Introduction and

Importance

Unit I
Contents
• Meaning & Definition
• Management as an art, as a science & as a profession
• Difference between management & administration
• Levels of management, Skills & Roles of managers
• Significance of values and ethics in Management
• Importance of management
• Evolution of management thoughts
• Different schools of management thought
Contd…
• The first reason managers are important is that organizations need their managerial skills and abilities
more than ever in these uncertain, complex, and chaotic times. As organizations deal with today’s
challenges—the worldwide economic climate, changing technology, ever increasing globalization,
and so forth—managers play an important role in identifying critical issues and crafting responses.
• Another reason managers are important to organizations is that they’re critical to getting things
done. Manager is the person who creates and coordinates the workplace systems and conditions so
that others can perform those task. If work isn’t getting done or isn’t getting done as it should be,
he’s also the one who must find out why and get things back on track.
• Finally, managers do matter to organizations! How do we know that? The Gallup Organization, which
has polled millions of employees and tens of thousands of managers, has found that the single most
important variable in employee productivity and loyalty isn’t pay or benefits or workplace
environment; it’s the quality of the relationship between employees and their direct supervisors.
• What can we conclude from such reports? That managers are important and they do matter!
• A manager is someone who coordinates and oversees the work of other people so that
organizational goals can be accomplished. A manager’s job is not about personal achievement—it’s
about helping others do their work.
Who are Managers?
Where Do they Work?
• Organization
• A deliberate arrangement of people brought together to accomplish a specific
purpose.

