Management principles aand practices

MANAGEMENT PRINCIPLES AND PRACTICES Dr. R. Krishna FT – MBA – NMIMS FIRST TRIMESTER

Definition of Management Management : On expanding : Manage – men – tactfully Manage – Men – technology Manage – men – as team Manage – competencies Manage – objectives (MBO) Manage – men and things (resources – physical, inanimate) MANAGE – f ( RISKS, REWARDS) Competencies = f (SKATE) (Men/Women- no discrimination) Norway will have by 2007, 40% women in all fields, in govt orgs, in corporates and also in NGOs. This is now made as a law.

When it comes to manage people, it is said that “people are enigmatic.” Thus, Management is enigmatic. Harold Koontz described the present state of management theory as a “jungle.” There can be lots of ambiguity and there will be no recipe book

MANAGEMENT IS A FUNCTION OF : M = f(RESULTS, FEEDBACK, RESULTS……) MANAGING THE INTERNAL AND EXTERNAL ENVIRONS IN THE BIO-ECOSYSTEMS, THROUGH VARIOUS EFFECTIVE AND EFFICIENT PROCESSES, WITH THE OBJECTIVE OF ACHIEVING LAID DOWN EXPECTED RESULTS.

All is PEOPLE RESOURCE MANAGEMENT Why? Get into discussion mode: Who Created all that is around us: Except the sun, the moon, air, ocean, sky, stars, and the first human being and the first animals/insects Thereafter the development of clones, artificial insemination, going on the moon, technological advancements and moving towards civilization is all done my people.

Definition of “Management” By Griffin: “A set of management functions directed at the efficient and effective utilization of resources in the pursuit of organization goals.”

Definition….contd…. By Koontz and Weihrich: “ Management is the process of designing and maintaining an environment in which individuals working together in groups, efficiently accomplish selected aims.”

Peter F. Drucker-Father of Modern Management Management is an organ, organs can be described and defined only through their functions

The difference between Management Principles and Management Functions: “ What should I do (principles) to ensure that I do my job (functions) with effectiveness and efficiency.” Principles are strategies / processes which enable the individual to do their functions better to achieve laid down goals and objectives GOALS – qualitative achievements Objectives – could have a mix of quantitative and qualitative

Terry & Franklin… Management is a distinct process consisting of activities of planning, organizing, actuating, and controlling, performed to determine and accomplish stated objectives with the use of human beings and other resources.”

Top level Middle level Supervisory level/entry level CONCEPTUAL SKILLS H U M A N S K ILL S TE CH NI CAL SKI LLS

Henry Mintzberg… He has categorized these roles into three groups interpersonal roles Informational roles Decisional roles Description of each of the roles……

Interpersonal Roles A manager serves as a figurehead – a symbol; as a leader, ie., hires, trains, encourages, fires, remunerates, judges; and as a liaison between outside contacts and the organizational)

Informational roles A manager serves as a monitor by gathering information; As a disseminator of information As a spokesperson of the organization

Decisional Roles A manager serves as an entrepreneur by being: An initiator Innovator Problem discoverer Designer of improvement projects As a disturbance handler of unexpected situations As a resource allocator and As a negotiator

ALL THE THREE ROLES PUT TOGETHER IS CALLED AS: THE MANAGERIAL WORK ACTIVITY APPROACH

The whole management process is actually an integration of the work activity (Mintzberg) and the management functions MANAGEMENT FUNCTIONS : Planning, Organization, Co-ordination, motivation, and control are Universal. These functions are performed in all organizations – SMEs, Large, not-for-profit organizations, etc.

Definitions Planning : Management functions that involves the process of defining goals, establishing strategies for achieving those goals and developing plans to integrate and coordinate activities Organizing: management function that involves the process of determining what tasks are to be done, who is to do them, how the tasks have to be grouped, who reports to whom, and where decisions are to be made

Leading : management functions that involves motivating subordinates, influencing individuals or teams as they work, selecting the most effective communicating channels or dealing with any with employee behavior issues Controlling : Management functions that involving monitoring actual performance, compiling actual to standard, and taking action if necessary Management process : The set of ongoing decisions and work activities in which managers engage as they plan, organize, lead and control.

The pyramid to the top Talk of management levels: Top level middle level Front line supervision Non-managerial work force

Leadership Blake and Mouton: R1 ----  R2 ------  R3 R1 = RESOURCES R2 = RELATIONSHIPS R3= RESULTS

What is leadership? A sound way of exercising leadership is through the use of what are called as three Rs – Resources, relationships and results. How a person operates in this context can make a difference between organization success and failure

5, 5 Middle of the Road Management CONCERN FOR PEOPLE CONCERN FOR PRODUCTION low Low High High 1,9 – Country Club Mgmt Team Mgmt 9,9 1,1 Impoverished Mgmt Authority Compliance 9,1 X & Y axis on a scale of 1 – 9 THE ;LEADERSHIP GRID : Source: Scientific Methods Inc.

