Principles of Management

School Year 2014-2015

Chapter 1: Introduction to Management
Management: A Definition
• According to Terry and Rue define management as “ a process or form of work
that involves the guidance and direction of a group of people toward
organizational goals or objectives.
• According to Stoner states that “management is a process of planning,
organizing, leading and controlling the efforts of organization members and
using all other organizational resources to achieve stated organizational goals.
• According to Koontz, O’Donnell, and Weihrich point out that “management is
the establishment of an environment for group effort in such a way that
individuals will contribute to group objectives with the least amount of such
money, time, effort discomfort and materials.
• According to Johnson and Stinson say that “management is the process of
working with and through other people to accomplish organizational goals.
Management: Functions and Processes (An Overview)
1. Planning- the process of setting the objectives to be accomplished by
an organization during a future time period and deciding on the
methods of reaching them.
2. Organizing- the process of grouping and assigning activities and
providing the necessary authority to carry out the activities.
3. Staffing- the process of filling positions in the organizational structure
with the most qualified people available.
4. Motivating- the process of getting people contribute their maximum
effort toward the attainment of organizational objectives.
5. Controlling- the process of ensuring the achievement of an
organization’s objectives.
Two essential processes are involved in all these five
managerial functions:

1. Decision- Making. This is the process of choosing from two or more

alternatives.
2. Communicating. It is the impossible to perform the managerial
functions without communication, which is the process of exchanging
facts, ideas, opinions and emotions between two or more persons.
Chapter 2: The Evolution of Management Thought
By 1860, or at the beginning of the Industrial Revolution in the United States,
it was evident that the energy, transportation and communication fields have
advanced to the point that they served as an incentive to the entrepreneur.

In 1895, Frederick W. Taylor who challenged the previous methods of

managing a business came up with Scientific Management. This was a
philosophy that dealt with the relationship of people and work.

Then another contribution to the Scientific Management was Henry L. Gantt

who devised what is known as the Gantt Chart , this is bar chart comparing
schedule with the actual performance widely used in production control and
now on computer scheduling operations.

In 1916, Henry Fayol, drew up of blueprint for a cohesive doctrine of

management after investigating managerial behavior. He presented a
breakdown of the functions of management which is: planning, organizing,
commanding, coordinating and controlling.
Fayol’s: 14 Principles of Management
1. Division of Labor
2. Authority and Responsibility
3. Discipline
4. Unity of Command
5. Unity of Direction
6. Subordination of individual interest to the general interest
7. Fair remuneration of personnel
8. Centralization
9. Scalar Chain
10. Order
11. Equity
12. Stability of tenure
13. Initiative
14. Esprit de corps
In 1927, Elton Mayo’s studies began to determine the relationship between
the physical and productivity emphasized the potential impact of the
behavioral sciences on management.

In 1930s, The Great depression shook the entire business structure. During
this economic crisis, with widespread unemployment with the collapse or
near collapse of major economic institutions, many companies disappeared.

In late 1940s to the early 1960s, the management process or functional

approach was accepted as the methodological approach to the study of
management.

From 1960s, many new schools of and approaches to management theory

and knowledge surfaced; so many that Harold Koontz coined the term
Management Theory Jungle.
Chapter 3: Planning
Planning Defined:
Planning is the process of setting the objectives to be accomplished by
the organization during the future time period and deciding on the
methods of reaching them.
Kinds of Planning
Strategic Planning is the type of that is generally reserved for the top-
level managers since it involves the determination of overall direction-
the direction the organization should be going.

Tactical Planning is the type of planning generally reserved for the

middle and lower level manager. This type of planning is primarily
concerned with how get where the organization wants to go.
The Planning Function
Firstly, the managers must critically appraise the present
position of the organization. Must take a complete inventory and
attempt to realistically determine just where organization is at
the moment.
Secondly, the manager must set objectives. Must decide where
organization must go. Must set growth, profitability, and social
responsibility objectives for this organization.
Finally, must develop a set of plans to achieve these objectives.
Objectives: Defined
Objectives are clear-cut and carefully considered statements designed to
give the organization and its member direction and purpose. Goals,
aims, purposes or missions are commonly used interchangeably for
objectives.
Characteristics of Effective Objectives
1. Objectives must be specific. They must have precise meaning for the manager.
Goals such as to maximize profits, to minimize expenses, to promote growth.
2. Objectives must be practical. They must be within the capacity of the individual
or group to achieve. The best approach is to aim for levels of achievement
which are difficult but attainable
3. Objectives must be quantifiable or measurable. An objective like “to develop
management’ can be quantified by reporting the number of qualified
promotions for a given period.
Setting Objectives
The managerial objectives sets normally fall into one of four general
categories:
1. Profitability. This can be expressed in terms of profits, return of
investments or earning per share.
2. Customer Service. This can be expressed in very explicit terms.
Example: To reduce the number of customer complaints.
3. Employee- Management Needs and Well Being. This may be
quantitatively expressed in the terms of number grievances, training
and etc.
4. Social Responsibility. This objective may be expressed in types of
activities, number of days of services or financial contributions.
Chapter 4: Organizing
Organizing Defined:
Organizing is the process of grouping and assigning activities and
providing the necessary authority to carry out the activities.

