CHAPTER 1

NATURE AND CONCEPT OF MANAGEMENT

Objectives:

1. Discuss the meaning and functions of management

2. Identify the scope of management
3. Recognize the importance of effectiveness and efficiency in organization.
4. explain the various types of management theories

MODULE I

Week 1
INTRODUCTION

The satisfaction of human wants is a universal concern and this is the basic reason why
organizations are established. Governments, business firms, and even nonprofit organizations
are expected to manage their resources properly, or they will fail in the attempt to contribute
their share in the alleviation of property and want.

WHAT IS MANAGEMENT?
 Management involves coordinating and overseeing the work activities of others so that
their activities are completed efficiently and effectively. Or simply, Management is the art of
getting work done through others.

 Management - co-ordination of human effort and material resource toward the

organization to achieve its objectives.
 Management is the brain of the enterprises/business.
 Management helps in predicting what is going to happen in future that will influence the
working of an enterprise.
  The word manage comes from the Italian word Maneggiare means to handle (Handle
the problem with the help of some tools); which is turn derives from the Latin word
Manus means hand.

MANAGEMENT AS A SCIENCE AND AS AN ART

ART

• It results to the accomplishment of objectives through the

use of human efforts.

• Requires skill and careful study in the management of any endeavor.

SCIENCE

• It is a systematic body of knowledge.

• gathers and analyzes facts and formulates general laws

or principles from these facts.

Management seeks to integrate into a unified, coordinated whole the essential factor that
makes up an organization – personnel, finance, production, sales or marketing, purchasing, and
procurement, administration, and advertising.
MANAGEMENT CAN BE DEFINED IN THE FOLLOWING CATEGORIES:

1. Management as a Process

2. Management as an Activity

3. Management as a Discipline

4. Management as a Group

5. Management as a Science

6. Management as an Art

7. Management as a Profession

CHARACTERISTICS OF MANAGEMENT

Basic characteristics of management are:

1. Management is a goal-oriented process: An organisation has a set of basic goals which are the
basic reason for its existence. Management unites the efforts of different individuals in the
organisation towards achieving these goals.
2. Management is all pervasive: The activities involved in managing an enterprise are common to
all organisations whether economic, social or political.
3. Management is multidimensional: Management is a complex activity that has three main
dimensions:
1. Management of work: All organisations exist for the performance of some work.
Management translates this work in terms of goals to be achieved and assigns the
means to achieve it.
2. Management of people: Human resources or people are an organisation’s greatest
asset. Managing people has two dimensions:
1. it implies dealing with employees as individuals with diverse needs and
behavior;
2. it also means dealing with individuals as a group of people

The task of management is to make people work towards achieving the organisation’s
goals, by making their strengths effective and their weaknesses irrelevant.

3. Management of operations: It requires a production process which entails the flow of

input material and the technology for transforming this input into the desired output for
consumption
4. Management of operations: It requires a production process which entails the flow of input
material and the technology for transforming this input into the desired output for consumption
5. Management is a continuous process: The process of management is a series of continuous,
composite, but separate functions (planning, organising, directing, staffing and controlling).
These functions are simultaneously performed by all managers all the time.
 6. Management is a group activity: An organisation is a collection of diverse individuals with
different needs. Management should enable all its members to grow and develop as needs and
opportunities change
7. Management is a dynamic function: Management is a dynamic function and has to adapt itself
to the changing environment. In order to be successful, an organisation must change itself and
its goals according to the needs of the environment.
8. Management is an intangible force: Management is an intangible force that cannot be seen but
its presence can be felt in the way the organisation functions

FUNCTIONS OF MANAGEMENT

Managers just don't go out and haphazardly perform their responsibilities. Good
managers discover how to master five basic functions: planning, organizing, staffing, leading,
and controlling.

1. Planning: This step involves mapping out exactly how to achieve a particular goal. Say,
for example, that the organization's goal is to improve company sales. The manager first
needs to decide which steps are necessary to accomplish that goal. These steps may
include increasing advertising, inventory, and sales staff. These necessary steps are
developed into a plan. When the plan is in place, the manager can follow it to
accomplish the goal of improving company sales.

2. Organizing: After a plan is in place, a manager needs to organize her team and materials
according to her plan. Assigning work and granting authority are two important
elements of organizing.

3. Staffing: After a manager discerns his area's needs, he may decide to beef up his staffing
by recruiting, selecting, training, and developing employees. A manager in a large
organization often works with the company's human resources department to
accomplish this goal.
 4. Leading/ Directing: A manager needs to do more than just plan, organize, and staff her
team to achieve a goal. She must also lead. Leading involves motivating, communicating,
guiding, and encouraging. It requires the manager to coach, assist, and problem solve
with employees.

5. Controlling: After the other elements are in place, a manager's job is not finished. He
needs to continuously check results against goals and take any corrective actions
necessary to make sure that his area's plans remain on track.

All managers at all levels of every organization perform these functions, but the amount of
time a manager spends on each one depends on both the level of management and the specific
organization.

