MANAGEMENT

DEFINITION
 Koontz
- Management is the art of getting things
done through and with people in formally
organized groups.

Robbins
- Management is the process of
coordinating work activities so that they
are completed efficiently and effectively
with and through other people.
Features of Management

◦ Organized activities:
◦ Existence of clear objectives and goals
◦ Resources are interrelated
◦ Working with and through people
◦ Decision-making
NATURE OF MANAGEMENT
 Multidisciplinary
 Dynamic Principles
 Relative, not Absolute Principles
 Science and an Art
 A Profession
 Universal
IMPORTANCE
 Effective utilization of resources.
 Development of resources
 Incorporate and use innovations
 Integrating interest groups
 Stability in society
Who is a Manager?
 A manager is someone who works with and
through other people by coordinating their
work activities in order to accomplish
organizational goals.
Functions
 PLANNING
 ORGANIZING
 STAFFING
 LEADING
 CONTROLLING
MANAGEMENT ROLES
Skills required by manager

 Technical Skills
 Human Skills
 Conceptual Skills.
 Diagnostic Skills
Features of Social responsibility
 Three types of behavior of person in the
society - positive, neutral and negative.
 Every has a social obligation to fulfill.
 The standards fixed for fulfilling
obligations to various parties are to be
decided according to social norms and
expectations.
Various interest groups:
 Shareholders
 Workers
 Customers
 Creditors, suppliers and others
 Government
 Society
Why social responsibility of
business
 Arguments against social responsibility:
- Contrary to basic functions of business
- Control of business values
- Inefficiency in the business
 Arguments for social responsibility
- business: a part of society
- Avoidance of government regulations
- Long-run self interest of business
- Traditional values
Two opposing views:
 The Classical View: The business
manager’s and organization’s only social
responsibility is to maximize the profits at
whatever cost.
 The Socioeconomic View: The view
that a manager’s and an organization’s
responsibility is much more than mere
profit maximization, it includes protecting
and improving the society’s welfare.

What are ethics?

 Rules and principles that define right and

wrong conduct are called ethics.
 Since most of the managerial activities affect
many people, a manger should think about
his actions and their consequences on
others.
 There are four views on managerial ethics.
1. Utilitarian view
2. Rights view
3. Theory justice view
4. Integrative social contracts theory
Utilitarian view:
ethical decisions are made solely on the
basis of their outcomes or consequences.
Rights view:
respecting and protecting individual liberties
and privileges.
Theory justice view:
Managers impose and enforce rules fairly
and impartially and do so by following all
legal rules and regulations.
Integrative social contracts theory:
ethical decisions should be based on
empirical (what is) and normative (what
should be) factors.
Business Ethics
It is concerned with truth & justice and
has a variety of aspects such as :
 Expectation of society.
 Fair competition.
 Public relations.
 Social responsibility.
 Corporate behavior in home country or
abroad.
Need of ethics
 Business operates within society
 Business survives on ethical means
 Responsible corporate citizenship & business
 Expectation of public
 Trust of employees
 Image
 Costs of unethical practices
 Price of best companies
 Overall benefits
Importance of Ethics
 Ethics corresponds to basic human
needs
 It creates credibility with the public
 It gives management credibility with the
employees
 It helps in better decision making
 Laws can’t protect society but ethics can
Ethical dilemma
 A situation that is although offering
potential benefits, is unethical
 One of the most common ethical
dilemmas occur when a company’s culture
conflicts with an employee’s personal
ethics.
Evolution of Management Thought
 Industrial Revolution led to need for greater
efficiency in production
resulted in -
dev of scientific approach to managing &
organizing workers

 Classical era of management thought

triggered by societal values, use of
technology, machines & demand of complex
products by consumers
 Managers of organizations began seeking better ways to
satisfy customer needs.
 Evolution of Modern Management
 Large-scale
mechanized manufacturing began to
supplant small-scale craft production in ways in
which goods were produced.

 Social
problems developed in large groups of
workers employed under factory system.

 Managers began to focus on increasing the

efficiency of the worker-task mix.

