CHAPTER - 1

What is Management?

Management is the process of designing and maintaining an environment in which

individuals, working together in group efficiently accomplish selected aims.

The Definition Needs To Be Expanded:

 As managers people carry out the managerial functions of planning, organizing,
staffing, motivating (leading) and controlling.
 Management applies to any kind of organization.
 It applies to managers at all organizational levels.
 The aim of managers is the same to create surplus.
 Managing is concerned with productivity, which implies effectiveness and
efficiency.

The Functions of Management

1. Planning

Selecting missions and objectives as well as the actions to achieve them,, which
requires decision making.

2. Organizing
Establishing and intentional structure of roles for people to fill in an organization..

3. Staffing
Filling and keeping filled the positions in the organization structure.

4. Motivating (Leading)
Influence people, so that they will contribute to organizational and group goals.

5. Controlling
Measuring and correcting individual and organizational performance to ensure
that events conform to plans.

Managers not only work to design an internal environment but also must operate in
external environment.
Respond to many elements of the external environment.
 Economic
 Technological
 Social
 Ecological
  Political
 Ethical
Organizations now operate in different countries.
 Management applies to all, small or large organizations, profit and
nonprofit enterprises, manufacturing as well as service industries.

 Enterprise: A business, government agency, hospital, university or

any other type of organization.

Managerial Functions at Different Organizational Levels:

Top Lever: are planning, organizing and controlling.

Middle Lever: they are equally sharing all functions.
First Line Supervisors: are only leading.

Managerial Skills and the Organizational Hierarchy

o Technical Skill (To know one’s job)

o Human Skill (Interaction, Communication, Behavior, Team Building)
o Conceptual Skill (Understanding the organization as a whole)
o Design Skills (Analysis and problem solving ability)

The Goals of All Managers and Organizations

The aim of all managers should be to create a surplus, by establishing an environment in

which people can accomplish group goals, with the least amount of time, money,
materials, and personal dissatisfaction.

Productivity, Effectiveness, and Efficiency

 Productivity:

The output-input ratio within a time period with due consideration for quality
Productivity = Output / Input (Time & Quality)

 Effectiveness:

The achievement of goals.

 Efficiency:

The achievement of goals with the least amount of resources.

Advances in IT and Globalization

To be successful in the 21st century companies must take advantage of information
technology especially the internet and globalizations
E-commerce & M-commerce
Managing: Science or Art?

Managing practice is an art; the organized knowledge underlying the practice is a science.

The Evolution of Management Thought

Frederick Taylor (1841 – 1925) & Scientific Management

 Gave up collage 1875 to work

 Became chief engineer later
 Got an engineering degree through evening studies
 Invented many steel cutting tools.

Frederick Taylor’s Principles

1) Replacing rule of thumb with science

2) Achieving cooperation of human beings, rather than chaotic individualism
3) Obtaining harmony, rather than discord in group actions (coordination in team
work)
4) Working for maximum output, rather than restricted output
5) Developing all workers to the fullest extended possible for their own and their
company’s highest prosperity )stressed on importance of capacity building)

Henry Fayol:

Perhaps the father of Modern Management Theory is a French industrialist Henry Fayol

• Gave up 14 principles which are still used by Managers and Organizations

around the World.
o Division of work
o Authority and Responsibility
o Discipline
o Order
o Unity of Command
o Unity Of direction
o Subordination of individual to General interest
o Remuneration
o Centralization (Degree Of)
o Scalar Chain
 o Equity
o Stability of Tenure
o Initiative
o Esprite de corps (in unity there is strength)

Fayol was a key figure in the turn-of-the-century Classical School of management theory.
He saw a manager's job as:

• planning
• organizing
• commanding
• coordinating activities
• controlling performance

Notice that most of these activities are very task-oriented, rather than people-oriented.
This is very like.

