MANAGEMENT

What is Management?

The concept of management has acquired special significance in the present competitive and complex
business world. Efficient and purposeful management is absolutely essential for the survival of a
business unit. Management concept is comprehensive and covers all aspects of business. In simple
words, management means utilising available resources in the best possible manner and also for
achieving well defined objectives. It is a distinct and dynamic process involving use of different resources
for achieving well defined objectives. The resources are: men, money, materials, machines, methods
and markets. These are the six basic inputs in management process (six M's of management) and the
output is in the form of achievement of objectives. It is the end result of inputs and is available through
efficient management process.

The term 'management' is used extensively in business. It is the core or life-giving element in business.
We expect that a business unit should be managed efficiently. This is precisely what is done in
management. Management is essential for the conduct of business activity in an orderly manner. It is a
vital function concerned with all aspects of working of an enterprise.

Definitions of Management

1. According to George R. Terry, "Management is a distinct process consisting of planning,

organising, actuating and controlling, performed to determine and accomplish stated
objectives by the use of human beings and other resources".

2. According to Henry Fayol, "To manage is to forecast and to plan, to organise, to command, to
coordinate and to control".

3. According to Peter Drucker, "Management is a multi-purpose organ that manages business and
manages managers and manages workers and work".

4. According to Harold Koontz, "Management is the art of getting things done through and with
people in formally organized groups”.

5. According to Mary Parker Follett, "Management is the art of getting things done through
people".

Characteristics of Management

1. Management is a managerial process: Management is a process and not merely a body of

individuals. Those who perform this process are called managers. The managers exercise
leadership by assuming authority and direct others to act within the organisation. Management
process involves planning, organising, directing and unifying human efforts for the
accomplishment of given tasks.

2. Management is a social process: Management takes place through people. The importance of
human factor in management cannot be ignored. A manager's job is to get the things done with
the support and cooperation of subordinates. It is this human element which gives management
its special character.

3. Management is action-based: Management is always for achieving certain objectives in terms

of sales, profit, etc. It is a result-oriented concept and not merely an abstract philosophy. It gives
importance to concrete performance through suitable actions. It is an action-based activity.
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 4. Management involves achieving results through the efforts of others: Management is the art
of getting the things done through others. Managers are expected to guide and motivate
subordinates and get the expected performance from them. Management acts as an activating
factor.

5. Management is a group activity: Management is not an isolated individual activity but it is a

collective activity or an activity of a group. It aims at using group efforts for achieving objectives.
Managers manage the groups and coordinate the activities of groups functioning in an
organisation.

6. Management is intangible: Management is not directly visible but its presence is noticed in the
form of concrete results. Management is intangible. It is like invisible spirit, which guides and
motivates people working in a business unit. Management is like government, which functions
but is not visible in physical form.

7. Management is aided, not replaced by computers: The computer is an extremely powerful tool
of management. It helps a manager to widen his vision. The computer supplies ocean of
information for important decision-making. The computer has unbelievable data processing and
feedback facilities. This has enabled the manager to conduct quick analysis towards making
correct decisions. A computer supports manager in his managerial work. However, it cannot
replace managers in business. They were required in the past, at present and also in future.
Their existence is absolutely essential in the management process.

8. Management is all pervasive: Management is comprehensive and covers all departments,

activities and employees. Managers operate at different levels but their functions are identical.
This indicates that management is a universal and all-pervasive process.

9. Management is an art, science as well as a profession: Management is an art because certain

skills, essential for good management, are unique to individuals. Management is a science
because it has an organised body of knowledge. Management is also a profession because it is
based on advanced and cultivated knowledge.

10. Management aims at coordination of activities: Coordination is the essence of management. It

gives one clear direction to the whole organisation and brings unity and harmony in the whole
business unit. For such coordination, effective communication at all levels is essential.

11. Management is innovative: Management techniques are dynamic and innovative. They need to
be adjusted as per the requirements of the situations. Another manager need not repeat the
decisions of one manager. Similarly, a manager has to change his decisions under different
situations.

12. Management has different operational levels: Every Organisation needs managers for
managing business activities. The manager's job is basically the same at all levels. The managers
at the higher levels have more important duties while managers at the lower levels have to
perform routine functions i.e. duties.

13. Management is different from ownership: Management is concerned with the management of
business activities. Managers are not the owners but they manage the business on behalf of the
owners. Separation of ownership and management is a special feature of modem business
organisation.

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 14. Management has vast scope: The scope of management is quite comprehensive. It covers all
aspects of business. The principles of management guide managers while managing various
business activities.

15. Management is dynamic: Business is influenced by changes in economic, social, political

technological and human resource. Management adjusts itself to the changing atmosphere
making suitable forecasts and changes in the policies. Hence, management is treated as a
dynamic activity.

16. Management aims at achieving predetermined objectives: Management is a meaningful

activity. All organisations are essentially groups of individuals formed for achieving common
objectives. An Organisation exists for the attainment of specific objectives.

Need of Management
1. Direction, coordination and control of group efforts: In business, many persons work together.
They need proper direction and guidance for raising their efficiency. In the absence of guidance,
people will work as per their desire and the, orderly working of enterprise will not be possible.
Management is needed for planning business activities, for guiding employees in the right
direction and finally for coordinating their efforts for achieving best/most favorable results.

2. Orderly achievement of business objectives: Efficient management is needed in order to achieve

the objectives of business activity in an orderly and quick manner.

3. Performance of basic managerial functions: Planning, Organising, Co-ordinating and Controlling

are the basic functions of management. Management is needed as these functions are
performed through the management process.

4. Effective communication at all levels: Management is needed for effective communication

within and outside the Organisation.

5. Motivation of employees: Management is needed for motivating employees and also for
coordinating their efforts so as to achieve business objectives quickly.

6. Success and stability of business enterprise: Efficient management is needed for success,
stability and prosperity of a business enterprise.

Modem business is highly competitive and needs efficient and capable management for survival and
growth. Management is needed as it occupies a unique position in the smooth functioning of a business
unit. This suggests the need of efficient management of business enterprises. Profitable/successful
business may not he possible without efficient management. In this sense, "No management, no
business" is true. Survival of a business unit in the present competitive world is possible only through
efficient and competent management.

Meaning of Management Process

The term management is explained in different ways. For example, it is said that management is what
management does. Here, management is explained with reference to its basic functions which include
planning, organising, coordinating and controlling. Similarly, management is described as a process
which involves various elements. Management process is a continuous one and is run by the managers
functioning at different levels. Management is now recognised as a distinct process in which managers
plan, organise, lead, motivate and control human efforts in order to achieve well defined goals. In fact,
process means a series of activities/operations undertaken/conducted for achieving a specific objective.
Process is a systematic way of doing things. For example, in a factory there is a production process.
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Similarly, in the management process, resources and human efforts are used in an orderly manner for
achieving specific objectives. The management process suggests functions to be performed by the
managers.

Definition of Management Process

1. According to D. E. McFarland, "Management is the distinct process by which the managers
create, direct, maintain and operate purposive organisation through systematic, co-
coordinated and cooperative human efforts”.

2. According to Gemp R. Terry, "Management is a distinct process consisting of planning,

organizing, actuating, and controlling, performed to determine and accomplish objectives by the
use of people and other resources".

Functions of Management

The essential elements/components of Management Process are four.

a. Planning

b. Organising

c. Directing and

d. Controlling.

We may add some more elements in the management process. Such elements are: -

i. Motivating

ii. Co-coordinating

iii. Staffing and

iv. Communicating.

The elements in the management process are actually the basic functions of management these
functions constitute the management process in practice. Management process is in fact, management
in practice. This process suggests what a manager is supposed to, do or the basic functions that he has
to perform while managing the job assigned to him.

Luther Gullic gave a new formula to suggest the elements of Management Process i.e. basic functions of
management. According to him, management process may be indicated by the word "PODSCORB”.
Here, ‘P' states for 'planning'. "O" for 'organising', "D" for 'directing', "S" for 'Staffing', "CO" for
'Coordinating, "R" for 'Reporting' and "B" for 'Budgeting'. Gullic coined the word "PODSCORB" to
suggest seven functions of management.

The following figures show the management process and the elements involved:

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Elements of Management Process

1. Planning: Planning is the primary function of management. It involves determination of a course

of action to achieve desired results/objectives. Planning is the starting point of management
process and all other functions of management are related to and dependent on planning
function. Planning is the key to success, stability and prosperity in business. It acts as a tool for
solving the problems of a business unit. Planning plays a pivotal role in business management It
helps to visualize the future problems and keeps management ready with possible solutions.

