Principles of Management Basics

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PSB Learning Material PM
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Management
Management is a multipurpose organ that manage a business and
manages Managers and manages Workers and work.—Peter Drucker.
Management "art of getting things done through people." Mary
Parker Follett.
Man+ Arrangement, so we can say that the process of Arrangements done by men is management. Here
the Management or the Manager is not working by himself rather he is just creating an environment so
that individual working in group in an organization can efficiently and effectively achieve the
organizational objectives.
Effectiveness is about doing the right task, completing activities and achieving goals.
Efficiency is about doing things right or we can say in an optimal way, for example doing it the fastest or
in the least expensive way. It could be the wrong thing, but it was done optimally.
Functions or Process of Management

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Hery Mint berg Ten Managerial Roles
Mintzberg published his Ten Management Roles in his book, "Mintzberg on Management: Inside our
Strange World of Organizations," in 1990.
Interpersonal Category
The roles in this category involve providing information and ideas.
Figurehead – As a manager, you have social, ceremonial and legal responsibilities. You're expected to
be a source of inspiration. People look up to you as a person with authority, and as a figurehead.
Leader – This is where you provide leadership for your team, your department or perhaps your
entire organization; and it's where you manage the performance and responsibilities of everyone in
the group.
Liaison – Managers must communicate with internal and external contacts. You need to be able to
network effectively on behalf of your organization.
Informational Category
The roles in this category involve processing information.
Monitor – In this role, you regularly seek out information related to your organization and industry,
looking for relevant changes in the environment. You also monitor your team, in terms of both their
productivity, and their well-being.
Disseminator – This is where you communicate potentially useful information to your colleagues and
your team.
Spokesperson – Managers represent and speak for their organization. In this role you're responsible
for transmitting information about your organization and its goals to the people outside it.
Decisional Category
The roles in this category involve using information.
Entrepreneur – As a manager, you create and control change within the organization. This means
solving problems, generating new ideas, and implementing them.
Disturbance Handler – When an organization or team hits an unexpected roadblock, it's the manager
who must take charge. You also need to help mediate disputes within it.

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Resource Allocator – You'll also need to determine where organizational resources are best applied.
This involves allocating funding, as well as assigning staff and other organizational resources.
Negotiator – You may be needed to take part in, and direct, important negotiations within your team,
department, or organization.
Different Management Skills
Technical skills refer to core competency and it is required at first level.
Human Skills refers to ability of the managers to communicate properly for a healthy work
environment, specially needed for middle managers while required at all levels of management.
Conceptual Skills refers to the ability of the Management to bring abstract situation into
reality.
Design skills refer to the problems solving ability of the Management.

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Approaches to Management
1. The empirical or case approach: In this approach, one tries to understand
management principles with the help of cases. It also identifies the situations,
wherein organizations have either succeeded or failed by following this approach.
However this approach has only limited value for developing management theory
2. The interpersonal behavior approach: This approach is based on individual
psychology and focuses on interpersonal relationships.
3. The group behavior approach: This approach is based on sociology and social
psychology. It stresses on the behavior of people in groups.
4. The cooperative social systems approach: It advocates a system of cooperation
using both interpersonal and group behavioral aspects.
5. The sociotechnical systems approach: It realizes the impact of technical systems
on personal attitudes and group behavior. This approach focuses on areas
involving close relationships between the people involved and technical systems
such as production, office operations, etc.
6. The decision theory approach: The focus in this approach is on the decision-
making process and people involved in it.
7. The systems approach: It considers organizations to be open systems as they
interact with the external environment. It recognizes the importance of the inter
relationship between planning, organizing and controlling.
8. Mathematical Approch- This approach treats management as a logical process, which
can be expressed in terms of mathematical symbols and relationships.
9. The contingency or situational approach: In this approach, the main assumption is
that there is no hard and fast rule for all situations. Managerial practice depends
upon circumstances. Different circumstances may necessitate the use of different
methods.
10. The managerial roles approach: This approach had been developed by studying
the work methods of five chief executives. The study identified ten managerial
roles, which were grouped into three categories – interpersonal, informational and decisional
roles.
11. MC Kinsey 7 s approach- strategy, structure, systems, style, staff, shared values and skills.
12. The operational approach: This approach attempts to develop the science and
theory of management by drawing upon concepts, principles, techniques and
knowledge from other fields and managerial approaches.

