: Management is not an end in itself. It is a means to
achieve certain goals. Management has no justification to exist without goals.
Management goals are called group goals or organisational goals. The basic goal of
management is to ensure efficiency and economy in the utilisation of human, physical
and financial resources. The success of management is measured by the extent to which
the established goals one achieved. Thus, management is purposeful.
(ii) Management is universal: Management is an essential element of every organised
activity irrespective of the size or type of activity. Wherever two or more persons are
engaged in working for a common goal, management is necessary. All types of
organisations, e.g., family, club, university, government, army, cricket team or business,
require management. Thus, management is a pervasive activity. The fundamental
principles of management are applicable in all areas of organised effort. Managers at all
levels perform the same basic functions.
(iii) Management is an Integrative Force: The essence of management lies in the
coordination of individual efforts in to a team. Man- agement reconciles the individual
goals with organizational goals. As unifying force, management creates a whole that is
more than the sum of individual parts. It integrates human and other resources.
(iv) Management is a Social Process: Management is done by people, through people and
for people. It is a social process because it is concerned with interpersonal relations.
Human factor is the most important element in management. According to Appley, “Man-
agement is the development of people not the direction of things. A good manager is a
leader not a boss. It is the pervasiveness of human element which gives management its
special character as a social process”.
(v) Management is multidisciplinary: Management has to deal with human behaviour
under dynamic conditions. Therefore, it depends upon wide knowledge derived from
several disciplines like engineering, sociology, psychology, economics, anthropology, etc.
The vast body of knowledge in management draws heavily upon other fields of study.
(vi) Management is a continuous Process: Management is a dynamicand an on-going
process. The cycle of management continues to operate so long as there is organised
action for the achievement of group goals.
(vii) Management is Intangible: Management is an unseen or invisible force. It cannot be
seen but its presence can be felt everywhere in the form of results. However, the
managers who perform the functions of management are very much tangible and visible.
(viii) Management is an Art as well as Science: It contains a systematic body of theoretical
knowledge and it also involves the practical application of such knowledge. Management
is also a discipline involving specialised training and an ethical code arising out of its
social obligations.
On the basis of these characteristics, management may be defined as a continuous social process
involving the coordination of human and material resources in order to accomplish desired
objectives. It involves both the determination and the accomplishment of organisa-
tional goals.

EVOLUTION OF MANAGEMENT THOUGHT

• The need to study management arose with the industrial revolution in Europe (more
specifically, England).
• The industrial revolution and the systematic study of management are the result of a
remarkable confluence of ideas and events.
• Management and organizations are products of their historical and social times and places.
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Evolution of Management Thoughts

Management is studied in business academics since earlier times and it is considered as an integral
part to understand business operations. People have been changing and redesigning organizations
for centuries. Though the 20th century is noticeable in history as an 'Era of scientific management',
still it does not indicate that management tactics were not used in yester years. Many studies
indicated that Management theory evolved with "scientific" and "bureaucratic" management that
used measurement, procedures and routines as the basis for operations. Firms developed
hierarchies to apply standardized rules to the place of work and penalized labour for violating rules.
With the "human relations" movement, companies emphasized individual workers. Modern
management theories, including system theory, contingency theory and chaos theory, focus on the
whole organization, with employees as a key part of the system.
The evaluation of management can be categorized in to different parts:
 Pre-Scientific Management Era (before 1880),
 Classical management Era (1880-1930),
 Neo-classical Management Era (1930-1950),
 Modern Management era (1950-on word).
Classical Management includes Scientific Management School, Administration Management School,
and Bureaucracy Management.
Neo- classical Management includes Human relation school and Behavioural Management School.
Modern Management includes Social system school, Decision theory school, Quantitative
Management School, System Management School, and Contingency Management School.

Early Management Thought

Earlier period emphasizes the industrial revolution and the factory system highlights the industrial
revolution and the importance of direction as a managerial purpose. Thus, the development of
management theory can be recognized as the way people have struggled with relationships at
particular times in olden periods.