 Management today is both a reflection of and a

reaction to past management theories
Job specialization
 Adam Smith, 18th century economist, found
firms manufactured pins in two ways:
Craft -- each worker did all steps.
Factory -- each worker specialized in one
step.

 Smithfound that the factory method had much

higher productivity

 Each worker became very skilled at one, specific task.

 Breaking down the total job allowed for the

division of labor
Evolution of Management Thought
 Predominant characteristic: emphasis on
the
economic rationality of the individual
employee
at work – Smith
 Smith’s assumptions:
 People choose course of action to maximize their
economic reward
 To get employees work hard, managers should
appeal to their monetary desires

 Theorist recognized humans have emotions, controlled by

logical & rational structuring of jobs & work
 3.Modern approaches:
1.Classical approach
a)Scientific management - SYSTEM THEORY

 taylor - MANAGEMENT
 gantt SCIENCE/QUANTITATIVE/
 gilbreth OPERATIONS
b) administrative management REASEARCH/
 (HENRY fayol)
MATHEMATICAL
APPROACH
c) bureaucratic managemnt
2. Neo- classical approach:
a.human relations approach
b. Behavioural approach
 Maslow
 Mcgregor
 Herzberg
 likert
Contributions of TAYLOR
 The concept of scientific management was
introduced by Frederick Winslow Taylor
 According to him, scientific management is
concerned with knowing exactly what you
want men to do and then see in that they do
it in the best and cheapest way.
Elements and tools of scientific
mangement
 Separation of planning and doing:
emphasized that planning should be left to the
supervisor and the worker should emphasize only
operational work
 Functional foremanship: in this concept, 8
persons are involved to direct the activities of
workers. Out of these, 4 persons are concerned
with planning and remaining 4 with doing
 Job analysis: job analysis is undertaken to find
out the one best way of doing the thing which
involves least movements , consequently less time
and cost. It involves time study, motion study and
fatigue study
 Standardization: it should be maintained in respect
of instruments, tools, period of work , amount of work,
working conditions and cost of production etc.
 Scientific selection and training of workers: a
worker should be given work for which he is
physically and technically most suitable
 Financial incentives: It can motivate workers to put
in their maximum efforts. He applied the concept of
differential piece rate system
 Economy: the economy and profit can be achieved by
making the resources more productive as well as by
eliminating the wastages
 Mental revolution: scientific management depends
upon the mutual co-operation between the
management and workers. To achieve this, there should
be mental change in both parties from conflict to co-
operation
Principles of scientific management
 Replacing rule of thumb with science: the
use of scientific method denotes precision in
determining any aspect of work and rule of
thumb emphasizes estimation
 Harmony in group action: group harmony
suggests that there should be mutual give and
take situation and proper understanding so that
group as a whole contributes to the maximum
 Co-operation: co-operation between
management and workers can be developed
through mutual understanding and a change in
thinking.
 Maximum output: he advised the managemnt
and workers to turn their attention towards
increasing the size of the surplus until the size
of the surplus becomes so large that it is
necessary to quarrel over how it shall be
divided
 Development of workers: development of
workers requires their scientific selection and
providing them training at the workplace.
Criticism of Scientific Management

1. Expectation of efficiency was not possible for an average

workers. Standard set for work and motion study was
too high.
2. Emphasis on efficiency at all cost turned workers into
mere machines.
3. Incentives were not matching with increase in
productivity.
4. Specialization makes work monotonous
5. Taylors concepts are more on problems of factory
management and did not touch general management like
planning, controlling etc.
 Scientific Management

 Henry L. Gantt
 Worked with Taylor & made significant contributions
to study of scientific mgmt
 Contribution
 Emphasized relations of mgmt & labor
 Stressed conditions that have favorable
psychological effects on worker
 Developed charting techniques for scheduling
 Gantt chart became very popular
 Concentrated on developing graphic methods for
presenting plans
 Task & bonus system of remunerating workers for
performance
 The Gilbreths

 Frank& Lillian Gilberth refined Taylor’s

methods
 Made many improvements to time and motion studies

 Time and motion studies:

 1. Break down each action into components.
 2. Find better ways to perform it.
 3. Reorganize each action to be more efficient

 Gilberth also studied fatigue problems,

lighting, heating, design of tools & machines
and other worker issues
Modern operational Management theory

 Henri Fayol -father of modern management theory

 Divided industrial activity into 6 groups: technical, commercial,
financial, security, accounting & managerial
 Focused on managerial activity, developed a set of 14 principles:

1. Division of work: allows for job specialization.

 Specialization increases output by making employees
more efficient
2. Authority & Responsibility: Fayol included
both
formal & informal authority resulting from
special expertise.
 14 principles:

3. Unity of Command: Employees should have only one boss.

4.Line of Authority: a clear chain from top to bottom of the firm.

