UNIT 1: Introduction to Management

Recommended Text & Reference Books:

1. Appanniah& Reddy, Management HPH.

2. T. Ramaswamy : Principles of Management, HPH

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Course outline overview

Unit # 1: Introduction to Management

Unit # 2: Planning

Unit # 3: Organizing and Staffing

Unit # 4: Directing and Coordinating

Unit # 5: Controlling

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Lesson 1 Structure

Meaning of Management

Nature and Characteristics of Management

Scope and Functional areas of Management

Management as a science, art or profession

Management & Administration

Principles of Management

Social responsibility of Management and Ethics

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What is Management?

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Definition

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Management Defined
Management is the process of achieving goals and objectives
1 effectively and efficiently through and with the people.

2 "Management is a process of designing and maintaining an

environment in which individuals work together in groups to
effectively and efficiently accomplish selected aims".

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Management Defined Cont’d

Management is the process of achieving organizational goals and

3 objectives effectively and efficiently by using management functions
i.e.
– Planning
– Organizing
– Staffing
– Controlling

Management is a set of activities directed at an organization's

4 resources with the aim of achieving organizational goals in an
efficient and effective manner.

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These definitions when expanded have these
implications:

• Management is thus a continuous effort aimed at shaping an organization and

contributing to its overall growth.

• The functions of managers include planning, organizing, staffing, leading and

controlling.

• These functions are essential to any kind of organization.

• It applies to managers at all hierarchical levels.

• The aim of managers is to increase productivity, effectiveness and efficiency.

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Elements of definition

• Process - represents ongoing functions or primary activities engaged in by

managers

• Efficiency - getting the most output from the least amount of inputs
• “doing things right”
• concerned with means
• Achieving the objectives in time

• Effectiveness - completing activities so that organizational goals are attained

• “doing the right things”
• concerned with ends
• Achieving the objectives on time

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Efficiency and Effectiveness
Means Ends
Efficiency Effectiveness

Goals

Goal Attainment
Resource Usage

Low High
Waste Attainment

FOM 1.9

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Nature and Characteristics of Management

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Management: Nature and Characteristics

1. Economic Resource – Factors of Production (Land,

Labor, Capital)
2. It is Goal Oriented
3. It is a Distinct Process
4. It is an Integrative Force
5. It is a System of Authority
6. It is a Multi-disciplinary subject – engineering, psychology,
sociology
7. It has Universal Application – Business, Education,
Military, Government, Hospital etc

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Scope and Functional Areas of Management

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Scope and Functional Areas of Management

Various functional areas of management are:

1. Production management
1. Plant layout and location
2. Production planning
3. Material management
4. Research and Development
5. Quality Control
2. Marketing management
1. Advertising
2. Sales management
3. Market research

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Scope and Functional Areas of Management

Various functional areas of management are:

3. Financial management
1. Financial accounting
2. Taxation
3. Costing
4. Personal management
1. Personnel planning
2. Recruitment and selection
3. Training and development
4. Wage administration
5. Industrial relation
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Management: Science or Art?
Science is a collection of systematic knowledge, collection of truths and
inferences after continuous study and experiments. It has fundamental
principles discovered.

Art uses the known rules and principles and uses the skill, expertise, wisdom,
experience to achieve the desired result.

Management has got two faces like a coin; on one side it is art
and on the other it is science. Management has got scientific
principles which constitute the elements of Science and Skills
and talent which are attributes of Art.

Management is both art and science.

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Management: As a Profession

• A person who undertakes management as a profession

• Management is a profession in the sense that there is a systematized
body of management , and it is distinct, identifiable discipline
• It has developed a vast number of tools and techniques
• There is no formal management education
• Formalized methods of training are designed to those who desire to
become managers

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Principles of Management

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Fayol’s Principles of Management

Henri Fayol (1841-1925)

He has proposed that there are six primary functions

of management and 14 principles of management,
Forecasting, Planning, Organizing, Commanding,
Coordinating, controlling

Management principles are the statements of

fundamental truth based on logic which provides
guidelines for managerial decision making and
actions

There are 14 Principles of Management described by

Henri Fayol.
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14 Principles of Henri Fayol

1. Division of Labor
Work of all kinds must be divided & subdivided and allotted to various persons according
to their expertise in a particular area.