The Classical Approach

The classical approach is the earliest thought of management .The classical approach was
associated with the ways to manage work and organizations more efficiently. The classical approach
are categorized into three groups namely, scientific management, administrative management, and
bureaucratic management.
I. Scientific Management: Scientific management which is also referred to Taylorism or the Taylor
system is a theory of management that evaluates and synthesizes workflows, with the aim of
improving labour productivity. In other words, conventional rules of thumb are substituted by
accurate procedures developed after careful study of an individual at work. Universal approaches of
Scientific management are developed for Efficiency of workers, Standardization of job roles/activities
and Discipline - the role of managers and the business hierarchy. The scientific management theory
had an enormous impact on the business industry at the beginning of the 20th century. Many big and
victorious organizations, such as McDonalds hamburger chain or call centres, utilised a modern
version of scientific management. Among famous theorist, Taylor's contribution in the area of
scientific management is invaluable. The components of scientific management are determination of
the task, planning, proper selection and training of workers improvement in methods, modification of
organization and mental revolution such as 'job specialization'. As a result, it became more
concerned with physical things than towards the people even though increased the output. Scientific
Management focuses on worker and machine relationships. Organizational productivity can be
increased by enhancing the competence of production processes. The competence viewpoint is
concerned with creating job that economizes on time, human energy, and other productive
resources. Jobs are planned so that each worker has a specified, well controlled task that can be
performed as instructed. Principle of scientific management are replacement of old rule of thumb
method, scientific selecting and training, labour management co-operation, maximizes output, equal
division of responsibility. There are four scientific management systems such as develop a science
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for each element of the job to replace old rule of thumb method, Scientifically select employees and
then train them to do the job as described in step, supervise employees to make sure they follow the
prescribed method for performing their job and continue to plan the work but use worker to actually
get the work done.
Taylor's Scientific Management: Academic records indicated that F.W. Taylor and his colleagues
developed the first systematic study in management. He initiated an innovative movement in 1910
which is identified as scientific management. Frederick Taylor is known as the father of Scientific
Management and he published Principals of Scientific Management in which he proposed work
methods designed to boost worker productivity. Taylor asserted that to succeed in these principles, it
is necessary to transform completely the part of management and labour. His philosophy was based
on some basic principles. The first principle is separation of planning and doing. In the pre-Taylor
era, an employee himself used to choose or plan how he had to do his work and what machines and
equipment would be necessary to perform the work. But Taylor divided the two functions of planning
and doing, he stressed that planning should be delegated to specialists. Second principle of Taylor's
management approach is functional foremanship. Taylor launched functional foremanship for
administration and direction. Under eight-boss-scheme of functional foremanship, four persons like
route clerk, instruction card clerk, time and cost clerk and disciplinarian are associated with planning
function, and the remaining four speed boss, inspector, maintenance foreman, and gang boss are
concerned with operating function. Third principle is elements of scientific management. The main
constituents of scientific management are work study involving work important and work
measurement using method and time study, standardization of tools and equipment for workmen
and improving working conditions, scientific Selection, placement and training of workers by a
centralized personal department. Fourth principle is bilateral mental revolution. Scientific
management involves a complete mental change of employees towards their work, toward their
fellow-men and toward their employers. Mental revolution is also necessary on the part of
management's side, the foreman, the superintendent, the owners and board of directions. Fifth
principle is financial incentives. In order to encourage workers to give better performance, Taylor
introduced differential piece-rate system. According to Taylor, the wage should be based on
individual performance and on the position which a worker occupies. Economy is other principle of
management devised by Taylor. According to him, maximum output is achieved through division of
labour and specialization. Scientific Management concentrates on technical aspects as well as on
profit and economy. For this purpose, techniques of cost estimates and control should be adopted.
Taylor concluded that science, not rule of thumb, Harmony, not discord, Cooperation and not
individualism, Maximum output, in place of restricted output.
(ii) Administrative Management: Administrative Management emphasizes the manager and the
functions of management. The main objective of Administrative management is to describe the
management process and philosophy of management. In contradiction of scientific management,
which deals mainly with jobs and work at individual level of scrutiny, administrative management
gives a more universal theory of management.
Henry Fayol's Administrative Management (1841–1925): Henri fayol is known as the father of
modern Management. He was popular industrialist and victorious manager. Fayol considered that
good management practice falls into certain patterns that can be recognized and analysed. From this
basic perspective, he devised a blueprint for a consistent policy of managers one that retains much
of its force to this day. Fayol provided a broad analytical framework of the process of management.
He used the word Administration for Management. Foyal categorized activities of business
enterprise into six groups such as Technical, Financial, Accounting, Security, and Administrative or
Managerial. He stressed constantly that these managerial functions are the same at every level of an
organization and is common to all firms. He wrote General and Industrial Management. His five
function of managers were plan, organize, command, co-ordinate, and control. Principal of
administrative management: 1.Division of labour, 2.Authority & responsibility, 3.Discipline, 4.Unity of
command, 5.Unity of direction, 6.Subordination of individual interests to general interest,
7.Remuneration of personnel, 8.Centralization, 9.Scalar chain, 10.Order, 11.Equity, 12.Stability of
tenure, 13.Initiative and14 .Esprit de corps (union of strength). These 14 principles of management
serve as general guidelines to the management process and management practice. His principles of
management are described below.
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1. Division of work: This is the principle of specialization which is detailed by economists as an