It is differentiated from staffing in that in organizing, the manager

decides what jobs will have to be filled and what the people who hold
them must do.
Types of Organization
PRESIDENT
Line Organization. The line
PLANT organization illustrated is the
MANAGER simplest and the oldest type of
organization. It is characterized by
MANAGER MANAGER MANAGER direct vertical flow of authority
PRODUCT A PRODUCT B PRODUCT C from the top man through the
various managers down to the
WORKERS WORKERS WORKERS workers.
 ASSISTANT TO
PRESIDENT THE PRESIDENT

PLANT
MANAGER

PERSONNEL PLANT ACCOUNTING

DIRECTOR MANAGER MANAGER

MANAGER MANAGER MANAGER

PRODUCT A PRODUCT B PRODUCT C

WORKERS WORKERS WORKERS

Line and Staff Organization. Consists of the addition of staff specialists, In essence
the staff component of a line and staff organization is advisory and supportive in
nature and added to contribute to the efficiency and maintenance of the
organization.
Matrix Organization
An advantage of the matrix organization is its ability to
meet unusual, innovative or complicated projects often
shunned by the typical organizational with its functional
departments. One potential disadvantage is that matrix
organization can cause conflict of authority.
 PRESIDENT

PRODUCTION ENGINEERING PERSONNEL FINANCE

PROJECT
PRODUCT ENGINEERING PERSONNEL FINANCE
MANAGER
A GROUP GROUP GROUP GROUP

PROJECT
PRODUCT ENGINEERING PERSONNEL FINANCE
MANAGER
B GROUP GROUP GROUP GROUP

PROJECT
PRODUCT PRODUCT PERSONNEL PERSONNEL
MANAGER
C GROUP GROUP GROUP GROUP
Principles of Organization
1. Consideration of Objectives. This principle scarcely need
starting if we accept the definition of organization as a
facilitating mechanism which enables us to achieve goals.
2. Division of Work or Specialization. The narrowing scope of a
person’s job to one or a few major functions to enable to
specialize on these few and to increase efficiency.
3. Delegation of Authority. Authority is the right to command or
act and expend resources. This is right may come ownership,
legal decree or status in the organization.
Principles of Organization
4. Parity of Responsibilities and Authority. Responsibility or
accountability is the obligation of a subordinate to a superior
to perform assigned activities to the best of activities.
5. Span of Control. Refers to the number of subordinates a
manager can effectively control. This question of span of
control is one wherein there is little agreement among
experts.
6. Unity of Command. This principle states that each member of
an organization should be accountable to, and receive
directions from only one supervisor, or immediate supervisor.
Principles of Organization
7. Short Chain of Command. This principle states that there should be
as few levels of supervision between the highest authority in an
organization and the rank and file as possible.
8. Coordination. This principle states that all individuals activities in an
organization must be synchronized with the respect to their amount
, time and direction to avoid duplication of work that results in
wasted effort and to obtain consolidated action toward a common
goal.
9. Efficiency. This principle in organizing specifies that “the
organization should be planned that the objectives can be attained
with the lowest possible cost, which may mean either money cost
or human cost.
Principles of Organization
10. Separation of Line and Staff Functions. This principles states
that where separation of functions is possible, no individual or
department should be given both line and staff functions.
11. Consideration of Policies, Procedures and Rules. This are all
guides to action which relate to the goal attainment. Policies
are general principles which indicate the intentions of those
who guide the organization and declare the attitude its
executives must adopt toward major issues.
12. Job Groupings. It is developing the organizational structure,
creates operating basic. Basic operations are assigned to
different individuals.
Principles of Organization
13. Flexibility. The organization is a dynamic not a static entity.
The environment in which it exist and the people who makes
it up continue to change. The changes in the environment are
bought about by new developments in technology and the
economy.
14. Communication. Aside reducing the number of levels of
authority to help in the smooth flow of communication.
15. Balance. The organization should be periodically assessed to
ensure that a reasonable balance exists in size of its various
segments.
Chapter 5: Staffing
Staffing Defined:
Staffing refers to the task of filling positions in the organization
with the most qualified people available.

