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Chapter 1

Management:
Definitions & Basics
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Difference Between Management and Administration

Definition of Management

Management is defined as an act of managing people and their work, for

achieving a common goal by using the organization’s resources. It creates
an environment under which the manager and his subordinates can work
together for the attainment of group objective. It is a group of people who
use their skills and talent in running the complete system of the
organization. It is an activity, a function, a process, a discipline and much
more.

Planning, organizing, leading, motivating, controlling, coordination and

decision making are the major activities performed by the management.
Management brings together 5M’s of the organization, i.e. Men, Material,
Machines, Methods, and Money. It is a result oriented activity, which
focuses on achieving the desired output.

Simply put, management can be understood as the skill of getting the work
done from others. It is not exactly same as administration, which alludes to
a process of effectively administering the entire organization. The most
important point that differs management from the administration is that
the former is concerned with directing or guiding the operations of the
organization, whereas the latter stresses on laying down the policies and
establishing the objectives of the organization.
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Broadly speaking, management takes into account the directing and

controlling functions of the organization, whereas administration is related
to planning and organizing function.

With the passage of time, the distinction between these two terms is
getting blurred, as management includes planning, policy formulation, and
implementation as well, thus covering the functions of administration. In
this article, you will find all the substantial differences between
management and administration.

Comparison Chart

BASIS FOR
MANAGEMENT ADMINISTRATION
COMPARISON

Meaning An organized way of The process of administering

managing people and things an organization by a group of
of a business organization is people is known as the
called the Management. Administration.

Authority Middle and Lower Level Top level

Role Executive Decisive

Concerned with Policy Implementation Policy Formulation

Area of It works under It has full control over the

operation administration. activities of the organization.

Applicable to Profit making organizations, Government offices, military,

i.e. business organizations. clubs, business enterprises,
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BASIS FOR
MANAGEMENT ADMINISTRATION
COMPARISON

hospitals, religious and

educational organizations.

Decides Who will do the work? And What should be done? And
How will it be done? When is should be done?

Work Putting plans and policies Formulation of plans, framing

into actions. policies and setting objectives

Focus on Managing work Making best possible allocation

of limited resources.

Key person Manager Administrator

Represents Employees, who work for Owners, who get a return on

remuneration the capital invested by them.

Function Executive and Governing Legislative and Determinative

Difference Between Management and Administration

Definition of Administration

The administration is a systematic process of administering the

management of a business organization, an educational institution like
school or college, government office or any nonprofit organization. The
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main function of administration is the formation of plans, policies, and

procedures, setting up of goals and objectives, enforcing rules and
regulations, etc.

Administration lays down the fundamental framework of an organization,

within which the management of the organization functions.

The nature of administration is bureaucratic. It is a broader term as it

involves forecasting, planning, organizing and decision-making functions at
the highest level of the enterprise. Administration represents the top layer
of the management hierarchy of the organization. These top level
authorities are the either owners or business partners who invest their
capital in starting the business. They get their returns in the form of profits
or as a dividend.

Administration

Management
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Three Levels of Management

The usual way of classifying the set up of any undertaking is:

1. Top Management
2. Middle Management, and
3. Lower Management,

the pictorial representation of which is shown in the following Figure.

1. Top Management
Since majority of the largescale undertakings are organized as joint stock
companies, the top level management is made up of Board of Directors.
However, in practice the Directors do not take part in the day-to-day affairs
of the enterprise. But the task is generally entrusted to the Managing
Directors or General Managers. They are called as Chief Executives and they
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are responsible to carry out the broad policies formulated by the Board.
However, the ultimate control rests with Directors.
This top level management is the policy making body responsible for the
overall direction and success of all the activities of the company.

Functions of the Top Management

The principal functions of the top management can be outlined as follows:

1. Determination of Objectives
It is the top level management which determines the broad objectives of the
enterprise. Within the framework of the Memorandum of the company, the
Board must determine the goals of the enterprise. The objectives may be
either general or specific.
2. Formulation of Policies
For realizing the cherished goals of the company, the top management must
also formulate the policies. The objectives and policies must guide the
activities of the company, the selection of policies also calls for the Board’s
judgement.

