Pom slide01

MG 6851
PRINCIPLES OF MANAGEMENT
UNIT 1: INTRODUCTION TO
MANAGEMENT & ORGANISATIONS
UNIT 2 : PLANNING
UNIT 3 : ORGANISING
UNIT 4 : DIRECTING
UNIT 5 : CONTROLLING
1
S.PALANIVEL ASSOCIATE PROF./MECH ENGG
KAMARAJ COLLEGE OF ENGG. & TECH. VIRUDHUNAGAR(Near)

COURSE OBJECTIVE
• To enable the students to study the
evolution of Management,
• to study the functions and principles
of management and
• to learn the application of the
principles in an organization.
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POM- Course outcomes
1. Define types of managers, list managerial roles
and skills and distinguish between different types
of business organization
2. Define types of planning, importance of setting
objectives & factors of objectives and describe &
steps of decision making.
3. Explain the basics of organization structure,
various departmentation concepts and staffing
activities of an organization
4. Discuss the various leadership styles, theories and
techniques of motivation and process of
communication
5. Emphasize the various aspects of controlling
namely productivity, cost, quality, maintenance
etc.
3

MEASURING TOOL FOR COURSE OUTCOME EVALUATION
UNIT Slip Test Internal Test Assignment Seminar/Discussion/
Quiz/Others
I 20% 40% 20% 20% (CASE STUDY/
SEMINAR)
II 20% 30% 20% 30%
(QUIZ/SEMINAR)
III 20% 40% 20% 20% (CASE
STUDY/SEMINAR)
IV 20% 40% 20% 20%
(QUIZ/SEMINAR)
V 20% 40% 10% 30%
(QUIZ/MOODLE
TEST)
4

LEADING … DIRECTING
5
S.PALANIVEL ASSOCIATE PROF./MECH ENGG KAMARAJ
COLLEGE OF ENGG. & TECH. VIRUDHUNAGAR(Near)

LEADING ….MANAGING
6
S.PALANIVEL ASSOCIATE PROF./MECH ENGG KAAMRAJ

MANAGING
7
Organising
people in
various
levels
Multi tasking …

MANAGING
8
Base, middle takes load of TOP
Handling one
ball at a time,
but handling
more than
two balls.
Balls refers to
activities

• Management is the process of designing and
maintaining an environment in which individuals working
together in groups, efficiently accomplish selected item
• Management is the process of getting things done, through
& with people in organization
• Management is accomplishment of objectives utilising Men,
Machineries and Money
• (Management is getting objectives using 3 Ms)
• Management is accomplishment of Objectives utilising Men,
Materials, Machineries, Money, Methods, Motivation and
Minutes.
• (Management is getting objectives using 7 Ms)
Management – Definition:
9

Management functions (or) Process
of Management:
There are five types of functions in management.
Planning-Defines the goal & establishing strategy.
Organizing-Includes determining what task has to be
done, who is to do them and how it is to be done
Staffing-Includes recruitment of people and training
them to do tasks and positioning in jobs.
Leading-Includes the motivating the employees and
directing the activities to reach objectives.
Controlling-It is the process of monitoring the
performance.
All functions aimed at reaching Objectives
10

Managerial Skills
Three types of Managerial skills
Conceptual Skills-These skills are required by the
employee MOSTLY who are in top level management.
Requirement is more at top level, less in Middle level
and very less in low level
Technical skills- These skills are required by the
employee MOSTLY who are in middle level
Management. Requirement is more at low level, less in
Middle level and very less in top level
Human Relations Skills-These skills are required by
the employee MOSTLY in the supervisory level.
Requirement is high at top level, more in Middle level
and less in low level. Required at all levels.
11

Different Managerial Levels
Top Management
Middle Management
Low Level Management
Supervisory Level
Human Relations Skills
Conceptual
Skills
Technical Skills
Human
Relation Skills
Technical
Skills
12

Order of Management
Operatives
(or)
Executive
First-Line Managers
Middle
Managers
Top
Manag
ement
13

Managerial Role approach
• Managerial Roles:
• Interpersonal Roles :
Figure head role, leader role and Liaison Role
• Informational Roles:
Recipient Role, Disseminator Role, Spoke
person Role
• Decision Roles :
Entrepreneurial Role, Disturbance Role,
Resource allocator Role, Negotiator Role
14

• Effectiveness: Adequate to accomplish a purpose
producing the intended or expected result.
• Efficiency: Performing or functioning in the best
possible manner with the least waste of time and
effort.
(Or)
• Efficiency is doing something with the least
possible expenditure of resources (such as time,
energy, etc.)
Efficiency & Effectiveness
15