How concerns for Production/People affect Leadership Style: 1,9 : Country Club Management : Thoughtful attention to the need of people for satisfying relationships leads to a comfortable, friendly organization atmosphere and work tempo. 1,1 : Impoverished Management : Exertion of minimum effort to get required work done is appropriate to sustain organizational membership 9,1 : Authority Compliance : Efficiency in operations results from arranging conditions of work in such a way that human elements interfere to a minimum degree 9,9 : Team Management : Work accomplishment is from committed people; interdependence to a “common stake” in organization purpose leads to relationships of trust and respect

9+9 : Paternalistic management : Reward and approval are granted to people in return for loyalty and obedience; failure to comply leads to punishment OPPORTUNISTIC MANAGEMENT : In this style, organization performance occurs according to a system of exchanges, whereby effort is given only for an equivalent measure of the same. People adapt to the situation to gain maximum advantage from it. (all leadership points ie. 1,1; 1,9;, etc., converge at a new point – OPM)

THE MOTIVATIONAL DIMENSIONS FOR EACH STYLE – PLEASE REFER TO LEADERSHIP GRID OF BLAKE AND MOUTON.

Management….. Is based on a systematic body of knowledge-laws, principles and concepts – And this knowledge is universal If a manager has this fundamental knowledge And knows how to apply it to a given situation He should be able to perform the managerial functions efficiently and effectively

Management…… Management Practice is regarded as an art But, organized knowledge about management is a science THUS MANAGEMENT IS BOTH AN ART AND A SCIENCE

Management ….. Is also a profession Separation of ownership from control The rules and regulations framed by the govt to protect citizens from exploitation The growth of trade union movement The desired of business leaders for social status And the Impetus of the scientific management philosophy which stresses the need for technically trained professional managers – contributed to the PROFESSIONALIZATION OF MANAGEMENT.

Most important human activities is managing Mackenzie King remarked: “Labor cannot do anything without capital, Capital nothing without labor and neither Can do anything without the guiding genius of management.”

This should have enabled you to understand what management is at a fundamental level of definition and understanding…….. Any questions……

Evolution of Management Thought Give a handout titled: “Early streams of Managerial ideas responding to situational demands Put students on discussion mode

Schools of Management Thought It was during the 20 th century that a systematic study of management began

4 schools of thought (by: Newman, Summer and Warren) Productivity approach Behavioral approach Rationalistic model approach, and Institutional approach

Hutchison’s classifications Classical management theory Human behavior theories Social and political systems approaches Ecological systems approach and Rational decision making concepts

THE CONTRIBUTORS ON MANAGEMENT PRICIPLES…

Charles Babbage (1792-1871) Benefits of division of labor Use of science and mathematics Emphasis on cost reduction

Henry R. Towne Main contribution is : “That he set the climate and atmosphere for the later application of scientific methods. Of lesser importance was his plan of gain-sharing as a system of wage payment.”

Henry Metcalfe (1847-1917) In 1885, his pioneering work: The Cost of Manufacturers and the administration of Workshops, Public and Private Theory of Management was based on system and control He insisted that all authority should emanate from a given source, with a flow back to that source of detailed information concerning expenditures and accomplishments

Henry Laurence Gantt (1816-1919) Educated from John Hopkins College Engineer, as draughtsman and later Asst. engineer His publications: Work, Wage and Profits (1910); Industrial Leadership(1916); and Organizing for Work.(1919)

Gantt’s Thoughts…. Task and Bonus Plan Daily Balance Chart (Gantt Chart) Humanizing Science of Management Important of Leadership Training of Workers Social Responsibility of Business (Also called as : Forerunner of modern industrial democracy; also called as “apostle of industrial peace”)

Harrington Emerson (1853-1931)- Popularizer of scientific management Principles of Efficiency (12) 1. Clearly define ideal 2. commonsense 3. Competent Counsel 4. Discipline 5. Fair deal 6. Reliable, immediate, adequate and permanent records 7. Dispatching (production scheduling and control techniques) 8. Standards and schedules 9. Standardized conditions 10. Standardized Operations 11. Written standard practice instructions 12. Efficiency reward

According to Ernest Dale, Emerson really advocated the elimination of waste: Setting definite logical goals for all company operations and making managers down the line understand them so that they would not be seeking private goals of their own Production planning and scheduling and the use of written standard practices Better utilization of machine and man

d. Cost Accounting e. Standards and specifications for materials f. Standardization of parts and products as far as possible g. A rational approach to capital expenditures h. Better selection, placement, and fair treatment of employees and a system of financial incentives as equitable as possible

Frank Bunker Gilbreth (1868-1924) and Lillian Moller Gilbreth(1878-1972) FBG: authored: Concrete Systems (1908); Field System (1908); Motion Study (1911); Power of Scientific Management (1912); Fatigue Study (1916); Applied Motion Study (1917, with Lillian Gilbreth); and Motion study for the Handicapped (1920) The Father of Motion Study was a contemporary of Taylor and Gantt

Lillian Moller Gilbreth:Professor of Management at Purdue University. Her famous works: The Psychology of Management (1914) and Quest for the Best Way (1924)

Contributions by Frank Gilbreth Motion study Time Study One best way Training of personnel Three position plan of promotion (each worker should be considered to occupy three positions: a. the job he held before promotion to his present position b. his present position and c. the next higher job Part of his work, then would be teaching the man below him and learning from the man above him. In this way, he would qualify for promotion himself and help to provide a successor to his current job.

Contributions of Lillian Gilbreth It should be noted that FBG was greatly assisted by Lillian Gilbreth whom he married in 1904 Both of them used motion picture films to analyze and improve motion sequences Both developed the process of chart and the flow diagram to record process and flow patterns used in a work situation They emphasized written instructions to avoid confusion and misunderstanding (the white list card system) The Gilbreths urged tha the POM and motion analysis could effectively be applied to huge untapped area of self-management. They started to search into the area of fatigue and its impact o health and productivity.