2. Organising: Organising is next to planning. It means to bring the resources (men, materials,
machines, etc.) together and use them properly for achieving the objectives. Organisation is a
process as well as it is a structure. Organising means arranging ways and means for the
execution of a business plan. It provides suitable administrative structure and facilitates
execution of proposed plan. Organising involves different aspects such as departmentation,
span of control delegation of authority, establishment of superior-subordinate relationship and
provision of mechanism for co-ordination of various business activities.

3. Staffing: Staffing refers to manpower required for the execution of a business plan. Staffing, as
managerial function, involves recruitment, selection, appraisal, remuneration and development
of managerial personnel. The need of staffing arises in the initial period and also from time to
time for replacement and also along with the expansion and diversification of business activities.
Every business unit needs efficient, stable and cooperative staff for the management of business
activities. Manpower is the most important asset of a business unit. In many organisations,
manpower planning and development activities are entrusted to personnel manager or HRD
manager. 'Right man for the right job' is the basic principle in staffing.

4. Directing (Leading): Directing as a managerial function, deals with guiding and instructing
people to do the work in the right manner. Directing/leading is the responsibility of managers at
all levels. They have to work as leaders of their subordinates. Clear plans and sound organisation
set the stage but it require a manager to direct and lead his men for achieving the objectives.
Directing function is quite comprehensive. It involves Directing as well as raising the morale of

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 subordinates. It also involves communicating, leading and motivating. Leadership is essential on
the part of managers for achieving organisational objectives.

5. Coordinating: Effective coordination and also integration of activities of different departments

are essential for orderly working of an Organisation. This suggests the importance of
coordinating as management function. A manager must coordinate the work for which he is
accountable. Co-ordination is rightly treated as the essence of management. It may be treated
as an independent function or as a part of organisms’ function. Coordination is essential at all
levels of management. It gives one clear-cut direction to the activities of individuals and
departments. It also avoids misdirection and wastages and brings unity of action in the
Organisation. Co-ordination will not come automatically or on its own Special efforts are
necessary on the part of managers for achieving such coordination.

6. Controlling: Controlling is an important function of management. It is necessary in the case of

individuals and departments so as to avoid wrong actions and activities. Controlling involves
three broad aspects: (a) establishing standards of performance, (b) measuring work in progress
and interpreting results achieved, and (c) taking corrective actions, if required. Business plans do
not give positive results automatically. Managers have to exercise effective control in order to
bring success to a business plan. Control is closely linked with other managerial functions. It is
rightly treated as the soul of management process. It is true that without planning there will be
nothing to control It is equally true that without control planning will be only an academic
exercise Controlling is a continuous activity of a supervisory nature.

7. Motivating: Motivating is one managerial function in which a manager motivates his men to
give their best to the Organisation. It means to encourage people to take more interest and
initiative in the work assigned. Organisations prosper when the employees are motivated
through special efforts including provision of facilities and incentives. Motivation is actually
inspiring and encouraging people to work more and contribute more to achieve organisational
objectives. It is a psychological process of great significance.

8. Communicating: Communication (written or oral) is necessary for the exchange of facts,

opinions, ideas and information between individual’s and departments. In an organisation,
communication is useful for giving information, guidance and instructions. Managers should be
good communicators. They have to use major portion of their time on communication in order
to direct, motivate and co-ordinate activities of their subordinates. People think and act
collectively through communication. According to Louis Allen, "Communication involves a
systematic and continuing process of telling, listening and understanding".

Importance of Management
1. Optimum utilisation of resources: Management facilitates optimum utilisation of available
human and physical resources, which leads to progress and prosperity of a business enterprise.
Even wastages of all types are eliminated or minimized.

2. Competitive strength: Management develops competitive strength in an enterprise. This

enables an enterprise to develop and expand its assets and profits.

3. Cordial industrial relation: Management develops cordial industrial relations, ensures better life
and welfare to employees and raises their morale through suitable incentives.

4. Motivation of employees: It motivates employees to take more interest and initiatives in the
work assigned and contribute for raising productivity and profitability of the enterprise.
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 5. Introduction of new techniques: Management facilitates the introduction of new machines and
new methods in the conduct of business activities. It also brings useful technological
developments and innovations in the management of business activities.

6. Effective management: Society gets the benefits of efficient management in terms of industrial
development, justice to different social groups, consumer satisfaction and welfare and proper
discharge of social responsibilities.

7. Expansion of business: Expansion, growth and diversification of a business unit are possible
through efficient management.

8. Brings stability and prosperity: Efficient management brings success, stability and prosperity to
a business enterprise through cooperation among employees.

9. Develops team spirit: Management develops team spirit and raises overall efficiency of a
business enterprise.

10. Ensures effective use of managers: Management ensures effective use of managers so that the
benefits of their experience, skills and maturity are available to the enterprise.

11. Ensures smooth functioning: Management ensures smooth, orderly and continues functioning
of an enterprise over a long period. It also raises the efficiency, productivity and profitability of
an enterprise.

12. Reduces turnover and absenteeism: Efficient management reduces labour turnover and
absenteeism and ensures continuity in the business activities and operations.

13. Creates sound organisation: A dynamic and progressive management guarantees development
of sound Organisation, which can face any situation - favorable or unfavorable with ease and
confidence.

The very survival of an enterprise depends on its management. Ineffective management leads to
disastrous consequences. According to George Terry, "Ineffective management cuts at the very roots of
economy of an enterprise. This suggests the importance of efficient management. In brief, management
occupies a unique position in the functioning of business enterprises. Its importance and positive role is
accepted in all sector-private, public, joint and co-operative. Management is like a human brain. It is an
integral aspect of business itself.

The importance of management is not fully realised in many developing countries. The economic
progress of western countries is not merely due to abundant material resources but because they are
efficiently managed and utilised. In other countries, resources are not utilised fully and properly due to
lack of managerial skills. This suggests that management is a key factor in the working of business
enterprises. There is no substitute to efficient management. An inefficiently managed business
enterprise has no place in the present complex and competitive business world groups.

Management in the Future

In the next couple of decades, management theory and practice is bound to change in order to meet
the complex and ever changing environmental variables. The phenomenal growth in multinational
and transnational operations, fast changing technology, increasing complexity of decision making,
dynamic social and economic environment, globalisation of business and elastic project organisations
and task groups will significantly influence the future managerial world and managerial tasks. There
are successful business and management leaders publishing their memories and offering their

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experience to the world. There is great increase in the number of business schools. Management
education is bank ably providing expertise to nonage the business and this trend is likely to continue.
Career paths are likely to be based on expertise alone. Managers will be under pressure to develop this
expertise and apply it in an ever-widening range of situations rather than their ability to survive the
bureaucratic jungle. They will have to combine their personal, professional and operational qualities and
capacities to the satisfaction of employers and the society. The future must be considered as an
opportunity and not a problem.

The future business environment will he dominated by information technology (IT), globalisation,
material and energy shortages, problems of pollution and ecological balance, consumerism, inflation
and R & D. The costs of employing expert managers are regarded as an investment for effective business
performance. Management is a designated expertise, increasingly professionalized and is likely to
progress to a highly organised status. It is assumed that young people will choose management as an
occupation and will progress from lower to middle and from middle to top management positions. An
ever-greater range of knowledge is available to all aspects of business and management.

Some forces/factors that are likely to have an impact upon management in future are as mentioned
below: -

1. Emergence of knowledge society.

2. Development of socially concerned Humanistic society.

3. Widespread application of information technology (IT)

4. Transition from industrial to service economy.

5. Growing use of innovations and R & D.

6. Social accountability of business.

7. Satisfaction of human and social values in man-machine system.

8. Liberalization and Globalisation of the business.

Development of Management Thought

Management thought has a long history. It is as old as human civilization itself. Management in one
form or the other has been a significant feature of economic life of mankind throughout ages.
Management thought is an evolutionary concept It has develop along with and in line with the growth of
social, political, economic and scientific institutions. Management thought has its origin in the ancient
times. It developed gradually along with other socioeconomic developments. The contributor’s to
management though are many. They include Management philosophers, management practitioners and
scholars. Modem management is based on the solid foundations laid down by management thinkers
from the early historical period.

Historical Background of Management

Management thought is an evolutionary concept. New theories and principles were suggested along
with new developments in the business field. The new thoughts supplemented the existing thoughts and
theories. This is how developments are taking place continuously in regard to management
thoughts/theories. Management thinkers and thinkers from other fields such as economics, psychology,
sociology and mathematics have also made their contribution in the evolution of management thought.

Evolution of Management Thought

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This evolution of management thought can be studied in the following flum broad stages:

A. The Classical Theory of Management (Classical Approach): It includes the following three
streams of thought: (i) Bureaucracy, (ii) Scientific Management; and (iii) Administrative
Management

B. The Neo-classical theory of Management: It includes the following two streams: (i) Human
Relations Approach and (ii) Behavioral Sciences Approach.