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History of Management Thoughts
Robert Owen: Human Resource Management Pioneer
 Significance of human resources.
 workers' performance was influenced by the environment in which they worked
 He proposed legislative reform that would limit the number of working hours and restrict the use of child labor
 At his own factories, he introduced a standard working day of 10½ hours and refused to employ children under
the age of ten.
 He tried to improve the living conditions of his employees by ensuring basic amenities like better streets,
houses, sanitation, and setting up an educational establishment in New Lanark.
 Recommended the use of a "silent monitor" to openly rate an employee's work on a daily basis.
 Publicizing of sales and production figures by many modern organizations is based on the same psychological
principle.
Charles Babbage: Inventor and Management Scientist
 Charles Babbage (1792-1871) is widely known as the "father of modern computing"
 His major contributions to the field of computing were the world's first mechanical calculator and an "analytical
engine" (which was a forerunner of the modern computer).
 Babbage was an advocate of the concept of division of labor. He was impressed by the idea of work
specialization, or the degree to which work is divided into various tasks.
 Devised a profit-sharing plan under which bonuses were given for useful suggestions contributed by employees
and wages were based on the profits generated by the factory
 The modern-day Scanlon Plan, under which workers offer suggestions to improve productivity and then share
the resulting profits, is based on Babbage's ideas.
Henry Robinson Towne (1844-1924)
He emphasized the need to consider management as a separate field of systematic study on the same level as
engineering.

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Classical Approach
The classical approach to management focused on the development of efficient methods of
managing work and organizations. This approach can be classified into three schools of
management. They are:
1. Scientific Management- One Best way to do a job, rule of thumb, economic man etc.
F.W. Taylor’s theory was based on four principles:
• Replacement of conventional methods by scientific methods.
• Scientific selection, training and development of workers.
• Equal distribution of work and responsibility between the managers and the
workers.
• Improvement of productivity through work and motion studies, tools and
incentives.
• Piece-rate incentive system
• Time-and-motion study

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Frank and Lillian Gilbreth The Gilbreths devised a classification scheme to label seventeen basic hand motions -
such as "search," "select," "position," and "hold" - which they used to study tasks in a number of industries. These 17
motions, which they called therbligs (Gilbreth spelled backward with the't' and 'h' transposed), allowed them to
analyze the exact elements of a worker's hand movements.
Henry Laurence Gantt
Gantt's incentive plan, if the worker completed the work fast, i.e. in less than the standard time, he received a
bonus. He also introduced an incentive plan for foremen, who would be paid a bonus for every worker who reached the
daily standard.
Limitations of scientific management
 The principles of scientific management revolve around problems at the operational level and do not
focus on the management of an organization from a manager's point of view
 Overlooked the social needs of workers and
overemphasized their economic and physical needs.
 Scientific management theorists also ignored the human desire for job
satisfaction
Administrative Theory
Fayol's Principles of Management

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Bureaucratic Management
Max Weber said that a bureaucracy is a highly structured, formalized, and impersonal organization." He propagated
the belief that an organization should have a defined hierarchical structure managed by clearly defined regulations
and lines of authority. The major characteristics of Weber's ideal bureaucracy include:
• Specialization of labor.
• Formal rules and regulations.
• Impersonality in application of rules.
• Well defined hierarchy.
• Career advancement based on merit.
Classical theorists ignored important aspects of organizational behavior. They did not deal with
the problems of leadership, motivation, power, or informal relations.

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Behavioral Approach
Mary Parker Follet: Focusing on Group Influences
She suggested that organizations function on the principle of "power with" rather than "power over." Power,
according to Follet, was the ability to influence and bring about a change. Follet also advocated the concept of integration,
which involves finding a solution acceptable to all group members.
Elton Mayo: Focusing on Human Relations
Elton Mayo (1880-1949), the "Father of the Human Relations Approach," led the team which conducted a study at
Western Electric's Hawthorne Plant between 1927 and 1933 to evaluate the attitudes and psychological reactions of
workers in on-the-job situations.
Abraham Maslow: Focusing on Human Needs
Abraham H. Maslow theorized that people were motivated by a hierarchy of needs. His theory rested on three
assumptions. First, all of us have needs which are never completely fulfilled. Second, through our actions we try to fulfill
our unsatisfied needs.

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Douglas McGregor: Challenging Traditional Assumptions about Employees
Chris Argyris: Matching Human and Organizational Development
Model I and Model II organization
The employees in Model I organization are manipulative and pitted against each other. They are not willing to take risks.
Workers in Model II organization are open to learning and less manipulative. Their access to information gives them
freedom to make informed choices, which in turn increases their willingness to take risks. Hence, according to
Argyris, managers should strive to create a Model II environment.
Quantitative Approach
Management Science
Management science aids in effective decision-making by applying modern mathematical and statistical models to
managerial practices in the areas of planning and control.

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Operations Management
Operations management is the field of study relating to the effective management of production and delivery of
goods and services. Operations management is concerned with: (i) inventory management, (ii) work scheduling, (iii)
production planning, (iv) facilities location and design, and (v) quality assurance
Management Information Systems
Management information systems aid in designing and implementing computer based information systems for
management applications. Data is collected, analyzed, and made available to managers when they need it.
Modern Approaches to Management
Systems Theory

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The systems approach gives managers a new way of looking at an organization as a whole and as a part of the larger,
external environment.
Contingency Theory
There is no single principle to manage all the situations in an organization

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Theory Z
William Ouchi, a management expert, conducted research on both American and Japanese
management approaches and outlined a new theory called Theory Z. This theory combines the
positive aspects of both American and Japanese management styles.