Productivity
• The output – input ratio within a time period
with due consideration for quality
• Productivity = Output/Input (within a time &quality)
• Productivity can be improved by
Increasing the Output with same input
Decreasing inputs with same output
Increasing Output and decreasing input
Decreasing the rejects of production
Inputs include labour, materials and capital cost
16

Management – 4 Aspects
• Firstly – Organisation’s Objective
Main purpose of organisation
• Secondly – Systems required to achieve Objective
Systems include machineries, No. of Tiers and inter
relation/controls among systems
• Thirdly – Operating Principles to operate Systems
Scientific operating principles based on fail safe,
effective, cost less etc., to operate systems
• Fourthly – Positioning people to carryout activities
Recruiting, training and positioning right people
17

Managing an organisation
• Check all the four aspects
• If Objective is achievable and beneficial, we have to
check whether the Systems defined are scientifically
and evidently made, if that is also in order
• Then we have to check operating principles, whether
limiting parameters are defined and principles are
expressed clearly without any ambiguity and operable
efficiently and in a cost effective way
• If all the three aspects are found to be in order, we have
to change positioning of personnel or training the
personnel to meet the gap evidently found as a hurdle
in achieving objective.
18

Managing - Science (or) Art
 Managing as a practice is an art. It is know
how, doing things in light of the realities of a
situation
 Yet Managers can work better by using
organised knowledge about management. It is
this knowledge is science.
 Systems and operating principles have to be
made on scientific management but positioning
people and controlling have to be done as per
situation on accepted principles ie like an art,
here achieving the targets is the prime activity.
19

Owner, Entrepreneur & Manager
• Owner : Person who is holding the all the
shares/ capital of a company or organisation
• Entrepreneur : Person who starts a business
on his own and identifies products/services
and continue its operation
• Manager : Person authorised or appointed by
company to head a unit or a division, who is
expected to carryout the functions of the
unit/divison using the resources provided
20

Emergence of Management Thought
• Scientific Management : Fredick W. Taylor
 To raise productivity through greater efficiency in
production and increased pay for workers by applying
scientific method.
 Using science creating group harmony and
cooperation achieving maximum output and developing
workers.
Henry L. Gantt : Called for scientific selection of workers
and harmonious cooperation between labor and
management. Developed Gantt Chart. Stressed need for
training.
21
S.PAANIVEL ASSOCIATE PROF./MECH ENGG

Modern Operational Management Theory
• Henry Fayol the father of modern
management theory.
• Divided industrial activities into six groups-
technical, commercial, financial, security,
accounting and managerial.
• Recognised need for teaching management
• Formulated 14 principles of management
22

• Behavioral science : Application of psychology to
Industry and management. Theory of
Bureaucracy. Influence of social attitudes and
relationships of work groups on performance.
• Systems Theory : Task of Mangers is to maintain
a system of cooperative effort in a formal
organisation
• Modern Management thought : Introduced
Quality control in Japan, Japanese managerial
practices
23

14 Principles of Management
• Division of work: This is the specialization that economists
consider necessary for efficiency in the use of labor. Fayol’s
applies the principle to all kinds of work, managerial as well as
technical.
• Authority & responsibility: Authority and responsibility to be
related, with the later arising from the former. He sees authority
as a combination of official factors, deriving from the manager’
position and personal factors.
• Discipline: Seeing discipline as “respect for agreements which
are directed at achieving obedience, application, energy, and the
outward marks of respect. Fayol declares that discipline requires
good superiors at all levels.
• Unity of command: This means that employees should receive
orders from one superior only.
• Unity of direction: According to this principle, each group of
actives with the same objective must have one head and one plan.
24

• Subordination of individual to general interest: This is self
explanatory when the two are found to differ, management
must reconcile them.
• Remuneration and methods: of payment should be fair
and afford the maximum possible satisfaction to employees
and employer.
• Centralization: Without using the term “Centralization of
authority.”Fayol's refers to the extent to which authority is
concentrated or dispersed. Individual circumstances will
determine the degree that will give the best overall yield.
• Scalar chain: Fayol thinks of this as a chain of superiors
from the highest to the lowest ranks, which, while not to be
departed from needlessly, should be short circuited when to
follow it scrupulously would be detrimental.
• Order: Breaking this into material and social order, Fayol's
follows the simple adage of a place for everything and
everything in its place.
25