• Common Characteristics of Organizations

• Goals
• People
• Structure
How are Managers Different from
Nonmanagerial employees?
• Nonmanagerial employees
• People who work directly on a job or task and have no responsibility for
overseeing the work of others.
• Ex : Associate and Team members
• Managers
• Individuals in organizations who direct the activities of others.
• A manager is someone who coordinates and oversees the work of other
people so that organizational goals can be accomplished. A manager’s
job is not about personal achievement—it’s about helping others do
their work.
LEVELS OF MANAGEMENT
• In traditionally structured organizations (which are often pictured as a pyramid because more
employees are at lower organizational levels than at upper organizational levels), managers can be
classified as first-line, middle, or top.
• At the lowest level of management, first-line managers manage the work of nonmanagerial
employees who typically are involved with producing the organization’s products or servicing the
organization’s customers.
• First-line managers may be called supervisors or even shift managers, district managers, department
managers, or office managers.
• Middle managers manage the work of first-line managers and can be found between the lowest and
top levels of the organization. They may have titles such as regional manager, project leader, store
manager, or division manager.
• At the upper levels of the organization are the top managers, who are responsible for making
organization-wide decisions and establishing the plans and goals that affect the entire organization.
These individuals typically have titles such as executive vice president, president, managing director,
chief operating officer, or chief executive officer.
• Not all organizations get work done with a traditional pyramidal form, however. Some organizations,
for example, are more loosely configured with work being done by ever-changing teams of
employees who move from one project to another as work demands arise.
What is Management?
• Management is the process of getting things done effectively and
efficiently ,with and through people.
• Efficiency refers to getting the most output from the least amount of
inputs. Because managers deal with scarce inputs—including
resources such as people, money, and equipment—they’re concerned
with the efficient use of those resources. It’s often referred to as
“doing things right”—that is, not wasting resources.
• Effectiveness is often described as “doing the right things”—that is,
doing those work activities that will help the organization reach its
goals
Management Functions
Definition of Management
• “Management identifies a group of people whose job is to direct the
efforts and activities of other people towards common objectives.”
• Management is an art of getting things done.
• Management as a process.
• Management as a group of managers.
• Management as a discipline.
Management is an art of getting things done.
• “ The art of getting things done through and with people in formally
organized groups, It is an art of creating an environment in which
people can perform as individuals and yet to co-operate towards
attainment of group goals.”
Harold Koontz
Management as a Process
• In the words of Henry Fayol - "To manage is to forecast and to plan, to
organise, to command, to co-ordinate and to control".
• Management is the process of effective utilization of human and
material resources to achieve enterprise objectives.
• In the words of George R Terry - "Management is a distinct process
consisting of planning, organising, actuating and controlling
performed to determine and accomplish the objectives by the use of
people and resources".
Management as a Continuous Process
Management as a Discipline
• Management is a multidisciplinary discipline.
• It has drawn heavily from anthropology, psychology, sociology,
economics, etc.
• Management is both an art and a science.
Characteristics of Management
• Goal oriented
• Economic resources
• Distinct process
• Integrative force
• Intangible force
• Results through others
• A Science and an Art
• Multi-disciplinary Subject
• Universal Application
Functions of Management
Significance of Management
• The existence and success of any organisation largely depends on the kind of
management it has. No amount of quality resources is going to help unless they
are put to productive use by efficient management. It is because of this reason
that management is studied as a subject in almost every discipline of study. In
today’s scenario with globalisation, job specialisation, changing technologies,
new responsibilities of business, consumerism, competition and emphasis on
research and development, the role of management has grown multifold.
• Attainment of Goals
• Stability and Growth Management
• Change and Development
• Efficiency and Effectiveness
Mintzberg’s Managerial Roles
CONTD…
• The diverse roles played by managers in discharging their duties have been summarised by Henry Mintzberg in the late