5.Centralization: the degree to which authority rests at the very

top.

6.Unity of Direction: One plan of action to guide the

organization.

7.Equity: Treat all employees fairly in justice and respect.

8.Order: Each employee is put where they have the most value.
14 principles:

9. Initiative: Encourage innovation.

10. Discipline: Employees must obey & respect the rules

that govern the organization.

11.Remuneration of Personnel: Workers must be

paid a fair wage for their services

12. Scalar chain: Chain of superiors can be short circuited

13. General interest over individual interest: The

organization takes precedence over the
individual.

14. Esprit de corps: Share enthusiasm or devotion to the

organization
 BUREAUCRATIC MANAGEMENT
 Seeksto create an organization that leads to
both efficiency and effectiveness.
 Max Weberdeveloped the concept of
bureaucracy
 ideas of bureaucracy: reaction to managerial abuse of
power
 looked for methods to eliminate managerial
inconsistency that contributed to ineffectiveness
 solution: set of principles for organizing group effort
through a bureaucratic organization
 Term bureaucracy referred to organizations that
rule too rigidly by the book; principles found in
almost every formal organization
 A formal system of organization and
administration to ensure effectiveness and
efficiency.
 Weber developed the 4 principles.
Behavioral Sciences -Bureaucratic Principles

Written rules

System of task A Bureaucracy Hierarchy of

relationships should have authority

Fair evaluation
and reward
Behavioral Sciences -
Key points of Bureaucracy

Authority is the power to hold people

accountable for their actions.
Positions in the firm should be held based
on performance not social contacts.
duties are clearly identified. People should
know what is expected of them.
Lines of authority should be clearly
identified.Workers know who reports to
whom.
Rules, Standard Operating Procedures
(SOPs), & Norms used to determine how
the firm operates.
II. NEO- CLASSICAL APPROACH
1. HUMAN RELATIONS APPROACH
2. BEHAVIOURAL APPROACH
 1. Human relations approach
The Hawthorne Studies

Elton Mayo, studies at Hawthorne Works of

the Western Electric Co. (during 1924-1932)
to evaluate attitudes & psychological reactions
of workers in on- the-job situations:
 Worker productivity was measured at various
levels of light illumination.
 Researchers found that regardless of whether the
light levels were raised or lowered, productivity
rose.

 Actually, it appears that the workers enjoyed the attention they

received as part of the study and were more productive.
The Hawthorne Effect: Elton Mayo (1880-1949)

• When the famous Hawthorne studies began,

Mayo was experimenting with the alteration
of physical working conditions to increase
productivity.

• They became aware that other unexpected

factors were interacting with physical factors
to influence work output.
• Output increased not matter how the
physical variables were changed. Mayo
and his colleagues came to understand
that a powerful and previously
unrecognized influence in the experimental
setting was the attention the researchers
were paying to the workers.

• As a result of the Hawthorne research,

production could no longer be viewed as
solely dependent on formal job and
organizational design.
This effect, widely know as the Hawthorne
effect, was the first documentation in
industrial psychological research of the
importance of human interaction and
morale for productivity
Elton Mayo conducted research in 4 phases

1.Experiments to determine the effects of

changes on productivity,
experiments,1924-27.

2. Experiments to determine the effects of

changes in hours & working conditions on
productivity, relay assembly test room
experiments,1927-28.
Conti…

3. Conducting plant-wise interviews to

determine worker attitudes and sentiments,
mass interviewing programme,1928-30.

4. Determination and analysis of social

organization at work, bank wiring
observation room experiuments,1931-32.
Illumination Experiments
 Hypothesis was higher illumination ,
productivity would increase.