C. The Modern Theory of Management: It includes the following three streams of thought: (i)
Quantitative Approach to Management (Operations Research); (ii) Systems Approach to
Management and (iii) Contingency Approach to Management.

It is rather difficult to state the exact period of each stage in the evolution of management thought.
Experts, in general, agree with the following period for each thought/school.

a. Classical School/thought: 1900 to 1930.

b. Neo-classical School/thought: 1930 to 1960.

c. Modern School/thought: 1960 onwards.

Contributors to Management Thought

The development of management thought is the result of contributions made by pioneering
management thinkers and experts from other social sciences such as economics and psychology.

Contribution of F. W. Taylor to Management Thought

F.W. Taylor is one of the founders (the other two are Max Weber and Henry Fayol) of classical
thought/classical theory of management. He suggested scientific approach to management also called
scientific management theory. F. W. Taylor (1856-1915) is rightly treated as the father of scientific
management. He suggested the principles of scientific management. His concept of scientific
management developed into a movement and dominated the industrial management for several
decades after him. His concepts and principles were refined and popularized by several of his followers,
notable among them being Henry Gantt, The Gilberths and Emerson.

Principles of Scientific Management

According to Taylor, scientific management in its essence consists of a philosophy which results in a
combination of four important underlying principles of management. First, the development of a true
science, second, the scientific selection of the workers, third, their scientific education and
development, Froth, intimate co-operation between management and their men. The basic principles of
Taylor philosophy of scientific management are as noted below. These principles of scientific
management are most crucial aspects of scientific management.

1. The development of 'One best way" of doing a job. This suggests the task of finding out the best
method for achieving the objectives of a given job. The standards are decided scientifically for
Jobs and incentive wages were paid for all production above this standard. Here, job analysis
and standardization of tools, equipment, machinery, etc. are required.

2. Scientific selection of workers and their development through proper training.

3. Scientific approach by management. The management has to develop a true science in all fields
of work activity through scientific investigation and experiments.

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 4. Close co-operation of managers and workers (labour management relations) for better results
and understandings.

5. Elimination of conflict between methods and men. The workers are likely to resist to new
methods. This can be avoided by providing them an opportunity to earn more wages.

Features of Scientific Management

1. Scientific task setting: F. W. Taylor suggested the introduction of standard task which every
worker is expected to complete within one day (working hours) the task is to be calculated
through careful scientific investigation. For this, work study (i.e. method study and work
measurement study) is essential. Taylor suggested time study, motion study, fatigue study and
rate-setting for the introduction of scientific task. Time study is the art of observing and
recording the time required to do each detailed element in an industrial operation. Motion
study refers to the study and analysis of the movements of an operator while performing a job
so that attempts can be made to remove useless/unwanted movements from the process. Both
the studies together help in determining the best method of performing a job and the standard
time allowed for it. This replaces the old rule-of-thumb knowledge of the workers. The
workload, the best method of performing the same and the time within which it must be
performed are suggested in this feature of scientific management by Taylor.

2. Planning the task: For performing the task by every worker, Taylor suggested the need of
planning the production activity accurately. This idea of planning is Taylor's gift to the science of
management. Planning of task gives answers to the following questions. What has to be done,
how it is to be done, where the work shall be done and when the work shall be done.

3. Scientific selection and training of workers: Taylor suggested the need of scientific selection of
workers for the plant/production activities. The procedure of selection must be systematic so as
to select the best and the most suitable persons for different types of jobs. Correct placement of
workers is equally important He also suggested the need of training of workers so as to raise
their ability or efficiency. Training is to be integrated with the promotion policy. He also
suggested differential piece wage plan for compensation payment to workers. He also suggested
the importance of cordial relations between management and workers.

4. Standardization: Taylor suggested the importance of standardization of tools and equipment,

materials, conditions of work and speed of machines. This brings co-ordination in different
activities and all workers will be able to perform the task assigned easily. The workers will have
satisfactory working conditions for work due to such standardization.

5. Specialization: Taylor suggested specialization in the administrative and organizational setup of

the plant He suggested functional foremanship. Taylor recommended eight functional foremen
for different activities and functions. The foremen suggested by him are like route clerk,
instruction card clerk, speed boss etc. Such specialization is useful for raising efficiency of the
whole organisation.

6. Mental revolution: The techniques suggested by F. W. Taylor in his scientific management are
different as compared to traditional techniques and methods. Naturally, these techniques can
be used only when workers supervisors and managers accept them in theory and also in practice
for this, Mental revolution on their part is essential The success of scientific management rests
basically on the attitude of management and workers. They must give up their old ideas and
methods and must accept new scientific methods. For this, mental revolution on the part of

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 both is essential. Cooperation from workers and management for the introduction of scientific
management depends on this mental revolution.

Benefits / Advantages of Scientific Management

1. Application and use of scientific methods.

2. Wide scope for specialization and accurate planning.

3. Minimum wastages of materials, time and money.

4. Cordial relations between workers and management.

5. Benefits to workers (higher wages and less burden of work), management (cost reduction,
better quality productions) and consumers (superior goods at lower prices)

Scientific management not only developed a rational approach to solving organisational problems but
also contributed a great deal to the professionalisation of management. Time and motion studies,
scientific selection of workers, work design and one best way to doing a job are some new ideals
suggested by Taylor and are responsible for the introduction of Many positive changes in the field of
industrial/ production management.

F. W. Taylor’s Contribution to the Development of Management Thought / Science

The contribution of F. W. Taylor to management thought is as explained below:

1. Emphasis on rational thinking: Taylor suggested rational thinking on the part of management
for raising efficiency and productivity. He wanted managements to replace old methods and
techniques by Modern methods which will raise productivity and offer benefits to all concerned
parties. He was in favour of progressive, scientific and rational thinking on the part of
management on all managerial problems. Such progressive outlook is essential for the
introduction of new techniques and methods in the Management.

2. Introduction of better methods and techniques of production: F. W. Taylor suggested the

importance of improved methods and techniques of production. Work-study techniques are his
contribution to management thought. He suggested new methods after systematic study and
research. Taylor recommended the use of new methods for raising overall efficiency and
productivity.

3. Emphasis on planning and control of production: Taylor suggested the importance of

production planning and control for high production, superior quality production and also for
low cost production. He introduced the concept of production management in a systematic way.

4. Importance of personnel and personnel department: Taylor suggested the importance of

manpower in management. He was in favour of progressive personnel policies for the creation
of efficient and satisfied labour force. He suggested the need of personnel department and its
importance. He favored incentive wage payment to workers.

5. Industrial fatigue and rest pauses: Taylor noted the nature of industrial fatigue and suggested
the introduction of suitable rest pauses for removing such fatigue of workers. He wanted to
reduce the burden of work on workers through the use of scientific methods.

6. Time and motion study: Taylor introduced new concepts like time study, motion study and work
study in the field of industrial management such concepts are for the introduction of new
methods which will be more quick, scientific and less troublesome to workers.

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The positive view of scientific management was described by Taylor as "Science, not rule of thumb;
Harmony, not discord; Co-operation, not individualism; maximum output in place of restricted output.
The development of each man to his greatest efficiency and prosperity".

F.W. Taylor a rightly treated as father of scientific management. In fact, through his concept of scientific
management, Taylor actually developed a new science of management which is applicable not only to
management of industrial units but also to the management of all other business units. He suggested
certain techniques which can be applied purposefully to all aspects of management of business
activities. This is treated as Taylor’s unique contribution to management thought.

The fundamental principles suggested by F. W. Taylor in his scientific management can be treated as his
contribution to management thought. In fact, Taylor suggested scientific attitude and a new philosophy
for discarding old and outdated ideas and techniques. He was instrumental for the introduction of new
ideas and techniques in the science of management. These ideas aid techniques are now accepted in
theory as well as in practice.

Criticism of Scientific Management or Opposition to Scientific Management

Scientific management has wider economic and social significance. It has succeeded in revolutionizing
the very concept of management by offering a novel approach to the managers in managing men,
materials and methods. In spite of several benefits, Taylor's scientific management concept has widely
been criticized by employers, workers, trade unions and also by theorists. They oppose Taylor's scientific
management on different grounds. The points of criticism we as explained below:

Criticism from Employers

1. Huge investment required: Heavy investment is necessary for reorganization of preliminary
standardization of tools, machines and equipment and conduct of time and motion studies and
other research activities for the introduction of scientific management. Such investment may
not be possible in small and medium size enterprises.

2. Sudden change may disturb existing working arrangements: Sudden change due to the
introduction of scientific management may paralyze the existing arrangement of work and will
bring the entire Organisation in difficulties. There will be loss due to reorganization, if scientific
management is to be introduced.