• Equity: Loyalty and devotion should be elicited from
personnel by a combination of kindliness and justice on
the part of managers when dealing with subordinators.
• Stability of tenure: Finding unnecessary turnover to be
both the cause and the effect Of bad management, Fayol
points out its dangers and costs.
• Initiative: Initiative is conceived of as the thinking out
and execution of a plan. Since it is one of the keenest
satisfactions for an intelligent man to experience.
• Esprit de corps: This is principle that “in union there is
strength” as well as an extension of the principle of unity
of command, emphasizing the need for teamwork and
the importance of communication in obtaining it.
26

Evolution of management
• Empirical / case approach
• Managerial Role approach
• Contingency/ Situational
approach
• Mathematical /
management Science
approach
• Decision theory approach
• Reengineering approach
• Systems approach
• Socio-technical
approach
• Cooperative social systems
approach
• Group behaviour approach
• Interpersonal behaviour
approach
• McKinsey’s 7 – S frame
work approach
• Total quality management
approach
• Management process or
operational approach
27

Management as an Essential for any
Organization
Managers are charged with the
responsibility of taking actions that will
enable individuals to make their best
contributions to group objectives.
Management thus applies to small and large
organizations, to profit and not-for profit
enterprises, to manufacturing as well as
service industries.
28

• Time Study
• Timing how long it takes good workers
to complete each part of their jobs.
• Motion Study
• Breaking each task into its separate
motions and then eliminating those that are
unnecessary or repetitive.
Time & Motion Studies:
Frank & Lillian Gilbreth
29

30
Ethics
MANAGER
E-Business
Globalization
Diversity
Customers
Innovation
Knowledge
Management

31
Traditional Viewpoint
Behavioral Viewpoint
Systems Viewpoint
Contingency Viewpoint
Quality Viewpoint
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000
S.PALANIVEL ASSOCIATE PROF./MECH ENGG KAAMRAJ

32
Goals:
Efficiency
Consistency
 Administrative
Management
 Bureaucratic
Management
 Scientific
Management

33
 Rules—formal guidelines for the
behavior of employees on the job
 Impersonality—employees are
evaluated according to rules and
objective data
 Division of Labor—splitting work into
specialized positions

34

Business organisation
Purpose of Business organisation is
to create profit or surplus thro their
business operation.
Activities of organisation may be
production of items or providing
services.
35

TYPES OF ORGANISATION
Composition of Company : Capital invested in a
company included as equity shares of predetermined
value. Normally face value of equities will range from
Rs.1, 2, 5, 10, 100 or 1000.
Proprietary Company: Company owned wholly by a
single person or in other words, all the shares of the
company owned by Owner.
Partnership company : Equities of Company are held by
more than one person and holding persons are called as
partners. Holding pattern or ratio may differ or same , of
course as per the terms and conditions specified in
partnership deed.
36
S.PALANIVEL ASSOCIATE PROF./MECH
ENGG KAAMRAJ COLLEGE OF ENGG. &
TECH. VIRUDHUNAGAR(Near)

Private Limited : Privately held small entity.
No. of share holders are limited to a max. of
50. The shares held by members are not
permitted to trade the shares in a open
market
Public Limited: Company equities are held by
public, promoters, Financiers of the
company. No. of shares will vary and trading
of shares are permitted.
37

PUBLIC SECTOR UNDERTAKING (PSU)
AFTER FREEDOM OF COUNTRY PSUs FORMED TO
INVOLVE IN MAJOR CORE INDUSTRIES.
GOVERNEMENT WAS HOLDING ALL SHARES WITH IT.
BOARD APPOINTED BY GOVT. RUNNING THE PSUs
INTIALLY BOARD COMPRISES OF DIRECTORS
(APPOINTED) AND REPRESENTATIVES FROM GOVT. OF
INDIA AND REPRESENTATIVES FROM FEDRAL GOVT.
APPOINTED DIRECTORS CALLED AS FUNCTIONAL
DIRECTORS. CHAIRMAN CUM MANAGING DIRECTOR
AUTHORISED TO HEAD THE PSU AND CHAIR BOARD
MEETINGS.
38

PSUs CONTD.
• IN ORDER TO ENHANCE PERFORMANCE AND TO REDUCE BURDEN ON
GOVT. A PORTION OF SHARES SOLD TO VARIOUS AGNECIES
• SHARES OFFERED AT DISCOUNT RATES TO EMPLOYEES TO INCREASE
THEIR PARTICIPATION.
• CONTROL OF PSUs MAINTAINED BY KEEPING SHARES MORE THAN 51
%
• INDEPENDENT DIRECTORS (NON FUNCTIONAL) INCLUDED IN THE
BOARD.
• GOVT. OFFLOADED ALL ITS SHARES TO PUBLIC/AGNECIES
• ALL PSUs LISTED IN SEBI. GOVERNED BY COMPANY ACTS
• PSUs GRADED AS PER STANDARD PERFORMANCE AS MAHA RATNA,
NAV RATNA, MINI RATNA , PSUs.
• DELGATED POWERS OF PSUs VARYING DEPENDING ON STATUS
• NO BUDGETARY SUPPORT TO PSUs SINCE 1992. IT MADE PSUs TO
WORKJ EFFICIENTLY , EARN PROFITS AND EXPAND ON THEIR OWN.
39