First, to emphasize the fact that a body of knowledge and

experience has been developed in this area.

Second, to highlight the fact that staffing is a manager’s

responsibility and not that of the personnel department which
merely provides assistance in this regard.
The Staffing Process
A. Personnel Acquisition
1. Human Resource Forecasting
2. Preparation of job descriptions
3. Recruitment of applicants for the job
4. Selection of the best qualified among the applicants
5. Orientation of the new personnel
B. Personnel Retention
6. Appraisal of Performance
7. Transfer and Promotion
8. Human Resource Development
Human Resource Forecasting
Human Resource Forecasting is the first step in the staffing process.
Management must determine how many people it will need to manage
operations.
Preparation of Job Descriptions
A job description must include a brief statement of the responsibilities
of the job, a listing of the various duties to be performed, and a
statement of what constitutes satisfactory and unsatisfactory standards
of performance for each duty.
Recruitment of Applicants for the Job
Recruitment means attracting or bringing in a few applicants for a single
position or hundreds for a major expansion.
Selection of the Best Qualified
Several aids are available to improve the selection process. These are
the examination of biological data, observation of the candidate’s
performance in actual tryouts, psychological tests, interviews and
physical examination.

Selection Process
A. Biological Data- showing personal data, educational qualifications
and past experience give some kind of a track record on which
applicant’s competent can be assessed.
B. Tests
1. Intelligence Tests- are designed to measure person’s mental capacity,
to test the mental and ability to see relationship in problematic
problems.
2. Aptitude Tests- are designed to discover interests, existing skills, and
the candidates’ potential for acquiring skills.
3. Personality Tests- are devised to reveal a candidate’s personal
qualities and the way they may affect others.
C. Interview- is really the most crucial part of the selection process and
often carries the most weight. It is also here where the managers can
make the greatest contribution to better staffing.

Orientation of the New Personnel

Orientation refers to the introduction of the new personnel to the
organization. This involves giving them an overview of what the
company does, what its objectives are, how it is organized, what
benefits it offers, what its general policies and practices.
Appraisal of Performance
Appraisal is a must in every organization. Both the managers and
subordinates want to know the qualities of their performance.
1. Production Records. These are applicable to work that is repetitive .
Figures the actual production rate are combined with other factors
such as punctuality, industry and observation.
2. Graphic Rating Scale. A linear scale, these is a provision for checking
the individual’s rating on these traits from maximum to minimum
attainment.
3. Performance against verifiable objectives. A relatively recent method
which has gained widespread acceptance; this method grades the
subordinate’s work, on-the-job activity rather than personal qualities.
Promotion and Transfer
Promotion may amount of filling a vacancy or may be an appointment to
a new position. More specifically , a promotion involves change of
duties, more difficult work and an increase in pay.

Transfer involves no change of class but a change in the organizational

unit.

Human Resource Development

The development of personnel is one of the fundamental pillars of good
management. Human resource development refers to the updating of
the personnel’s knowledge and attitudes with the end in view of
improving their skills and performance to organizational objectives.
Chapter 6: Motivating
Motivating Defined:
Motivating can be defined as getting people to contribute their
maximum effort toward the attainment of organizational
objectives.