3. Unsuitable to small units: Small manufacturers argue that the concept of scientific management
is not suitable to their units due to financial and other difficulties.

4. Benefits after a long period: The benefit of scientific management will be available only after a
long period and the business unit may come in financial and other difficulties during the process
of introduction of new changes as suggested in the scientific management.

5. Huge overhead expenses required: Introduction of scientific management involves huge

overhead expenses which may erode profitability.

Criticism from Workers and Trade Unions. Why did Trade Unions Oppose Scientific Management?
1. Heavy burden on workers: Workers feel that they will have to share more burden of work as a
result of introduction of scientific management. They also fear that the benefits will he shared
by the employer alone and that they will be at a loss from all sides. Workers and their unions
feel that it will lead to their exploitation and they oppose scientific management on this ground.

2. Reduces initiative among workers: Workers and trade unions argue that scientific management
will destroy their initiative and they will be converted into machines in the production process
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 with no freedom, initiative and choice. Similarity, over-specialization (excessive specialization)
will lead to monotony and mental fatigue. Hence, they oppose Taylor's scientific management.

3. Possibility of unemployment: Workers and their unions also feel that scientific management
will lead to unemployment and that workers will be removed due to the use of labour-saving
devices. This will lead to loss of employment and income to workers. This is likely to make trade
unions weak and hence they oppose scientific management.

4. Exploitation of workers: Workers argue that they will be exploited under scientific management
as they will have to share more burden of work without corresponding increase in the wage
rate. Trade unions also oppose to scientific management as it is likely to put more burden of
work on the workers without corresponding monetary benefit.

5. Possible adverse effects on workers unity: Trade unions also oppose scientific management as
they fear that the unity among workers will be adversely affected. Workers will be divided into
efficient and inefficient categories. In addition, different piece rate plans will be introduced in
place of uniform wage rate. As a result, workers will be divided. Workers getting high salary will
not be interested in the union activities and this will make their union week and ineffective.
Even more unions and rival unions will be formed. In brief, trade unions strongly criticize
scientific management as it breaks solidarity of workers

The criticism of scientific management by employers and workers/trade unions is not based on sound
reasoning. Their arguments are not based on realities. It is possible to give counter-arguments to every
point of criticism noted by them. For example, employers object scientific management on the ground
of huge investment for its introduction. It is true that huge investment will be necessary but it is likely to
give greater return in due course. In addition, scientific management will bring down the cost and
thereby enhance the profits.

Contribution of Henry Fayol to Management Thought

Henry Fayol (1841-1925) is rightly treated as the father of modern theory of general and industrial
management. The credit of suggesting the basic principles of management in an orderly manner goes to
Henry Fayol. After obtaining an engineering degree, Henry Fayol, joined as chief executive in a coal
mining company. He developed his management principles and general management theory and
published them in the form of a book (in French) "General and Industrial Administration" in 1916. It was
translated into English in 1930. In due course of time, Henry Fayol came to be recognised as the founder
of modern management theory. His analysis of management process acts as the foundation of the
whole management theory and the present super-structure of management has been built on it.

Henry Fayol suggested important qualities of managers and stressed the need for raising such qualities.
He developed fourteen principles of management out of his practical experience. These principles are
universal in character and are applicable to all types of organisations. Each principle suggested by him
has specific meaning and significance. According to him, managers in all organisations need to follow
these principles/guidelines while managing the affairs of their business units. The management
principles suggested by him in 1916 are universally accepted by modern authorities on management and
are treated as valid even to this day. This is because these principles are practical in nature and also
result-oriented. In fact, these principles are the outcome of his long experience as a practicing manager.
These basic principles are useful for effective management of business activities. They are related to the
basic components of management process such as planning, organizing, staffing, leading, coordinating
and controlling. He incorporated these principles in the management theory suggested by him. The
principles of management suggested by him are useful not only in business/industrial enterprises but
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also in other organisations such as colleges, hospitals, charitable institutions and government
departments. Due to his contribution to management theory and principles, Henry Fayol is rightly
treated as the Father of Modern Management Thought. Fayol is the first management thinker who
provided the conceptual framework of the functions of management in his book “General and Industrial
Management.

The functions of management according to Fayol are:

1. Planning

2. Organising

3. Staffing

4. Commanding

5. Coordinating

6. Controlling

The fourteen principles of management suggested by him are related these basic functions of
management process and are universally accepted. Fayol has given adequate details of every principle
suggested by him. He also made them easily acceptable by others. According to Henry Fayol, managers
should be flexible in the application of these principles.

The fourteen principles of management suggested by him are related these basic functions of
management process and are universally accepted. Fayol has given adequate details of every principle
suggested by him. He also made them easily acceptable by others. According to Henry Fayol, managers
should be flexible in the application of these principles.

Fayol divided general and industrial management into following six groups: -
a. Technical activities (production, manufacture, adaptation).

b. Commercial activities (buying, selling and exchange).

c. Financial activities (search for and optimum use of capital).

d. Security activities (protection of property and persons).

e. Accounting activities (stock taking, balance sheet, cost, and statistics).

f. Managerial activities (planning, organising, command, coordination and control).

Henry Fayol also suggested 14 principles of management. These principles are: -

1. Division of work,

2. Authority and responsibility,

3. Discipline,

4. Unity of command,

5. Unity of direction,

6. Subordination of personal interest to organizational interests,

7. Remuneration,
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 8. Centralization,

9. Scalar chain,

10. Order,

11. Equity,

12. Stability of tenure,

13. Span of co-operation and

14. Initiative

Henry Fayol’s contribution to management theory is certainly remarkable. He gave overall concepts of
general management and suggested the basic functions of management. He recommended the
selection and training of workers and managers. He also advocated the use of organisation charts. He
suggested certain qualities of manager’s winch include physical, mental, moral, educational technical
and experience. Fayol’s theory of management was the first complete theory of management as we
understand today. It incorporated proven principles, elements, procedures and techniques based on his
practical experience.

Fayol's Principle of Division of Work - Meaning, Example, Explanation

Principle of Division of Work
1. Division of something (e.g. an object, a process, work, etc.) means to divide, chop or break it up
into smaller parts to facilitate a better understanding, easier handling and operation, and
focused observation on a fixed set of goals. It is a way to separate things apart based on some
established criteria like quality, quantity, nature of work, so on. It untangles, simplifies, and
narrows down various complexities that were involved prior separation. It helps to ease and
enhance the efficiency of managing a giant complex task through smaller chunks that are easy
to handle.

2. Work is any assigned job, task, duty, goal or an objective one is supposed to accomplish
(achieve) before the deadline (on-time) and as expected at the expense of one's mental and
physical labour to earn the desired reward (usually monetary but not always) in return.

With this understanding, let's grasp the meaning of division of work:

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 1. Division of Work means to divide or break up a single complicated job into different smaller
specialised tasks.

2. Here, each of these smaller tasks is handled separately probably by an expert or a team working
under his command.

3. In case, these tasks are dependent on each other's completion, they are achieved separately
and procedurally one after another.

4. When all smaller tasks complete as expected, they all together help to accomplish the single
complicated job.

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Study the following image depicting an example of division of work.

Consider for an example, for the first time in your life you have planned to construct a beautiful dream
house at your favourite location. Before initiating the actual phase of construction work, you do some
pre-research regarding how to build a house systematically. You figure out which crucial steps you'll
need to carry out and professional services you'll need to access, communicate, negotiate and hire.
After getting acquainted with the basic construction procedure and having the necessary funds in hand,
you start further planning accordingly.

You divide the combined work of house construction as follows:

1. First, you hire an Architect to prepare the layout plan of your house as per your needs.

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 2. Once the house plan is ready, you then contact and hire a civil contractor to build your house as
per the approved plan.

3. When primary construction phase ends, you finally hire an interior designer to enhance the
beauty or aesthetic feel of your dream house.

The division of work does not stop at the above three steps else it further bifurcates into numerous
specialised works as listed below.

Architect divides his work of preparing the layout plan of house among:

1. Draftsman,
2. 3D-Designer,
3. Structural Designer, etc.
Civil contractor divides his work of house construction among:

1. Civil Engineer,

2. Supervisor,

3. Masons,

4. Labours,

5. Welder,

6. Electrician,

7. Plumber, so on.

Interior Designer realises his creative aesthetic concept from:

1. Carpenter,

2. False Ceiling installer,

3. Painter,

4. Tiler,

5. Windows installer,

6. Handyman,

7. Electrician,

8. Landscaper, etc.

In fact, efficient completion of each of the above listed numerous specialised works overall helps to
progress gradually and ultimately finish the single difficult job of a house construction.

