Management concepts introduction

MANAGEMENT
CONCEPTS -
INTRODUCTION
K. ARAVINDARAJ B.E., M.Tech., M.B.A.,

Management - Definition
• Management is the act and science of getting things done by proper
planning, organizing, directing, coordinating and control.
• Management in some form or another is an integral part of living and is
essential wherever human efforts are to be undertaken to achieve desired
objectives.
• The basic ingredients of management are always at play whether we
manage our lives or own business.
• The management is the act of getting people together in order to fulfill
desired goals and objectives using available resources in an efficient and
effective manner.

Definition by Different Authors
• Peter Drucker: Management should accomplish the basic task of marketing and
innovation.
• Henry Fayol: Management to have the following six functions, which are
forecasting, planning, organizing, commanding, coordinating and controlling.
• Mary Parker Follet: Management as being a philosophy. She describes management
in simple terms as the art of getting things done through people.
• Van Fleet and Peterson: Management as a set of activities directed at the efficient
and effective utilization of resources in the pursuit of one or more goals.
• Megginson, Mosley and Pietri: Management as working with human financial and
physical resource in order to achieve organizational objectives by performing the
planning, organizing, leading and controlling functions.
• Kreitner: Management is a problem solving process of effectively achieving
organizational objectives through the efficient use of scarce resources in a changing
environment.

Nature of Management
• Management is a
Universal process
Factor of production
Goal oriented
Supreme in thought and action
Group activity
Dynamic Function
Social science
Important organ of society
System of authority
A profession
A process

Scope of Management
1. Subject matter of Management
2. Functional area of Management
3. Management is an inter disciplinary approach
4. Universal Application
5. Essential of Management
6. Modern Management is an agent of change

Function of Management
• Managerial Function:
Planning
Organizing
Directing
Coordinating and
Controlling
• Organizational Structure:
Tall structure
Flat structure
Line structure
Line and Staff structure
Functional Structure

Management Skills
Technical Skills
Interpersonal Skills
Conceptual Skills
Diagnostic Skills
Communicational Skills
Political Skills

Managerial Responsibility
The management is responsible and answerable to many
groups. Sometimes the interests of these groups conflict
with each other. Hence, management must conduct its affairs
in a manner so as to be fair and equitable to all parties who
have vested interest and claim on management. These
interest parties are as follows.
The stockholders and other investors
Employees
Consumers
Inter-related business
The government
The community

Evolution of Management Thought

Major Classification of Management Approach

The Classical Approach is also known as Functional Approach, Empirical
Approach and Management Process Approach. The main feature of this
approach are as follows:
Management is viewed as a systematic network of various functions like
planning, organizing, directing, staffing and controlling.
On the basis of experiences of practicing managers management
principles are developed and used as guidelines for practicing managers
and form the management training.
Functions, principles and skills of management are universal.
Formal education and training are emphasized for developing managerial
skills in upcoming managers.
Emphasis is placed on economic efficiency and the formal organization
structure.
People are motivated by economic gains. Therefore, the organization
controls economic incentives.

Advantages of Classical Approach
It focuses on what managers actually do.
It highlights the universal nature of management.
It provides a scientific basis for managerial practice.
It provides a starting point for researchers to verify
the validity and to improve the applicability of
management thought.

Disadvantages of Classical Approach
It ignores the environment changes and their effect on
management.
It relays too much on the past experience. The
technique or principle found effective in the past may
not be effective in the future.
It is based on oversimplified assumptions. Its
principles are ambiguous and contradictory.
It offers a mechanistic framework that undermines the
role of human factor.

Bureaucracy – Contribution of Max Weber
Max Weber, a German social scientist, analysed the formation and
administration of enterprises. The main features of this approach as
follows:
1. Division of Work: There is a division of work on basis of
specialization of jobs in bureaucratic organisation. Each employee
performs his specialized work in a predictable manner.
2. Rules and Regulation: Detailed rules and regulations regarding
work behavior, rights and duties of employee are laid down. Rules
are designed to ensure the consistency and predictability in work
performance. In addition to it, procedures are laid down for orderly
performance of tasks.
3. Hierarchy of authority: Hierarchy in organizations is characterised
by downward delegation of authority. Each superior exercises
control over his subordinates. The authority flows from the top
level to lower levels of management.

4. Technical Competence: Selection and promotion of employees
are based on the technical competence of employees. For each
job, the qualifications are prescribed. Training is also provided
to familiarise the employees with the rules and administrative
procedures of the organization.
5. Record Keeping: Every decision and action is recorded in its
original as well as draft form.
6. Impersonal Relations: Superiors are formal in dealings with
their subordinates.

