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UNIT-1

What is Management? Definitions


According to Harold Koontz, "Management is the art of getting things done through and with people in formally organised groups." According to Henri Fayol, "To manage is to forecast and to plan, to organise, to command, to co-ordinate and to control." According to Peter Drucker, "Management is a multi-purpose organ that manages business and manages managers and manages workers and work." According to Mary Parker Follet, "Management is the art of getting things done through people."

Meaning of Management
According to Theo Heimann, management has three different meanings, viz., 1. Management as a Noun : refers to a Group of Managers. 2. Management as a Process : refers to the Functions of Management i.e. Planning, Organising, Directing, Controlling, etc. 3. Management as a Discipline : refers to the Subject of Management. Management is an individual or a group of individuals that accept responsibilities to run an organisation. They Plan, Organise, Direct and Control all the essential activities of the organisation. Management does not do the work themselves. They motivate others to do the work and co-ordinate (i.e. bring together) all the work for achieving the objectives of the organisation. Management brings together all Six Ms i.e. Men and Women, Money, Machines, Materials, Methods and Markets. They use these resources for achieving the objectives of the organisation such as high sales, maximum profits, business expansio

The nature, main characteristics or features of management: 1. Continuous and never ending process. 2. Getting things done through people. 3. Result oriented science and art. 4. Multidisciplinary in nature. 5. A group and not an individual activity. 6. Follows established principles or rules. 7. Aided but not replaced by computers. 8. Situational in nature. 9. Need not be an ownership. 10. Both an art and science. 11. Management is all pervasive. 12. Management is intangible. 13. Uses a professional approach in work. 14. Dynamic in nature. Now let's briefly discuss each feature of management.

1. Continuous and never ending process


Management is a Process. It includes four main functions, viz., Planning, Organising, Directing and Controlling. The manager has to Plan and Organise all the activities. He had to give proper Directions to his subordinates. He also has to Control all the activities. The manager has to perform these functions continuously. Therefore, management is a continuous and never ending process.

2. Getting things done through people


The managers do not do the work themselves. They get the work done through the workers. The workers should not be treated like slaves. They should not be tricked, threatened or forced to do the work. A favourable work environment should be created and maintained.

3. Result oriented science and art


Management is result oriented because it gives a lot of importance to "Results". Examples of Results like, increase in market share, increase in profits, etc. Management always wants to get the best results at all times.

4. Multidisciplinary in nature
Management has to get the work done through people. It has to manage people. This is a very difficult job because different people have different emotions, feelings, aspirations, etc. Similarly, the same person may have different emotions at different times. So, management is a very complex job. Therefore, management uses knowledge from many

different subjects such as Economics, Information Technology, Psychology, Sociology, etc. Therefore, it is multidisciplinary in nature.

5. A group and not an individual activity


Management is not an individual activity. It is a group activity. It uses group (employees) efforts to achieve group (owners) objectives. It tries to satisfy the needs and wants of a group (consumers). Nowadays, importance is given to the team (group) and not to individuals.

6. Follows established principles or rules


Management follows established principles, such as division of work, discipline, unity of command, etc. These principles help to prevent and solve the problems in the organisation.

7. Aided but not replaced by computers


Now-a-days, all managers use computers. Computers help the managers to take accurate decisions. However, computers can only help management. Computers cannot replace management. This is because management takes the final responsibility. Thus Management is aided (helped) but not replaced by computers.

8. Situational in nature
Management makes plans, policies and decisions according to the situation. It changes its style according to the situation. It uses different plans, policies, decisions and styles for different situations. The manager first studies the full present situation. Then he draws conclusions about the situation. Then he makes plans, decisions, etc., which are best for the present situation. This is called Situational Management.

9. Need not be an ownership


In small organisations, management and ownership are one and the same. However, in large organisations, management is separate from ownership. The managers are highly qualified professionals who are hired from outside. The owners are the shareholders of the company.