3. Long Range Planning and Strategy

Since long range plans and strategies are major decisions, they are also
rested in the hands of the top level management. If the long range planning
proves faulty, the company shall find itself in serious financial difficulties.

4. Organizing for Action

Setting up of the administrative organization of large companies with
thousands of employees is a complex problem and calls for greater caution
and skill. Hence, this function also vests with the top management.
Responsibilities which are necessary to execute the policies must be assigned
to different employees and relationship among the jobs should also be
clarified.

5. Developing of Major Resources

This function includes the finding out of the various ways and means for
procuring the resources required to put the plans into action. Resources also
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include physical resources such as machinery, tools, furniture, equipment,

building, etc.

6. Selecting Key Personnel

The managerial personnel not only dominate the success or failure of the
existing policies but they are key figures in formulating future plans. Right
type of men must be selected and placed at the right places. Hence, this
function also vests with the top management.

7. Co-ordination and Controlling

Although the top management is primarily concerned with the future, it must
maintain guiding influence on the current activities. It must guide in the
execution of plans through the organization with the resources assembled.
This calls for co-coordinating and controlling the operation.

2. Middle Level Management

The middle level management is concerned with the execution of the policies
and plans evolved by the top management. Therefore, the middle level
management comprises of departmental heads and other executives.
Though the top management forms the head and brain of the enterprise, the
personnel in the middle management actually take part in the execution of
the plans and experience the difficulties involved in it.

Functions of the Middle Management

The principal functions of the middle level management can be outlined as
follows:

1. Middle level management interprets the policies of the company.

2. It is the responsibility of the Middle Management to prepare

organizational set up in their department.

3. They issue orders to the subordinates and others in their department,

4. Middle level management motivate the personnel for higher productivity.

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5. Collecting reports and other information about the work turned out in
their respective departments.

6. Providing information and assisting the top management in revising the

plans to secure better performance.

3. Lower Level Management

This term is applied to subordinate departmental heads, foremen, office

superintendents, supervisors, etc. The personnel in the lower level
management come in direct contact with the workers. They actually carry
out the operations as per schedule. Hence, they are also designated as
‘operating management’. They provide the essential link between the
worker and the management. In fact, the efficiency of the whole
organization depends on the efficiency of the lower management.
Functions of the Lower Management
The important functions of the personnel in lower management can be
summed up as follows:

1. Executing of the work entrusted to them,

2. Maintaining of the standard, quality and workmanship of the product,

3. Eliminating wastage of material, time, etc.,

4. Maintaining strict discipline amongst the workers,

5. Preserving the morale of the workers, and

6. Providing instructions and other information to the workers and guiding
them while in action.
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Management Functions

Planning, Organizing, Leading, and Controlling

L E A R N IN G O B J E C T IV E S

1. Know the dimensions of the planning-organizing-leading-controlling

(P-O-L-C) framework.
2. Know the general inputs into each P-O-L-C dimension.

A manager’s primary challenge is to solve problems creatively. While

drawing from a variety of academic disciplines, and to help managers
respond to the challenge of creative problem solving, principles of
management have long been categorized into the four major functions of
planning, organizing, leading, and controlling (the P-O-L-C framework). The
four functions, summarized in the P-O-L-C figure, are actually highly
integrated when carried out in the day-to-day realities of running an
organization. Therefore, you should not get caught up in trying to analyze
and understand a complete, clear rationale for categorizing skills and
practices that compose the whole of the P-O-L-C framework.

It is important to note that this framework is not without criticism.

Specifically, these criticisms stem from the observation that the P-O-L-C
functions might be ideal but that they do not accurately depict the day-to-
day actions of actual managers. H. Mintzberg, The Nature of Managerial
Work (New York: Harper & Row, 1973); D. Lamond, “A Matter of Style:
Reconciling Henri and Henry,” Management Decision 42, no. 2 (2004): 330–
56. The typical day in the life of a manager at any level can be fragmented
and hectic, with the constant threat of having priorities dictated by the law
of the trivial many and important few (i.e., the 80/20 rule). However, the
general conclusion seems to be that the P-O-L-C functions of management
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still provide a very useful way of classifying the activities managers engage
in as they attempt to achieve organizational goals.D. Lamond, “A Matter of
Style: Reconciling Henri and Henry,” Management Decision 42, no. 2
(2004): 330–56.