Advantages of Bureaucracy
 Specialization
 Structure
 Rationality
 Predictability
 Democracy

Limitation of Bureaucracy
Rigidity
Goal Displacement
Impersonality
Compartmentalization of activities
Paperwork
Empire Building
Red Tape

Contribution of Henry Fayol
• Henry Fayol is said to be Father of Modern
Management. He was a Frenchman and working as a
Engineer with a mining company. He improved the
condition of the company from virtual bankruptcy to
high success.
• He wrote a book entitled, General and Industrial
Management, in French that was later on translated
into English.
• He laid down the principles of management, which he
deemed important for any organization.

The principles of Management are as follows:
1. Division of work
2. Authority and Responsibility
3. Discipline
4. Unit of command
5. Unity of direction
6. Subordination of individual interest to general interest
7. Remuneration of Personnel
8. Centralization
9. Scalar Chain
10. Order
11. Equity
12. Stability of tenure of personnel
13. Initiative
14. Espirit de corps

1. Division of Work: This is the principle of specialization,
which is very well expressed by economists as being
necessary factor for efficiency in the utilization of labour.
2. Authority and Responsibility: Fayol conceives authority as a
combination of official authority deriving from manager’s
official position and authority which is compounded of
intelligence, experience, moral worth, etc.,
3. Discipline: Respect for agreements which are directed as
achieving obedience, application, energy and the outward
market of respect. And also it requires good superiors at all
levels, clear and fair agreements and judicious application of
penalties.
4. Unity of Command: It states that an employee should receive
orders from one superior only.

5. Unity of Direction: This principle implies that each group of activities
having the same objectives must have one head and one plan and also the
direction is related to the functions of personnel.
6. Subordination of Individual Interest to general Interest: In any group, the
interest of the group should supersede of that individual. When the interest
differ, it is the function of management to reconcile them.
7. Remuneration of Personnel: Fayol perceives that remuneration and methods
of payment should be fair and also should be able to afford maximum
satisfaction to employee and employer.
8. Centralization: This principle refers to the extent to which authority is
concentrated or dispersed in an enterprise. Individual circumstances
determine the degree of centralization that gives the best over all yields.
9. Scalar Chain: Fayol thinks the scalar chain as a line of authority, a chain of
superiors from the highest to lowest ranks. And because it is an error of a
subordinate to depart needlessly from the lines of authority, the chain
should be short-circulated.

10. Order: Breaking this principle into material order
and social order, Fayol thinks of it as a simple edge
for everything. This organization is the principle,
which refers to arrangement of things and persons in
an organization.
11. Equity: Fayol perceives this principle as one of
eliciting loyalty and devotion from personnel with a
combination of kindliness and justice in managers
while dealing with subordinates.
12. Stability of tenure of personnel: Finding that
instability is both the cause and effect of bad
management, Fayol points out the dangers and costs
of unnecessary turnover.

13. Initiative: It is conceived as the process of thinking
out and executing a plan. Since it is one of the
keenest satisfactions for an intelligent man to
experience, Fayol exhorts managers to sacrifice
personal vanity in order to permit subordinates to
exercise it.
14. Esprit de corps: This principle implies that union is
strength and an extension of the principle of unity of
command. Fayol here emphasizes on the need for
teamwork and the importance of communication in
obtaining it.

Contribution of F. W. Taylor – Scientific
Management
• Frederic Winslow Taylor started his career as a machinist in 1875. He
studied engineering in an evening college and rose to the position of chief
engineer in his organization. He invented high – speed steel cutting tools
and spent most of his life as a consulting engineer.
• Taylor is called the Father of Scientific Management. His experience from
the bottom most level in the organization gave him an opportunity to know
at first the problems of the workers.
• Taylor’s principle concern was that of increasing efficiency in production,
not only to lower costs and raise profits but also to make possible increased
pay for workers through their higher productivity.
• Taylor saw productivity as the answer to both higher wages and higher
profits. He believed that the application of the scientific method, instead of
customs and rule of thumb could yield this productivity without the
expenditure of more human energy or effort.

• Taylor published a book entitled, The Principles of Scientific Management, in 1911.
He said that, ”Scientific Management is
 Not any efficiency device,
 Not a device of any kind for securing efficiency, nor is it a bunch or
group of efficiency devices.
 It is not a new system of figuring costs,
 It is not a new scheme of paying men,
 It is not a piece work system,
 It is not a bonus system,
 It is not a premium system,
 It is not holding a stop watch on a man and writing things down
about him,
 It is not time study,
 It is not motion study,
 Not an analysis of the movements of man,
 It is not the printing and loading and unloading of a ton or two of
blanks on a set of men and saying, “Here’s your system; go and use
of it .”
 It is not divided foremanship or functional foremanship; it is not
any of the devices which the average man calls to mind when
scientific management is spoken of…”

• Now, in its essence, scientific management involves a complete mental
revolution of the part of the working man engaged in any particular
establishment or industry.
• This complete mental revolution focuses on the duties of the organization
toward its work, toward its fellowmen and towards its employee, and it
involves an equally complete mental revolution on the part of those on
Management’s side, which involve the foreman, superintendent, owner of
the business, board of directors, and so on.
• They come to see that when they stop pulling against one another and
instead both turn and push shoulder to shoulder in the same direction, the
size of the surplus created by their joint effort is truly appreciable.
• When friendly cooperation and mutual helpfulness replace antagonism and
strife, it becomes possible for both the parties to make the surplus so
enormous that there is ample room for a large increase in wages for the
workman and an equally great increase in profits for the manufacturer.