10. Both an art and science


Management is result-oriented. Therefore, it is an Art. Management conducts continuous research. Thus, it is also a Science.

11. Management is all pervasive


Management is necessary for running a business. It is also essential for running business, educational, charitable and religious institutions. Management is a must for all activities, and therefore, it is all pervasive.

12. Management is intangible


Management is intangible, i.e. it cannot be seen and touched, but it can be felt and realised by its results. The success or failure of management can be judged only by its results. If there is good discipline, good productivity, good profits, etc., then the management is successful and vice-versa.

13. Uses a professional approach in work


Managers use a professional approach for getting the work done from their subordinates. They delegate (i.e. give) authority to their subordinates. They ask their subordinates to give suggestions for improving their work. They also encourage subordinates to take the initiative. Initiative means to do the right thing at the right time without being guided or helped by the superior.

14. Dynamic in nature


Management is dynamic in nature. That is, management is creative and innovative. An organisation will survive and succeed only if it is dynamic. It must continuously bring in new and creative ideas, new products, new product features, new ads, new marketing techniques, etc.

Classical versus Behavioral Management Theory One of the schools of management thought involves a principle known as the behavioral management theory. This theory is the school of thought that focuses on the way people work, and how employers could manage their employees. During the development of the behavioral management theory, a scientist named Elton Mayo developed an experiment that showed that increasing human motivation and satisfaction would have a concurrent role in increasing productivity. By making employees feel like they had a valued role in business operations, Mayo and his group of colleagues observed that psychological needs and wants had as much a role in the success of the workplace The classical theory is a school of thought that preceded the behavioral management theory, different on a number of fundamental aspects. One of the main characteristics of the classical management theory is that it was devised to increase productivity and efficiency. In order to find the best way to manage workers, employers would develop almost scientific solutions, such as standardizing methods and training employees on a single task. In addition, the classical management theory also produced new administrative methods geared towards efficiency, such as creating records and competence standards. The classical method focused mainly on achieving results, ignoring the motivations and the will of the workers. However, the behavioral management theory addresses this dynamic, taking into account employee behavior and expectations. One of the main characteristics of the behavioral management theory is that in order to more adequately achieve success, it is critical to recognize the human relations behind a company. Studies during this period showed that employees, when given attention and privileges, would perform better, thus allowing the company to achieve higher results. Lasting Effects of the Behavioral Management Theory The development of the behavioral management theory has had a number of lasting effects on everyday business operations. One of the main benefits of the behavioral management theory is the human relations movement, in which researches would study the behavior of groups in workplace settings. These researchers determined that it was important to nurture communication and interpersonal relations within a workplace, instead of focusing solely on mindless production. In almost every company today exists a human relations department, designed for addressing the needs of the workers. One of the main goals of the human relations movement was to create an efficient workplace without sacrificing the motivations of the employees. Satisfaction played a role in productivity, and thus companies addressed this by implementing incentives programs and other benefits. However, the behavioral management theory is flawed in that it ignored external elements, assuming that the outside environment was static. In addition, future studies would show that satisfaction

only plays a role in certain situations. Nonetheless, the lasting effects of the behavioral management theory can be seen in the implementation of human relations practices in many businesses today. Henri Fayol (1841 - 1925)

1.Division of work 2. Authority 3. Discipline 4. Unity of command 5. Unity of direction

Reduces the span of attention or effort for any one person or group. Develops practice and familiarity The right to give an order. Should not be considered without reference to responsibility Outward marks of respect in accordance with formal or informal agreements between firm and its employees One man superior One head and one plan for a group of activities with the same objective