important to efficiency in the utilization of labour. Fayol goes beyond shop labour to apply the
principle to all kinds of work, managerial as well as technical.
2. Authority and responsibility: In this principle, Fayol discovers authority and responsibility to be
linked with the letter, the consequence of the former and arising from the latter.
3. Discipline: This discipline denotes "respect for agreements which are directed at achieving
obedience, application, energy and the outward marks of respect". Fayol declares that
discipline requires good superiors at all levels, clear and fair agreement, and judicious
application of penalties.
4. Unity of command: This is the principle that an employee should receive orders from one
superior only.
5. Unity of direction: Fayol asserted that unity of direction is the principle that each group of
activities having the same objective must have one head and one plan. As distinguished from
the principle of unity of command, Fayol observes unity of direction as related to the
functioning of personnel.
6. Subordination of individual interest to general interest: In any group the interest of the group
should supersede that of the individual. When these are found to differ, it is the function of
management to reconcile them.
7. Remuneration of personnel: Fayol recognizes that salary and methods of payment should be
fair and give the utmost satisfaction to worker and boss.
8. Centralization: Fayol principle of centralization refers to the extent to which authority is
concentrated or dispersed in an enterprise. Individual circumstances will determine the
degree of centralization that will give the best overall yield.
9. Scalar chair: Fayol believe of the scalar chair as a line of authority, a 'Chain of Superiors"
from the highest to the lowest ranks and held that, while it is an error of subordinate to depart
'needlessly' from lines of authority, the chain should be short-circuited when scrupulous
following of it would be detrimental.
10. Order: Breaking this principle into 'Material order' and 'Social Order', Fayol thinks of it as the
simple edge of "a place for everything (everyone), and everything (everyone) in its (his)
place". This is basically a principle of organization in the arrangement of things and persons.
11. Equity: Fayol perceives this principle as one of eliciting loyalty and devotion from personnel
by a combination of kindliness and justice in managers dealing with subordinates.
12. Stability of tenure of personnel: Finding that such instability is both the cause and effect of
bad management, Fayol indicated the dangers and costs of unnecessary turnover.
13. Initiative: Initiative is envisaged as the thinking out and execution of a plan. Since it is one of
the "Keenest satisfactions for an intelligent man to experience", Fayol exhorts managers to
"Sacrifice Personal Vanity" in order to permit subordinates to exercise it.
14. Esprit de corps: This is the principle that 'union is strength' an extension of the principle of
unity of command. Fayol here emphasizes the need for teamwork and the importance of
communication in obtaining it.
(iii) Bureaucratic Management:.
Bureaucratic management denotes to the perfect type of organization. Principal of Bureaucracy
include clearly defined and specialized functions, use of legal authority, hierarchical form, written
rules and procedures, technically trained bureaucrats, appointment to positions based on technical
expertise, promotions based on competence and clearly defined career paths. The German
sociologist, Max Weber recognized as father of modern Sociology who appraised bureaucracy as
the most logical and structure for big organization. With his observation in business world, Weber
summarized that earlier business firms were unproductively managed, with decisions based on
personal relationships and faithfulness. He proposed that a form of organization, called a
bureaucracy, characterized by division of labour, hierarchy, formalized rules, impersonality, and the
selection and promotion of employees based on ability, would lead to more well-organized
management. Weber also argued that authoritative position of managers in an organization should
be based not on tradition or personality but on the position held by managers in the organizational
hierarchy.

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Max Weber (1864-1920) devised a theory of bureaucratic management that emphasized the need
for a firmly defined hierarchy governed by clearly defined regulations and lines of authority. He
considered the perfect organization to be a bureaucracy whose activities and objectives were
reasonably thought out and whose divisions of labour were clearly defined. Weber also believed that
technical capability should be emphasized and that performance evaluations should be made
completely on the basis of merit. Presently, it is considered that bureaucracies are huge, impersonal
organizations that put impersonal competence ahead of human needs. Like the scientific
management theorists, Weber sought to advance the performance of socially important
organizations by making their operations predictable and productive. Although we now value
innovation and flexibility as much as efficiency and predictability, Weber's model of bureaucratic
management evidently advanced the development of vast corporations such as Ford. Bureaucracy
was a particular pattern of relationships for which Weber saw great promise. Although bureaucracy
has been successful for many companies, in the competitive global market of the 1990s
organizations such as General Electric and Xerox have adopted bureaucracy, throwing away the
organization chart and replacing it with ever-changing constellations of teams, projects, and alliances
with the goal of unleashing employee creativeness.

NEO CLASSICAL APPROACH

Behavioural Approach: Numerous theorists developed the behavioural approach of management
thought as they observed weaknesses in the assumptions of the classical approach. The classical
approach emphasized efficiency, process, and principles. Some management scholars considered
that this thought ignored important aspects of organizational life, particularly as it related to human
behaviour. Therefore the behavioural approach concentrated on the understanding of the factors that
affect human behaviour at work. This is an improved and more matured description of human
relations approach. The various theorists who have great contribution in developing principles of
management in this are Douglas Mc Gregor, Abraham Maslow, Curt Levin, Mary Porker Follelt,
Rensis Likert. Behavioural Scientists hold the classical approach as highly mechanistic, which finds
to degrade the human spirit. They choose more flexible organization structures and jobs built around
the capabilities and talent of average employees. The behavioural approach has based the
numerous principles.
1. Decision-making is done in a sub-optimal manner, because of practical and situational
constraints on human rationality of decision-making. The behaviourists attach great weight
age on participative and group decision-making.
2. Behavioural Scientists promote self-direction and control instead of imposed control.
3. Behavioural Scientists believe the organization as a group of individuals with certain goals.
4. Behavioural scientists perceive that the democratic-participative styles of leadership are
enviable, the autocratic, task oriented styles may also be appropriate in certain situation.
5. Behavioural scientists propose that different people react differently to the same situation. No
two people are exactly similar and manager should tailor his attempts to influence his people
according to their needs.
6. Behavioural scientists identify that organizational variance and change are predictable.