Robert Owen (UK)-The father of personnel management Contributions: Improvement in Factory and domestic conditions of his employees Social reforms (creating model community out of his mills town; educational reforms) Owen said that his object was not to be a “mere manager of cotton mills, but to introduce principles in the conduct of the people.”

Fredrick Taylor The credit of systematic study and practice of management goes to FWT, very well known as FATHER OF SCIENTIFIC MANAGEMENT Experiments of Taylor ……

Midvale experience At Midvale Steel Company, he found that individual workers had their own notions about work and different workers performed the same task in different ways He realized that greater output was possible on the part of the workers but most of them were engaged in what he called ‘systematic soldiering.’ The solution: the first task of management was to know what constituted a proper day’s work He conducted time studies at Midvale Steel Company which proved of immense use to him

Bethlehem Experiments – Pig-Iron Handling Taylor was hired by the Bethlehem Steel Company to increase the output of one of the larger machine shops which had been a serious production bottleneck Conclusion: Periodic rests enabled a worker to produce more than continuous work. By a systematic resting time and improved methods average productivity was raised from 12.5 tons to 47.5 tons per day. Taylor began selecting workers and training them in handling pig-iron The original crew was 75, this reduced dramatically The earnings of the crew increased from USD1.15 to USD 1.85 per man per day.

Taylor’s prescription for Manager’s responsibilities Under four heads : They should develop a science for each element of man’s work which replaces the old rule of thumb method They should scientifically select and then train, teach and develop the workmen They should heartily cooperate with the men so as to ensure performance of work in accordance with the principles of the science which have been developed There should be almost equal division of work and responsibility between management and workmen Taylor, wanted that management should take the responsibility of planning, directing and organizing work. HE DEEMED IT ESSENTIAL TO SEPARATE THE PLANNING OF WORK FROM ITS EXECUTION , SO THAT EACH INDIVIDUAL COULD WORK AT HIS BEST EFFICIENCY AND COULD BE COMPENSATED ACCORDINGLY.

Taylor’s Management Principles Large, daily, defined task Standard conditions – skill sets and tool sets to be made available with authority along with clear cut objectives and expectations; this is called as ACCOUNTABILITY High Pay for success Loss in case of failure Separation of planning from doing – the most valuable insights of TAYLOR Functional foremanship

HENRY FAYOL= Father of Principles of Management Division of labor Authority and Responsibility Discipline Unity of command (one boss---subordinate) Unity of Direction (one head and one plan) Subordination of Individual Interests to General Interest (FIRM, FAST AND FAIR)

Remuneration of Personnel (Pay by Results; motivational – ESOPS, etc) Centralization (optimization between centralization and decentralization; as the human body – brain is the centralized organ) Scalar Chain – This is “the chain of superiors” ranging from the ultimate authority to the lowest ranks. THE ORGANOGRAM Order: Right man in the right place; competency specific; man should fit the job and not the other way round; or else this will be like A SQUARE PEG IN A ROUND HOLE.

Stability of tenure of personnel – retention of talent; attrition; turnover of people Initiative – encourage initiative among subordinates Esprit-de-Corps : UNION IS STRENGTH; team work; cohesiveness among the members

Fayol’s Elements of Management Fayol made a distinction between “General Principles of Management” and “elements of Management.” The latter was regarded as functions of management. Dividing them into: PLANNING, ORGANIZATION, COMMAND, COORDINATION AND CONTROL

Planning Planning : most important and difficult managerial function. Planning meant “looking ahead” and to foresee – both to assess the future and make provision for it He considered – unity, continuity, flexibility and provision as the broad features of a good plan of action A GOOD PLAN IS A PRECIOUS MANAGERIAL INSTRUMENT A GOOL PLAN ALSO HAS TO BE IMPLEMENTABLE

ORGANIZING Means : “to organize a business is to provide it with everything useful to its functioning, raw materials, tools, capital, personnel.” Fayol concerned himself both with structure and process, listing 16 managerial duties and emphasizing the necessity for clear objectives, authority, decisions and task

COMMAND/DIRECTION After the organization is formed, it is the mission of command to set it going. For every manager, the object of command is to get the optimum return from all employees of his unit in the interest of the whole concern The art of command, according to Fayol, rests on certain personal qualities and knowledge of general principles of management

COORDINATION To coordinate is to harmonize all the activities of a concern so as to facilitate its working and its success According to him, in a well coordinated enterprise the following facts are to be observed; Every dept works in harmony with the rest Divisions or sub-divisions in each dept are precisely informed as to the share they must take in the commercial task and the reciprocal aid they are to afford one another The working schedule of the various departments and sub-divisions thereof is constantly attuned to circumstances

CONTROL/MEASUREMENT AND FEEDBACK According to Fayol, control consists in verifying whether everything occurs in conformity with the plan adopted, the instruction issued and the principles established Its object is to point out weaknesses and errors in order to rectify them and prevent recurrence. It operates on everything – resources (things), people and actions

Key principles of Mgmt of FAYOL Unity of command Unity of direction Responsibility equal to authority and Scalar Chain

MAX WEBER- THETHEORY OF AUTHORITY STRUCTURES There are three factors involved in the understanding of any organization as under: The laws and the traditional taboos of the society Individual leadership (charisma) which is largely emotional Bureaucracy, i.e., The mass of administrators who carried out the laws and policies of the government