 Group of workers were chosen and placed

in 2 separate groups.

 One group was experimental group other

was control group.
 Relay Assembly Test Room Experiments

 Designed to determine the effect of changes

in various job conditions.
 Researchers set up a relay assembly test
room and 2 girls were chosen.
 The work related to the assembly of
telephone relays.
 Each relay consisted of a number of parts
which girls assembled into finished product.
 Conti….

 An observer was associated with girls.

 Before each change was introduced the girls
were consulted.
 Two –fine minute rests one in morning &
other in evening & later increased to 10
minutes.
 Then the rest period was reduced to 5
minutes and the frequency was increased.
 Contin…..

 They started serving coffee or soup along

with sandwich in morning & snacks were
provided in evening.
 Changes in working hours…4:30 instead of
5:00., and productivity increased.
 This development caused a considerable
amount redirection in thinking not because of
positive changes but because of change in
girls attitude.
Mass Interviewing Programme

 Determining employees attitude towards

company, supervision, insurance plans,
promotion, and wages.

 This method had disadvantage of the over

simplified ‘yes’ or ‘no’ responses which could not
get to the root of the problems.

 The interview programme gave valuable insights

about human behavior in the company.
 Findings of the programme

 A complaint is not necessarily an objective ; it

is a symptom of personal disturbance.
 The social organization of the worker in the
company is a reference from which the
worker assign meaning & value to the events,
objects, 7 hours of work, wages
 The social demands of the worker are
influenced by social experiences in groups
both inside & outside the work plant.
Bank Wiring Observation Room Experiments

 A group of 14 male workers was employed

in the bank wiring room: nine wiremen,
three solder man, and two inspectors.
 The work involved attaching wire to
switches for certain equipment used in
telephone exchange.
 The hypothesis was that in order to earn
more, workers would produce more.
 Conti….

 In order to take the advantages of group

bonus , they would help each other to
produce more.
 The workers decided the target for
themselves which was lower than the
company’s target.
Implication of Hawthorne experiments

 Group influence
 Conflicts
 Leadership
 Supervision
 communication
2. Behavioural approach
1.Abraham Maslow
2.Herzberg
3.Mcgregor
4.Likert
Maslow Theory
 Human life is surrounded by wants.

A person satisfies one of his needs and immediately the

next need arises.

 If
the person has no need in his life then there would be
no purpose of his life.

 If
all the needs of a person are satisfied then he will not
work any more.

 In fact the human needs never come to an end.

 MASLOW’S THEORY

“We each have a hierarchy of needs

that ranges from "lower" to "higher." As
lower needs are fulfilled there is a tendency
for other, higher needs to emerge.”
 MASLOW’S THEORY

Maslow’s theory maintains that a person

does not feel a higher need until the needs
of the current level have been satisfied.
Maslow's basic needs are as follows:
Self-Actualization

Esteem

Belonging

Safety

Physiological
 Basic Human Needs

 Food

 Air

 Water

 Clothing

Physiological Needs
 Safety and Security
 Protection
 Stability
 Pain Avoidance

Safety Needs
 Love and Belonging

 Affection
Social Needs  Acceptance
 Inclusion
 Esteem
Esteem Needs  Self-Respect
 Self-Esteem
 Respected by Others
Self-Actualization
 Achieve full potential
 Fulfillment
Maslow’s need Hierarchy Theory

 Unless basic needs (physiological & safety

needs) are satisfied, other needs will not
motivate any individual

 Once basic needs are satisfied, they no

longer motivate the individual
Maslow’s need Hierarchy Theory

Limitations of Maslow’s Theory

 Human needs don’t always emerge in

hierarchical manner

 Does not explain how a person prioritizes

his
particular hierarchy of needs

 Outdated, still starting point of all studies

Herzberg’s Theory of Motivation
 200 engineers & accountants asked to recall
instances when they were
a) particularly satisfied
b) dissatisfied with their work

 According to respondents, satisfying aspects of

job were:
 opportunity to achieve
 receive recognition/promotion; and
 new responsibilities

 These factors were called Motivators

Herzberg’s Theory of Motivation
 Dissatisfying factors related to

 Poor working conditions, low pay, job insecurity

 These factors were termed as Hygiene factors

 Findings of Herzberg:

 Best way to motivate workers: satisfy their need

for job content

 Hygiene factors: important to prevent them from

feeling dissatisfied
Douglas McGregor

Theory X and Y
Douglas McGregor proposed the two different
sets of worker assumptions.
Theory X: Assumes the average worker is lazy, dislikes
work and will do as little as possible.
 Managers must closely supervise and control through reward
and punishment.