The P-O-L-C Framework

Planning

Planning is the function of management that involves setting objectives and

determining a course of action for achieving those objectives. Planning
requires that managers be aware of environmental conditions facing their
organization and forecast future conditions. It also requires that managers
be good decision makers.

Planning is a process consisting of several steps. The process begins

with environmental scanning which simply means that planners must be
aware of the critical contingencies facing their organization in terms of
economic conditions, their competitors, and their customers. Planners
must then attempt to forecast future conditions. These forecasts form the
basis for planning.
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Planners must establish objectives, which are statements of what needs to

be achieved and when. Planners must then identify alternative courses of
action for achieving objectives. After evaluating the various alternatives,
planners must make decisions about the best courses of action for
achieving objectives. They must then formulate necessary steps and ensure
effective implementation of plans. Finally, planners must constantly
evaluate the success of their plans and take corrective action when
necessary.

There are many different types of plans and planning.

Strategic planning involves analyzing competitive opportunities and threats,

as well as the strengths and weaknesses of the organization, and then
determining how to position the organization to compete effectively in
their environment. Strategic planning has a long time frame, often three
years or more. Strategic planning generally includes the entire organization
and includes formulation of objectives. Strategic planning is often based on
the organization’s mission, which is its fundamental reason for existence.
An organization’s top management most often conducts strategic planning.

Tactical planning is intermediate-range (one to three years) planning that is

designed to develop relatively concrete and specific means to implement
the strategic plan. Middle-level managers often engage in tactical planning.

Operational planning generally assumes the existence of organization-wide

or subunit goals and objectives and specifies ways to achieve them.
Operational planning is short-range (less than a year) planning that is
designed to develop specific action steps that support the strategic and
tactical plans.
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Organizing

Organizing is the function of management that involves developing an

organizational structure and allocating human resources to ensure the
accomplishment of objectives. The structure of the organization is the
framework within which effort is coordinated. The structure is usually
represented by an organization chart, which provides a graphic
representation of the chain of command within an organization. Decisions
made about the structure of an organization are generally referred to as
organizational design decisions.

Organizing also involves the design of individual jobs within the

organization. Decisions must be made about the duties and responsibilities
of individual jobs, as well as the manner in which the duties should be
carried out. Decisions made about the nature of jobs within the
organization are generally called “job design” decisions.

Organizing at the level of the organization involves deciding how best to

departmentalize, or cluster, jobs into departments to coordinate effort
effectively. There are many different ways to departmentalize, including
organizing by function, product, geography, or customer. Many larger
organizations use multiple methods of departmentalization.

Organizing at the level of a particular job involves how best to design

individual jobs to most effectively use human resources. Traditionally, job
design was based on principles of division of labor and specialization, which
assumed that the more narrow job content, the more proficient the
individual performing the job could become. However, experience has
shown that it is possible for jobs to become too narrow and specialized. For
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example, how would you like to screw lids on jars one day after another, as
you might have done many decades ago if you worked in company that
made and sold jellies and jams? When this happens, negative outcomes
result, including decreased job satisfaction and organizational commitment,
increased absenteeism, and turnover.

Recently, many organizations have attempted to strike a balance between

the need for worker specialization and the need for workers to have jobs
that entail variety and autonomy. Many jobs are now designed based on
such principles as empowerment, job enrichment and teamwork.
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Examples:
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Leading

Leading involves the social and informal sources of influence that you use
to inspire action taken by others. If managers are effective leaders, their
subordinates will be enthusiastic about exerting effort to attain
organizational objectives.

The behavioral sciences have made many contributions to understanding

this function of management. Personality research and studies of job
attitudes provide important information as to how managers can most
effectively lead subordinates. For example, this research tells us that to
become effective at leading, managers must first understand their
subordinates’ personalities, values, attitudes, and emotions.

Studies of motivation and motivation theory provide important information

about the ways in which workers can be energized to put forth productive
effort. Studies of communication provide direction as to how managers can
effectively and persuasively communicate. Studies of leadership and
leadership style provide information regarding questions, such as, “What
makes a manager a good leader?” and “In what situations are certain
leadership styles most appropriate and effective?”