Three types of authority Charismatic Authority – based on the personal magnetism of the leader CHARISMA : PERSONAL QUALITY OR GIT THAT ENABLES AN INDIVIDUAL TO IMPRESS AND INFLUENCE MANY OF HIS FELLOWS, A LEADER DOMINATES DECISION MAKING

TRADITIONAL AUTHORITY In this type of authority system – the leader has authority by virtue of his status that he has inherited The extent of his authority is fixed by custom The officials who carry out the orders are like ‘household staff’ of the master

Rational-Legal authority = bureaucracy This authority system dominates, and it is most efficient one This system is characterized by rationality and legality The system is rational because the means are expressly designed to achieve certain specific goals The org is like a well designed machine with a certain function to perform, and every part of the machine contributes to the attainment of maximum performance of that function. It is legal, because authority is exercised by means of a system of rules and procedures through the office which the individual occupies at a particular time

BUREAUCRATIC FUNCTIONS ARE: Regular activities aimed at organizational goals – so that they are distributed as fixed official duties All activities follow the organizational principles of hierarchy Operations receive equal treatment under a consistent systems of abstract rules Officials operate as formalistic personalities without becoming emotionally involved.

Lyndall Urwick – 6 sets Principle of Investigation Principle of Objective Principle of Organization Principle of Direction Principle of Experiment Principle of Control (Urwick’s principles of management and organization – source: A dictionary of Industrial Administration edited by John Lee )

Urwick’s Principles of Organization This was his main contirbutions to original thinking in regard to the framework of management The principles were modified and published by AMA They are :

Principle of Objective (purpose/mission/objectives and vision) Principle of Specialization : the activities of every member of any organized group should be confined, as far as possible, to the performance of a single function Principle of coordination: The purpose of organizing per se, as distinguished from the purpose of the undertaking, is to facilitate coordination and unity of effort.

Principle of Authority: In every organization group, the supreme authority must rest somewhere. There should be a clear line of authority from the supreme authority to every individual in the group Principle of Responsibility : The responsibility of the superior for the acts of his subordinate is absolute Principle of Definition: The content of each position, the duties involved, the authority and responsibility contemplated and the relationships with other positions, should be clearly defined in writing, and published to all concerned

Principle of Correspondence: in every position, the responsibility and the authority should correspond Principle of Span of Control: No person should supervise more than five, or at the most six direct subordinates (reportees) whose work interlocks Principle of Balance: The various units of an organization should be kept in balance Principle of continuity : Reorganization is a continuous process, in every undertaking specific provision should be made for it.

George Elton Mayo (1880-1949) He has been called the founder of the “human relations school.” He became famous on account of the Hawthorne experiments These experiments had a significant impact on management thought, and considerably influenced the “human relations movement.” Experiments conducted in the Hawthorne Plant of the Western Electric Company in Chicago – from 1927 to 1932.

Hawthorne studies – three general phases Test Room Studies : the object being to assess the effect of single variables upon employee performance. They were experimental in nature Interviewing Studies: these were largely concerned with improving employee attitudes and were psychological in nature Observations Studies: these were undertaken to understand and describe the factors influencing the informal organization of work groups and were sociological in nature

TEST ROOM STUDIES Illumination Experiments: Two test groups – varied effects of lighting on output vs. no change situation; the results were that in both the groups the output increased. Conclusion that environmental factors like lighting may not be the only factor, there could be other variables Relay Assembly Test Room Experiments: This study was made to discover the anomalies of the previous experiments. Numerous variables were put into action – room conditions, pauses during work, piece-work, work without pauses and shorter working hours. After 12 week study, the output went up to a record level

Interviewing studies: An interview program of thousands of workers was conducted with the object of finding out the attitude of the employees towards their job, working conditions and supervision The interviewing program revealed the following points: Merely giving a person an opportunity to talk and air his grievance has a beneficial effect on his morale Complaints are not necessarily objective statements of facts. They are often symptoms of more deep-seated disturbances Workers are influenced in their demands by experience both inside and outside the factory Worker is satisfied or dissatisfied not in terms of any objective frame of reference but rather in terms of how he regards his social status in the firm and what he feels he is entitled to in the way of rewards

Observational studies The Bank Wiring Observation Group Study constituted the last phase of Hawthorne studies It was conducted to investigate the social pattern of a group of fourteen workers and their associated supervisors The main point of difference between this study and the earlier test room studies was that no experimental changes were planned but efforts were directed to study the group in its customary functioning This study revealed that there existed a GROUP NORM in terms of which the behavior of different individuals was in some sense being regulated

This group was restricting the output on account of various forms of social pressures The group had for itself a standard of a day’s work which was not imposed upon them, but had apparently been evolved by workmen themselves The group had various social pressures to see that the workers did not exceed the group output norm, and nobody attempted to attain official production targets Those who attempted to exceed became targets of social disapproval, verbally or physically This study showed the importance of informal, social group in business organization A member of such a group cared more for the opinion of the group rather than for financial incentives of the management IT WAS THE GROUP THAT DECIDED HIS ATTITUDE TO WORK, MANAGEMENT AND LEVEL OF PRODUCTION THESE STUDIES FURTHER REAFFIRMED THE IMPORTANCE OF INFORMAL GROUP IN THE MOTIVATION OF WORKERS.