Human Relations Approach: The human rationalists which is also denotes to neo-classicists,
focused as human aspect of business. These theorists emphasize that organization is a social
system and the human factor is the most vital element within it.
There are numerous basic principles of the human relations approach that are mentioned below:
1. Decentralization: The concept of hierarchy employed by classical management theorists is
replaced with the idea that individual workers and functional areas (i.e., departments) should
be given greater autonomy and decision-making power. This needs greater emphasis on
lateral communication so that coordination of efforts and resources can occur. This
communication occurs via informal communication channels rather than the formal,
hierarchical ones.
2. Participatory Decision-Making: Decision-making is participatory in the sense that those
making decisions on a day-to-day basis include line workers not normally considered to be
"management." The greater sovereignty afforded individual employees and the subsequent
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reduction in "height" and increase in span of control of the organizational structure requires
that they have the knowledge and ability to make their own decisions and the communication
skill to coordinate their efforts with others without a nearby supervisor.
3. Concern for Developing Self-Motivated Employees: The importance on a system of
decentralized and autonomous decision-making by members of the organization necessitates
that those members be extremely "self-motivated". Goal of managers in such an organization
is to design and implement organizational structures that reward such self-motivation and
autonomy. Another is to negotiate working relationships with subordinates that foster
effective communication in both directions.
Therefore, the human relations approach implies modifications in the structure of the organization
itself, in the nature of work, and in the association between manager and assistant. Each of these
changes depends upon assumptions about the individual, the organization, and communication, just
like any other theory of organizations. Elton Mayo and others conducted experiments that was
known as Hawthorne experiments and explored informal groupings, informal relationships, patterns
of communication, and patterns of internal leadership. Elton Mayo is usually popular as father of
Human Relations School. The human relationists, advocates the several factors after conducting
Hawthorne experiments which are mentioned below.
1. Social system: The organization in general is a social system consists of numerous
interacting parts. The social system established individual roles and establishes norms that
may differ from those of formal organization.
2. Social environment: The social climate of the job affects the workers and is also affected.
3. Informal organization: The informal organization does also exist within the frame work of
formal organization and it affects and is affected by the formal organization.
4. Group dynamics: At the place of work, the workers often do not act or react as individuals but
as members of group. The group plays an important role in determining the attitudes and
performance of individual workers.
5. Informal leader: There is an appearance of informal leadership as against formal leadership
and the informal leader sets and enforces group norms.
6. Non-economic reward: Money is an encouraging element but not the only motivator of human
behaviour. Man is diversely motivated and socio psychological factors act as important
motivators.

MODERN APPROACH
Contingency Approach: This approach of management thought focuses on management principles
and concepts that have no general and universal application under all conditions. Joan Woodward in
the 1950s has contributed to develop this approach in management. Contingency school states that
management is situational and the study of management recognize the important variables in the
situation. It distinguishes that all the subsystem of the environment are interconnected and
interrelated. By studying their interrelationship, the management can find resolution to specific
situation. Theorists stated that there is not effective way of doing things under all business
conditions. Methods and techniques which are extremely effective in one situation may not give the
same results in another situation. This approach proposes that the role of managers is to recognize
best technique in particular situation to accomplish business goals. Managers have to develop
situational understanding and practical selectivity. Contingency visions are applicable in developing
organizational structure, in deciding degree of decentralization, in motivation and leadership
approach, in establishing communication and control systems, in managing conflicts and in
employee development and training. The contingency approach is associated with applying
management principles and processes as dictated by the sole characteristics of each situation. It
depends on various situational factors, such as the external environment, technology, organizational
characteristics, characteristics of the manager, and characteristics of the subordinates. Contingency
theorists often implicitly or explicitly disapprove the classical approach as it focuses on the
universality of management principles.
The Quantitative Approach Of Management Thought

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The quantitative approach aimed at enhancing the process of decision making through the use of
quantitative techniques. It is evolved from the principles of scientific management.
1. Management Science (Operations Research): Management science which is also known
as operations research utilized mathematical and statistical approaches to resolve
management issues. It was developed during World War II as strategists attempted to apply
scientific knowledge and methods to the intricate troubles of war. Industry started to apply
management science after the war. The introduction of the computer technology made many
management science tools and concepts more practical for industry
2. Production and Operations Management: This approach emphasizes the operation and
control of the production process that changes resources into manufactures goods and
services. This approach is emerged from scientific management but became a specific area
of management study after World War II. It uses many of the devices of management
science. Operations management underlines productivity and quality of both manufacturing
and service organizations. W. Edwards Deming exercised a great influence in developing
contemporary ideas to improve productivity and quality. Major areas of study within
operations management include capacity planning, facilities location, facilities layout,
materials requirement planning, scheduling, purchasing and inventory control, quality control,
computer integrated manufacturing, just-in-time inventory systems, and flexible
manufacturing systems.
Systems Approach Of Management Thought
The systems approach deals with the thoroughly understanding the organization as an open system
that converts inputs into outputs. The systems approach has great impact on management thought
in the 1960s. During this period, thinking about managing practices allowed managers to relate
different specialties and parts of the company to one another, as well as to external environmental
factors. The system approach focuses on the organization as a whole, its communication with the
environment, and its need to achieve equilibrium.
System approach

To summarize, there are important theories of Management and each theory has distinct role to
knowledge of what managers do. Management is an interdisciplinary and global field that has been
developed in parts over the years. Numerous approaches to management theory developed that
include the universal process approach, the operational approach, the behavioural approach, the
systems approach, the contingency approach and others. F W Taylor, Adam Smith, Henry Fayol,
Elton Mayo and others have contributed to the development of Management concept. The classical
management approach had three major categories that include scientific management,
administrative theory and bureaucratic management. Scientific management highlighted the
scientific study of work methods to improve worker efficiency. Bureaucratic management dealt with
the characteristics of an perfect organization which operates on a rational basis. Administrative
theory explored principles that could be used by managers to synchronise the internal activities of
organizations. The behavioral approach emerged mainly as an outcome of the Hawthorne studies.

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Mary Parker Follet, Elton Mayo and his associates, Abraham Maslow, Douglas McGregor and Chris
Argyris were main players of this school.

FUNCTIONS OF MANAGEMENT
George and Jerry explained four fundamental functions of management. According to them
functions of management are planning, organizing, actuating and controlling.
POSDCORB is the key word used by Luther Gullick to explain the functions of management In
POSDCORB; P stands for planning, O for organizing, S for staffing, D for directing, Co for co-
ordination, R for reporting and B for budgeting.
Newman and Summer gave the managerial functions which include organizing, planning, reading
and measuring and controlling.
Koontz and O’Donnel explained five functions of management. They have become widely accepted
functions of management everywhere. They are planning, organizing, staffing, directing and
controlling.
Five Functions of Management
Five functions of management as explained by Koontz and O'Donnel are as follows;
 Planning,
 Organising,
 Staffing,
 Directing and
 Controlling.