EFFICIENCY AND EFFECTIVESS: A BASIC REQUIREMENT

Efficiency means getting the most output from the least amount of inputs
 “doing things right”
 concern with means(ways) of getting things done
 getting work done with a minimum effort, expense, or waste
 use resources – people, money, raw materials wisely and cost-effectively

Effectiveness means do those work activities that will help the organization reach its goals

 “doing the right things”

 concern with ends(result) of organizational goal achievement
 accomplish tasks that help fulfill organizational objectives
  make the right decisions and successfully carry them out to accomplish the
organization’s goal.

GeorgeR.Terry

After Fayol, many theorists have looked at the functions and crafter their own
ideas, deviating only slightly from Fayol’s core functions. George R. Terry wrote a book
Principles of Management in 1968 and outlined his view on the principles. Terry believed there
to be four core functions, each function posing and responding to a specific question the
management must solve. The question, the fundamental function and the resulting action are
outlined in the below graph:

The Question The Function The Result

Objectives, policies, procedures and
What is the need? Planning
methods
Where should actions
Work division, work assignment, and
take place and who Organizing
authority utilization
should do what work?
Why and how should
Leadership, communication,
group members perform Actuating
development, and incentives
their tasks?
Are the actions being
Reports, comparisons, costs and
performed according to Controlling
budgets
plan?
HaroldKoontz and CyrilO’Donnell

In 1976, Harold Koontz and Cyril O’Donnell published an essay Management: A Systems
and Contingency Analysis of Managerial Functions. They felt the previous studies have been
effective in describing the functions, but believed the division should be more detailed. Koontz
and O’Donnell believed there to be five key functions of management:Planning, Organizing,
Staffing, Directing/Leading,andControlling. These five functions of management have become
perhaps the most cited and they are explained further in the following section. Overall, the
quick outlook would hopefully have highlighted the alignment of the functions of management
in different management theories.
EVOLUTION OF MANAGEMENT THEORIES

The simplest definition of management is getting things done through people. It implies that
an organization, whether small, medium, or large, is composed of people. A business
organization exists for a purpose.

1910s-1940s: Management as Science

Management as Science was developed in the early 20th century and focused on increasing
productivity and efficiency through standardization, division of labor, centralization, and
hierarchy. A very ‘top-down’ management with strict control over people and processes
dominated across industries.

1950s-1960s: Functional Organizations

Due to growing and more complex organizations, the 1950s and 1960s saw the emergence
of functional organizations and the Human Resource (HR) movement. Managers began to
understand the human factor in production and productivity and tools such as goal-setting,
performance reviews, and job descriptions were born.

1970s: Strategic Planning

The focus is from measuring function to resource allocation and tools like Strategic
Planning, Growth Share Matrix, and SWOT (identification and analysis of the company’s
Strengths, Weaknesses, Opportunities, and Threats) were used to formalize strategic
planning process. After several decades of ‘best practice’ and ‘one size fits all’ solutions,
academics began to develop contingency theories.

1980s: Competitive Advantage

As the business environment grew increasingly competitive and connected, and with a
blooming management consultancy industry. Competitive Advantage became a priority for
organizations in the 1980s. Tools like Total Quality Management (TQM), Six Sigma, and Lean
Management were used to measure processes and improve productivity. Employees were
more involved by collecting data, but decisions were still made at the top, and goals were
used to manage people and maintain control.

1990s: Process Optimization

Benchmarking and business process reengineering became popular in the 1990s, and by the
middle of the decade, 60% of Fortune 500 companies claimed to have plans for or have
already initiated such projects. TQM, Six Sigma, and Lean remained popular and more
holistic, organization-wide approach and strategy implementation took the stage with tools
such as Strategy Maps and Balance Scorecards.
2000s: Big Data
Largely driven by the consulting industry under the banner of Big Data, organizations in the
2000s started to focus on using technology for growth and value creation. Big data is a
broad term for data sets so large or complex that traditional data processing applications
are inadequate. Accuracy in big data may lead to more confident decision-making. And
better decisions can mean greater operational efficiency, cost-reductions, and reduced risk.

After several decades of trying to manage people through the different management
theories, one has to realize that what worked before just simply is not enough anymore.
Traditional Management is fine if one wants compliance, but if one wants innovation and
growth, management has to engage its people on a whole new level. Top down control is a
thing of the past. Succeeding in today’s environment requires a management style that
inspires and is participatory.
ACTIVITY 1

1. Briefly explain the importance of studying management.

2. Explain why efficiency and effectiveness are important to management.

Activity 2

Read the story, write your interpretation and the lesson you have learned about the story.

That’s Not My Job

This is a story about four people named Everybody, Somebody, Anybody and Nobody. There
was an important job to be done and Everybody was sure that Somebody would do it. Anybody
could have done it, but Nobody did it. Somebody got angry about that, because it was
Everybody’s job. Everybody thought Anybody could do it, but Nobody realized that Everybody
wouldn’t do it. It ended up that Everybody blamed Somebody when Nobody did what Anybody
could have.