PRINCIPLES OF MANAGEMENT 1.1.

Definition Management is the art of getting things done through people Mary Parker Follet Management is what a manager does Louis Allen. Management is the art of knowing exactly what you want your men to do and then seeing that they do it in the best and the cheapest way F.W. Taylor According to Luther Gullick we can state management functions as POSDCORB; where P = Planning, O = Organizing, S = Staffing, D= Directing, CO =Coordinating, R = Reporting, B = Budgeting. 1.2.Meaning Management is a process involving planning, organizing, staffing, directing, and controlling human efforts to achieve stated objectives in an organization. 1.3.SCOPE OF MANAGEMENT Management practices are applied in the following major functional areas of business: a) Production Management Production management is concerned with the proper planning organizing, direction, coordination and controlling the production activities. Creation of the factory building Acquisition of the necessary plant and machinery Purchase and storage of raw materials Attaining the targeted level of production Quality control etc., b) Personnel Management Personnel Management is primarily concerned with the management of the human resource of a business organization. (i.e.) Recruitment to Retirement. Manpower planning Recruitment and selection of employees Employee training Job analysis and evaluation Determination of the correct remuneration of r the workers Performance appraisal or evaluation Promotion, transfer, demotion and termination Encouraging workers participation in management and so on. c) Marketing Management Marketing is the total system of interacting business activities designed plan, price, promote and distribute want-satisfying products and services present and potential customers. Product planning o Product mix to manufacture one product or a number of products. o Product modification to alter outdated products. o Product elimination to drop unsuccessful product. o Branding selection of the most appropriate name for the product. etc., Pricing determining the right price for the product is yet another important task of the marketer. o Psychological pricing. o Prestige pricing. o Skimming pricing. o Penetration pricing. etc., Physical distribution the channels of distribution comprising the wholesalers, retailers and others but also storage and transportation which are vital in distribution.

I. Rosanth. Lecturer in PRIST University.

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PRINCIPLES OF MANAGEMENT Promotion the marketer has to take certain important decisions on the promotional measure that he would adopt to create demand for his products. o Advertising o Publicity o Personal selling etc., d) Financial Management Finance is the basic requirement of any business. A business requires fixed capital to acquire fixed assets like land and building plant and machinery, etc., it also needs working capital to buy raw materials, pay salaries and wage and to meet out all other routine expenses. FUNCTION OF MANAGEMENT (refer your assignment POSDCORB) Planning Organizing Staffing Directing Co-ordination Reporting Budgeting

a) b) c) d) e) f) g)

Business Management

Production Management

Personnel Management

Marketing Management

Financial Management

1.4.MANAGEMENT AND ADMINISTRATION A Terminological Conflict At the initial level of development of management thought, no distinction was made between management and administration and both the terms were used interchangeably. Oliver Sheldon in this book the philosophy of management when he emphasized administration as decision-making function and management as execution function.

I. Rosanth. Lecturer in PRIST University.

Planning

Organizing

Staffing

Directing

Co-ordination

Reporting

Budgeting Page 2

PRINCIPLES OF MANAGEMENT After that this distinction between the two terms was emphasized by many and the terminological conflict proceeded further. Various views expressed in this regard have led to the emergence of three approaches: a) Administration is above management According to many classical thinkers, administration is above management so far as different functions in the organization are concerned. They perceive that both administration and management activities are different though both of them may be performed by a single individual in an organization. The general view is that administration relates to policy formulation and management related to policy execution and these two activities are not the same. Top Administration (policy formulation)

Organizational level Management (policy execution) Lower Functions in organization Administrative and Management functions S.NO. 1 2 3 4 5 6 7 BASIS OF DIFFERENCE Level in organization Major focus Nature of functions Scope of functions Factors affecting decisions Employer employee relation Qualities required ADMINISTRATION Top level Policy formulation and objective determinations Determinative Broad and conceptual Mostly external Entrepreneurs and owners Administrative MANAGEMENT Middle and lower level Policy execution for objective achievement Executive Narrow and operational Mostly internal Employees Technical

b) Administration is a part of management This view is accepted, administration becomes a subordinate function to overall management functions. From this point of view, administration is concerned with day-to-day function and is a part of management. According to this approach, the previous analysis, that is, administration is above management, stands completely reversed. c) Management and administration are same According to the third approach which is the most popular and practical one, management and administration are same. Both involve the same functions, principles and objectives. One of the most important early thinkers on management thought, has said, all undertakings require planning, organization, command, coordination and control, and in order to function properly, all must observe the same general principles. We are no longer confronted with several administrative sciences but with one which can be applied equally well to public and private affairs. Thus there is no difference between management and administration. I. Rosanth. Lecturer in PRIST University. Page 3