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Explanation of Henri Fayol's Principle of Division of Work:

1. In French, Henri Fayol originally called it ‘La Division Du Travail’ in his influential book
‘Administration Industrielle et Générale.’

2. According to Fayol, the ‘Division of Work’ or ‘Specialization’ is of the natural order. That is this
principle is present and seen operating in nature too.

3. It is noticeable in the animal world. If a creature is highly developed, then its organs are also
highly differentiated to efficiently carry out numerous specialized bodily functions to sustain the
whole body itself. For example, a unicellular animal called Amoeba is physically less complicated
than a multicellular Human Being. In other words, the Human body has more specialized organs
compared to Amoeba‘s body.

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 4. It is also noticeable in our human societies or communities. When society grows from its
primitive stage to a developed (civilised) one, new dedicated social organs (agencies) also start
appearing and developing within its sphere by dividing and replacing the functions of old organs.
For example, when a small-town transform into a giant metropolitan city the role, functions,
scale of operation of its local administrative body also expands, divide and becomes much more
complicated than its previous stage.

5. When an entrepreneur starts a company, most of the important business activities at the initial
phase of setup are personally managed and handled by himself. However, as the company
grows, he hires staff to support such a growth. He assigns his newly appointed staff various
duties and some key responsibilities that earlier he was personally handling and managing. In
other words, he now doesn't do the same work he was earlier doing else he now gets it done
from his qualified staff instead. As the activities of the company expand further, newer branch
offices, departments, positions, personnel, etc. also starts expanding and widely replacing the
functions of a single person who once founded the business. For example, Mark Zuckerberg,
who founded the Facebook.

6. The objective of the division of work is to get more work done in a better way with the same
effort and become productive.

7. If a person is engaged routinely in the same type of occupation, after some time, as a
consequence of his routine he automatically acquires some expertise, skill, sureness, accuracy
and precision over how to do it in a better and efficient way. Such an ability develops as a result
of his numerous hours of work and regular practice. Knowledge acquired through routine work
process makes him more competent than those who lack such an experience.

8. According to Henri Fayol, when there is a change in individual's occupation (work) it results in
the phase of adaptation that demands efforts for adjusting to the new job. Each change of
routine work reduces the output, decreases the yield or productivity of an individual. However,
an individual's performance can be regained through quality training, regular practice, earned
experience, and passage of time.

9. Division of work helps to reduce the number of objects (*) towards whom some attention and
efforts need to be focused and directed. It is the best-recognized means (way) to make the best
use of individuals and teams (groups of people) in most work-related environments. Note: (*)
Here, objects are those individuals whose regular job (duty) has been changed or altered and on
whose shoulders newer responsibilities are laden, and are, therefore, going through the phase
of adaptation.

10. The principle of Division of Work not just applies to the technical work. It is also applicable to all
other types of jobs where there is a need or demand for less or more individuals who specializes
in different areas and have the essential set of skills or talents.

11. As a consequence, the division of work mainly results in:

a. Specialization of functions - Here, tasks are separated into different functions or roles
according to the expertise of one's nature of work.

b. Separation of powers - It means there is a distribution of authority.

12. The advantages of division of work are now universally recognized.

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 13. Even though the principle is applicable in most work-related scenarios, it is still subjected to
limitations like:

a. Doing the same type of work for a longer period makes it monotonous.

b. Since labor or work is divided, it greatly increases interdependency.

c. Also, since the focus in only on executing one's assigned part of work, there is a lack of
the spirit of collective responsibility.

14. Conscious of such limitations or shortcomings, Sir Henri Fayol, recommended using:

a. The principle of division of labour in moderation and not in excess.

b. One's wise judgement earned from years of work experience.

Contribution of Elton Mayo to the Development of Management Thought

Elton Mayo (1880-1949) is recommended as the Father of Human Relations School. He introduced
human relations approach to management thought. His contribution to the development of
management thought is unique and is also treated as human relations approach to management. It was
Mayo who led the team for conducting the study at Western Electric's Hawthorne Plant (1927-1932) to
evaluate the attributes and psychological reactions of workers in on-the-job situations. His associates
included John Dewery, Kurt Lewin and others. Mayo and his associates came to the following
conclusions from their famous Hawthorne experiments:

1. The amount of work to be done by a worker is not determined by his physical capacity but by
the social norms.

2. Non-economic rewards play a significant role in influencing the behavior of the workers.

3. Generally, the workers de not reacts as individuals, but as members of group.

4. Informal leaders play an important part in setting and enforcing the group norms.

Mayo discussed the factors that cause a change in human behaviour. He concluded that the cause of
increase in the productivity of the workers is not a single factor like rest pauses or changing working
hours but a combination these and several other factors such as less restrictive supervision, giving
autonomy to workers, allowing the formation of small cohesive groups of workers and so on. Today, as a
result of the efforts of Mayo and his associates, the managers in different organisations recognize that
workers' performance is related to psychological, sociological and physical factors. Thus, Hawthorne
Study was an important landmark to study the behavior of worker and his relationship to the job, his
fellow workers and the organisation. It proved that informal work groups and the opportunity to be
heard and participate in decision-making have an important impact on the productivity of the workers.

Mayo is one leading management thinker and also a leading advocate of neo-classical theory. The
concept of participative management style was suggested in the neo-classical theory. The human
relations approach suggested by Mayo has special importance in the present period. He rightly
suggested the importance of democratic leadership and participative management style for running
business activities efficiently. The role of people (workers) is clearly suggested by Mayo. He rightly
suggested that management is not a mechanical process but a study of people involved in the
production activities. Management will get positive response from its employees when their actions,
sentiments and expectations are given due attention.

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Mayo is best known for his work on the project commonly referred to as the Hawthorne Studies. They
were conducted in the Hawthorne plant of Western Electric Company in the USA between 1927 and
1932. It is said that Mayo applied psychological approach to management for the first time. He used
clinical and diagnostic methods. Mayo has drawn various conclusions from these studies. The
Hawthorne Studies have had a shattering impact on management thinking. Mayo is regarded as
revolutionary thinker because of his contribution to the management thought in the recent period. The
credit of humanization of management with a view to achieve common interest of management and
workers goes to Elton Mayo.

Some of the major findings of Hawthorne Studies we as noted below:

1. Employee's behavior is influenced by mental attitudes and emotions including prejudices.

2. The workers in a group develop a common psychological bond uniting them as a group in the
form of informal organisation.

3. In managing and motivating employee groups, human and social motivation plays greater role
then financial incentives.

4. Management must understand that a typical group behavior can dominate or even supersede
individual propensities and preferences.

5. When workers are given special attention by management, the productivity is likely to increase
irrespective of actual changes in the working conditions.

Hawthorne Studies are primarily responsible for consideration of non-financial incentives in improving
productivity. Mayo pointed out that the organization is a social system and informal organisation is a
reality. The knowledge of human nature can solve many problems of management. He emphasized that
successful human relations approach can easily create harmony in an organisation, higher employee
satisfaction and great operational efficiency. Central to this approach was an increased understanding of
the individual worker with emphasis on motivation, needs, interpersonal relationships and group
dynamics Mayo believed that a factory is not only a workplace but also a social environment in which
the employees interact with each other. This gave rise to the concept of the 'social man' whose
interaction with others would determine the quality and quantity of the work produced.

Mayo developed his Human Relations Theory of Management on his Hawthorne experiments. He
introduced human relations approach to management and is rightly considered as one of the pioneers
of the Human Relations Theory of Management.

Features of Human Relations Approach

1. A business organisation is not merely a techno-economic system but also a social system and
involves human element.

2. An individual employee is motivated not merely by economic incentives but also by non-
economic incentives, psychological and social interests, needs and aspirations.

3. The informal groups in the organisation are more important than individuals and play an
important role in raising productivity.

4. In place of task-centered leadership, the employee-centered, humanistic, democratic and

participative style of leadership should be introduced as it is more effective / productive.

5. Employees are not necessarily inefficient or negative in their approach. They are capable of self-
direction and control.
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 6. Employees performance can be raised by meeting their social and psychological needs. Cordial
atmosphere at work place is also useful for raising productivity.

7. Management needs social skills along with technical skills in order to create a feeling (among the
employees) that they are a part and parcel of the organisation and not outsiders.

8. Employees need respect and positive feeling from the management. For this, employees should
be encouraged to participate and communicate freely their views and suggestions in the
concerned areas of decision-making.

9. The management has to secure willing cooperation of employees. The objective before the
management should be to secure cooperative effort of its employees. For this, employees
should be made happy and satisfied.

Human relations approach is a progressive development as compared to classical approach. Here,

productivity is not treated merely as an engineering problem. Cooperation of employees, team spirit
and their satisfaction are treated as factors useful for raising productivity. The human relations
approach has put special stress on social needs and the role of management in meeting such needs.