1960s, under three broad headings: interpersonal roles, informational roles and decisional roles. Let us understand them
one by one.
• Interpersonal Role: Three interpersonal roles help the manager keep the organisation running smoothly. Managers play
the figurehead role when they perform duties that are ceremonial and symbolic in nature. These include greeting the
visitors, attending social functions involving their subordinates (like weddings, funerals), handing out merit certificates to
workers showing promise etc. The leadership role includes hiring, training, motivating and disciplining employees.
Managers play the liaison role when they serve as a connecting link between their organisation and others or between
their units and other organisational units. Mintzberg described this activity as contacting outsiders who provide the
manager with information. Such activities like acknowledgements of mail, external board work, etc., are included in this
category.
• Informational Role: Mintzberg mentioned that receiving and communicating information are perhaps the most important
aspects of a manager’s job. In order to make the right decisions, managers need information from various sources.
Typically, this activity is done through reading magazines and talking with others to learn about changes in the customers’
tastes, competitors’ moves and the like. Mintzberg called this the monitor role. In the disseminator role, the manager
distributes important information to subordinates that would otherwise be inaccessible to them. Managers also perform
the spokesperson role when they represent the organisation to outsiders.
• Decisional Role: There are four decision roles that the manager adopts. In the role of entrepreneur, the manager tries to
improve the unit. He initiates planned changes to adapt to environmental challenges. As disturbance handlers, managers
respond to situations that are beyond their control such as strikes, shortages of materials, complaints, grievances, etc. In
the role of a resource allocator, managers are responsible for allocating human, physical and monetary resources. As
negotiators, managers not only mediate in internal conflicts but also carry out negotiations with other units to gain
advantages for their own unit.
Contd…
• The term managerial roles refers to specific actions or behaviors expected of and
exhibited by a manager.
• When describing what managers do from a roles perspective, we’re not looking at a
specific person per se, but at the expectations and responsibilities that are associated
with being the person in that role.
• The interpersonal roles are ones that involve people (subordinates and persons
outside the organization) and other duties that are ceremonial and symbolic in nature.
• The three interpersonal roles include figurehead, leader, and liaison. The
informational roles involve collecting, receiving, and disseminating information.
• The three informational roles include monitor, disseminator, and spokesperson.
• Finally, the decisional roles entail making decisions or choices. The four decisional
roles include entrepreneur, disturbance handler, resource allocator, and negotiator
• Evidence generally supports the idea that managers—regardless of the type of
organization or level in the organization—perform similar roles.
CONTD…
• However, the emphasis that managers give to the various roles seems
to change with organizational level. At higher levels of the
organization, the roles of disseminator, figurehead, negotiator, liaison,
and spokesperson are more important; while the leader role (as
Mintzberg defined it) is more important for lower-level managers
than it is for either middle or top level managers.
Managerial Skills
• What types of skills do managers need? Robert L. Katz proposed that managers
need three critical skills in managing: technical, human, and conceptual.
• Technical skills are the job specific knowledge and techniques needed to proficiently
perform work tasks. These skills tend to be more important for first-line managers
because they typically are managing employees who use tools and techniques to
produce the organization’s products or service the organization’s customers.
• Human skills: involve the ability to work well with other people both individually and
in a group. Because all managers deal with people, these skills are equally important
to all levels of management. Managers with good human skills get the best out of
their people. They know how to communicate, motivate, lead, and inspire
enthusiasm and trust.
• Finally, conceptual skills are the skills managers use to think and to conceptualize
about abstract and complex situations. Using these skills, managers see the
organization as a whole, understand the relationships among various subunits, and
visualize how the organization fits into its broader environment. These skills are
most important to top managers
Managerial Skills
Important Managerial Skills