CONCLUSIONS OF HAWTHORNE STUDIES Environmental factors not the sole factors affecting productivity Worker is not an economic man (not purely motivated by money alone) Importance of recognition, Security and Morale Importance of Informal group Importance of total work situation Complaints as symptoms

Mary Parker Follett-famed political and social philosopher Her main contributions: Was formulation of principles of human association and organization, especially in terms of industry The basis of her philosophy was that one cannot separate work from human beings Business is a series of interrelationships between people Follett pleaded that there is a great need to recognize the motivating desires of the individual and the group She said that the basic problem of any organization was that of harmonizing and coordinating the group efforts to achieve the most efficient effort towards completing a task She talked about power, leadership and authority. Her ideas are as under:

Conflicts Follett said that conflicts have a constructive role to play in an organization. Conflicts are not “warfares” but the “appearance of difference, difference of opinion, of interests.” Conflicts are neither good or bad; if used constructively their results are god and if used destructively their results are bad She suggested that conflicts can be harnessed to the service of the group much as an engineer uses friction

Three ways to resolve conflicts Domination (victory of one side over the other. Follett did not advance this method, because of use of force beyond a certain point lessens energies and self-respect) Compromise (This is better than Domination; both sides surrender some part of what they are demanding, i.e., for a compromise there must be a mid-point between the needs and desires of both parties on which they agree, willingly or unwillingly. This method is still commonly unsatisfactory) Integration (best way to resolve conflicts; it means combination of what is best in all view points, i.e, bringing about unity of conflict in which both sides se a way out which will satisfy their real needs. It resolves conflicts for good FOR DETAILS ATTEND A CONFLICT MANAGEMENT CLASS

Follett’s views on Leadership It is the role of the leader to educate and train The leader is responsible for integrative unity The great leader is one who is able to integrate the experience of all and use it for a common purpose Leadership is not the product of position but of knowledge

Follett’s views on Authority and Responsibility Authority belongs to the job and stays with the job An executive decision is an movement in a process Authority and responsibility go with function

Follett’s views on Co-ordination CONTROL , Follett, meant fact control rather than human control, and central control meant synthesis rather than domination from the center The four principles of organization at which she finally arrived at provided for the need of four kinds of coordination as the basis of good management:

4 principles of coordination Coordination by direct contact of the responsible people concerned. Ideas, ideals, goals and purposes can be easily stated and understood through direct personal contact and communication Coordination should be achieved in early stages of planning and policy-making. It would be easier to secure the willing enthusiastic adherence of all concerned to any new principles and policy if they have participated from the beginning. For this principle – Follett had suggested cross relations between heads of departments instead of up and down the line through the chief executive

In coordination all factors in a situation are reciprocally related Coordination is a continuous process. It means that coordination should be left to chance and it is the duty of the coordinator to strive for it constantly so that the efforts of the group are directed towards achieving the common goals

Follett on PROFESSIONAL MANAGEMENT Management can develop as a profession on two bases: Its recognition as a function of or service to the community Application of an accepted and proven body of knowledge and principles Managers can become professional by working for long hours and thus getting satisfaction from work. According to her, a professional manager has three main jobs: S/he must be loyal to company S/he must inform the public what are good practices and standards (today it is called Corporate Governance) and S/he must try to extend the boundaries of knowledge in his/her profession and then pass on his/her extra knowledge for the benefit of all.

CHESTER I. BARNARD (1886-1961) While Fayol developed the principles of management, Barnard proved that such principles could be applied in practice He defined organization as : “ a system of consciously coordinated activities or forces of two or more persons.” He believed people in organization contributed services and not themselves Barnard tried to analyze how organization functions as a ‘living body.’ For him, to understand the small organization was to understand the large organization because all organizations possess certain common characteristics

Elements of Organization Willingness to cooperate Common purpose and Communication Are the elements of an organization

Equilibrium internal and external Barnard firmly believe that an organization is separate from the environment in which it operates The person who contribute services to the orgs has two distinct roles – the personal role and the an organizational role He suggested that orgs must maintain internal and external equilibrium Internal equilibrium he meant: reward and satisfaction for the participation; thus the balance between what employees get out of work (money, status, reward, etc) and what they contribute (time, worry, discomfort, etc) must be maintained The relationship of the org to the environment is not static but functional

Acceptance theory of authority Barnard disagreed with the classical view that authority transcends from top to bottom He said that authority transcends from bottom to top i.e. it is delegated upwards Authority does not depend on commands, but on a reciprocal relationship; a communication becomes authoritative by virtue of its acceptance by a contributor. Thus AUTHORITY DEPENDS ON COMMUNICATION

A PERSON CAN AND WILL ACCEPT A COMMUNICATION AS AUTHORITATIVE ONNLY WHEN FOUR CONDITIONS ARE SIMULTANEOUSLY FULFILLED: S/HE can and does understand communication At the time of his/her decision, he believes that it is not inconsistent with the purpose of the organization At the time of his/her decision, s/he believes it to be compatible with his / her personal interest as a whole , and s/he is able, mentally and physically, to comply with it.

Zone of Indifference Barnard developed the concept of ‘zone of indifference.’ He believed that the form and nature of the acceptance of the communication differ and it depends upon the zone of indifference Certain orders are acceptable, certain barely acceptable, and certain orders are unquestionable Those orders which are unquestionably acceptable lie within the zone of indifference, ie. They lie within the range that in a general way was anticipated at the time of undertaking the connection with their organization

Barnard’s views on Incentives Incentives are prerequisites of cooperation in any organization. Barnard was of the view that people in the org do not work for money alone. Some of the incentive types are: Material or financial inducements Personal opportunities, such as status, power, et Good physical conditions Attractiveness of social conditions General conditions adapted or suitable to the individual’s ideas and attitudes Opportunities for participation Good communication and Opportunities for satisfying perosnal motivation such as pride in work, sense of adequacy, etc.