Limitations of Human Relations Approach

1. Too much importance to employees, and social needs: Human relations approach to
management has given too much importance to employees, their needs and satisfaction. It has
given undue stress on the social side of management as compared to technical side. It is another
extreme as compared to classical theory where employees were neglected considerably. Human
relations approach has also neglected many other aspects such as organizational issues,
environment at the work place, labour unions, structure of the organisation and so on.

2. Employee-oriented approach to a limited extent: It is argued that human relations approach is

apparently employee-oriented but in reality, it is organisation-oriented. Many measures are
suggested for the happiness and satisfaction of employees. Measures are suggested to satisfy
employees in order to achieve organizational objectives and not for meeting the real needs of
workers. Their participation in management or upward communication with the management,
etc. is outwardly employee-oriented and gives them a false sense of happiness. In brief, the
human relations approach is employee-oriented but only to a limited extent.

3. Faulty assumption in the theory: The human relations approach is based on a wrong assumption
that satisfied workers are more productive. After 1950s, it was proved that productivity
improvement, as a result of better working conditions and the human relations skills of
manager’s did not result in productivity improvement as expected. Thus, workers satisfaction is
one but not the only factor which raises industrial productivity.

4. Limited importance to economic incentives: The human relations approach has given limited
importance to economic incentives in motivating employees. They prefer informal groups and
cordial relations among them. However, their interest and loyalty to the organisation largely
depends on monetary incentives. Low wages lead to Labour turnover even when the good
treatment is given to employees.

The human relations movement is based on the experiments conducted in the Hawthorne Plant in
Cicero (USA). The major conclusion of (Hawthorne Experiments) was that the workers respond to their
work situation as a whole and their attitudes and social relations constitute an important part of the
total situation. In addition, the attitudes of workers and their relations with each other and with the

23 | P a g e
management would play a role in forming their attitudes towards the total work situation. Elton Mayo
conducted a series of pioneering studies at the Hawthorne plant they proved to be of much use in
associating employees with the management for achieving organizational objectives.

It is rightly pointed out that F. W. Taylor in his contribution to management thought suggested
rationalizing work for greater labour productivity while Elton Mayo recommended/ advocated
humanism work for enhanced efficiency and personal satisfaction. The basic purposes of both the
approaches are identical. However; the approaches of Taylor and Mayo are different. Taylor's approach
was purely engineering while Mayo referred to social needs of employees and their satisfaction.
Taylor's approach to scientific management lacks human elements in the production process. He treated
employee as a cog in the wheel emphasizing on efficiency at all costs as if there is no difference between
workers and machines. Mayo applied psychological approach to management. He recommended
humanization of management for better results in terms of production and productivity. He rightly
suggested that workers are human beings and not machines. They should be treated with dignity and
honour while on job.

Both the approaches (of Taylor and Mayo) are supplementary in the present management thought. At
present, stress is on scientific management principles as well as on human approach to management.
Efforts are being made to create favorable organisation climate for achieving organizational goals.
Taylor's approach is comparatively old and was popular in the early decades of 19th century the human
relations approach (suggested by Elton Mayo) is comparatively new and got popularity by 1930s.

Systems Approach to Management Thought

Contributions to management thought/theory after 1960s are covered by modem management
theories. Modem theories are based on classical and neo-classical theories but consider the
management problems as they developed in the recent years. There are three streams under modern
management theory. These are: -

a. Quantitative / Mathematical Approach to Management,

b. Systems Approach to Management, and

c. Contingency Approach to Management.

Systems Management School

A system is an organised entity i.e. a company or a business enterprise made up of parts connected and
directed to some purpose. Each system has an input, a process and an output. It acts as a self-sufficient
unit. Every system is interlinked with its subsystems. Any organisation is looked upon as an artificial
system, the internal parts of which work together to achieve established goals and the external parts to
achieve interplay with the environment including customers, the general public, suppliers and
government. The manager integrates available facilities to achieve a goal by means of systems that
relate activities required for the end result. The system serves as the media through which the manager
operates. An integrated system can be used purposefully for the conduct of production, marketing,
distribution and other activities relating to business in an orderly manner. A manager can conduct
various activities in an orderly manner with the help of the systems established. A system is a set of
interrelated and interdependent parts arranged in a manner that produces a unified whole. Almost
anything can be viewed as a system.

As per systems management school, an organisation is looked upon as an artificial system. Its internal
parts work together to achieve established goals and the external parts to achieve interplay with the
environment including customers, the general public, suppliers and government. The manager
24 | P a g e
integrates available facilities to achieve a goal by means of systems that relate activities required for the
end result. In this way, the systems management school helps in achieving the established goals of the
organisation.

It is possible to establish such systems management organisation in a business enterprise. For this
authority, departments, etc. will be created. The work will be properly distributed and various
departments (sub-systems) will operate as per the work assigned under the project. The computer can
be used extensively for the execution of systems management Data processing work will become easy
and quick. Systems management enables a manager to work more efficiently because of easy availability
of information in different aspects of business.

Features of Systems Approach to Management

1. Open or Closed Systems: Systems may be either open or dosed. An open system is one that is
dependent on the outside environment for survival e.g., human body as a system is composed
of many subsystems. This is an open system and it must depend on outside input and energy for
survival. A system is considered closed if it does not interact with the environment. Physical and
mechanical Systems are closed system because they are insulted from their external
environment. Traditional organisation theorists regarded organisations as closed systems while
according to the modern view organizations are open systems, always interacting with the
environment.

2. Interdependent parts: A system is a set of interdependent parts which together form a unitary
whole that perform some function. An organisation is also a system which consists of four
interdependent parts viz., task, structure, people and technology.

3. Consideration of whole system: No part of the system can be precisely analyzed and under-
stood apart from the whole system. Conversely, the whole system cannot be exactly evaluated
without understanding all its parts. Each part is related to every other part. It means rather than
dealing separately with the various parts of one organisation, the systems approach attempts to
give the manager a way of looking at the organisation as a whole. For example, in order to
understand the operations of the finance or production or marketing departments, he must
understand the company as a whole. It is because activity of any one part of the company
affects the activity of every other part.

4. Information, energy and material: Generally, there are three basic inputs that enter the
processor of the system viz., information (technology), energy (motive power) and materials to
be transformed into goods. If the output is service, materials are not included in the inputs. If
we have manufacturing company, output is goods or materials. If we have a consultancy firm,
output is information or advice. if we have a power generating company, output is energy.

5. Defined boundaries: Each system including an organisation has its own boundaries which
separate it from other system in the environment. For open systems the boundaries are
penetrable whereas for closed systems, they are not. The boundaries for closed systems are
rigid. In a business organisation, it has many boundary contacts or 'interfaces' with many
external system-like creditors, suppliers, customers, government agencies etc. The system is
inside the boundary, the environment is outside the boundary'.

6. Synergy: Output of a system is always more than the combined output of its parts. This is called
'synergy’. In organizational terms, synergy means when separate departments within an
organisation cooperate and interact, they become more productive than if they had acted in

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 isolation e.g., it is certainly more efficient for each department to deal with one secretarial
department than for each department to have a separate secretarial department of its own.

7. Feedback mechanism: A system can adopt and adjust itself to the changing environment
through the feedback mechanism. As operations of the system proceed information in feedback
to the appropriate people. This helps to assess the work and if need be, to get it corrected.

8. Multidisciplinary approach: Systems approach integrates and uses with profit ideas emerging
from different schools of thought. Management freely draws concepts and techniques from
many fields of study such as psychology, sociology, ecology, economics, mathematics, statistics,
operations research, systems analysis etc.

Merits of Systems Approach

Systems approach to management is comparatively new to the management thought. This approach
represents a refreshingly new thinking on organisation and management. It stresses that managers
should avoid analyzing problems in isolation but should develop the skills for integrated thinking on
management problems. The systems approach provides a unified focus to organizational efforts. It
provides a strong conceptual framework for meaningful analysis and understanding of organisations.
Systems approach provides clues to the complex behavior of organisation.

The systems theory suggests to practicing manager to study/analyze a particular element by taking into
consideration its interacting consequences with other elements. A variety of systems concepts and
perspectives have been developed for managers.

The systems approach rightly points out the role of 'synergy' in management. Each subsystem derives
strength by its association and interaction with other sub-systems. As a result, the overall outcome is
more than the sum total of individual contributions. The other contribution of systems theory is its
treatment of organisation as an open system. The Organisation exhibits a 'holistic' character.

Limitations of Systems Approach

1. The systems approach is criticized on the ground that it is too abstract and vague. It is difficult to
apply it to practical problems directly and easily.