Approaches to Motivation
1. Work Performance Approach. This approach stresses rewards
based on the individual’s productivity. Job descriptions are
specific, work performance is carefully measured and the wage
is explicitly stated.
2. Environmental Approach. This approach assumes that a
worker will perform best in a comfortable environment. To
motivate , the manager must extend friendliness and personal
considerations to the workers.
3. Needs- Satisfaction Approach. This approach adopts the
standpoint that a satisfied worker is a productive worker and
that management, therefore should aim to identify worker’s
needs and find ways of satisfying them.
Theories of Motivation
1. Classical Theory
Frederick W. Taylor propounded the theory that people will be highly
motivated if their reward is tied directly to performance. His
theory assumes that man consciously chooses the course that is
most profitable financially and that money is the best motivation.
2. Human Relations Theory
The human relations approach to motivation is commonly credited to
the studies of Elton Mayo, the theory evolved from these studies
states that informal groups exists alongside the formal
organization and that those informal groups could exert a greater
pull on the worker’s motivation than combined strength of
money, discipline and job security.
Theories of Motivation
3. Field Theory
Kurt Lewin explained how motivation depends on organizational
environment through his celebrated formula for human
behavior : B=(P,E)26
B stands for human behavior, P a person, and E environment. In
other words, human behavior is a function of a person and
his environment. If we relate this to motivation, it implies
that people can have different motivations at different times
and what motivates an individual depends on the
environment.
Theories of Motivation
4. Hierarchy of Needs Theory
According to Abraham Maslow, Self- Actualization Needs
each of us wanting being;
there is always a need to Esteem Needs
satisfy. He visualized human
needs as taking the form of a Social Needs
hierarchy. He put forth the
idea that once a low- level is Safety and Security
satisfied, it ceases to become Needs
a motivator and only a higher-
Physiological Needs
level need could then fulfil the
same functions.
 Maslow’s Hierarchy of Needs
a. Physiological Needs
At the base of the hierarchy are physiological needs: those
needs for sustaining human life itself. They include food,
water, clothing, shelter, sleep and sexual gratification.
b. Safety and Security Needs
These needs are those connected with protection from possible
harm. They do not only include protection from physical
dangers, but also freedom from fear of loss of job, property,
food, clothing or shelter.
 Maslow’s Hierarchy of Needs
c. Social Needs
When physiological safety and security needs are basically
satisfied, social needs become the predominant motivators.
People need to belong, to be accepted by the others.
d. Esteem Needs
These needs refer to the individual’s need for self-respect and
good opinion of others.
e. Self- Actualization Needs
When the previous needs have been satisfied, self actualization
needs become active. At this level, the individual attempt to
maximize his full potential.
Theories of Motivation
5. Need Theory
a. Need for Power. People who have a high need for power
express great concern for exercising influence and control
over others.
b. Need for Affiliation. People with a high need for affiliation
seek acceptance by social groups. They are likely to be
concerned with maintaining pleasant relationships and
avoiding rejection by social groups.
c. Need for Achievement. People having a high need for
achievement have a intense desire for success and an
equally intense dread of failure.
Theories of Motivation
5. Need Theory
a. Need for Power. People who have a high need for power
express great concern for exercising influence and control
over others.
b. Need for Affiliation. People with a high need for affiliation
seek acceptance by social groups. They are likely to be
concerned with maintaining pleasant relationships and
avoiding rejection by social groups.
c. Need for Achievement. People having a high need for
achievement have a intense desire for success and an
equally intense dread of failure.
Theories of Motivation
6. Theory X and Theory Y
According to Douglas Mcgregor, there are two types of employees the Theory X
and Theory Y assumptions.
Theory X Workers: Theory Y Workers:
1. Dislikes work and will avoid it 1. Work is natural as play
possible. or rest.
2. Lack of responsibility, has little 2. People are not inherently lazy.
ambition and seeks security
above all.
3. Must be coerced, controlled and 3. Self direction and Self- control
threatened with punishment to
get them to work.
-With these the managerial role is to -With these assumptions the managerial
coerced and control employees. role is to develop the potential in employees.
Chapter 7: Controlling
Controlling Defined:
Controlling may be defined as the managerial activity for
ensuring the achievement of an organization’s objectives.