PRINCIPLES OF MANAGEMENT policy formulation

Top

Middle Levels of management policy execution

Lower Management functions Management functions at different levels 1.5.MANAGEMENT: SCIENCE OR ART The controversy with regard to the nature of management, as to whether it is a science or an art, is very old. This controversy, however, is not very much in the air though the controversy is yet to be settled. Specification of exact nature of management as science or art or both is necessary to specify the process in science differs from that of art. a) Management as science Science may be viewed in terms of its structure, its goals, and its methods. In terms of its structure, it is a number of scientific disciplines: physics, biology, psychology, economics, management and many others. Each of these sciences attempts to provide a set of internally consistent hypotheses, principles, laws, and theories dealing with an aspect of total knowledge. The most important rules of science is that concepts have to be defined clearly in terms of the procedures involved in their measurement. Meanings have to be clear and unambiguous to avoid confusion and erroneous classification. In science, observation must be controlled sot that causation may be imputed correctly. The most common method of eliminating a given factor as possible cause of an event is to hold it constant-to keep it from varying so that it cannot operate as a source of change. To the extent that this effort is successful, reliability of perception and reasoning, and hence valid explanation is possible. Theories in science are in terms that permit empirical confirmation. Scientific statements are testable and the tests are capable of repetition with same result. Furthermore, explanatory statements are logically consistent with other explanatory statements that have been frequently confirmed. Such principles are not evolved, management cannot be called a science in it true sense. b) Management as art Skill the process of management does involve the use of know-how and skills like any other art such as music, painting, sculpture, etc. Achieve the result the process of management is directed to achieve certain concrete results as other fields of art do. Creativity management is creative like any other art. Creativity is a major dimension in managerial success. It creates new situations for further improvement. Success management is personalized meaning thereby that there is no one best way of managing. The success of managerial task is related with the personality of the person apart from the character and quality of general body of knowledge.

I. Rosanth. Lecturer in PRIST University.

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PRINCIPLES OF MANAGEMENT c) Management: Both science and art To be a successful manager, a person requires the knowledge of management principles and also the skills of how the knowledge can be utilized. Absence of either will result in inefficiency. A comparison between science and art is presented in which suggest that a manager require both aspects of management to be successful. SCIENCE Advances by knowledge Proves Predicts Defines Measures Impresses ART Advances by practice Feels Guesses Describes Opines Expresses

1.6.MANAGEMENT AS PROFESSION Management is regarded as profession by many, although it does not possess all the features of a profession. Therefore, it is desirable to find out whether management is a profession. Profession is an occupation for which specialized knowledge, skills and training are required and the use of these skills is not meant for self-satisfaction by these are used for larger interests of the society and the success of the use of these skills is measured not in terms of money alone. a) Existence of knowledge A profession emerges from the establishment of fact that there is a body of knowledge which cannot be skirted around but has to be studied for being a successful professional. Management satisfies the requirement of a profession in the form of existence of knowledge. b) Acquisition of knowledge An individual can enter a profession only after acquiring knowledge and skills through formal training. For example law graduates can enter the profession of legal practice. A professional is one who practices a profession and is regarded as an expert since he has mastery of a specific branch of learning upon which his occupation is based so that he may offer service to his client. c) Professional association An occupation which claims to be a profession should have an association. A professional association consists of firms and individuals whose membership is based on common professional, scientific, or technical aims. In the field of management, there are associations at various levels. In India, there is All India Management Association with its local chapters in most of the cities. d) Ethical code Ethical standards are provided and every individual of the profession is expected to maintain conformity with these standards. The need for ethical codes arises because of the fact that occupations whose practitioners have mastery over an area of knowledge have a degree of power by virtue of their expertise and this power can be used for the benefit of the professionals at the cost of the society. Their duty to protect the interest of all parties associated with an organization. These parties may be customers, suppliers, employees, financiers, creditors, government, and the general public. e) Service motive While ethical code provides the behavioural pattern for professionals, service motive concept suggests that professionals should keep social interest in their mind while charging fees for their professional services. It is essential because the monetary value or professional service cannot be measured easily in the absence of market mechanism except the competition among the professionals themselves.