The fundamental principles that Taylor saw
underlying the scientific approach to
management may be summarized as follows:
Replacing rule of thumb with science.
Obtaining harmony in group action, rather than discord.
Achieving co-operation of human beings, rather than
chaotic individualism.
Working for maximum output, rather than restricted
output.
Developing all workers to the fullest extent possible for
their own as well as company’s highest prosperity.

• Taylor concentrated more on productivity and
productivity based wages. He stressed on time and
motion study and other techniques for measuring
work.
• Apart from this, in Taylor’s work, there also runs a
strongly humanistic theme.
• He had an idealist’s notion that the interests of
workers, managers and owners should be harmonised.

Contribution of Henry L Gantt
• Henry Gantt worked with Taylor and was responsible for introducing
“Task and Bonus Plan” and the Gantt chart.
• The “Task and Bonus Plan” was aimed at providing extra wages for
extra work in addition to a guaranteed minimum wage. Bonuses were
also awarded to supervisors who were successful in getting their
workers to meet the output goal.
• The Gantt chart, which was a forerunner of today’s PERT (Program
Evaluation and Review Technique) was a chart on which the process of
work could be recorded.
• Managerial operations were Fayol’s primary concern and he defined
these organisation in terms of functions. These functions are:
Planning
Organizing
Command
Coordination
Control

Behavioral Approach
• The behavioral approach or the human relations approach is
based upon the premise of increase in production and
managerial efficiency through an understanding of the people.
• The growth and popularity of this approach is attributable to
Elton Mayo and his Hawthrone experiments.
• Mayo discovered that when workers are given special attention
by management, the productivity is likely to increase
irrespective of actual changes in the working condition.
• Abraham Maslow presented a theory of individual needs. The
basic aim of this approach is to increase the effectiveness of its
human resources, which could be achieved by properly take
care of human needs.
• The research results do not support the contention of
behavioral scientists that an increase job satisfaction alone
leads to higher productivity.

Contribution of Mayo and Roethlisberger
• Elton Mayo along with Roethlisberger conducted the famous Hawthorne
experiment. These experiments proved to be a milestone in the
development of Behavioral School of Management.
• These studies were primarily conducted to determine the effect of better
physical facilities and material incentives on worker output and also better
physical environment or increased economic benefits.
• In effect, the emphasis shifted to psychological and social forces in addition
to economic forces.
• The Hawthorne experiments suggested that an office or a factory is not
only a workplace but also a social environment in which the employees
interact with each other.
• This gave rise to the concept of social man whose interactions with others
would determine the quality and quantity of the work produced.
• No other theory or set of experiments has stimulated more research and
controversy nor contributed more to a change in management thinking than
the Hawthorne studies and human relations movement they spawned.

Contribution of H.A.Simon
• Herbert Simon, a noble prize winner in
Economics, has made significant contributions
in the field of management particularly
administrative behavior and decision making.
• Some of the major contributions of Herbert
Simon towards management are as follows: 1.
Concept of Organisation 2. Decision-making
3. Bounded Rationality 4. Administrative Man
5. Organizational Communication.

• His contributions cover both social systems
and decision theory approaches, more
particularly the latter.
• He described these principles as ‘myths’,
‘slogans’; and ‘homely proverbs’. Simon
looked at organizational problems in totality of
socio-psychological context and viewed that
decision making takes place in this context.

Contribution of Peter F. Drucker - MBO
• Drucker is a highly respected management thinker.
He is a prolific writer and has published several
books and articles on management practices. He has
drawn from his consultancy experience spread over
the last four to five decades.
• His view on management may be summarised as
follows:
Management as a Practice
Functions of Management
Objective Setting
Orientation towards Justice
Federalism

Management as a Practice
• According to Drucker, Management has two important
functions, Innovations and Marketing. He treated management
as:
Discipline and Profession.
Practice and Goal oriented.
Purpose of business.
Creation of customer.
• Drucker’s view on innovation is equally important to pay
emphasis towards the development of a new product.
• He considers the modern organisations are knowledge-based
and describes the modern workers as considering their skills
and innovative abilities.