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Social Responsibilities of Management
"Social responsibility contends that management is responsible to the organization itself and
to all the interest groups with which it interacts. Other interest groups such as workers, customers,
creditors, suppliers, government and society in general are placed essentially equal with
shareholders."
Arguments for and against Social Responsibilities of Business
 Change in public expectations
 Business is a part of society
 Avoiding intervention by government
 Balance of responsibility and power
 Impact of internal activities of the organization on the external environment:
 Protecting shareholder interests
 New avenues to create profits
 Favorable public image
 Endeavor to find new solutions
 Best use of resources of a business
 Prevention is better than cure
Arguments against Social Responsibilities of Business
 Opposes the principle of profit maximization
 Excessive costs
 Weakened international balance of payments
 Increase in the firm's power and influence:
 Lack of necessary skills among businesspeople
 Lack of accountability to society
 Lack of consensus on social involvement
Social Stakeholders
Business enterprises are primarily accountable to six major interest groups

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Measuring Social Responsiveness
What should be Measured?
Contributions- Ex - many companies made financial contributions towards relief and rehabilitation work after the
Gujarat earthquake (January, 2001)
Fund-raising- The Times of India and the Indian Express participate in fund-raising campaigns to help people affected by
natural disasters
Volunteerism- Boots Company has a volunteering program called 'Skills for Life,' which gives employees a host of
opportunities to get involved in community activities in company time.
Recycling- Nike and The National Recycling Coalition have decided to expand their 'Reuse-a-shoe' program to 25
community centers across the United States. This will allow athletic footwear to be recycled into new products like
sports surfaces.
Valuing diversity- In India, some of the companies that have well-developed diversity policies are Hewlett-Packard,
Philips Software, MindTree Consulting, IBM, Motorola, Oracle and Microsoft.
Direct corporate investment- Hewlett-Packard has launched three digital villages across the United States, which
will provide local schools, businesses and community technology centers with equipment and training in the latest digital
technology.
Quality of work life- The survey revealed, among other things, that employees desired to have access to personal
training facilities. So, Tate & Lyle set up a new Learning Resource Center at the Thames Refinery in London. This would
allow all Thames-based employees to update their existing skills or acquire new ones. The Center also provided
employees the facilities for enhancing their professional qualifications or just expanding their knowledge base.
Attention to consumers- Bajaj Auto aims at designing vehicles which give excellent performance and cause the
least harm to the environment, Bajaj Auto also employs test riders who test the vehicles on all types of terrain and
weather conditions to ensure the suitability of the design before its commercialization.
Pollution control- Industries' first power plant near the Krishna-Godavari gas fields observes stringent pollution
control standards. The plant uses natural gas or naptha (instead of coal) to produce electricity, thereby, causing
significantly less pollution.
Social audits- a commitment to systematic assessment of and reporting on some meaningful, definable domain of
the company's activities that have a social impact.
Social audits can be broadly distinguished into two types: (i) those required by the government, and (ii) voluntary
social programs. The audits imposed by the government involve the audit of pollution control measures, audit of product
performance, and audit of equal employment standards. The second type includes voluntary audits made by companies
to identify the extent of their social responsiveness.

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Managerial Ethics
"Business ethics is concerned with truth and justice and has a variety of aspects such as the expectations of society, fair
competition, advertising, public relations, social responsibilities, consumer autonomy and corporate behavior in the
home country as well as abroad."
Types of Managerial Ethics
Factors that Influence Ethical Behavior
 Stages of moral development
 Individual characteristics
 Structural variables
 Organization's culture
 Issue intensity
Ethical Guidelines for Managers
 Obeying the law
 Tell the truth
 Uphold human dignity
 Adhere to the golden rule
 Primum non-nocere (above all, do no harm)
 Allow room for participation
 Always act when you have responsibility
 Mechanism for Ethical Management

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Top management commitment
 Code of ethics- A code of ethics is a formal document that defines an organization's values
and ethical rules. They guide employees on ethical behavior
 Ethics committee- An ethics committee is responsible for framing ethical policies and
implementing them in the right manner.
 Ethics audits- Ethics audits involve the systematic assessment of the adherence of employees
to the organization's ethical policies. They aid in better understanding of the policies and
also identify the deviations in conduct that require corrective action.
 Ethics training
 Ethics hotline- An employee who reports real or perceived misconduct to an external agency
(which may be able to take remedial action) is called a whistle-blower.
Best of Luck !

Principles of Management Basics

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