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PRINCIPLES OF MANAGEMENT 1.7.UNIVERSALITY OF MANAGEMENT The concept of universality of management suggests that transmission of management knowledge may be undertaken: Arguments for universality Experts subscribing to the concept of universality of management suggest that the basics of management are universal and can be found in all types of organizations situated in any country or culture. a) Management as process Management as a process is universal. It is argued that management as a process is found in all organized activates irrespective of country, culture, or size. The various elements of management process-planning, organizing, staffing, directing and controlling are universal for all organizations and as a manager, each one must, at one time or another, carry all these duty characteristics of managers. b) Distinction between management fundamentals and techniques In order to ascertain the universality of management, it is proper to make distinction between management fundamentals and management techniques because it is the specific technique which varies according to the needs of the situation. Management fundamentals and the basic principles and theories while management techniques are the tools for performing managerial functions. c) Distinction between management fundamentals and practices Universality of management suggests that management fundamentals are the same, only practices differ. This is so because management is both science and art. The most productive are is always based o an understanding of the science underlying it. Thus, science and art are complementary. The art of managing or the practice of managing makes use of organized knowledge that is science. Its practice is subject to variations under different conditions. Arguments against universality According to this view, management is entirely situational and there is nothing like universal principles of management. Therefore, there is no such way as the right way for a manager to operate or behave. There are only ways that are appropriate for specific tasks of specific enterprises under specific conditions, faced by managers of specific temperaments and styles. a) Culture of country or of an organization The application of management is determined by the culture of a country or of an organization. There fore, many management experts have viewed that management is culture bound. The basis of this statement is the any people-oriented process is based on culture from where people come. Culture is a set of belies, attitudes, and values that are shared commonly by the members of society. b) Objectives of an organization The objective of an enterprise determines the type of management required. The skill, competence and experience of a management cannot as such be transferred and applied to the business organization and running of other institutions. The basis of his view is that business organization and running of other institutions. The basis of his view is that business organizations exist for economic ends and management consists of skills and techniques for attaining these ends. c) Management philosophy of an organization Differences in philosophies of various organizations put a limit on the person being a good manager in all types of organizations. Philosophy can mean an attitude toward certain activities as in a persons philosophy of meaningful in life. Difference in philosophy of various organizations requires different kinds of managerial techniques. The management processes of two groups of companies operating in India professionally managed and family managed and found differences in the practices in two groups of companies.

I. Rosanth. Lecturer in PRIST University.

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PRINCIPLES OF MANAGEMENT S.No. Dimension of management Professionally managed company Family managed company 1 Nature of desired Emphasis on professional Emphasis on demonstrated managerial skill qualifications and rank skills, depth and quality and knowledge 2 Actual performance Emphasis on conformity to Emphasis on originality of organizational values loyalty and action and thinking, relative fit with the position innovation and up gradation of knowledge and skills. 3 Management systems Emphasis on use of elegant, Emphasis on reliance on adopted scientific, sophisticated and rational business sense and no frills, system systems geared to quick action. 4 Style of planning and Emphasis on information gathering, Emphasis on selective decision making bureaucratic mode of function, risk information usage, initiative aversion and non entrepreneurial and qualitative decision decision making making of entrepreneurial nature 5 Nature of management Comprehensive, formal and written Emphasis on primary use of control reporting verbal reporting and remedial action. 1.8.LEVELS OF MANAGEMENT Managers are organizational members who are responsible for the work performance of other organizational members. Managers have formal authority to use organizational resources and to make decisions. In organizations, there are typically three levels of management: top-level, middle-level, and first-level. These three main levels of managers form a hierarchy, in which they are ranked in order of importance. In most organizations, the number of managers at each level is such that the hierarchy resembles a pyramid, with many more first-level managers, fewer middle managers, and the fewest managers at the top level. a) Top Level Manager Top-level managers, or top managers, are also called senior management or executives. These individuals are at the top one or two levels in an organization, and hold titles such as: Chief Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operational Officer (COO), Chief Information Officer (CIO), Chairperson of the Board, President, Vice president, Corporate head. b) Middle Level Manager Middle-level managers, or middle managers, are those in the levels below top managers. Middle managers' job titles include: General manager, Plant manager, Regional manager, and Divisional manager. Middle-level managers are responsible for carrying out the goals set by top management. They do so by setting goals for their departments and other business units. Middle managers can motivate and assist first-line managers to achieve business objectives. Middle managers may also communicate upward, by offering suggestions and feedback to top managers. c) First Level Manager First-level managers are also called first-line managers or supervisors. These managers have job titles such as: Office manager, Shift supervisor, Department manager, Foreperson, Crew leader, Store manager.First-line managers are responsible for the daily management of line workersthe employees who actually produce the product or offer the service. There are first-line managers in every work unit in the organization. Although first-level managers typically do not set goals for the organization, they have a very strong influence on the company. These are the managers that most employees interact with on a daily basis, and if the managers perform poorly, employees may also perform poorly, may lack motivation, or may leave the company. I. Rosanth. Lecturer in PRIST University. Page 7