PLANNING
Planning is deciding in advance what to do and how to do.It is one of the basic managerial functions.
Before doing something, the manager must formulate an idea of how to work on a particular task.
Thus, planning is closely connected with creativity and innovation. It involves setting objectives and
developing appropriate courses of action to achieve these objectives.
Planning Definition
"Planning bridges the gap from where we are to where we want to go. It makes it possible for
things to occur which would not otherwise happen"
- Koontz and O'Donnel.
Planning Process
Setting objectives: Objectives may be set for the entire organisation and each department or unit
within the organisation.
Developing premises: Planning is concerned with the future which is uncertain and every planner is
using conjucture about what might happen in future.
Identifying alternative courses of action: Once objectives are set, assumptions are made. Then
the next step would be to act upon them.
Evaluating alternative courses: The next step is to weigh the pros and cons of each alternative.
Selecting an alternative: This is the real point of decision making. The best plan has to be adopted
and implemented.
Implement the plan: This is concerned with putting the plan into action.
Follow-up action: Monitoring the plans are equally important to ensure that objectives are achieved.
Types of Plans
Objectives: Objectives are very basic to the organisation and they are defined as ends which the
management seeks to achieve by its operations.They serve as a guide for overall business planning.

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Strategy: strategy is a comprehensive plan for accomplishing an organisation objectives. This

comprehensive plan will include three dimensions,
(a) determining long term objectives,
(b) adopting a particular course of action, and
(c) allocating resources necessary to achieve the objective.
Policy: They are guides to managerial action and decisions in the implementation of strategy.
Procedure: Procedures are routine steps on how to carry out activities. Procedures are specified
steps to be followed in particular circumstances.
Method: Methods provide the prescribed ways or manner in which a task has to be performed
considering the objective. It deals with a task comprising one step of a procedure and specifies how
this step is to be performed.
Rule: Rules are specific statements that inform what is to be done. They do not allow for any
flexibility or discretion.
Programme: Programmes are detailed statements about a project which outlines the objectives,
policies, procedures, rules, tasks, human and physical resources required and the budget to
implement any course of action.
Budget: It is a plan which quantifies future facts and figures. It is a fundamental planning instrument
in many organisations.

ORGANIZING
Organising is the process of defining and grouping activities and establishing authority relationships
among them to attain organizational objectives.
Organising Definition
"Organisation is the process of identifying and grouping of the works to be performed,
defining and delegating responsibility and authority and establishing relationships for the
purpose of enabling people to work most efficiently".
- Louis A. Allen
Organising Process
Division of work: The first process of Organising includes identification and division of work which
shall be done in accordance with the plans that are determined previously.

Departmentation: once the work of identifying and dividing the work has been done those are
similar are to be grouped.

Linking departments: When the process of departmentation was completed, linking of departments
has to be done so that those departments operate in a co-ordinated manner which gives a shape to
overall organisation structure.

Assigning Duties: On completion of departmentation process assigning duties i.e. defining authority
and responsibilty to the employees on the basis of their skills and capabilities has to be done, which
in consequence magnifies efficiency with regard to their work.

Defining hierarchal structure: Each employee should also know from whom he has to take orders
and to whom he is accountable/responsible.

Organisation Structure

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Organisation structure is the pattern of relationships among various components or parts of the
organisation which prescribes the relations among various activities and positions. An effective
structure will result in increased profitability of the enterprise. whenever an enterprise grows in size
or complexity it needs an adequate organisation structure.

Line Organisation Structure: Hierarchy derived from a scalar process. Organisation is quite simple
in understanding and implementation. this does not offer scope for specialization.

Line and Staff Organisation Structure: Staff personnel generally specialists in their fields advice
line managers to perform their duties. Staff personnel have right to recommend, but have no
authority.

Functional Organisation: Grouping of activities on the basis of functions required for the
achievement of ultimate objectives.

Divisional Organisation Structure: Several fairly self-contained autonomous units were created.
Each unit was headed by a manager and is directly accountable to the organisation.

DIRECTING
Directing means giving instructions, guiding, counselling, motivating and leading the staff in an
organisation in doing work to achieve Organisational goals. Directing is a key managerial function to
be performed by the manager along with planning, organising, staffing and controlling. From top
executive to supervisor performs the function of directing and it takes place accordingly wherever
superior – subordinate relations exist. Directing is a continuous process initiated at top level and
flows to the bottom through organisational hierarchy.

Directing Definition
"Activating deals with the steps a manager takes to get sub-ordinates and others to carry out plans".
- Newman and Warren.
Supervision
"Guiding and directing efforts of employees and other resources to accomplish stated work outputs"
- Terry and Franklin.
Supervision is an element of direction.
"Day-to-day relationship between an executive and his immediate assistant and covers training,
direction, motivation, coordination, maintenance of discipline, etc."
- Newman and Warren.
Supervision denotes the functions performed by the supervisors.
Motivation
"Motivation is the complex force starting and keeping a person at work in an organisation. Motivation
is something that moves the person to action, and continues him in the course of action already
initiates."
- Dubin.
Motivation is the core of management. Technically, the term motivation can be traced to the Latin
word movere, which means 'to move'. Motivating is a term which implies that one person induces
another, to engage in action by ensuring that a channel to satisfy the motive becomes available to
the individual. Motive is energizer of action, motivating is the channelization and activation of

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motives, motivation is the work behavior itself. Motivation depends on motives and motivating. It is a
complex process.