Fayol laid down the following principles of organization (he called them principles of
management):

1. Specialization of labor. Specializing encourages continuous improvement in

skills and the development of improvements in methods.
2. Authority. The right to give orders and the power to exact obedience.
3. Discipline. No slacking, bending of rules.
4. Unity of command. Each employee has one and only one boss.
5. Unity of direction. A single mind generates a single plan and all play their part in
that plan.
6. Subordination of Individual Interests. When at work, only work things should
be pursued or thought about.
7. Remuneration. Employees receive fair payment for services, not what the
company can get away with.
8. Centralization. Consolidation of management functions. Decisions are made
from the top.
9. Scalar Chain (line of authority). Formal chain of command running from top to
bottom of the organization, like military. Scalar Chain is the number of different
levels of authority through which decisions are passed in the organization.
10. Order. All materials and personnel have a prescribed place, and they must remain
there.
11. Equity. Equality of treatment (but not necessarily identical treatment)
12. Personnel Tenure. Limited turnover of personnel. Lifetime employment for good
workers.
13. Initiative. Thinking out a plan and do what it takes to make it happen.
14. Esprit de corps. Harmony, cohesion among personnel.
Out of the 14, the most important elements are specialization, unity of command, scalar
chain, and, coordination by managers (an amalgam of authority and unity of direction).

Fayol (1841-1925) Functions and Principles of Management

Henri Fayol, a French engineer and director of mines, was little unknown outside France
until the late 40s when Constance Storrs published her translation of Fayol's 1916
“Administration Industrielle et Generale ".

Fayol's career began as a mining engineer. He then moved into research geology and in
1888 joined, Comambault as Director. Comambault was in difficulty but Fayol turned the
operation round. On retirement he published his work - a comprehensive theory of
administration - described and classified administrative management roles and processes
then became recognized and referenced by others in the growing discourse about
management. He is frequently seen as a key, early contributor to a classical or
administrative management school of thought (even though he himself would never have
recognized such a "school").

His theorizing about administration was built on personal observation and experience of
what worked well in terms of organization. His aspiration for an "administrative science"
sought a consistent set of principles that all organizations must apply in order to run
properly.

F. W. Taylor published "The Principles of Scientific Management" in the USA in 1911,

and Fayol in 1916 examined the nature of management and administration on the basis of
his French mining organization experiences..

Fayol synthesized various tenets or principles of organization and management and

Taylor on work methods, measurement and simplification to secure efficiencies. Both
referenced functional specialization.

Both Fayol and Taylor were arguing that principles existed which all organizations - in
order to operate and be administered efficiently - could implement. This type of assertion
typifies a "one best way" approach to management thinking. Fayol's five functions are
still relevant to discussion today about management roles and action.

1. to forecast and plan - purveyance

examine the future and draw up plans of action
2. to organize
build up the structure, material and human of the undertaking
 3. to command
maintain activity among the personnel
4. to co-ordinate
bind together, unify and harmonies activity and effort
5. to control
see that everything occurs in conformity with policy and practice

Fayol also synthesized 14 principles for organizational design and effective

administration. It is worthwhile reflecting on these are comparing the conclusions to
contemporary utterances by Peters, Kanter and Handy to name but three management
gurus. Fayol's 14 principles are:

• Specialization/division of labor
A principle of work allocation and specialization in order to
concentrate activities to enable specialization of skills and
understandings, more work focus and efficiency.
• Authority with corresponding responsibility
If responsibilities are allocated then the post holder needs the
requisite authority to carry these out including the right to require
others in the area of responsibility to undertake duties. Authority
stems from:
• that ascribed from the delegation process (the job holder
is assigned to act as the agent of the high authority to
whom they report - hierarchy)
• Allocation and permission to use the necessary resources
needed (budgets, assets, and staff) to carry out the
responsibilities.
• Selection - the person has the expertise to carry out the
responsibilities and the personal qualities to win the
support and confidence of others.

The R = A correspondence is important to understand. R = A

enables accountability in the delegation process. Who do we cope
with situations where R > A? Are there work situations where our
R< A?