2. Authority & Responsibility

Authority refers to the right of superiors to get exactness from their sub-ordinates.

Responsibility means obligation for the performance of the job assigned.

Note that responsibility arises wherever authority is exercised

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14 Principles of Henri Fayol Cont’d

3. Unity of Command
A sub-ordinate should receive orders and be accountable to one and only one boss at a time.

He should not receive instructions from more than one person

Dual sub-ordination should be avoided unless and until it is absolutely essential

4. Unity of Direction
One head One plan

People engaged in the same kind of business or same kind of activities must have the same
objectives in a single plan.

Without unity of direction, unity of action cannot be achieved.

It avoids duplication of efforts and wastage of resources.

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 14 Principles of Henri Fayol Cont’d

5. Equity
Equity means combination of fairness, kindness & justice.

The employees should be treated with kindness & equity if devotion is expected of them.

No discrimination

6. Order
This principle is concerned with proper & systematic arrangement of things and people.

Arrangement of things is called material order and placement of people is called social
order.

Material order- There should be safe, appropriate and specific place for every article and
every place to be effectively used for specific activity and commodity.

Social order- Selection and appointment of most suitable person on the suitable job.
There should be a specific place for every one and everyone should have a specific
place so that they can easily be contacted whenever need arises.
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14 Principles of Henri Fayol Cont’d
7. Discipline
Discipline means sincerity, obedience, respect of authority & observance of rules and
regulations of the enterprise.

Subordinate should respect their superiors and obey their order.

Discipline is not only required on path of subordinates but also on the part of management

8. Initiative
Initiative means eagerness to initiate actions without being asked to do so.

Management should provide opportunity to its employees to suggest ideas,

experiences& new method of work.

It helps in developing an atmosphere of trust and understanding.

They can be encouraged with the help of monetary & non-monetary incentives

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 14 Principles of Henri Fayol Cont’d
9. Remuneration
The quantum and method of remuneration to be paid to the workers should be fair,
reasonable, satisfactory & rewarding of the efforts.

It should accord satisfaction to both employer and the employees.

Wages should be determined on the basis of cost of living, work assigned, financial
position of the business, wage rate prevailing etc

Fayol also recommended provision of other benefits such as free education, medical &
residential facilities to workers

10. Stability of Tenure

Employees should not be moved frequently from one job position to another i.e. the
period of service in a job should be fixed.

According to Fayol. “Time is required for an employee to get used to a new work &
succeed to doing it well but if he is removed before that he will not be able to render
worthwhile services”. As a result, the time, effort and money spent on training the
worker will go waste.

Stability of job creates team spirit and a sense of belongingness among workers which
ultimately increase the quality as well as quantity of work. 25
14 Principles of Henri Fayol Cont’d
11. Scalar Chain
Scalar chain is the chain of superiors ranging from the ultimate authority to the
lowest. Every orders, instructions, messages, requests, explanation etc. has
to pass through Scalar chain.

But, for the sake of convenience & urgency, this path can be cut short and this
short cut is known as Gang Plank.A Gang Plank is a temporary arrangement
between two different points to facilitate quick & easy communication

12. Sub-ordination of Individual’s Interest to common

goal
An organization is much bigger than the individual it constitutes therefore
interest of the undertaking should prevail in all circumstances.

The interests of any one employee or group of employees should not take
precedence over the interests of the organization as a whole.

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14 Principles of Henri Fayol Cont’d
13. Espirit De’ Corps
It refers to team spirit i.e. harmony in the work groups and mutual understanding among
the members.

Espirit De’ Corps inspires workers to work harder.

14. Centralization and Decentralization

Centralization means concentration of authority at the top level. In other words,

centralization is a situation in which top management retains most of the decision
making authority. Decentralization means disposal of decision making authority to all
the levels of the organization. In other words, sharing authority downwards is
decentralization.