Theory Y: Assumes workers are not lazy, want to do a

good job and the job itself will determine if the
worker likes the work.
 Managers should allow the worker great freedom, and create
an organization to stimulate the worker.
Theory X v. Theory Y
 Likert
 This method of standardized survey was developed by Likert
in 1932 and is widely used even today.
 An individual is asked to indicate agreement or disagreement
with job factors.
 The individual is also required to state how strongly he or
she agrees or disagrees with a statement.
 This is normally done on a 5-point scale, though it is possible
to use a 7-point scale also.
 The normal practice is to incorporate the various statements
in a questionnaire.
 The individual is asked to respond to these statements,
indicating the extent of his or her agreement or
disagreement.
 A value may be given to each response category in order to
produce a numerical score, and the different scores in each
category may be added together to arrive at a total score.
 A high overall score can be viewed as positive, where a low
score indicates negative.
Modern techniques
1. Management science:
1. mathematical or quantitative measurement approach,
2. visualizes management as a logical entity,
3. the action of which can be expressed in terms of
mathematical symbols, relationships and
measurement data.
- The primary focus is mathematical model.
- Through this device, managerial and other
problems can be expressed in basic
relationships and where a given goal is sought,
the model can be expressed in terms which
optimize that goal.
Features
 Management is regarded as the problem
solving mechanism with the help of
mathematical tools and techniques
 Management problems can be described
in terms of mathematical symbols and
data. Thus every managerial activity can be
quantified.
 This approach covers decision making ,
system analysis and some aspects of
human behaviour.
 Various mathematical tools like
◦ sampling,
◦ linear programming,
◦ game theory,
◦ time series analysis
have provided more exactness in solving various
managerial problems
 One drawback : many managerial activities are
not capable of being quantified
◦ because of involvement of human beings who are
governed by many irrational factors
 Decision theory approach
 This approach looks at the basic problem of management
around decision making .
 The selection of a suitable course of action out of the
given alternatives .
 The major contribution towards decision making approach
is by Herbert Simon
 Features
- Management is essentially a decision making body.
- The members of the organization are decision makers and
problem solvers
- Organization can be treated as a combination of decision
centres.
- Quality of decision affects the organizational effectiveness
- All factors affecting decision making are the subject matter
of study of management
Decision tree
 A decision tree is a decision support tool that
uses a tree-like graph or model of decisions and
their possible consequences, including chance
event outcomes, resource costs, and utility.
 It is one way to display an algorithm.
 Decision trees are commonly used in operations
research, specifically in decision analysis, to help
identify a strategy most likely to reach a goal.
 Another use of decision trees is as a descriptive
means for calculating conditional probabilities
System Theory - Chester Irving Barnard

Contributions of Barnard towards Management Thoughts

◦ Theory of Formal Organization

◦ Organizational Equilibrium
◦ Concept of Authority
◦ Function Of An Executive
◦ Informal Organization
System approach to management

1.Theory Of Formal Organization :- “System of

consciously coordinated activities of forces of two or
more persons”
Existence of Organization Depends On:-
1. Willingness of person to contribute effort
2. Objective of co-operation
3. Proper communication system is essential

2. Organizational Equilibrium :- Both the

personal goal and organizational goal should be same
 System approach to management

3.Concept Of An Authority :- “Authority means

power”
◦ Bernard says that Authority is confirmed only by
bottom.

4.Function Of An Executive :- Maintaining proper

communication and obtaining essential services from individuals

5.Informal Organization :- Those social interaction

which do not have consciously coordinated joint
purpose
 System approach to management

 According to Chester Barnard, this happens

because organizations do not meet the two
criteria necessary for survival: effectiveness
and efficiency.