Based on “Dear Workforce: We’re Developing Onboarding for New Managers: What Should Be Included?” Workforce Online, March 4, 2010; J. R. Ryan, “The Coming Leadership
Gap: What You Can Do About It,” Bloomberg BusinessWeek Online, December 15, 2009; In-Sue Oh and C. M. Berry, “The Five Factor Model of Personality and Managerial
Performance: Validity Gains Through the Use of 360 Degree Performance Ratings,” Journal of Applied Psychology, November 2009, pp. 1498–1513; and R. S. Rubin and E. C.
Dierdorff, “How Relevant Is the MBA? Assessing the Alignment of Required Curricula and Required Managerial Competencies,” Academy of Management Learning & Education,
June 2009, pp. 208–224.
How Manager’s job changing?
• In today’s world, managers are dealing with global economic and
political uncertainties, changing workplaces, ethical issues, security
threats, and changing technology. For example,
Changes Facing Managers
Evolution of Management Thought

• The origin of management can be traced back to the days when man started living in
groups. History reveals that strong men organized the masses into groups according to
their intelligence, physical and mental capabilities.
• Evidence of the use of the well recognized principles of management is to be found in
the organization of public life in ancient Greece, the organization of the Roman
Catholic Church and the organization of military forces.
• Thus management in some form or the other has been practiced in the various parts
of the world since the dawn of civilization.
• With the on set of Industrial Revolution, however, the position underwent a radical
change. The structure of industry became extremely complex. At this stage, the
development of a formal theory of management became absolutely necessary. It was
against this background that the pioneers of modern management thought laid the
foundations of modern management theory and practice.
Industrial revolution
• Starting in the late eighteenth century when machine power was
substituted for human power, a point in history known as the
industrial revolution, it became more economical to manufacture
goods in factories rather than at home.
• These large efficient factories needed someone to forecast demand,
ensure that enough material was on hand to make products, assign
tasks to people, direct daily activities, and so forth. That “someone”
was a manager: These managers would need formal theories to guide
them in running these large organizations. It wasn’t until the early
1900s, however, that the first steps toward developing such theories
were taken.
Classical Approach
• Although we’ve seen how management has been used in organized efforts
since early history, the formal study of management didn’t begin until early
in the twentieth century. These first studies of management, often called the
classical approach, emphasized rationality and making organizations and
workers as efficient as possible. Management thought focussed on job
contents, division of labour, standardization, simplification and specialization
and scientific approach towards organization.
• Three major theories comprise the classical approach:
• Scientific management (Frederick W. Taylor)
• Bureaucracy (Max Weber)
• Administrative theory (Henri Fayol)
Scientific management (F. W. Taylor)
• F. W. Taylor well-known as the founder of scientific management was
the first to recognize and emphasis the need for adopting a scientific
approach to the task of managing an enterprise.
• Aims
• Increased production
• Quality control
• Cost reduction
• Elimination of waste
• Right men for right work
• Incentives wages
Principles of SM
• Replacement of old rule of thumb
• Scientific selection & training of workers
• Cooperation between labour and management
• Equal division of responsibility
• Maximum output
Techniques of SM
• Scientific setting of fair day’s work
• Work study (Method, Time , Fatigue and Motion study
• Planning the task
• Setting of wage rate (differential piece wage rate)
• Standardisation of tools, equipment etc
• Scientific selection, training and placement of workers
• Specialization or functional foremanship
• Route clerk Gang boss
• Instruction clerk Speed boss
• Time & cost clerk Repair boss
• Shop disciplinarian Inspector
Bureaucracy
• Weber developed a theory of authority structures and relations based
on an ideal type of organization he called a bureaucracy—a form of
organization characterized by division of labor, a clearly defined
hierarchy, detailed rules and regulations, and impersonal
relationships. He identified three kinds of authority
• Rational legal authority
• Traditional authority
• Charismatic authority
features
• Division of work
• Hierarchy of positions
• Rules & regulations
• Impersonal conduct
• Staffing
• Technical competence
• Official records
General administrative theory
Features of Classical Theory
• Considered formal organization
• Organizational structure
• Organizations as closed system
• Individual efficiency
• Centralization of authority
• Economic rewards
Appraisal of classical theory
• Narrow view of organization
• Assumption of closed system
• Assumption about human behavior
• Economic rewards as main motivators
• Lack of empirical verification
• Lack of universality of principles
• Excessive emphasis on rules and regulations
Neo-Classical Approach