EXTERNAL ENVIRONMENT
• All Managers have to take into account the elements
and forces of their external environment.
• Though Managers could do a little or no control over
these forces, they have no alternative but to respond to
them.
• Managers must identify, evaluate and react to the
forces outside the enterprises that may affect its
operation.
• Organisation may have to take care of changes in
Technological, Social, Economic. Ethical, Ecological and
Political& legal.
• Influences of external factors are more crucial in
international management.
40

Operating in Pluralistic Society
• Pluralistic Society – A society where many orgainsed
groups represent various interests.
• Working within a pluralistic society has several
implications.
 Keep business power in balance
 Business interests can be expressed by joining groups
 Participate with other groups on common objectives
 There can be conflict as well as agreements among
groups.
• In pluralistic society one group is quite aware of
what other groups are doing.
41

Technological environment
• One of the most influential factors in the
environment is the Technology.
• It is Science that provides knowledge and it is the
technology that uses it.
• Technology refers the sum total of knowledge we
have of ways to do things
 First wave economy based on land and farm labor.
 Second wave centred on machines and large
Industries
 Third wave economy is the knowledge age
42

Ecological Environment
• Mangers must take into account the ecological
factors in their decision making.
• Ecology means the relationship of people & other
living things with their environment such as soil,
water, air , land. Water and air pollution is of great
concern to all people.
• Land may be polluted by dumping of industrial waste
• Water pollution may be caused by mixing harzrdous
waste and sewage in river & water bodies.
• Air pollution may be caused by emitting Carbon
mono oxide and harmful gases , vehicle fumes
43

Ecological Environment contd..
• Variety of legislation has been passed dealing
with solid waste, water and air pollution.
• Restrictions are there in emitting Nox, SOx
and carbon emissions.
• Penalties are there for firms violating norms.
• Managers must be aware of these laws and
regulations and must incorporate the
ecological concerns into their decision
making.
44

Ecological Environment contd….
• BHOPAL PLANT disaster :
• In Dec 1984, leaking of Mythial Cyanide- 2000
people died, over 40000 people injured badly
• In order to protect environment ISO 14001
standards developed.
• This standard aims in identifying Risks in Industrial
operations and aiming to reduce and eliminate.
• This standard aims to improve safety standards and
needed compliance of certain safety norms
45

Protection of Environment
• To protect environment, European countries devised
the ISO 14001 standard to assure that company policies
address a variety of public concerns , including pollution
prevention and compliance of relevant laws and
regulations.
• The standard was valuable to Ford for reducing water
consumption, disposed paint sludge and disposable
packing materials.
• Disposal of Industrial wastes is considered important
factor. Disposal of e – waste has to be done according to
norms.
• Dumping of wastes in river , sea are prohibited. It has to
be treated before disposal.
• Nuclear wastes, Mercury wastes are to be disposed as
per accepted safety procedures.
46

Social Responsibility
• In early 1900s the mission of Business was exclusively
economic ie. generating profit.
• Due to interdependencies of the many groups in our
society, the social involvement of business has increased.
• Stake holders expect Manages to discharge their social
responsibilities
• CSR – Corporate Social Responsibility- serious
consideration of the impact of the company’s actions on
Society.
• Social Responsiveness : Ability of a Corporation to relate
its operations and policies to the social environment in
ways that are mutually beneficial to the company and
society.
47

Business Involvement in Social actions
Arguments for Business involvement:
• Business received its charter from society and
consequently Business organisations has to respond
to the needs of society.
• Creation of a better social environment benefits both
society and business. Society gains through better
neighbourhoods and employment opportunities;
business benefits from a better community, since the
community is the source of its workforce and
consumer of its products and services.
• Problems can become profits. Wastes can be used
profitably
48

Arguments for Business involvement - Contd.
• Social involvement discourages Govt. intervention
with new regulation. The result is greater freedom
and more flexibility in decision making for business.
• Business has a great power, hence it should be
accompanied by equal amount of responsibility.
• Modern society is an interdependent system and
the internal activities of the enterprise have an
impact on the external environment.
• Social involvement may be in the interests of stock
holders (share holders).
• Social involvement creates a favorable image, Firm
may attract customers, employees and investors.
49