PRINCIPLES OF MANAGEMENT

Top level

CEO

Middle level

Production Manager

Finance Manager

Marketing Manager

Lower level

Supervisor A

Supervisor B

Supervisor C

Workers

Workers

Workers

MANAGEMENT LEVELS AND THE FOUR MANAGERIAL FUNCTIONS Managers at different levels of the organization engage in different amounts of time on the four managerial functions of planning, organizing, leading, and controlling. Planning is choosing appropriate organizational goals and the correct directions to achieve those goals. Organizing involves determining the tasks and the relationships that allow employees to work together to achieve the planned goals. With leading, managers motivate and coordinate employees to work together to achieve organizational goals. When controlling, managers monitor and measure the degree to which the organization has reached its goals. The figure show the management level and skills: Technical Skills Human Skills Conceptual Skills

Top Level Management

Middle Level Management

Lower Level Management

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PRINCIPLES OF MANAGEMENT Management Skills In order to perform the functions of management and to assume multiple roles, managers must be skilled. Robert Katz identified three managerial skills that are essential to successful management: technical, human, and conceptual. a) Technical skill involves process or technique knowledge and proficiency. Managers use the processes, techniques and tools of a specific area. b) Human skill involves the ability to interact effectively with people. Managers interact and cooperate with employees. c) Conceptual skill involves the formulation of ideas. Managers understand abstract relationships, develop ideas, and solve problems creatively. Thus, technical skill deals with things, human skill concerns people, and conceptual skill has to do with ideas. 1.9.PRINCIPLES OF MANAGEMENT The 14 Management Principles from Henri Fayol are: 1) Division of Work Specialization allows the individual to build up experience, and to continuously improve his skills. Thereby he can be more productive. 2) Authority The right to issue commands, along with which must go the balanced responsibility for its function. 3) Discipline Employees must obey, but this is two-sided: employees will only obey orders if management play their part by providing good leadership. 4) Unity of Command Each worker should have only one boss with no other conflicting lines of command. 5) Unity of Direction People engaged in the same kind of activities must have the same objectives in a single plan. This is essential to ensure unity and coordination in the enterprise. Unity of command does not exist without unity of direction but does not necessarily flows from it. 6) Subordination of individual interest (to the general interest) Management must see that the goals of the firms are always paramount. 7) Remuneration Payment is an important motivator although by analyzing a number of possibilities, Fayol points out that there is no such thing as a perfect system. 8) Centralization (or Decentralization) This is a matter of degree depending on the condition of the business and the quality of its personnel. 9) Scalar chain (Line of Authority) A hierarchy is necessary for unity of direction. But lateral communication is also fundamental, as long as superiors know that such communication is taking place. Scalar chain refers to the number of levels in the hierarchy from the ultimate authority to the lowest level in the organization. It should not be over-stretched and consist of too-many levels. 10) Order Both material order and social order are necessary. The former minimizes lost time and useless handling of materials. The latter is achieved through organization and selection. 11) Equity In running a business a combination of kindliness and justice is needed. Treating employees well is important to achieve equity. 12) Stability of Tenure of Personnel Employees work better if job security and career progress are assured to them. An insecure tenure and a high rate of employee turnover will affect the organization adversely.

I. Rosanth. Lecturer in PRIST University.

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PRINCIPLES OF MANAGEMENT 13) Initiative Allowing all personnel to show their initiative in some way is a source of strength for the organization. Even though it may well involve a sacrifice of personal vanity on the part of many managers. 14) Esprit de Corps Management must foster the morale of its employees. He further suggests that: real talent is needed to coordinate effort, encourage keenness, use each persons abilities, and reward each ones merit without arousing possible jealousies and disturbing harmonious relations. ROLE OF MANAGEMENT PRINCIPLE The principles of management have a tremendous impact upon the practice of management in increasing the efficiency of the organisation. The need and important of management principles can be visulised as follows: 1) To increase efficiency The established principles of management provide managers guidelines as to how they should work in different situations. These principles increase managerial efficiency. 2) To crystallize the nature of management Lack of understanding of management principles makes it difficult to analyses the management job and to define the exact scope of managerial functions. Individuals cannot be trained effectively for managerial positions. Management principles, rules methods and procedure are necessary to train and educate future management. 3) To carry on researches If, in any subject, certain fundamental principles are developed, the scope and limitations defined, these become the basis for future researches. In the absence of these principles, researches become difficult and future horizons of knowledge cannot be expanded. 4) To attain social objectives The understanding of management principle enables managers to take a more realistic view of organizational problems and their solution. Management deals with people in the organization, and the structure and behaviour of the atom are for less complex than the structure and behaviour of group of people. However, managers, while putting management principles into practice, should check their validity and applicability before their use.

I. Rosanth. Lecturer in PRIST University.

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