Functions of Management
• Drucker’s point out three basic function of
Management. The action of management contribute
to:
1. The achievement of purpose and mission of the
institution.
2. Make the work productive and the worker
achieving.
3. Effective management of Social Responsibility.

Objective Setting
• He has specified that objectives should be set for all
the key result areas of business. To make objectives
and their achievement more meaningful, he has
framed a tool called as Management By Objectives
(MBO).
• It is a process where superiors and subordinates
jointly the common objective, set results that should
be achieved by subordinates and assess the
contribution of each individual.

Orientation towards Justice
• Drucker is a great visionary and futurologist. He was
ahead of others in visualizing the future trends that
affect society.
• His views on the many facets of modern corporations
have come into practical use now. To put it in his own
words, he describes the present age as the age of
discontinuity.

Federalism
• Drucker advocated the concept of federalism.
According to him, Federalism involves centralised
control in a decentralised structure. Some of the
positive values as follows:
1. It sets the top management free to devote itself to
major policy formulation and strategy development.
2. It defines the function and responsibilities of the
employees.
3. It creates yardsticks to measure twin suceess and
effectiveness in operating jobs.
4. It helps resolve the problem of continuity through
giving education to the managers of various units while
in an operating position.

Relevance of Management to Different
Types of Organization
• Every organization has a structure which
defines the hierarchy, the distribution of roles
or the responsibilities within the organization.
• The organizational structure of a company
affects which department is powerful, which
department takes more decisions or which
department has less power.

The types of Organization are:
1. Line Organization
2. Line and Staff Organization
3. Functional Organization
4. Project Organization
5. Matrix Organization

1. Line Organization:
• Line organisation is the simplest and oldest form
of organisation structure. It is called as military or
departmental or scalar type of organization. Under
this system, authority flows directly and vertically
from the top of the managerial hierarchy ‘down to
different levels of managers and subordinates and
down to the operative level of workers.
• Line organisation clearly identifies authority,
responsibility and accountability at each level.
The personnel in Line organization are directly
involved in achieving the objectives of the
organization.

Management concepts introduction

Line and Staff Organization
• This type of organization structure is in large
enterprises. The functional specialists are added to
the line in line and staff organization. Mere, staff
is basically advisory in nature and usually does
not possess any command authority over line
managers. Allen has defined line and staff
organization as follows.
• “Line functions are those which have direct
responsibility for accomplishing the objectives of
the enterprises and staff refers to those elements
of the organization that help the line to work most
effectively in accomplishing the primary
objectives of the enterprises.”

• In the line and staff organisation, staffs assist the line
managers in their duties in order to achieve the high
performance. So, in an organization which has the
production of textiles, the production manger,
marketing manager and the finance manager may be
treated as line executives, and the department headed
by them may be called line departments
• On the other hand, the personnel manager who deal
with the recruitment, training and placement of
workers, the quality control manager who ensure the
quality of products and the public relations manager are
the executives who perform staff functions.

Functional Organization
The functional organisation was evolved by F.W. Taylor while
he was working as a foreman. He suggested eight foremen,
four in factory and four in planning division as under.
Factory Division:
(i) The gang boss,
(ii) The speed boss,
(iii) The inspector, and
(iv) The maintenance or repair boss.
Planning Division:
(i) Route Clerk,
(ii) Instruction card clerk,
(iii) Time and cost clerk, and
(iv) The shop disciplinarian.

Project Organization
• This organizational structure are temporarily formed for
specific projects for a specific period of time, for the
project of achieving the goal of developing new
product, the specialists from different functional
departments such as production, engineering, quality
control, marketing research etc., will be drawn to work
together. These specialists go back to their respective
duties as soon as the project is completed.
• Really, the project organisation is set-up with the object
of overcoming the major weakness of the functional
organisation, such as absence of unity of command,
delay in decision-making, and lack of coordination.

Matrix Organization
• According to Stanley Davis and Paul Lawrence
matrix organisation is “any organisation that
employs a multiple command system that
includes not only the multiple command structure,
but also related support mechanism and an
associated organizational culture and behavior
pattern.”
• A matrix organisation, also referred to as the
“multiple command system” has two chains of
command. One chain of command is functional in
which the flow of authority is vertical.

• The second chain is horizontal depicted by a
project team, which is led by the project, or
group manager who is an expert in his team’s
assigned area of specialization.
• Since the matrix structure integrates the efforts
of functional and project authority, the vertical
and horizontal lines of authority are
combination of the authority flows both down
and across.

References:
• Koontz & Weirich,(1998) Essentials of
Management: Tata McGraw Hill Publishing
Company:New Delhi.
• Michael A. Hitt, J. Stewart Black, & Lyman W.
Porter, (2011). Management. (11th ed.): Pearson
• Ricky W. Griffin & Gregory Moorhead.
(2011). Organisational Behaviour: Managing
people and Organisations, category Learning.

Management concepts introduction

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