Arguments for Business involvement - Contd.
• Business should try to solve problems that other
institutions have not been able to solve.
Business has a history of coming with novel
ideas.
• Business has resources. Specifically business
should use their talents of managers & staffs
and resources to solve the problem of society.
• It is better to prevent social problems through
business involvement than to cure them. It may
be easier to help hard core unemployed than to
cope with social unrest.
50

Arguments against for Business involvement
• Primary task of business to maximize profit by focusing strictly on
economic activities. Social involvement could reduce economic
efficiency.
• Society must pay for social involvement of business through high
costs. Social involvement would create excessive costs for
business.
• Social involvement can create a weakened international business
balance of payment situation. Cost of social programs would have
to be added to he production costs. Socially involved companies
selling in international markets would be at a disadvantage when
competing with companies from other countries that do not have
these social costs to bear.
• Business has enough power and additional social involvement
would further increase its power and influence.
51

Arguments against for Business involvement
• Business people lack the social skills to deal
with problems of society . Their training and
experience are with economic matters may not
be pertinent to social problems.
• There is a lack of accountability of business to
society. Unless accountability can be established
business should not be involved.
• There is not full support for involvement in
social actions. Consequently disagreements
among groups with different view points will
cause friction.
52

CSR in India
• Corporate Social Responsibility is made as
mandatory requirement of Corporates in
India
• Every PSU has to spend 2 to 5 % of Profit to
the developmental activities of their
surroundings.
• Under these CSR programme, projects are
being carried out by PSUs since
• PSUs are also taking part in National Building.
53

Reaction or proaction
PROACTION is essential
• Managers need not react in the face of stress due to change
in environment.
• No enterprise can be expected to react quickly to unforeseen
developments, an enterprise must practice ways of
anticipating developments through forecasts.
• An alert company does not wait until its product is obsolete
and sales have fallen off before coming out with anew or
improved product.
• Any company should not wait until govt’s regualtions are
obsolete and discredited before looking for another way to
achieve its objectives.
• No enterprise should wait for problems to develop before
preparing to face them
54

Ethics in Managing
• Ethics is defined as “ the discipline dealing with what is
good and bad and with moral duty and obligation.
• Business ethics is concerned with truth & justice and
has a variety of aspects both in home country and in
abroad
 Expectations of society
 Fair competition
 Advertising
 Public relations
 Social responsibility
 Consumer autonomy
 Corporate Behaviour
55

Bad Ethics in Indian Corporates
• Satyam Computers – falsely inflated profits to
show the networth of company hingh wrongly
and to use it in unholy way. Company was forced
to face actions and finally company owners had
to face Jail and company also sold.
• King Fishers – UB involved in Beverages
production and sales entered Airline Business.
Its operational costs were high, company faced
huge loss. Company frdaulently sold aircrafts
and transferred its assets to another company
and failed to repay loans. Now owner facing
litigation.
56

Ethical Theories
• Three basic types of moral theories in the field of
normative ethics have been developed
• Utilitarian theory – Plans and actions should be
evaluated by their consequences. The idea is that
plans and actions should produce the greatest good
number of people.
• Theory based on Rights – All people have bsic rights
like rights to freedom and conscience, free speech
and due process.
• Theory of Justice – Decision makers be guided by
fairness and equity as well as impartiality.
57

Institutionalising Ethics
• Managers especially Top Managers have to create an
organizational environment that fosters ethical decision
making by institutionalising ethics. This can be done
 By establishing an appropriate company policy or code
of ethics
 By using a formally appointed ethics committee
 By teaching ethics in management development
programs.
• Managers must set themselves as a good example thro
ethical behavior and practices.
• A Code is a statement of policies , principles or rules
that guide behavior. Codes of ethics do not apply to
business enterprises, they should guide the behavior of
persons in all organisations and in every day life.
58

Ethics committee
Appointment of ethics committee consisting of
internal and external directors is considered
essential for institutionalising ethical behavior.
Functions of such committee include
 Holding regular meetings to discuss ethical issues
 Dealing with “grey areas”
 Communicating the codes to all in the organisation
 Checking possible violations of the code
 Enforcing the code
 Rewarding compliance and punishing violations
 Reviewing and updating the code
 Reporting activities of committee to the Board of
Directors.
59

Factors that raise Ethical standards
• Two factors that raise ethical standards
Public disclosure and publicity
Increased concern of a well informed public
• For ethical codes to be effective
Provisions must be made for their enforcement
Unethical managers should be held responsible
for their actions, privileges and benefits should
be withdrawn and sanctions should be applied.
Effective code enforcement requires
demonstration of consistent ethical behavior and
support from top management.
60

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