Leadership

"Leadership is essentially a continuous process of influencing behavior A leader breathes life into the
group and motivates it towards goals. The lukewarm desires for achievement are transformed into
burning passion for accomplishment".
- George R. Terry.
Leadership is the process of influencing the behavior of others to work willingly and enthusiastically
for achieving predetermined goals. It is an essential ingredient for successful organisation.The
successful organisation has one major attribute that sets sets it apart from unsuccessful organisation
that is dynamic and effective leadership.

STAFFING
Staffing in Management
Staffing is that part of the process of management which is concerned with acquiring, developing,
employing, appraising, renumerating and retaining people so that right type of people are available
at right positions and at right time in the organisation. In the simplest terms, staffing is ‘putting people
to jobs’.

Staffing Definition
"Staffing is the function by which managers build an organisation through the recruitment, selection,
and development of individuals as capable employees"
- McFarland
Staffing Process
1. Analyzing Manpower requirements: It is making an analysis of work and estimating the
manpower requirement to accomplish the same.
2. Recruitment: It is identifying and attracting capable applicants for employment. it ends with the
submission of applications by the aspirants.
3. Selection: It is choosing the fit candidates from the applications received in the process of
recruitment.
4. Placement: This may be on probation and on successfully completion of the same the
candidate may be offered permanent employment.
5. Training and Development: It is concerned with imparting and developing specific skills for a
particular purpose.
6. Performance Appraisal: Systematic evaluation of personnel by superiors or others familiar with
their performance so as to rank employees to ascertain their eligibilty for promotions.

CONTROLLING
Controlling in Management
The managerial function controlling always maximise the use of scarce resources to achieve the
purposeful behaviour of employees in an organisation. In planningstage, it is decided that how the
resources would be utilised but where as in the controlling stage it is observed that whether the
resources are being utilised in the same way as planned or not. Thus, control completes the whole
sequence of management process.

Controlling Definition

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"Control refers to the task of ensuring that activities are producing the desired results. Control in this
case is limited to monitoring the outcome of activities, reviewing feedback information about this
outcome, and if necessary, taking corrective actions".
- Reeves and Woodward.
"Controlling is determining what is being accomplished - that is, evaluating performance and, if
necessary, applying corrective measures so that performance takes place according to plans".
- Terry and Franklin.
Features of Controlling
 One can control future happenings but not the happened. Hence in here all the past
performance is measured for taking corrective actions for future periods.
 Every manager in an organisation has to perform the control function. The control may be
quality control, inventory control, production control, or even administrative control.
 Control is a continuous process, it follow a definite pattern and time-table, month after month
and year after year on a continuous basis.
Management by Exception
It is a system of identification and communication that signals to the manager when his attention is
needed and he concentrates more on the important areas where deviation occurred. Components of
management by exception are as follows:
Measurement: By measuring past and present performance the manager tries to find out the
deviations.
Projection: Manager analyses those measurements that are meaningful to the organisational
objectives.
Selection: It involves the criteria which the manager will use to follow progress towards
organizational objectives.
Observation: It involves measurements of current performances.
Comparison: The manager makes comparisons of actual and planned performance and identifies
the exceptions that require attention.
Decision Making: The manager prescribes the action that must be taken in order to bring
performance back into control or to adjust expectations to reflect changing conditions.

Theories of Motivation

Overview
At a simple level, it seems obvious that people do things, such as go to work, in order to get stuff
they want and to avoid stuff they don't want.
Why exactly they want what they do and don't want what they don't is still something a mystery. It's a
black box and it hasn't been fully penetrated.
Overall, the basic perspective on motivation looks something like this:

In other words, you have certain needs or wants (these terms will be used interchangeably), and this
causes you to do certain things (behavior), which satisfy those needs (satisfaction), and this can
then change which needs/wants are primary (either intensifying certain ones, or allowing you to
move on to other ones).
A variation on this model, particularly appropriate from an experimenter's or manager's point of view,
would be to add a box labeled "reward" between "behavior" and "satisfaction". So that subjects (or
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employees), who have certain needs do certain things (behavior), which then get them rewards set
up by the experimenter or manager (such as raises or bonuses), which satisfy the needs, and so on.
Classifying Needs
People seem to have different wants. This is fortunate, because in markets this creates the very
desirable situation where, because you value stuff that I have but you don't, and I value stuff that you
have that I don't, we can trade in such a way that we are both happier as a result.
But it also means we need to try to get a handle on the whole variety of needs and who has them in
order to begin to understand how to design organizations that maximize productivity.
Part of what a theory of motivation tries to do is explain and predict who has which wants. This turns
out to be exceedingly difficult.
Many theories posit a hierarchy of needs, in which the needs at the bottom are the most urgent and
need to be satisfied before attention can be paid to the others.
Maslow
Maslow's hierarchy of need categories is the most famous example:
self-actualization
esteem
belongingness
safety
physiological
Specific examples of these types are given below, in both the work and home context. (Some of the
instances, like "education" are actually satisfiers of the need.)
Need Home Job
self- education, religion, hobbies,
training, advancement, growth, creativity
actualization personal growth
approval of family, friends,
esteem recognition, high status, responsibilities
community
teams, depts, coworkers, clients,
belongingness family, friends, clubs
supervisors, subordinates
freedom from war, poison,
safety work safety, job security, health insurance
violence
physiological food water Heat, air, base salary
According to Maslow, lower needs take priority. They must be fulfilled before the others are
activated. There is some basic common sense here -- it's pointless to worry about whether a given
color looks good on you when you are dying of starvation, or being threatened with your life. There
are some basic things that take precedence over all else.
Alderfer's ERG theory
Alderfer classifies needs into three categories, also ordered hierarchically:
 growth needs (development of competence and realization of potential)
 relatedness needs (satisfactory relations with others)
 existence needs (physical well-being)
This is very similar to Maslow -- can be seen as just collapsing into three tiers. But maybe a bit more
rational.
Do any of these theories have anything useful to say for managing businesses? Well, if true, they
suggest that
 Not everyone is motivated by the same things. It depends where you are in the hierarchy
(think of it as a kind of personal development scale)