Executive decisions and functions The executive who occupies a crucial position in the organization has three basic functions. They are: Maintaining org communication. It includes determining the scheme of organization, fostering loyalty in subordinates and maintaining the informal system Obtaining essential services from individuals: It includes correct selection of individuals, and provision of the necessary inducements, maintaining morale (subjective feeling toward work), providing incentives and sanctions, supervision and training Formulating purposes and objectives at all levels

Barnard on Communication Principles of Communication: Channels of communication must be definitely known by all These channels must be formally laid down Each channel should be as short as possible Generally communication should go through all stages in the channel People acting as communication centers (managers) should be adequate to their tasks Channels of communications should not be interrupted while the organization is functioning Communications (orders) must come from points where the necessary authority is known to exist

Barnard on Leadership The real test of the executive or manager is leadership Leaders should recognize that low morality will not sustain leadership long

Alfred P. Sloan (1875-1966) Greatly responsible for the success of General Motors Sloan regarded two factors as important for the success of a business: Motivation – through incentive compensation Opportunity – through decentralization He said that good management rests on a reconciliation of centralization and decentralization or “decentralization with coordination control” Decentralization results in initiative, responsibility, development of personnel, decisions close to facts, and flexibility. Coordination results in efficiencies and economies Authority and responsibility must be congruent and commensurate to each other

Sloan’s real partnership process… with his executives was done by Utilizing their abilities to the full A fair policy of promotion Offering real incentives By using persuasion rather than command

GM PLAN: IN 1920, INDICATES HIS SEVERAL THOUGHTS This plan was based on two principles: Decentralization of operation and Centralized staff services to advise the line on specialized phases of the work, and central measurement of results to check the exercise of delegated authority (staff function = support function; line function = responsible for the “earnings” for the corporation. Thus only line function is SALES AND ALL OTHER FUNCTIONS INCLUDING MARKETING ARE STAFF FUNCTIONS.

Points emphasized in the PLAN: Relationship of various divisions of a corporation with one another as well as with the central organization Status of central organization Coordination of operations of the central organization with the corporation as a whole Centralization of control of all the executive functions in the CEO Limit on the number of executives reporting directly to the President

Sloan’s Principles of Organization Establishment, by the Board of Directors and its committees, of uniform policies and procedures to govern the overall operations of all divisions in any area in which such consistency is judged to be necessary for the best interests of the corporation as a whole Delegation of full authority, within this framework of uniform policy and procedures, with corresponding responsibility for the use of the authority so delegated A continuous flow of ides and information upward and downward through the management organization, by means of executive visits, formal reports and frequent meetings of line and staff executives at all appropriate levels

ABRAHAM H. MASLOW :THE FATHER OF HUMAN PSYCHOLOGY (1908-1970) His need based theory of motivation, published in 1943, laid foundation for subsequent psychologists (Renis Likert, Douglas McGregor, Fredrick Herzberg, etc) to analyze human behavior

Maslow’s Hierarchy of Needs Physiological Stimulation Safety & Security Love, Affection & Social Self-esteem Self actualization

Frederick I. Herzberg – a noted behaviorist of USA (1923- His greatest contributions to management thought : his Two-Factor Theory, Two-Human Needs Theory, KITA concept, and illuminating ideas about job loading (vertical and horizontal) ie is job enrichment He assumes that the individual is the center of the work-managerial situation He said that if anything meaningful was to be found about motivation, the question of factors-attitudes-effects must be studied as a whole and not as an isolated item He believed management is monolithic (huge, massive, single stone like)

MOTIVATION HYGIENE THEORY Growth and development Money, status, security Increased responsibility Interpersonal relations Challenging Work Working conditions Recognition for accomplishments Supervision Achievement Policies and administration (the Job itself) (Environment) MOTIVATORS Hygiene factors

Relationship between Maslow’s and Herzberg’s Theories to Motivation SITUATION MOTIVES (NEEDS) MASLOW GOAL (INCENTIVES) HERZBERG BEHAVIOR

Douglas M. McGregor-(1906-1964; a social psychologist) People can be self-directed and creative at work if properly motivated Most people must be closely controlled and often coerced to achieve organizational objectives Motivation occurs at the social, esteem, and self-actualization levels, as well as physiological and security levels Motivation occurs only at the psychological and safety levels The capacity for creativity in solving organizational problems is widely distributed in the population Most people have little capacity for creativity in solving organizational problems Self-control is often indispensable in achieving organizational goals Most people are not ambitious, have little desire for responsibility, and prefer to be directed Work is as natural as play, if the conditions are favorable Work is inherently distasteful to most people THEORY Y THEORY X

David C. McClelland Best known for his achievement motivation, his research ranges from personality to consciousness. Along with John. W. Atkinson, he developed the scoring system for the THEMATIC APPERCEPTION TEST (TAT) which was used in achievement motivation research

McCllelland’s need theory Need for power Need for Affiliation Need for Achievement Need for training

Henry Mintzberg (1939- Well known luminary in the field of management Dubbed as ICONOCLAST – as he rejected several accepted management practices He is against the B-schools in USA – their curriculum, case study methods, etc.

Contributions-The managerial roles He grouped ten basic roles performed by managers into three major classes ( as a result of detailed research on the activities of five practicing CEOs): INTERPERSONAL ROLES INFORMATIONAL ROLES DECISIONAL ROLES

Interpersonal roles While performing interpersonal roles, mangers work as: Figureheads performing number of routine duties of legal or social nature; these duties include handling ceremonies, signing documents required by law, and officially receiving visitors.