The Control Process

1. Establishing standards against which performance can be
measured. These standards are closely tied up with the
objectives which the manager formulates during the planning
stage. These standards which are often expressed in terms of
money, time, quotas and etc.
2. Comparing actual performance against standards. This step,
which necessitates the collection of accurate data relating to
actual performance, helps the manager see how things really
are.
3. Correcting deviations or straightening up what is crooked.
After the causes of the deviations have been identified,
appropriate corrective action should be taken so that
performance takes place according to plans.
Types of Control
1. Preliminary Control. This a type of control which identifies
major problems before they occur. It is pre-emptive and
focuses on the preventions of deviations in planning,
organizing, staffing and motivating by assuring that every
possible malfunction has been taken care of.
2. Concurrent Control. This form of control endeavours to
monitor the operation in progress, work may not proceed to
the next step unless it passes a screening test.
3. Post-Action Control. This type is carried out after the event.
It exist only for the improvement of the next attempt.
Control Techniques
Managers in the field use various control techniques. These may
be classified in three: traditional, specialized and over-all
performance techniques.
Traditional Control Techniques
1. Budgetary Control. A budget is a financial statement
prepared and approved prior to a defined period of time of
the policy to be pursued during that period for the purpose
of achieving a predetermined objective.
2. Break- Even Point Analysis. This is the point when income is
equal to the total cost, that is, the level of activity when
neither profit or loss is made by the organization.
Specialized Control Techniques
1. Gantt Chart Technique. This is a way of presenting control
information to management developed by Henry L. Gantt. Data
relating to costs, sales or production and plotted by time period
as a series of bars, the length of bars depends upon the value of
the data represented.
2. Network Analysis. This is a technique for controlling a
complex project which requires analyses into its various
activities and events.
3. Milestone Scheduling. This is a schedule and control
procedure developed by the National Aeronautics and Space
Administration (NASA). Like the Gantt chart, it uses bar chart to
monitor progress.
Controlling Overall Performance
1. Income Statement. This is a statement compiled at the
conclusion of an accounting period for the purpose of
calculating the net profit or loss from the business operations.
This is done by deducting administration expenses, financial,
selling, and deducting overheads from the gross profit, derived
from the trading account, financial charges such as bank
interests.
2. Return in Investment (ROI). Every business organization must
control its operations to achieve on optimum rate of return, that
is, a rate of return on investments which is adequate to satisfy
the shareholders, and which satisfactory for the type of
business.
3. Key Area Control. This is a control technique by which an
organization rates its performance in a number of critical areas.
Key areas control may include quantity, quality of time and cost
with profit as the criterion of success.
4. Audits.
a. Internal Audits. This type of audit is conducted by internal
auditors who are employees of the organization and are
responsible for performing impartial monitoring activities.
b. External Audits. This type of audit is conducted by external
auditors who are not employees of the company.
c. Management Audit. Essentially, a management audit is a
periodic assessment of managerial performance conducted
by internal and external auditors.
Chapter 8: Decision- Making

Decision- Making Defined:

Decision-making is the conscious act of choosing from among a
number of option or courses of action. A decision always has
several components: a desire for a better state of affairs, a
manager who wishes to change the present state of affairs, and
a manager who has the needed abilities and resources to effect
the change.
Types of Decision
1. Policy Decision. These are decision which will affect the
prospects of the organization for a very long time. These
decisions are made by the top management, who are charged
with responsibility of the survival and prosperity of the
organizations. Such decisions include major capital investments,
product and market choice of key executives, volume of
production output and similar long- term problems.
2. Administrative Decision. These decision are less far-reaching,
involving such problems as minor capital investment, market
planning, and those decisions that are needed to keep the
organization on course with top level objectives.
Types of Decision
3. Executive Decisions. These that have immediate results and
such are made by supervisors at the lower levels of
management. Examples are, replenishment of stocks, routes for
deliveries and so on.
Chapter 9: Communicating
Communicating Defined:
Communicating is the exchange (sending and receiving) of
intelligence, information or emotions by two or more persons by
writing, verbal and non- verbal means.

Approaches to Communicating
1. Developmental Communicating. The manager assumes that
two heads is better than one. He does not think that he is always
right. He encourages the contribution in the form of suggestion
and ideas from people he works with.
2. Controlling Communication. A manager who subscribes to this
approach believes that there are no alternatives to his ideas so
he find no need to consult others. He believes that his own ideas
or solutions are best.
3. Relinquishing Communication. In this approach, the manager
relinquishing his role as manager, makes few contributions of his
own ideas and tries to shift the burden to this employees.
4. Withdrawing Communication. The manager completely
withdraws. He avoids interaction with the people he works with
and is simply interested in maintaining the status.
Personal Factors Affecting the Quality of Communication
1. Self- Concept. A person with a poor opinion or a negative self-
image of himself usually experiences difficulty in communicating
with others. A positive self- image is needed for a healthy
exchange of ideas and feelings.
2. Coping with angry feelings. Communication breakdown is
usually the result of angry exchange. Angry feeling should be
expressed constructively rather destructively.
3. Self- disclosure. People find it difficult to talk honestly about
themselves for fear of being branded too forward or rude, to
communicate, people should learn to talk truthfully about their
ideas and feelings.
Reference:
Lorenzana, Carlos C. , M.A; Management, Theory and Practice
Revised Edition; 2003; REX Bookstore Inc.