• Human Relations Approach

• Organisation is a social system and the human factor is the most important
element within it.
• The findings were based on “Hawthorne Experiments” and revealed the
importance of social and psychological factors in determining worker’s
productivity and satisfaction.
• This approach put stress on communication, interpersonal relations and
informal groups at the work place.
• Eltom Mayo is generally recognized as the father of the Human Relation
School who conducted the Howthrone experiment along with his
associates.(1927-1932)
Hawthorne Experiment
• Illumination experiment
• Relay Assembly Room Experiment
• Bank Wiring Observation Room Experiment
• Mass Interview Program
Features of Neo Classical Approach

• Social System
• Social Environment
• Informal Organization
• Group Dynamics
• Informal Leader
• Two way Communication
• Non-economic Rewards
Human Relation Approach
• Elton Mayo and his associates conducted their studies in the Hawthorne plant of the western electrical
company, U.S.A., between 1927 and 1930. According to them, behavioural science methods have
many areas of application in management. The important features of the Hawthorne Experiment are:-
• 1. A business organization is basically a social system. It is not just a techno-economic system.
• 2. The employer can be motivated by psychological and social wants because his behaviour is also
influenced by feelings, emotions and attitudes. Thus economic incentives are not the only method to
motivate people.
• 3. Management must learn to develop co-operative attitudes and not rely merely on command.
• 4. Participation becomes an important instrument in human relations movement. In order to achieve
participation, effective two-way communication network is essential.
• 5. Productivity is linked with employee satisfaction in any business organization. Therefore
management must take greater interest in employee satisfaction.
• 6. Group psychology plays an important role in any business organization. We must therefore rely
more on informal group effort.
Contd..
• Features
• Social Systems
• Social environment
• Informal organization
• Group dynamics
• Informal leader
• Two way communication
• Non economic rewards
Criticism of Neo classical/Human Relation
Approach
• Lack Of scientific Validity
• Limited focus on work
• Over emphasis on group
• Over stretching of human relations
Behavioural approach
• As we know, managers get things done by working with people. This
explains why some writers have chosen to look at management by
focusing on the organization’s people.
• The field of study that researches the actions (behavior) of people at
work is called organizational behavior (OB). Much of what managers
do today when managing people—motivating, leading, building trust,
working with a team, managing conflict, and so forth—has come out
of OB research.
Features
• Inter disciplinary
• Applied science
• Normative science
• People oriented
• Goal oriented
• Based on system approach
• Based on collection and analysis of relevant data
• Provides insight about human behaviour
• Emphasized the role of motivation, perception, leadership, group
dynamics, organizational change.
Quantitative approach
• What exactly does the quantitative approach do? It involves applying
statistics, optimization models, information models, computer
simulations, and other quantitative techniques to management
activities. Linear programming, for instance, is a technique that
managers use to improve resource allocation decisions. Work
scheduling can be more efficient as a result of critical-path scheduling
analysis. The economic order quantity model helps managers
determine optimum inventory levels.
Contemporary approach
• Systems theory
• A system is a set of interrelated and interdependent parts arranged in
a manner that produces a unified whole.
• The two basic types of systems are closed and open.
• Closed systems are not influenced by and do not interact with their
environment. In contrast, open systems are influenced by and do
interact with their environment. Today, when we describe
organizations as systems, we mean open systems.
Contingency approach
• Management is not (and cannot be) based on simplistic principles to
be applied in all situations. Different and changing situations require
managers to use different approaches and techniques. The
contingency approach (sometimes called the situational approach)
says that organizations are different, face different situations
(contingencies), and require different ways of managing
Management as an Art, as a Science & as a
Profession
• A question often arises whether management is a science or art. It is
said that "management is the oldest of arts and the youngest of
sciences". This explains the changing nature of management but does
not exactly answer what management is? To have an exact answer to
the question it is necessary to know the meanings of the terms
"Science" and "Art".
What is “Science”?
Science may be described- "as a systematic body of knowledge pertaining to an area of
study and contains some general truths explaining past events or phenomena".
The above definition contains three important characteristics of science. They are
1. It is a systematized body of knowledge and uses scientific methods for observation
2. Its principles are evolved on the basis of continued observation and experiment and
3. Its principles are exact and have universal applicability without any limitation.
Judging from the above characteristics of science, it may be observed that
• Management is a systematized body of knowledge and its principles have evolved on
the basis of observation.
• The kind of experimentation (as in natural sciences) cannot be accompanied in the area
of management since management deals with the human element.
• In management, it is not possible to define, analyse and measure phenomena by
repeating the same conditions over and over again to obtain a proof.
• The above observation puts a limitation on management as a science. Management like
other social sciences can be called as "inexact science".
CONTD…
• What is “Art”?
• 'Art' refers to "the way of doing specific things; it indicates how an objective is to be achieved." Management like
any other operational activity has to be an art. Most of the managerial acts have to be cultivated as arts of
attaining mastery to secure action and results.
The above definition contains three important characteristics of art. They are
1. Art is the application of science. It is putting principle into practice.
2. After knowing a particular art, practice is needed to reach the level of perfection.
3. It is undertaken for accomplishing an end through deliberate efforts.

Judging from the above characteristics of art, it may be observed that

1. Management while performing the activities of getting things done by others is required to apply the knowledge
of certain underlying principles which are necessary for every art.
2. Management gets perfection in the art of managing only through continuous practice.
3. Management implies capacity to apply accurately the knowledge to solve the problems, to face the situation and
to realise the objectives fully and timely.