2. The systems theory/approach fails to provide specific tools and techniques for the practicing
executives/managers.

3. The systems approach does not recognize differences in systems. It fails to clearly identify the
nature of interactions and interdependencies between an Organisation and its external
environment it also fails to offer a unified body of knowledge.

Contingency Management School / Contingency Approach to Management / Situational Approach

A common deficiency of the classical, behavioral and quantitative schools is that they have stress one
aspect of the organisation at the cost of others. The classical approach emphasizes on 'task' while
behavioral approach emphasizes on 'people’. The stress of quantitative approach is on 'mathematical
decision-making’. However, it is difficult to understand precisely which aspect is most useful and
appropriate in a given practical situation. This brings the need to develop me broad conceptual
framework that can help a manager diagnose a problem and decide which tool or tools will best do the
job. The systems approach as well as contingency approach provide one integrated approach to
management problems. The contingency/situational approach is the second approach (the first being
the systems approach) which attempts to integrate the various schools of management thought in an
orderly manner. The contingency management approach is similar to known leadership theory called

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situational leadership theory. The contingency approach is applicable to leadership as well as to business
management. This situational management approach is relatively a new approach to management and
is an extension of systems approach. The basic theme of contingency approach is that organisations
have to deal with different situations in different ways. There is no single best way of managing
applicable to all situations. In order to be effective, the internal functioning of the organisation must be
consistent with the needs and demands of the external environment. In other words, internal
organisation should have the capacity to face any type of external situation with confidence.

Features of the Contingency / Situational Approach

1. Management is entirely situational. The management has to use the measures/techniques as
per the situation from time to time.

2. Management should match its approach as per the requirements of the situation. The policies
and practices used should be suitable to environmental changes.

3. The success of management depends on its ability to cope up with its environment. Naturally, it
has to make special efforts to anticipate and comprehend the possible environmental changes.
Managers should realize that there is no one best way to manage. They have to use
management techniques as per the situation which they face.

According to contingency approach, management principles and concepts of different schools have no
universal/general applicability under all situations. This means these schools have not suggested one
best method of doing things under all situations and at all times. The contingency approach has
provided a solution to this situation.

As per the contingency approach, the task of managers is to try to identify which technique or method
will be most suitable for achieving the management objectives under the available situation. Managers
have to develop a sort of situational sensitivity and practical selectivity in order to deal with their
managerial problems as they develop from time to time.

Contingency approach views are applicable in designing organizational structure and in deciding the
degree of decentralization in establishing communication and control systems and also in deciding
motivational and leadership approaches. In brief, the contingency approach is applicable to different
areas of organisation and management it is an attempt to integrate various viewpoints and to synthesize
various fragmented approaches to management.

The contingency approach is the outcome of the research studies conducted by Tom Burns and G. W.
Stalker, James Thompson and others.

Merits of Contingency Approach

1. Contingency approach is pragmatic and open minded It discounts preconceived notions, and
universal validity of principles.

2. Theory relieves managers from dogmas and set principles. It provides freedom/choice to
manage to judge the external environment and use the most suitable management techniques.
Here, importance is given to the judgment of the situation and not the use of specific principles.

3. The contingency approach has a wide-ranging applicability and practical utility in, organisation
and management. It advocates comparative analysis of organisations to bring suitable
adjustment between organisation structure and situational peculiarities.

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 4. The contingency approach focuses attention on situational factors that affect the management
strategy. The theory combines the mechanistic and humanistic approaches to fit
particular/specific situation. It is superior to systems theory as it not only examines the
relationships between sub-systems of an organisation but also the relationship between the
organisation and its external environment.

Limitations of Contingency Approach

1. It is argued that the contingency approach lacks a theoretical base.

2. Under contingency approach, a manager is supposed to think through all possible alternatives as
he has no dried principles to act upon. This brings the need of more qualities and skills on the
part of managers. The responsibility of a manager increases as he has to analyze the situation,
examine the validity of different principles and techniques to the situation at hand, make right
choice by matching the technique to the situation and finally execute his choice. The areas of
operation of a manager are quite extensive under this theory.

Contingency approach/theory is the latest addition to existing management theories. It was observed
that different theories developed earlier are not applicable to all real-world situations developed since
1970. An open and adaptable systems approach (also called contingency approach) is more convenient
to deal with complex management problems. Contingency/ situational approach appears to be better
suited to lead management out of the present management theory jungle.

Contingency theories do not give special importance to any specific theory. It suggests that there is no
one best way to management. In the Contingency approach, what is best for a particular business unit
or organisation or under the available situation is given special attention. Each situation (before the
management) is different and calls for a Contingency / situational approach. A manager has to study the
complexity under each situation. He has to adjust his policies/decisions as per his awareness. He has to
decide what is best under the available total situation and act accordingly. He (manager) has to identify
the technique which will be most effective for achieving organisation objectives under particular
situation/ circumstances and act accordingly. This is the practical aspect of contingency approach. What
constitutes best/effective management varies with the organisations internal and external environment
and the make-up of the organizational sub-systems. The best management pattern depends on a
number of interrelated internal and external variable factors around the specific organisation/business
unit.

The contingency approach falls somewhere in between the classical theory and systems theory. It
provides a synthesis that brings together the best of aft segments of what Koontz has termed
"management theory jungle". Contingency approach is practical progressive and action oriented. It
considers each organisation as unique and gives special attention to situation around it. Finally, it
integrates theory with practice in a systems framework. The other theories (classical or systems) are not
rejected in the, contingency approach. However, they are viewed as incomplete, vague and unsuitable
to all organisations and situations.

Management By Objectives (MBO) - Peter Drucker MBO

The Concept of Management by Objectives (MBO)

The concept of MBO is closely connected with the concept of planning. The process of planning implies
the existence of objectives and is used as a tool/technique for achieving the objectives. Modern
managements are rightly described as 'Management by Objectives' (MBO). This MBO concept was
popularized by Peter Drucker. It suggests that objectives should not be imposed on subordinates but

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should be decided collectively by a concerned with the management. This gives popular support to them
and the achievement of such objectives becomes easy and quick.

Management by Objectives (MBO) is the most widely accepted philosophy of management today. It is a
demanding and rewarding style of management. It concentrates attention on the accomplishment of
objectives through participation of all concerned persons, i.e., through team spirit. MBO is based on the
assumption that people perform better when they know what is expected of them and can relate their
personal goals to organizational objectives. Superior subordinate participation, joint goal setting and
support and encouragement from superior to subordinates are the basic features of MBO. It is a result-
oriented philosophy and offers many advantages such as employee motivation, high morale, effective
and purposeful leadership and clear objectives before all concerned per-sons.

MBO is a participative and democratic style of management. Here, ample a scope is given to
subordinates and is given higher status and positive/participative role. In short, MBO is both a
philosophy and approach to management. MBO concept is different from MBC (Management by
Control) and is also superior in many respects. According to the classical theory of management, top
management is concerned with objectives setting, directing and coordinating the efforts of middle level
managers and lower level staff. However, achievement of organizational objectives is possible not by
giving orders and instructions but by securing cooperation and participation of all persons. For this, they
should be associated with the management process. This is possible in the case of MBO and hence MBO
is different from MBC and also superior to MBC.

MBO is an approach (to planning) that helps to overcome these barriers. MBO involves the
establishment of goals by managers and their subordinates acting together, specifying responsibilities
and assigning authority for achieving the goals and finally constant monitoring of performance. The
genesis of MBO is attributed to Peter Drucker who has explained it in his book 'The Practice of
Management'.

Definitions of Management by Objectives MBO: -

1. According to George Odiome, MBO is "a process whereby superior and subordinate managers of
an Organisation jointly define its common goals, define each individual's major areas of
responsibility in terms Of results expected of him and use these measures as guides for
operating the unit and assessing the contribution of each of its members."

2. According to John Humble, MBO is "a dynamic system which seeks to integrate the company's
needs to clarify and achieve its profits and growth goals with the manager's need to contribute
and develop himself. It is a demanding and rewarding style of managing a business."

Features of Management by Objectives MBO: -

1. Superior-subordinate participation: MBO requires the superior and the subordinate to

recognize that the development of objectives is a joint project/activity. They must be jointly
agreed and write out their duties and areas of responsibility in their respective jobs.

2. Joint goal-setting: MBO emphasizes joint goal-setting that are tangible, verifiable and
measurable. The subordinate in consultation with his superior sets his own short-term goals.
However, it is examined both by the superior and the subordinate that goals are realistic and
attainable. In brief, the goals are to be decided jointly through the participation of all.

3. Joint decision on methodology: MBO focuses special attention on what must be accomplished
(goals) rather than how it is to be accomplished (methods). The superior and the subordinate
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 mutually devise methodology to be followed in the attainment of objectives. They also mutually
set standards and establish norms for evaluating performance.