According to Fayol, “Degree of centralization or decentralization depends on no. of factors

like size of business, experience of superiors, dependability & ability of subordinates
etc.

Anything which increases the role of subordinate is decentralization & anything which
decreases it is centralization. 27
Management and Administration

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Management Vs Administration

• Three different types of Views expressed by different

schools of thought
• (i) Administration is concerned with the determination of
policies and management with the implementation of
policies. Thus, administration is a higher level function.
• Administration determines the organization; management uses it.
Administration defines the goals; management strives towards it
• Administration refers to policy-making whereas management refers to
execution of policies laid down by administration.
• (ii) Management is a generic term and includes
administration.
• (iii) There is no distinction between the terms management
and administration and they are used interchangeably.
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Management Vs Administration

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Social Responsibility

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Social Responsibility - Meaning

• Social responsibility refers to such decisions and activities

of a business firm which provide for the welfare of the
society as a whole along with the earning of profit for the
firm
• The business firm functions and acts in such a way that it
will accomplish social gains (social output) along with the
traditional economic gains (economic output) in which the
business firm is interested
• The objective concern of the business firm for the welfare
of the society and it involves following by the management
of such policies, making such decisions or following of
such lines of action which are desirable in terms of
objectives and values of our society
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Areas of Social Responsibility

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Areas of Social Responsibility

Owners

Economic
Policy of Workers
State

Business
Weaker
Consumer
Section

Government Society

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1. Towards the owners

• Payment of fair rate of dividend regularly

• Ensuring full participation of owners in the management of
the affairs of the enterprise
• Arresting the tendency towards the growth of ‘Oligarchic
management’
• Disclosing of financial information and clarifying
information and clarifying doubts, if any
• Accessibility of chairman and directors to the owners for
getting the information relating to the company

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2. Towards workers

• Security of job with fair wages, bonus, profit-sharing etc

• Fair promotional practices
• Equal opportunity for growth and development
• Facilities for training
• Participative management
• Employee welfare and social security
• Protecting workers from occupational hazards

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3. Towards consumers

• Ensuring availability of products in the right quality, at the

right place and at the right time
• Supplying products of high quality
• Charging reasonable prices for its products
• Good after-sales service
• Transparency in the contents used

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4. Towards Society

• Optimizing the use of resources

• Providing public amenities
• Maintaining environmental ecology and adopting anti-
pollution measures
• Participating in social welfare programmes, such as
adopting villages, medical facilities, educational
scholarships to deserving students, constructing shelter at
bus stops etc

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5. Towards the Government

• Strictly observing the provisions of the various laws and

enactments
• Extending full support to the government in its efforts to
solve national problems such as unemployment, food,
inflation, regional imbalance in economic development etc

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6. Towards the weaker sections of the society

• Providing an opportunity for growth

• Encouraging voluntary organizations and agencies
engaged in improvement of the weaker sections

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7. Towards the economic policy of state

• Encouraging development of small business, import

substitution and self-reliance and dispersal of economic
activity
• Producing goods to meet the needs of the various sections
of the society
• Taking measures to subserve the national policy to
establish an egalitarian social order in the country

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Social Responsibility and Ethics

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Ethics - Meaning

• Principles of behavior that distinguish between what is

good, bad, right, wrong
• It is a science of morals
• Ethics is an individual’s own personal attitude and beliefs
concerning what is right, wrong, good or bad. Therefore
what is ethical to an individual or society may be unethical
to another individual or society

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Examples

• Most kinds of lying are perfectly legal, but lying is generally

recognized as being unethical;
• Breaking promises is generally legal, but is widely thought
of as unethical;
• Taking credit for work you did not do
• Lying on your resume in order to get a job.
• Dumping pollutants into the water supply rather than
cleaning up the pollution properly.
• Not paying an employee for all of the hours worked.
• Corruption
• Refusing to honour a warranty claim on a defective
product
• Sexual Discrimination 44
Lesson 1 Structure

Meaning of Management

Nature and Characteristics of Management

Scope and Functional areas of Management

Management as a science, art or profession

Management & Administration

Principles of Management

Social responsibility of Management and Ethics

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