The interests of one individual or one group should 6. Subordination of individual not prevail over the general good. This is a difficult interests to the general interest area of management 7. Remuneration 8. Centralisation 9. Scalar chain 10. Order 11. Equity 12. Stability of tenure of personnel 13. Initiative 14. Esprit de corps Pay should be fair to both the employee and the firm Is always present to a greater or less extent, depending on the size of the company and quality of its managers The line of authority from top to bottom of the organisation A place for everything and everything in its place; the right man in the right place A combination of kindliness and justice towards the employees Employees need to be given time to settle into their jobs, even though this may be a lengthy period in the case of the managers Within the limits of authority and discipline, all levels of staff should be encouraged to show initiative Harmony is a great strength to an organisation; teamwork should be encouraged

System Theory Attention began to focus on organisations as 'systems' with a number of inter-related subsystems. The 'systems approach' attempted to synthesise the classical approaches ( 'organisations without people') with the later human relations approaches that focused on the psychological and social aspects, emphasised human needs - almost 'people without organisations'. Systems theory focuses on complexity and interdependence of relationships. A system is composed of regularly interacting or interdependent groups of activities/parts that form the emergent whole. Part of systems theory, system dynamics is a method for understanding the dynamic behaviour of complex systems. The basis of the method is the recognition that the structure of any system -- the many circular, interlocking, sometimes time-delayed relationships among its components -- is often just as important in determining its behaviour as the individual components themselves. Early systems theorists aimed at finding a general systems theory that could explain all systems in all fields of science. The term goes back to Bertalanffys basic work 'General Systems Theory'. Sociologists like Niklas Luhmann also worked towards a general systems theory. As of today, whilst no systems theory can live up to this claim, there are general system principles which are found in all systems. For example, every system is an interaction of elements manifesting as a whole. Miller and Rice likened the commercial and industrial organisation to biological organisms. Systems theories took much more of an holistic view of organisations, focusing on the total work organisation and the inter-relationships between structures and human behaviours producing a wide range of variables within organisations. They help us understand the interactions between individuals, groups, organizations, communities, larger social systems, & their environments and help us enhance our understanding of how human behaviour operates in a context. A system is a part, and it is a whole, at the same time. An example of this in the Modern NHS is care pathways for patients which will often require a range of health disciplines to work together and will often also include professionals from social services or the local authority as well.

System Theory Key Terms: Boundary - an imaginary line around system of focus. Regulates flow of energy (e.g. information, resources) into & out of the system. Focal system - the system on which you are concentrating at any given time (eg: a manufacturing plant or a family). Subsystem - a part of the focal system (e.g., in a family, it may be children or parents) , sometimes referred to as 'sibling subsystem' & 'parental subsystem'). Suprasystem - is external to focal system; it is its environment. May include place of employment, school, neighbourhood, church, social service system. Open system - Relatively open systems have a freer exchange of information and resources within the system and also allow relatively free passage of energy from and to the outside of the system. Closed system - is more self-contained & isolated from their environment. The business organisation is an Open System: there is continual interaction with the broader external environment of which it forms a part, The systems approach considers the organisation within its total environment and emphasises the importance of 'multiple channels of interaction'. Thus the systems approach views organisations as a whole and involves the study of the organisation in terms of the relationship between technical and social variables with the systems. Thus changes in one part, technical or social, will affect other parts and therefore the whole system. It was Trist and others at the Tavistock Institute of Human relations who focused in on socio-technical systems arising from their study of the effects of changing technology in the coal-mining industries in the 1940s. The following Timeline gives an interesting perspective to the development of Systems Theory:

1950 General Systems Theory (founded by Ludwig von Bertalanffy) 1960 cybernetics (W. Ross Ashby, Norbert Wiener) Mathematical theory of the communication and control of systems through regulatory feedback. Closely related: "control theory" 1970 catastrophe theory (Ren Thom, E.C. Zeeman) Branch of mathematics that deals with bifurcations in dynamical systems, classifies phenomena characterized by sudden shifts in behavior arising from small changes in circumstances.