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 The needs hierarchy probably mirrors the organizational hierarchy to a certain extent: top
managers are more likely to motivated by self-actualization/growth needs than existence
needs.

Acquired Needs Theory (mcclellan)
Some needs are acquired as a result of life experiences
 need for achievement, accomplish something difficult. as kids encouraged to do things for
themselves.
 need for affiliation, form close personal relationships. as kids rewarded for making friends.
 need for power, control others. as kids, able to get what they want through controlling others.
Again similar to maslow and alderfer.
These needs can be measured using the TAT (thematic apperception test), which is a projection-
style test based on interpreting stories that people tell about a set of pictures.
Two Factor theory (Herzberg)
According to Herzberg, two kinds of factors affect motivation, and they do it in different ways:
 hygiene factors. These are factors whose absence motivates, but whose presence has no
perceived effect. They are things that when you take them away, people become dissatisfied
and act to get them back. A very good example is heroin to a heroin addict. Long term
addicts do not shoot up to get high; they shoot up to stop being sick -- to get normal. Other
examples include decent working conditions, security, pay, benefits (like health insurance),
company policies, interpersonal relationships. In general, these are extrinsic items low in the
Maslow/Alderfer hierarchy.
 motivators. These are factors whose presence motivates. Their absence does not cause
any particular dissatisfaction, it just fails to motivate. Examples are all the things at the top of
the Maslow hierarchy, and the intrinsic motivators.
So hygiene factors determine dissatisfaction, and motivators determine satisfaction. The two scales
are independent, and you can be high on both.
If you think back to the class discussion on power, we talked about a baseline point on the well-being
scale. Power involved a threat to reduce your well-being, causing dissatisfaction. Hence, power
basically works by threatening to withhold hygiene factors. Influence was said to fundamentally be
about promising improvements in well-being -- when you are influenced to do something, it is
because you want to, not because you were threatened. Influence basically works by offering to
provide motivators (in Herzberg's terms).
Equity Theory
Suppose employee A gets a 20% raise and employee B gets a 10% raise. Will both be motivated as
a result? Will A be twice as motivated? Will be B be negatively motivated?
Equity theory says that it is not the actual reward that motivates, but the perception, and the
perception is based not on the reward in isolation, but in comparison with the efforts that went into
getting it, and the rewards and efforts of others. If everyone got a 5% raise, B is likely to feel quite
pleased with her raise, even if she worked harder than everyone else. But if A got an even higher
raise, B perceives that she worked just as hard as A, she will be unhappy.
In other words, people's motivation results from a ratio of ratios: a person compares the ratio of
reward to effort with the comparable ratio of reward to effort that they think others are getting.
Of course, in terms of actually predicting how a person will react to a given motivator, this will get
pretty complicated:
1. People do not have complete information about how others are rewarded. So they are going
on perceptions, rumors, inferences.
2. Some people are more sensitive to equity issues than others
3. Some people are willing to ignore short-term inequities as long as they expect things to work
out in the long-term.

Leadership
The concept and definion of leadership:

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The word leadership has come from the word "lead" which means to guide, to conduct, to direct etc.
It can simply be defined as the ability to influence others.
Leadershiop is an art. It is the catalyst that transforms potential into reality.
Leadership is the process of influencing and supporting others to work enthusiastically toward
achieving objectives.
According to harold Koontz
"Leadership is the art of influencing people so that they will strive willingly and enthusiastically
towards the achievement of group goals."
Fred luthans said
"The behaviour of a leader influences the work performance and satisfaction of his subordinates"
According to Stogdill
" Leadership is the situation and maintenance of structure in expectation and interaction"

paul Pigors has mentioned the four talks of a leader:- Initiation, Representation, Administration and
Exlanation.

Leadership Behavior:
In early days, personal traits were considered as a man source of successful leadership . But this
concepts have been changed at present. Now a days, emphases is given upon the behaviour of
leadership
That means, successful leadership does not depend upon personalo qualities alone, but mainly
eepends upon the appropriatebehaviou of a leader, his skills and actions.
A leader uses three types of skills, namely - Technical skill, human Relation skill and Conceptual
skill. Although these skills are inter-related in practice, these skills are inter-related in practice, they
can be considered separately.
(a) Technical skill:
It refers to a person's knowledge and ability in any type of process or technique. Examples are the
skill learned by Accountants, Engineers, Mechanics, Carpenters.
(b) Human skill:
It is the ability to work effectively with people and to build teamwork.
(c) Conceptual skill:
It is the ability to think in trms models, frameworks and broad relationships.Conceptual skill deals
with ideas, while human skill concered people and technical skill involves things.
On the other hand , it is said that leaders are the product of situation. Successful leadership requires
behaviour that units and stimulates followers toward defined objectives in specific situation.
The three elements-- leader, follower and situation- are variables that affect one another in
determining appropriate leadership behavior.