Leaders As leaders, the mangers perform all managerial activities involving subordinates including hiring, training and firing. As leaders they are responsible for motivation and direction of subordinates

Liaison persons Serving as liaison between outside contacts (community, suppliers,, etc) and the organization

Informational roles Mintzberg pointed out that managers function as nerve centers in which they obtain information about the environment and their own organization by monitoring them. The three informational roles are: Monitor Disseminator spokesperson

Montiors : As monitors, managers seek and are presented with information about the operations for which they are responsible and bout the environment Disseminators: they are disseminators of information flowing from both external and internal sources; Managers pass information from outside their units to inside and also from one subordinate to another Spokesperson: mangers speak on behalf of their units to outsiders. They transmit information to outsiders on organization’s plans, policies, actions and results and serve as experts on organization's industry THESE INFORMATIONAL ROLES PROVIDE A COMMUNICATIONS NETWORK FOR THE ORGANIZATION.

Decisional roles Four of them as per Mintzberg: Entrepreneur Disturbance handler Resource allocator negotiator

As ENTREPRENUEURS : managers are initiators, innovators, problem-discoverers and designers of improvement projects that direct and control change in the organization. Thus, entrepreneurial work refers to mangers’ efforts to improve the functioning and accomplishments of their organizations As disturbance handler: managers take corrective action in response to unforeseen problems such as resignation of subordinates, breakdown of productive equipment, etc. It is worthwhile to mention that while entrepreneurs, managers voluntarily take initiative to improve performance, as disturbance handler As resource allocator: they are responsible for allocating human, physical, and monetary resources. MAKING DECISIONS ABOUT HOW LIMITED TIME, MONEY, MATERISALS, LABOR HOURS AND OTHER RESOURCES WILL BE APPLIED TO MULTIPLE AND COPETING CLAIMS UPON THEM IN THE WORK OF RESOUCRCE ALLOCATION ROLE Mangers as Negotiators: they discuss issues and bargain with other units to gain advantages for their own units. Mintzberg opines : that “negotiation is resource trading in real-time.”

Relationship of Managerial roles and process ROLE PORCESS INTERPERSONAL INFORMATIONAL DECISIONAL PLANNING LEADING ORGANIZIING CONTROLLING

PETER F. DRUCKER (1909-2005) Austrian by birth Numerous books – around 35/36 Drucker is repeatedly preaching a philosophy of management, that of management by objectives and self-control He pleaded for creative management instead of bureaucratic management He said that managers should go beyond decentralization, and design principles of taskforce team, simulated decentralization and the systems organizations Managers should learn to lead people rather than contain them He said that the Innovative org – the org that resists stagnation rather than change – is a major challenge to management More and more organizations which are innovative and productive for society, economy and the individuals should come up His first line in “practice of management” – “The manager is the dynamic, life-giving element in every business.”

Jobs of Management According to Peter Drucker, management has the following three tasks: ECONOMIC PERFORMANCE PRODUCTIVE WORK AND WORKER ACHIEVEMENT SOCIAL IMPACT AND SOCIAL RESPONSIBILITIES

Business objectives and entrepreneurial functions…Drucker There is only one valid definition of business purpose : to create a customer According to him, “it is the customer who determines what a business is. It is the customer alone whose willingness to pay for a good or for a service converts economic resources into wealth, things into goods.” CONCEPT OF PROFIT AS THE OBJECT OF BUSINESS Profit is not the explanation, cause or rationale of business behavior and business decisions but the TETST OF THEIR VALIDITY.

On Profit….Drucker The profit motive and profit maximization are, in his opinion, ‘irrelevant’ in managing a business. However, profits are necessary on account of risk in business Profit is the test of performance; it is premium for the risk of uncertainty; profit alone can supply capital for tomorrow’s jobs, profit pays for the economic satisfaction and services of a society

As the purpose of business is to create a customer, the business enterprise has two functions as under : Marketing Innovation Rest is cost.

Drucker on Objectives… Objectives are not fate; they are direction They are not commands; they are commitments They do not determine the future; they are means to mobilize the resources and energies of the business for the making of the future

The following areas where objectives are to be set: Marketing; Innovation; Human organization; Financial resources Physical resources; Productivity; Social responsibility Profit requirements OBJECTIVES IN THESE AREAS ENABLE MANGERS TO : ORGANIZE AND EXPLAIN THE WHOLE RANGE OF BUSINESS PHENOMENA IN A SMALL NUMBER OF GENERAL STATEMENTS TEST THESE STATEMENTS IN ACUTAL EXPERIENCE PREDICT BEHAVIOR APPRAISE THE SOUNDNESS OF DECISIONS WHILE THEY RE STILL BEING MADE AND ANALYZE THEIR EXPERIENCES AND THUS IMPROVE PERFORMANCE

MANAGEMENT BY OBJECTIVES AND SELF-CONTROL The concept is credited to Drucker and George S.Odiorne. The MBO is the central point of discussion in his book – The practice of Mangement-writes : “ Management is not just a creature of the economy; it is a creator as well. And only to the extent to which it masters the economic circumstances, and alters them by conscious, directed action, does it really change. To manage business means, therefore, to mange by objectives.”