1980 chaos theory (David Ruelle, Edward Lorenz, Mitchell Feigenbaum, Steve Smale, James A. Yorke) Mathematical theory of nonlinear dynamical systems that describes bifurcations, strange attractors, and chaotic motions. 1990 complex adaptive systems (CAS) (John H. Holland, Murray Gell-Mann, Harold Morowitz, W. Brian Arthur,). The "new" science of complexity which describes emergence, adaptation and self-organization, all of which are basic system principles, was established mainly by researchers of the Santa Fe Institute (SFI). It is based on agents and computer simulations and includes multi-agent systems (MAS) which have become an important tool to study social and complex systems. CAS are still an active field of research.

Tavistock Institute of Human Relations


organisation is an 'open system' with environment organisations are complex systems of people, task, technology technological environmental factors are just as important as social/psychological

Contingency Theories From the late 1950s, a new approach to organisation theory was developed which became known as contingency theory. This theory argues that there is no 'one best way' to structure an organisation. An organisation will face a range of choices when determining how it should be structured, how it should be organised, how it should be managed. Successful organisations adopt structures that are an appropriate response to a number of variables, or contingencies, which influence both the needs of the organisation and how it works.

these theories take a comprehensive view of people in organisations they recommend a diagnosis of people/ task/ technology/environment - then suggest the development of appropriate solutions

1. Pugh (UK) 2. Burns and Stalker (UK) 3. Lawrence / Lorsch (USA) Contingency theorists have found that three contingencies are particularly important in influencing an organisation's structure. These are:

its size the technology it uses its operating environment.

There are two significant implications of contingency theory:

if there is no 'one best way', then even apparently quite similar organisations, for example, two nearby colleges, may choose significantly different structures and still survive, be reasonably successful in achieving their missions, and so on if different parts of the same organisation are influenced in different ways by the contingencies bearing upon them, then it may be appropriate for them to be structured differently, for example, one university department may have a functional structure, whilst another may have a matrix structure.

What do we mean by Management Theories? Management theories are the set of general rules that guide the managers to manage an organization. Theories are an explanation to assist employees to effectively relate to the business goals and implement effective means to achieve the same. General Management Theories: There are four general management theories. 1. Frederick Taylor Theory of Scientific Management. 2. Henri Fayol Administrative Management Theory. 3. Max Weber - Bureaucratic Theory of Management. 4. Elton Mayo Behavioral Theory of Management (Hawthorne Effect). 1. Frederick Taylors Theory of Scientific Management: Taylors theory of scientific management aimed at, improving economic efficiency, especially labor productivity. Taylor had a simple view about, what motivated people at work, - money. He felt that, workers should get a, fair day's pay for a fair day's work, and that pay, should be linked to the amount produced. Therefore he introduced the, DIFFERENTIAL PIECE RATE SYSTEM, of paying wages to the workers. Taylor's Differential Piece Rate Plan: If Efficiency is greater than the defined Standard then workers should be paid 120 % of Normal Piece Rate. If Efficiency is less than standard then workers should be paid 80% of Normal Piece Rate.

Principles of Scientific Management. Four Principles of Scientific Management are: 1.Time and motion study: - Study the way jobs are performed and find new ways to do them. 2.Teach, train and develop the workman with improved methods of doing work. Codify the new methods into rules. 3.Interest of employer & employees should be fully harmonized so as to secure mutually understanding relations between them. 4.Establish fair levels of performance and pay a premium for higher performance.

2. Henri Fayols Administrative Management Theory: Henri Fayol known as the Father Of Management laid down the 14 principles of Management.1.Division of Work. 2.Equity. 3.Discipline. 4.Initiative. 5.Authority and Responsibility. 6.Esprit De Corps. 7.Subordination of Individual Interest to General Interest. 8.Stability of Tenure. 9.Remuneration. 10.Unity of Direction. 11.Centralization.

12.Scalar Chain. 14.Unity of Command. 3. Max Webers Bureaucratic Theory Of Management: Weber made a distinction between authority and power. Weber believed that power educes obedience through force or the threat of force which induces individuals to adhere to regulations. According to Max Weber, there are three types of power in an organization:1.Traditional Power 2.Charismatic Power 3.Bureaucratic Power or Legal Power. Features of Bureaucracy: 1.Division of Labor. 2.Formal Hierarchical Structure. 3.Selection based on Technical Expertise. 4.Management by Rules. 5.Written Documents. 6.Only Legal Power is Important. 7.Formal and Impersonal relations.