The above observation makes management an art and that to a fine art.
CONTD…
Management is both a science as well as an Art
Management is both a science as well as an art. The science of
management provides certain general principles which can guide the
managers in their professional effort. The art of management consists
in tackling every situation in an effective manner. As a matter of fact,
neither science should be over-emphasised nor art should be
discounted; the science and the art of management go together and
are both mutually interdependent and complimentary.
Management is thus a science as well as an art. It can be said that-"the
art of management is as old as human history, but the science of
management is an event of the recent past."
Professionalisation of Management
• There has been a growing trend towards professionalisation of
management. Professionalisation imparts a certain social responsibility
and dignity to management. A professional cannot be controlled or
directed by the client. He has professional knowledge and judgment
which he uses to make his decision. Thus, professionalisation makes
business more efficient, dynamic and socially responsible.
• The growth of management education in India has contributed to
professionalisation in the business field.
• The company form of business organization which has split ownership
from management and the gaining popularity of the company form of
business organization have increased the need for professional
managers.
CONTD…
• Is management a profession? To answer this question, first of all we
should understand what a profession is. Many authorities on the
subject have attempted to define a profession. According to Abraham
Flexner, A profession is –
1. A body of specialized knowledge and recognized educational process
of acquiring it.
2. A standard of qualifications governing admission to the profession.
3. A standard of conduct governing the relationship of the practitioners
with clients, colleagues and the public.
4. An acceptance of the social responsibility inherent in an occupation
and the public interest.
5. An association or society devoted to the advancement of the social
obligations as distinct from the economic interests of the group.
CONTD…
• According to Peter Drucker, "Professional management is a function, a
discipline, a task to be done; and managers are the professionals who
practice this discipline, carry out the functions and discharge these tasks. It
is no longer relevant whether the manager is also an owner; if he is it is
incidental to his main function, which is to be a manager.”
The World Council of Management has recommended the following criteria
for professionalisation. They are –
1. Members of a profession subordinate self-interest to the client interest
and the official interest.
2. A profession is based on a systematic body of knowledge that is held to
common and lends to application.
3. Membership of a profession should depend on the observance of certain
rules of conduct or behaviour.
CONTD….
• A critical evaluation of the above definitions show that professionalisation of business management
shows that –
1. There exists a systematic body of knowledge on management. A professional should have formally
acquired the specialized knowledge and skill for management. Management is taught as a discipline in
various educational institutes, throughout the world.
2. Membership of a profession should depend on the observance of certain rules of conduct and
behaviour. The decisions and actions of a professional are guided by certain ethical considerations.
3. A profession is based on a systematic body of knowledge that is held in common and lends itself to
application. Thus, a profession should have no ideological bias in the discharge of his functions.

A close scrutiny of management shows that management unlike law or medicine is not a full-fledged
profession. The reasons are –
1. It is not obligatory to possess specific qualifications for being appointed as a manager.
2. There is no single association to regulate the educational and training standards of managers.
3. Uniform professional standards have not been set up for the practicing managers.
Thus, from the above mentioned discussion we can understand that management fulfils certain criteria
to call it a profession. Whereas, it fails to meet certain other criteria. Therefore, we can conclude that
management is not a full-fledged profession but it is advancing towards professionalisation.
Management Vs Administration

• There has been some controversy over the use of the terms ‘management’, ‘administration’
and ‘organisation’. At the outset, it may be pointed out that organisation is a narrower term
as compared to the management process. The organisation function of management deals
with the division of work among individuals, creation of structure of relationship in terms of
authority and responsibility and laying down the channels of communication.
• The debate over the use of the terms management and administration has given rise to
three viewpoints:
• Administration is a higher level function concerned with the determination of policies
whereas management with the implementation of policies.
• Management is a generic term and includes administration.
• There is no distinction between management and administration and both the terms are
used interchangeably.
• The distinction between management and administration may be of academic interest, but
in practical life this distinction seems superfluous. Even if we accept the distinction made by
Sheldon or Tead, it will be very difficult to demarcate between the so-called administrative
and managerial functions because the same set of persons perform these functions.
CONTD…
1. Management is a systematic way of managing people and things
within the organization. The administration is defined as an act of
administering the whole organization by a group of people.
2. Management is an activity of business and functional level, whereas
Administration is a high-level activity.
3. While management focuses on policy implementation, policy
formulation is performed by the administration.
4. Functions of administration include legislation and determination.
Conversely, functions of management are executive and governing.
5. Administration takes all the important decisions of the organization
while management makes decisions under the boundaries set by the
administration.
CONTD…
6. A group of persons, who are employees of the organization, is collectively known as
management. On the other hand, administration represents the owners of the
organization.
7. Management can be seen in the profit making organization like business enterprises.
Conversely, the Administration is found in government and military offices, clubs,
hospitals, religious organizations and all the non-profit making enterprises.
8. Management is all about plans and actions, but the administration is concerned with
framing policies and setting objectives.
9. Management plays an executive role in the organization. Unlike administration, whose
role is decisive in nature.
10. The manager looks after the management of the organization, whereas
administrator is responsible for the administration of the organization.
11. Management focuses on managing people and their work. On the other hand,
administration focuses on making the best possible utilization of the organization’s
resources.
Difference between Management and Administration
Basis Management Administration
1.Meaning Management means getting the work done through and with others. Administration is concerned with the formulation
of objectives, plans and policies of the
organisation.