Leadership and Management

It should be clear that leadership and management are related but they are not the same. A person
can be a manager, a leader, both or neither.
Leadership is an important part of management, but it is not the whole story. Managers plan
activities, organize appropriate structure and control resources , but the primary role of a leader is to
influence others voluntarily to seek defined objectives.
Mangers hold formal position. when as any one could use their informal influence while acting as a
leader.
Strong leaders may be weak managers. On the other hand weak leaders may be effective
managers, It is also said that a managers is necessarily a leader but a leader may not be a manager.

Leadership and Power

The first ingredient of leadership is power. Power is the potential ability to affect the behavior of
others,In organizational setting, there are usually five kinds of power:
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1. Legitimate power: This power is granted through the organizational hierarchy. It is the same
as the authority all managers have legitimate power over their subordinates.
2. Reward power: This power is the power to give withhold rewards. In general, the greater the
number of rewards controlled by a manager and the more important the rewards are to the
subordinates, the greater the manager's reward power. ( Rewards may be salary, bonuses,
promotions, praise, recognition, interesting).
3. Coercive power: This type of power is the power to force compliance via psychological,
emotional or physical punishment. The more a manager uses coercive power, the more likely he or
she is to provoke resentment and hostility.
4. Referent power: This type of power is more abstract that other types of power. It is usually
based on identification or imitation. It may also take the form of charisma, an intangible attribute inte
leader's personality that inspires loyalty and enthusiasm.
5. Expert power: Expert power is derived from expertise. This power is the personal power that
accrues to some one based on the information or expertise that the possess.

Theories of leadership
The different theories of leadership are discussed below:
1. Trait Theory of leadership:
The trait theory also called the “Greatman Theory” of leadership is based on the view that leaders
are born, not made. According to this theory, the leadership is innate.
In ancient times the Greek and Romans believed that leaders were to have certain inborn qualities
such as, intelligence, assertiveness, good vocabulary, attractiveness, self confinece above average
height and similar attributes:
In recent studies, the following key leadership traits have been identified:
a) Drive (including achievement, ambition, energy, initiative and tenacity).
b) Leadership motivation (the aspiration to lead).
c) Honesty and integrity, self- confidence
d) Cognitive ability and an understanding in the business.
e) Creativity, flexibility, adjust-ability and charisma.

2. Situational theory of leadership:

The general be3lief of situational theory is that leaders are products of real situation rather that gifts
of nature.
A large number of studies have been made on the premise that leadership is strongly affected by the
situation from which the leader emerges and in which he or she operates. Example are – the rise of
Mao Ts c-tung in China in the period after World War second and the emergence of Gandhi in India
during the eighty decades of the twentieth century.
This theory is also known as contingency y theory which is mainly developed by F.E.Fiedler and his
associates.

This approach mainly focuses on the following elements:

a) The leader member relations: The effectiveness of a leader depends upon how the leader is
accepted by its members, how much he is popular among the members.
b) Task structure: If the tasks are clear, the quality of performance can be more easily controlled.
Designing well-defined task structure is a success for a good leader.
c) Position power: A leader with clear and considerable position power can obtain good
fellowship more easily than one without such power.
3. Path-goal theory:
The Path-goal theory developed by Martin G. Evans and Robert House suggests that the main
function of the leader is to clarify and set goals with subordinates, help them find the best path for
achieving the goals and remove obstacles.
4. Behavioral theory of leadership:
In this theory, the success of leader depends upon the behavior pattern of the leader to his
subordinates irrespective of his quality or traits.
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5. Follower theory of leadership: This theory is developed by F.H.Sanford. According to his

theory, the subordinates or members of the group accepts a person a leader who is always
determined to meet their expectations, hopes and aspirations, demands etc and fulfill their personal
grievances.

Functions of leadership

The following functions are included to leadership:

1) Influence on the behavior of subordinates/follower.
2) Goal setting
3) Maintaining unity
4) Solution of internal conflict
5) Responding subordinates needs
6) Representation
7) Ensuring security
8) Praising for good work.

Leadership style/types:

1. Leadership style based on the use of authority:

a. Autocratic leadership:
This type of leadership is based on the use of coercive power. An autocratic leader gives orders and
expects compliance. He is dogmatic and leads by the ability to withhold or give punishment or
reward.
b. Democratic leadership:
A democratic leader usually consults with subordinates on proposed actions and decisions
encourage participation from them and respect their opinion.
c. Free- rein leadership:
A free rein leader gives followers a high degree of independence in their operations.
In this type, the leader is considered irresponsible. He keeps minimum controlling g and directing
authority in his hands. So, he is regarded as on e of the members of the group.
2. Management style by Rensis Likert:

a. Exploitative-authoritative:
( Managers/leaders are highly autocratic)
b. Benevolent-authoritative:
(Managers/leaders use both reward and punishment to motivate.)
c. Consultative:
(Managers/loaders try to make use of subordinates ideas by allowing them some participation.)
d.Participative:
(Managers/Leaders have complete trust and confidence in subordinates.)

Leadership Qualities:
The following qualities are required to become a successful leader:
 Attitude of accepting overall responsibility
 Physical fitness
 Pleasant personality
 Administrative and Organizing ability
 Farsightedness
 Self determination and control
 Justice
 Cooperative attitude
 Courage and Initiative
 Time consciousness
 Work related knowledge
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