4. Makes way to attain maximum result: MBO is a systematic and rational technique that allows
management to attain maximum results from available resources by focusing on attainable
goals. It permits lot of freedom to subordinate to make creative decisions on his own. This
motivates subordinates and ensures good performance from them.

5. Support from superior: When the subordinate makes efforts to achieve his goals, superior's
helping hand is always available. The superior acts as a coach and provides his valuable advice
and guidance to the subordinate. This is how MBO facilitates effective communication between
superior and subordinates for achieving the objectives/targets set.

Steps in Management by Objectives Planning: -

1. Goal setting: The first phase in the MBO process is to define the organizational objectives. These
are determined by the top management and usually in consultation with other managers. Once
these goals are established, they should be made known to all the members. In setting
objectives, it is necessary to identify "Key-Result Areas' (KRA).

2. Manager-Subordinate involvement: After the organizational goals are defined, the

subordinates work with the managers to determine their individual goals. In this way, everyone
gets involved in the goal setting.

3. Matching goals and resources: Management must ensure that the subordinates are provided
with necessary tools and materials to achieve these goals. Allocation of resources should also be
done in consultation with the subordinates.

4. Implementation of plan: After objectives are established and resources are allocated, the
subordinates can implement the plan. If any guidance or clarification is required, they can
contact their superiors.

5. Review and appraisal of performance: This step involves periodic review of progress between
manager and the subordinates. Such reviews would determine if the progress is satisfactory or
the subordinate is facing some problems. Performance appraisal at these reviews should be
conducted, based on fair and measurable standards.

Advantages of Management by Objectives MBO: -

1. Develops result-oriented philosophy: MBO is a result-oriented philosophy. It does not favor
management by crisis. Managers are expected to develop specific individual and group goals,
develop appropriate action plans, properly allocate resources and establish control standards. It
provides opportunities and motivation to staff to develop and make positive contribution in
achieving the goals of an Organisation.

2. Formulation of dearer goals: Goal-setting is typically an annual feature. MBO produces goals
that identify desired/expected results. Goals are made verifiable and measurable which
encourage high level of performance. They highlight problem areas and are limited in number.
The meeting is of minds between the superior and the subordinates. Participation encourages
commitment. This facilitates rapid progress of an Organisation. In brief, formulation of realistic
objectives is me benefit of MBO.

3. Facilitates objective appraisal: NIBO provides a basis for evaluating a person's performance
since goals are jointly set by superior and subordinates. The individual is given adequate
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 freedom to appraise his own activities. Individuals are trained to exercise discipline and self-
control. Management by self-control replaces management by domination in the MBO process.
Appraisal becomes more objective and impartial.

4. Raises employee morale: Participative decision-making and two-way communication encourage

the subordinate to communicate freely and honestly. Participation, clearer goals and improved
communication will go a long way in improving morale of employees.

5. Facilitates effective planning: MBO programmes sharpen the planning process in an

Organisation. It compels managers to think of planning by results. Developing action plans,
providing resources for goal attainment and discussing and removing obstacles demand careful
planning. In brief, MBO provides better management and better results.

6. Acts as motivational force: MBO gives an individual or group, opportunity to use imagination
and creativity to accomplish the mission. Managers devote time for planning results. Both
appraiser and appraise are committed to the same objective. Since MBO aims at providing clear
targets and their order of priority, employees are motivated.

7. Facilitates effective control: Continuous monitoring is an essential feature of MBO. This is useful
for achieving better results. Actual performance can be measured against the standards laid
down for measurement of performance and deviations are corrected in time. A clear set of
verifiable goals provides an outstanding guarantee for exercising better control.

8. Facilitates personal leadership: MBO helps individual manager to develop personal leadership
and skills useful for efficient management of activities of a business unit. Such a manager enjoys
better chances to climb promotional ladder than a non-MBO type.

Limitations of Management by Objectives MBO: -

1. Time-consuming: MBO is time-consuming process. Objectives, at all levels of the Organisation,
are set carefully after considering pros and cons which consumes lot of time. The superiors are
required to hold frequent meetings in order to acquaint subordinates with the new system. The
formal, periodic progress and final review sessions also consume time.

2. Reward-punishment approach: MBO is pressure-oriented programme. It is based on reward-

punishment psychology. It tries to indiscriminately force improvement on all employees. At
times, it may penalize the people whose performance remains below the goal. This puts mental
pressure on staff. Reward is provided only for superior performance.

3. Increases paper-work: MBO programmes introduce ocean of paper-work such as training

manuals, newsletters, instruction booklets, questionnaires, performance data and report into
the Organisation. Managers need information feedback, in order to know what is exactly going
on in the Organisation. The employees are expected to fill in a number of forms thus increasing
paper-work. In the words of Howell, "MBO effectiveness is inversely related to the number of
MBO forms.

4. Creates organizational problems: MBO is far from a panacea for all organizational problems.
Often MBO creates more problems than it can solve. An incident of tug-of-war is not
uncommon. The subordinates try to set the lowest possible targets and superior the highest.
When objectives cannot be restricted in number, it leads to obscure priorities and creates a
sense of fear among subordinates. Added to this, the programme is used as a 'whip' to control
employee performance.

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 5. Develops conflicting objectives: Sometimes, an individual's goal may come in conflict with those
of another e.g., marketing manager's goal for high sales turnover may find no support from the
production manager's goal for production with least cost. Under such circumstances, individuals
follow paths that are best in their own interest but which are detrimental to the company.

6. Problem of co-ordination: Considerable difficulties may be encountered while coordinating

objectives of the Organisation with those of the individual and the department. Managers may
face problems of measuring objectives when the objectives are not clear and realistic.

7. Lacks durability: The first few go-arounds of MBO are motivating. Later it tends to become old
hat. The marginal benefits often decrease with each cycle. Moreover, the programme is
deceptively simple. New opportunities are lost because individuals adhere too rigidly to
established goals.

8. Problems related to goal-setting: MBO can function successfully provided measurable

objectives are jointly set and it is agreed upon by all. Problems arise when: (a) verifiable goals
are difficult to set (b) goals are inflexible and rigid (c) goals tend to take precedence over the
people who use it (d) greater emphasis on quantifiable and easily measurable results instead of
important results and (e) over-emphasis on short-term goals at the cost of long-term goals.

9. Lack of appreciation: Lack of appreciation of MBO is observed at different levels of the

Organisation. This may be due to the failure of the top management to communicate the
philosophy of MBO to entire staff and all departments. Similarly, managers may not delegate
adequately to their subordinates or managers may not motivate their subordinates properly.
This creates new difficulties in the execution of MBO programme.

Essential Conditions for Successful Execution / Implementation of MBO

Q. How to Make MBO Effective?

1. Support from all: In order that MBO succeeds, it should get support and co-operation from the
management. MBO must be tailored to the executive's style of managing. No MBO programme
can succeed unless it is fully accepted by the managers. The subordinates should also clearly
understand that MBO is the policy of the Organisation and they have to offer cooperation to
make it successful. It should be a programme of all and not a programme imposed on them.

2. Acceptance of MBO programme by managers: In order to make MBO programme successful, it

is fundamentally important that the managers themselves must mentally accept it as a good or
promising programme. Such acceptances will bring about deep involvement of managers. If
manages are forced to accept NIBO programme, their involvement will remain superfluous at
every stage. The employees will be at the receiving-end. They would mostly accept the lines of
action initiated by the managers.

3. Training of managers: Before the introduction of MBO programme, the managers should be
given adequate training in MBO philosophy. They must be in a position to integrate the
technique with the basic philosophy of the company. It is but important to arrange practice
sessions where performance objectives are evaluated and deviations are checked. The
managers and subordinates are taught to set realistic goals, because they are going to be held
responsible for the results.

4. Organizational commitment: MBO should not be used as a decorative piece. It should be based
on active support, involvement and commitment of managers. MBO presents a challenging task

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 to managers. They must shift their capabilities from planning for work to planning for
accomplishment of specific goals. Koontz rightly observes, "An effective programme of
managing by objective must be woven into an entire pattern and style of managing. It cannot
work as a separate technique standing alone."

5. Allocation of adequate time and resources: A well-conceived MBO programme requires three
to five years of operation before it provides fruitful results. Managers and subordinates should
be so oriented that they do not look forward to MBO for instant solutions. Proper time and
resources should be allocated and persons are properly trained in the philosophy of MBO.

6. Provision of uninterrupted information feedback: Superiors and subordinates should have

regular information available to them as to how well subordinate's goal performance is
progressing. Over and above, regular performance appraisal sessions, counseling and
encouragement to subordinates should be given. Superiors who compliment and encourage
subordinates with pay rise and promotions provide enough motivation for peak performance.

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