Controlling

Controlling involves ensuring that performance does not deviate from

standards. Controlling consists of three steps, which include (1) establishing
performance standards, (2) comparing actual performance against
standards, and (3) taking corrective action when necessary. Performance
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standards are often stated in monetary terms such as revenue, costs, or

profits but may also be stated in other terms, such as units produced,
number of defective products, or levels of quality or customer service.

The measurement of performance can be done in several ways, depending

on the performance standards, including financial statements, sales
reports, production results, customer satisfaction, and formal performance
appraisals. Managers at all levels engage in the managerial function of
controlling to some degree.

The managerial function of controlling should not be confused with control

in the behavioral or manipulative sense. This function does not imply that
managers should attempt to control or to manipulate the personalities,
values, attitudes, or emotions of their subordinates. Instead, this function
of management concerns the manager’s role in taking necessary actions to
ensure that the work-related activities of subordinates are consistent with
and contributing toward the accomplishment of organizational and
departmental objectives.

Effective controlling requires the existence of plans, since planning provides

the necessary performance standards or objectives. Controlling also
requires a clear understanding of where responsibility for deviations from
standards lies. Two traditional control techniques are budget and
performance audits. An audit involves an examination and verification of
records and supporting documents. A budget audit provides information
about where the organization is with respect to what was planned or
budgeted for, whereas a performance audit might try to determine
whether the figures reported are a reflection of actual performance.
Although controlling is often thought of in terms of financial criteria,
managers must also control production and operations processes,
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procedures for delivery of services, compliance with company policies, and

many other activities within the organization.

The management functions of planning, organizing, leading, and controlling

are widely considered to be the best means of describing the manager’s
job, as well as the best way to classify accumulated knowledge about the
study of management. Although there have been tremendous changes in
the environment faced by managers and the tools used by managers to
perform their roles, managers still perform these essential functions.

Managing and Supervising Rules:

Rule #1 - Get Involved

• Know your People
o Get out from behind your desk
o Don’t be over-involved
o Show Interest
• Sense of Mission
o Have a plan
o Share your vision

Rule #2 - Open Channels of Communication

• Encourage discussion
• Resolve conflict
• Listen
• Remain in control
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Rule #3 - Give Your People a Chance to Develop

• Match the People to the Work
• Be aware of requirements of Education and training
• Be Flexible
• Welcome Change

Rule #4 - Establish Standards and Stick to Them

• Company Standards
• Personal Standards
• Enforce Them

Rule #5 - Provide Feedback

• Constructive criticism
• Praise in public and discipline in private
• Don’t be afraid to approach/discipline
• Ask for their views/opinions
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PROJECT DEVELOPMENT LIFE CYCLE

The project development life cycle consists of 5 phases, planning, analysis,

design, implementation, and maintenance & operation.

1. Planning – this phase begins after the project has been defined and
appropriate resources have been committed. The first part of this phase
involves collecting, defining and validating functional, support and training
requirements. The second portion is developing initial life cycle
management plans, including project planning, project management,
Configuration Management (CM), support, operations, and training
management. We cannot just go and build the system.

2. Analysis – system requirements are studied and structured in this

phase. System analysts collect facts from existing system users in order to
develop limitations and details. They will also define new system objectives.
They use different data gathering techniques such as interviews,
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observations and surveys. This is an attempt to understand all aspects of

the current system and eventually indicate how things may be improved by
a new system.

3. Design – Describes how the system will fulfil the user requirements.
To achieve this, logical and physical design must be created. The logical
design produced during the analysis is turned into a physical design – a
detailed description of what is needed to solve original problem. Input,
output, databases, forms, codification schemes and processing
specifications are drawn up in detail. In the design stage, the programming
language and the hardware and software platform in which the new system
will run are also decided. Data structure, control process, equipment
source, workload and limitation of the system, Interface, documentation,
training, procedures of using the system, taking backups and staffing
requirement are decided at this stage.

4. Implementation: This is followed by testing and then

implementation. During this phase, the new or enhanced system is installed
in the production environment, users are trained, data is converted, the
system is turned over to the sponsor, and business processes are
evaluated. This stage includes efforts required to implement, resolve
system problems identified during the implementation process, and plan
for sustainment Coding. The physical design specifications are turned into
working computer code. Integration and Testing– a testing environment is
created where all components are brought together. Installation – here the
new system is rolled out.