"Judgment demands high moral character, therefore, a good

leader should possess and infuse into those around him courage to
accept responsibility. The best safeguard against abuse of
authority and weakness on the part of a higher manager is
personal integrity and particularly high moral character of such a
manager..... This integrity is conferred neither by election nor
ownership. “1916
 A manager should never be given authority without
responsibility--and also should never be given responsibility
without the associated authority to get the work done.

• Discipline
The generalization about discipline is that discipline is essential
for the smooth running of a business and without it - standards,
consistency of action, adherence to rules and values - no
enterprise could prosper.

"in an essence - obedience, application, energy, behavior and

outward marks of respect observed in accordance with standing
agreements between firms and its employees " 1916

• Unity of command
The idea is that an employee should receive instructions from one
superior only. This generalization still holds - even where we are
involved with team and matrix structures which involve reporting
to more than one boss - or being accountable to several clients.
The basic concern is that tensions and dilemmas arise where we
report to two or more bosses. One boss may want X, the other Y
and the subordinate is caught between the devil and the deep blue
sea.
• Unity of direction
The unity of command idea of having one head (chief executive,
cabinet consensus with agree purposes and objectives and one
plan for a group of activities) is clear.
• Subordination of individual interest to the general interest
Fayol's line was that one employee's interests or those of one
group should not prevail over the organization as a whole. This
would spark a lively debate about who decides that the interests
of the organization as a whole are. Ethical dilemmas and matters
of corporate risk and the behavior of individual "chancres" are
involved here. Fayol's work - assumes a shared set of values by
people in the organization - a unitary where the reasons for
organizational activities and decisions are in some way neutral
and reasonable.
• remuneration of staff

“The price of services rendered. " 1916

The general principle is that levels of compensation should be

"fair" and as far as possible afford satisfaction both to the staff
and the firm (in terms of its cost structures and desire for
profitability/surplus).
 • Centralization
Centralization for HF is essential to the organization and a natural
consequence of organizing. This issue does not go away even
where flatter, devolved organizations occur. Decentralization - is
frequently centralized-decentralization!!! The modes of control
over the actions and results of devolved organizations are still
matters requiring considerable attention.
• Scalar chain/line of authority
the scalar chain of command of reporting relationships from top
executive to the ordinary shop operative or driver needs to be
sensible, clear and understood.
• Order
The level of generalization becomes difficult with this principle.
Basically an organization "should" provide an orderly place for
each individual member - who needs to see how their role fits
into the organization and be confident, able to predict the
organizations behavior towards them. Thus policies, rules,
instructions and actions should be understandable and
understood. Orderliness implies steady evolutionary movement
rather than wild, anxiety provoking, unpredictable movement.
• Equity
Equity, fairness and a sense of justice "should” pervade the
organization - in principle and practice.
• Stability of tenure
Time is needed for the employee to adapt to his/her work and
perform it effectively. Stability of tenure promotes loyalty to the
organization, its purposes and values.
• Initiative
At all levels of the organizational structure, zeal; enthusiasm and
energy are enabled by people having the scope for personal
initiative. (Note: Tom Peters recommendations in respect of
employee empowerment)
• Esprit de corps
Here Fayol emphasizes the need for building and maintaining of
harmony among the work force, team work and sound
interpersonal relationships.

In the same way that Alfred P Sloan, the executive head of General Motors reorganized
the company into semi-autonomous divisions in the 1920s, corporations undergoing
reorganization still apply "classical organization" principles - very much in line with
Fayol's recommendations.

Hawthorne Studies
Elton Mayo (1880 – 1949)

The purpose of the study was to see the affect of illumination and lightening on
productivity.

Mayo found that changing illumination, modifying rest periods, shortening workdays,
and varying inventive pay systems did not seem to explain changes in productivity.

In general improvement in productivity was due to social factors such as morale, sense of
belongingness and effective management.