2.Nature of work Management refers to execution of decisions. It is a doing function Administration relates to decision making. It is a
thinking function.

3.Decision Making Management decides who shall implement the administrative decisions. Administration determines what is to be done and
when it is to be done.

4. Status Management is relevant at lower levels of management. Administration refers to higher levels of
management.

5. Usage of term The term 'management' is widely used in business organisations in the The term 'administration' is often associated with
private sector government offices, public sector and non-
business organisations.
CONTD…
Conclusion
• Theoretically, it can be said that both are different terms, but
practically, you will find that the terms are more or less same. You
would have noticed that a manager performs both administrative and
functional activities. Although the managers who are working on the
top most level are said to be the part of administration whereas the
managers working on the middle or lower level represents
management. So, we can say that administration is above
management.
Significance of values and ethics in Management
• Meaning of management ethics
• ‘Management Ethics’ is related to social responsiveness of a firm. It is
“the discipline dealing with what is good and bad, or right and wrong,
or with moral duty and obligation. It is a standard of behaviour that
guides individual managers in their works”.
• “It is the set of moral principles that governs the actions of an
individual or a group.”
• Business ethics is application of ethical principles to business
relationships and activities. When managers assume social
responsibility, it is believed they will do it ethically, that is, they know
what is right and wrong.
CONTD…
• Ethics is important because of the following:
• Satisfying Basic Human Needs: Being fair, honest and ethical is one the basic human needs. Every employee desires to be
such himself and to work for an organization that is fair and ethical in its practices.
• Creating Credibility: An organization that is believed to be driven by moral values is respected in the society even by those
who may have no information about the working and the businesses or an organization. Infosys, for example is perceived
as an organization for good corporate governance and social responsibility initiatives. This perception is held far and wide
even by those who do not even know what business the organization is into.
• Uniting People and Leadership: An organization driven by values is revered by its employees also. They are the common
thread that brings the employees and the decision makers on a common platform. This goes a long way in aligning
behaviors within the organization towards achievement of one common goal or mission.
• Improving Decision Making: A man’s destiny is the sum total of all the decisions that he/she takes in course of his life. The
same holds true for organizations. Decisions are driven by values. For example an organization that does not value
competition will be fierce in its operations aiming to wipe out its competitors and establish a monopoly in the market.
• Long Term Gains: Organizations guided by ethics and values are profitable in the long run, though in the short run they
may seem to lose money. Tata group, one of the largest business conglomerates in India was seen on the verge of decline
at the beginning of 1990’s, which soon turned out to be otherwise. The same company’s Tata NANO car was predicted as
a failure, and failed to do well but the same is picking up fast now.
• Securing the Society: Often ethics succeeds law in safeguarding the society. The law machinery is often found acting as a
mute spectator, unable to save the society and the environment. Technology, for example is growing at such a fast pace
that the by the time law comes up with a regulation we have a newer technology with new threats replacing the older
one. Lawyers and public interest litigations may not help a great deal but ethics can.
• Ethics tries to create a sense of right and wrong in the organizations and often when the law
fails, it is the ethics that may stop organizations from harming the society or environment.