Bureaucratic Theory by Max Weber


Bureaucratic Theory was developed by a German Sociologist and political economist Max Weber (1864-1920). According to him, bureaucracy is the most efficient form of organisation. The organisation has a well-defined line of authority. It has clear rules and regulations which are strictly followed According to Max Weber, there are three types of power in an organisation :1. Traditional Power, 2. Charismatic Power, and 3. Bureaucratic Power Or Legal Power.

Features of Bureaucratic Organisation


The characteristics or features of Bureaucratic Organisation are as follows :1. 2. 3. 4. 5. 6. 7. 8. 9. There is a high degree of Division of Labour and Specialisation. There is a well defined Hierarchy of Authority. It follows the principle of Rationality, Objectively and Consistency. There are Formal and Impersonal relations among the member of the organisation. Interpersonal relations are based on positions and not on personalities. There are well defined Rules and Regulations. There rules cover all the duties and rights of the employees. These rules must be strictly followed. There are well defined Methods for all types of work. Selection and Promotion is based on Technical qualifications. Only Bureaucratic or legal power is given importance.

Criticism of Bureaucratic Organisation


Bureaucratic organisation is a very rigid type of organisation. It does not give importance to human relations. It is suitable for government organisations. It is also suitable for organisations where change is very slow. It is appropriate for static organisations. Bureaucratic organisation is criticised because of the following reasons :1. Too much emphasis on rules and regulations. The rules and regulations are rigid and inflexible. 2. No importance is given to informal groups. Nowadays, informal groups play an important role in all business organisations. 3. Bureaucracy involves a lot of paper work. This results in lot of wastage of time, effort and money. 4. There will be unnecessary delay in decision-making due to formalities and rules. 5. Bureaucratic model may be suitable for government organisations. But it is not suitable for business organisations because business organisations believe in quick decision making and flexibility in procedures. 6. Too much importance is given to the technical qualifications of the employees for promotion and transfers. Dedication and commitment of the employee is not considered. 7. There is difficulty in coordination and communication. 8. There is limited scope for Human Resource (HR). 4. Elton Mayos Behavioral Theory of Management:

Elton Mayo's experiments showed an increase in worker productivity was produced by the psychological stimulus of being singled out, involved, and made to feel important. Hawthorne Effect, can be summarized as Employees will respond positively to any novel change in work environment like better illumination, clean work stations, relocating workstations etc. Employees are more productive because they know they are being studied. Elton Mayo's contribution to management theory helped pave the way for modern human relations management methods. Based on his well-known Hawthorne experiments, Mayo's management theories grew from his observations of employee productivity levels under varying environmental conditions. His experiments drew a number of conclusions about the real source of employee motivation, laying the groundwork for later approaches to team building and group dynamics. Mayo management theory states that employees are motivated far more by relational factors such as attention and camaraderie than by monetary rewards or environmental factors such as lighting, humidity, etc. Elton Mayo developed a matrix which he used to illustrate the likelihood that a given team would be successful. His matrix demonstrates the role that varying combinations of group norms and group cohesiveness play in team effectiveness. The following are the four combinations of Mayo theory and the effect of each on team dynamics: 1. Groups with low norms and low cohesiveness are ineffective; they have no impact, since none of the members are motivated to excel, according to Mayo's theory. 2. Groups with low norms and high cohesiveness have a negative impact, since fellow members encourage negative behavior (e.g., gangs). 3. Groups with high norms and low cohesiveness have some degree of positive impact through individual member accomplishments. 4. Groups with high norms and high cohesiveness have the greatest positive impact, Mayo's theory predicts, since group members encourage one another to excel.

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