Management Theory of Jangle

The variety of approaches to management analysis, amount of research, and the great
number of differing views have resulted in much confusion as to what management is,
what management theory and science is, and how managerial events should be analyzed.

Systems Approach to Management

The system approach defines an organization as a system which interacts with it’s
environment and the process of management of an organization aims at using inputs to
produce outputs and consists of the five functions of planning, organizing, staffing,
motivating and controlling.

CHAPTER - 4

Essentials of Planning and Managing by Objectives

What is Planning?

Planning is selecting missions and objectives as well as the actions to achieve them,
which requires decision making, that is choosing a course of action from among
alternatives.

Types of plans:

1) Missions or Purpose
2) Objectives or Goals
3) Strategies
4) Policies
 5) Procedure
6) Rules
7) Programs
8) Budgets

Missions or Purposes
The basic purpose or function or tasks of an enterprise or agency or any part of it

Synergy: The whole is greater than its parts.

Objectives or Goals
The end toward which activity is aimed, objectives and goals should be SMART

Specific
Measurable
Assigned to
Realistic
Time-bound

Strategies
The determination of the basic long-term objectives, of an enterprise, and the adoption of
courses of actions, and allocation of resources, necessary to achieve these goals.

Policies
General statement or understandings that guide channel thinking in decision making

Rules
Rules spell out specific required actions or non-actions, allowing no discretion.

Rules and Policies: The Difference

Rules are different from policies in that policies are meant to guide decision making by
marking off areas in which managers can use their discretion, while rules allow no
discretion in their application.

Procedure
Plans that establish a required method of handling future activities.

Example: Some times the procedures and rule are imposed by outsiders, general
dynamics.

Programs
A complex of goals, policies, procedure, rules, tasks, assignment, steps to be taken,
resources to be employed, and other elements necessary to carry out a given course of
action.

Budgets
A statement of expected results expressed in numerical terms.

Steps in Planning

1) Being Aware of Opportunities

2) Setting Objectives or Goals
3) Considering Planning Premises
4) Identifying Alternatives
5) Comparing Alternatives in Light of Goals
6) Choosing Alternatives
7) Formulating Supporting Plans
8) Qualifying Plans by Making Budgets

Being Aware of Opportunities

(SWOT Analysis)
Strengths
Weaknesses
Opportunities
Threats

Setting Objectives or Goals

Where we want to be and what we want to accomplish and when we want to accomplish.

Considering Planning Premises

Assumptions about the environment in which the plan is to be carried out.
• No matter how well objectives are designed if the appropriate environment is not
provided for them they can not be achieved.
• Forecasting and adjusting to the changes is also important at this stage.

Identifying Alternatives
What are the most promising alternative to accomplish our objectives? Alternatives are
different courses of actions or ways that can take us to our goals.

Comparing Alternatives in Light of Goals

Which alternative will give us the best chance of meeting our goals at the lowest cost and
highest profit?

Choosing an Alternative
After a through analysis of the strengths and weaknesses of all possible alternatives the
most suitable alternative is selected.

Formulating Supporting Plans

A main plan needs the support of the smaller plans for its completion, such as plans to;
• Buy Equipments
• Buy Materials
• Hire and train workers
 • Rent a place

Qualifying Plans by Making Budgets

The last stage of planning is to numerate our plans with budgets. Developing such
budgets as:
• Salaries to the Staff
• Operating expenses necessary for plans
• Expenditure for capital equipments

Objective
Objectives are the ends towards which organizational and individual activities are
directed.
An objective is verifiable when at the end of the period one can determine whether or not
it has been achieved. Objective should be SMART.

Verifiable Vs. Non-verifiable Objectives

Non-verifiable
To make a reasonable profit

Verifiable
To achieve a return on investment of 12% at the end of the current fiscal year.

Non-verifiable
To improve productivity of the production department

Verifiable
To increase production output by 5% by 31-12-05, without additional cost while
maintaining the current quality.