MBO is a managerial philosophy and technique that attempts to draw on people’s needs for achievement, competence and anatomy by allowing them to set their objectives, goals, and performance criteria This concept applies to employees at any position

Why MBO? The specialized work of the manager The hierarchy in organizations The existence of difference in vision in businesses Such factors cause conflict and breakdown in the organization and MBO overcomes these deficiencies by relating the task for each manager to the overall goals for he company.

WORK OF MANAGER To set objectives To organize ie. To analyze the activities, decisions, and relations needed To motivate and communicate To analyze, appraise and measure performance and To develop people, including himself

In 1950s, Drucker’s 7 tasks to be performed by tomorrow’s manager He must manage by objectives He must take more risks and for a longer period ahead He must be able to make strategic decision He msut be ableto build and integrated team He must be able to communicate information fast and clearly He mustbe bale to see the business as a whole and to integrate his function with it, and He must be able to relate his product and industry to the total environment

Social responsibilities for Management The triple bottom line : Economic profit (profit as by product in a business process) Social profit ( giving to the community) Environmental profit (carbon trading, etc)

Warren G. Bennis Does the right thing Does things right Own person Classic good soldier Challenges the status quo Accepts status quo Originates Imitates Eye on the horizon Eye on the bottom line Asks what and why Asks how and when Long range perspective Short range view Inspires trust Relies on control Focuses on people Focuses on systems and structure Innovates Administers Leader Characteristics Manager Characteristics

Bennis’ four competencies of leadership Attention through vision Meaning through communication Trust through positioning – being predictable, making your position clear, keeping at it, and Positive self-regard

Chris Argyris’ Immaturity-Maturity model Awareness and control over self Lack of awareness of self Equal or superordinate position Subordinates position Long-time perspective (past and future) Short-time perspective Deeper and stronger interests Erratic shallow interests Capable of behaving in many ways Behave in a few ways Independence Dependence Active Passive Maturity Immaturity

T- Groups Also known as sensitivity training and laboratory training. T-Group technique had its genesis in the late 1940s, largely as a result of work done by Kurt Lewin and Ronald Lippitt. Argyris contributed to this concept by making several clarifications about it.

Definition T-Group T-Group is ….a group experience designed to provide maximum possible opportunity to the individuals to expose their behavior, give and receive feedback, experiment with new behavior and develop an everlasting awareness and acceptance of self and others.”

Properties of Organizational effectiveness Core activities influenced by past, present and future Core activities only influenced by immediate present Ability to influence core activities whether they are internally or externally oriented Inability to influence core activities whether they are internally or externally oriented Objectives related to the whole Objectives related only or mainly to parts Awareness of pattern among parts Awareness only of random plurality of parts The whole is created and controlled through the inter-relationship of the parts One part or subset of parts, controls the whole Properties leading to effectiveness Properties leading to Ineffectiveness

Argyris’ other contributions Leadership Intervention theory (OD) Process consulting: Argyris and Edgar H. Schein are regarded as chief developers of the process consulting method

Process consulting method Process consulting regards groups such as teams, task force, committees or project groups as the basic building blocks of organization. Process consulting deals with tasks, conflicts, between members, work flows, and the processes by which the group achieves its task Process consulting analyzes the roles and functions of group members, group problem-solving-methods, decision making, the development of group norms, and the use of leadership and authority

Process consulting…contd… The process consultant examines the processes at work among group members by using devices such as questionnaires, role playing session, coaching and counseling methods, etc.

Argyris’ – 4 principles of organization Task specialization – Individuals should concentrate on a narrow range of task. It increases human skills and output too Chain of command (Hierarchy of authority) Unity of direction – Leaders must define and direct the work of those under them Span of control – administrative efficiency is increased if there is a limit to the number of people a leader or supervisor can control

William G. Ouchi Ouchi’s main contribution to management thought relates to Theory Z. Contrast between Japanese and American corporations leads to identification of the Z theory

Z theory Concern for parts of the organization Concern for the whole organization Individual responsibility Collective responsibility Explicit control techniques Implicit control techniques Specialized career points Non-specialized career points Rapid evaluation and promotion Slow evaluation and promotion Short-term employment Lifetime employment American Corporation Japanese Corporation

Participative Management Ouchi emphasized participative management and consensus decision-making, if Theory Z is to work. Social scientists have described this as a democratic process in which may people are drawn into shaping of important decisions The participative process is one of the mechanisms that provides for the broad dissemination of information and values within the org, and it also serves the symbolic role of signaling in a unmistakable way the cooperative intent of the firm Typically, Theory Z orgs devote a great deal of energy to developing the interpersonal skills necessary to effective group decision making In theory Z companies the decision making may be collective, but the ultimate responsibility for decisions still resides in one individual

Tom Peters Seven S Model- developed for McKinsey & Co Skills Strategy Structure Superordinate Goals Systems Style Staff

7-S framework for change Structure refers to the organizational structure Strategy is a plan or course of action leading to the allocation of a firm’s scarce resources, over time, to reach identified goals Systems consist of all the formal and informal procedures that allow the organization to function Style is the pattern of substantive and symbolic actions under taken by top mangers Staff is another factor. Successful organization view people as valuable resources who should be carefully nurture, developed, guarded and allocated. Skills refer to those activities organizations do best and for which they are known Superordinate Goals referred to guiding concepts, values and aspirations that unite an organization in some common purpose TOM PETERS ADVOCATED : MBWA

Tom Peter’s books In search of Excellence Passion for excellence Thriving in chaos And many others

Management principles aand practices

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Management principles aand practices