5. Maintenance: After having the user acceptance of the new system

developed, the implementation phase arises. Implementation is the stage
of a project during which theory is turned into practice. The major steps
involved in this phase are:

• Acquisition and Installation of Hardware and Software

• Conversion
• User Training
• Documentation
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PROJECT MANAGEMENT PROCESS

Every phase of the project life cycle could be carried out as process groups
from initiation to closing as shown below:
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Traditionally (depending on what project management methodology is

being used), project management includes a number of elements: four to
five project management process groups, and a control system. Regardless
of the methodology or terminology used, the same basic project
management processes or stages of development will be used. Major
process groups generally include:

• Initiation
• Planning
• Production or execution
• Monitoring and controlling
• Closing

Initiation
The initiating processes determine the nature and scope of the project. If
this stage is not performed well, it is unlikely that the project will be
successful in meeting the business’ needs. The key project controls needed
here are an understanding of the business environment and making sure
that all necessary controls are incorporated into the project. Any
deficiencies should be reported and a recommendation should be made to
fix them.
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The initiating stage should include a plan that encompasses the following
areas. These areas can be recorded in a series of documents called Project
Initiation documents. Project Initiation documents are a series of planned
documents used to create order for the duration of the project. These tend
to include:

• project proposal goal

• project scope
• Project contract
• Project client needs

Planning
After the initiation stage, the project is planned to an appropriate level of
detail. The main purpose is to plan time, cost and resources adequately to
estimate the work needed and to effectively manage risk during project
execution. As with the Initiation process group, a failure to adequately plan
greatly reduces the project's chances of successfully accomplishing its
goals.
Project planning generally consists of:

• Work breakdown structure

• Project plans & Checklists
• Schedules
• Resources & Tasks
• Risks

Executing
While executing we must know what are the planned terms that need to be
executed. The execution/implementation phase ensures that the project
management plan's deliverables are executed accordingly. This phase
involves proper allocation, co-ordination and management of human
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resources and any other resources such as material and budgets. The
output of this phase is the project deliverables.

Project Documentation
Documenting everything within a project is key to being successful. To
maintain budget, scope, effectiveness and pace a project must have
physical documents pertaining to each specific task. With correct
documentation, it is easy to see whether or not a project's requirement has
been met. To go along with that, documentation provides information
regarding what has already been completed for that project.
Documentation throughout a project provides a paper trail for anyone who
needs to go back and reference the work in the past. In most cases,
documentation is the most successful way to monitor and control the
specific phases of a project. With the correct documentation, a project's
success can be tracked and observed as the project goes on. If performed
correctly documentation can be the backbone to a project's success.

Monitoring and controlling

Monitoring and controlling consists of those processes performed to
observe project execution so that potential problems can be identified in a
timely manner and corrective action can be taken, when necessary, to
control the execution of the project. The key benefit is that project
performance is observed and measured regularly to identify variances from
the project management plan.
Monitoring and controlling includes:

• Measuring the ongoing project activities ('where we are');

• Monitoring the project variables (cost, effort, scope, etc.) against the
project management plan and the project performance baseline (where
we should be);
• Identifying corrective actions to address issues and risks properly (How
can we get on track again);
• Influencing the factors that could circumvent integrated change control
so only approved changes are implemented.
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In multi-phase projects, the monitoring and control process also provides

feedback between project phases, to implement corrective or preventive
actions to bring the project into compliance with the project management
plan.
Project maintenance is an ongoing process, and it includes:

• Continuing support of end-users

• Correction of errors
• Updates to the product over time

Closing
Closing includes the formal acceptance of the project and the ending
thereof. Administrative activities include the archiving of the files and
documenting lessons learned.
This phase consists of:

• Contract closure: Complete and settle each contract (including the

resolution of any open items) and close each contract applicable to the
project or project phase.
• Project close: Finalize all activities across all of the process groups to
formally close the project or a project phase
Also included in this phase is the Post Implementation Review. This is a vital
phase of the project for the project team to learn from experiences and
apply to future projects. Normally a Post Implementation Review consists
of looking at things that went well and analyzing things that went badly on
the project to come up with lessons learned.