PRINCIPLE OF MANAGEMENT UNIT ~ I: Management Management is a universal phenomenon, It is a very popular and widely used term, All organizations - business, political, cultural or social are involved in management because it is the management which helps and directs the various efforts towards a definite purpose. Management is required in all kinds of organisations whether they are manufacturing computers or handlooms, trading in consumer goods or providing saloon services and even in non-business organisations. No matter what the organisation is or what its goals might be, they all have something in common ~ management and managers. Successful organisations achieve their goals by following a deliberate process called ‘management. Management consists of a series of interrelated functions that are performed by all managers. In simple words Management is the art of getting things done through people. Management is a purposive activity. It is something that directs group efforts towards the attainment of certain pre - determined goals. It is the process of working with and through others to effectively achieve the goals of the organization, by efficiently using limited resources in the changing world. Of course, these goals may vary from one enterprise to another. E.g.: For one enterprise it may be launching of new products by conducting market surveys and for other it may be profit maximization by minimizing cost. Management involves cresting an internal environment: - It is the management which puts into use the various factors of production. Therefore, itis the responsibility of management to create such conditions which are conducive to maximum efforts so that people are able to perform their task efficiently and effectively. It includes ensuring availability of raw materials, determination of wages and salaries, formulation of rules & regulations ete. Some of the common definition of management given by famous writers and thinkers are: © According to Harold Koontz and Heinz Weihrich, Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims * According to Robert I.. Trewelly and M. Gene Newport, Menagement is defined as the process of planning, organising, actuating and controlling an organisation’s operations in order to achieve coordination of the human and material resources essential in the effective and efficient attainment of objectives.According to F.W. Taylor, “Management is an art of knowing what to do, when to do and see that it is done in the best and cheapest way”. According to Kreitner, “Management is the process of working with and through others to effectively achieve organisational objectives by efficiently using limited resources in the changing envirenment, According to Georze R Terry. Management consists of planning, organising, actuating and controlling, performed to determine and accomplish the objectives by the use of people and resources. So Management can be defined as a process of getting things done with the aim of achieving goals effectively and efficiently. Some important terms in this definition are: Process: Process means the primary functions or activities that management performs to get things done. These functions are planning, organising, staffing, directing and controlling. Effectiveness: Effectiveness is concerned with the end result, It basically means finishing, the given task. Thus Effectiveness in management is concerned with doing the right task, completing activities and achieving goals. Efficient: Efficiency means doing the task comeetly and with minimum cost. Management is concerned with the efficient use of input resources which ultimately reduce costs and lead to higher profits. It is important for management to achieve goals (effectiveness) with minimum resources i.e., as efficiently as possible while maintaining a balance between effectiveness and efficieney.Management as Science or Art Management as a Science: Science is a systematic body of knowledge pertaining to a specific field of study that contains general facts which explains a phenomenon. It establishes cause and effect relationship between ‘two or more variables and underlines the principles governing their relationship. These principles are developed through scientific method of observation and verification through testing, Science is characterized by following main features Universally acceptance principles - Scientific principles represents basic truth about a particular field of enquiry. These principles may be applied ir all situations, at all time & at lll places. E.g. - law of gravitation which can be applied in all countries irrespective of the time. ‘Management also contains some fundamental principles which can be applied universally like the Principle of Unity of Command ic. one man, one boss. This principle is applicable to all type of organization - business or non business. Experimentation & Observation - Scientific principles are derived through scienti investigation & researching i. they are based on logic. E.g. the principle that earth goes round the sun has been scientifically proved. Management principles are also based on scientific enquiry & observation. They have been developed through experiments & practical experiences of large no. of managers. E.g. it is observed that fair remuneration to personal helps in erating a satisfied work force. Cause & Effect Relationship - Principles of science lay down cause and effect relationship between various variables. E.g. when metals are heated, they are expanded. ‘The cause is heating & result is expansion The same is true for management; therefore it also establishes cause and effect relationship. E.g. lack of parity (balance) between authority & responsibility will lead to ineffectiveness. If you know the cause i.e. lack of balance, the effect can be ascertained easily i.e. in effectiveness. Similarly if workers are given benuses, fair wages they will work hard but when not treated in fair and just manner, reduces productivity of organization. Test of Validity & Predictability - Validity of scientific principles can be tested at any time or any number of times i.e. they stand the test of time Each time these tests willgive same result, Moreover future events can be predicted with reasonable accuracy by using scientific principles. E.g. H2 & 02 will always give H20.\ Principles of management zan also be tested for validity. E.g. principle of unity of command can be tested by comparing two persons - one having single boss and one having 2 bosses. The performance of Ist person will be better than 2nd. It cannot be denied that management has a systematic body of knowledge but itis not as exact as that of other physical scierces like biology, physics, and chemistry ete. The main reason for the inexactess of science of management is that it deals with human beings and it is very difficult to predict their behavior accurately. Since it isa social process, therefore it falls in the area of social sciences, It is a flexible science & that is why its theories and prine’ples may produce different results at different times and therefore it is a behavior science. Ernest Dale has called it as a Soft Science. Management as an Art: Art implies application of knowledge & skill to trying about desi-ed results. An art may be defined as personalized application of general theoretical principles for achieving best possible results. Art has the following characters ~ * Practical Knowledge: Every art requires practical knowledge therefore learning of theory is not sufficient. [t is very important to know practical application of theoretical principles. E.g. to become a good painter, the person may not only be knowing different colour and brushes but different designs, dimensions, situations ete to use them appropriately. A manager can never be successful just by obtaining degree or diploma in ‘management; he must have also know how to apply various principles in real situations by functioning in capacity of manager. © Personal Skill: Altkough theoretical base may be same for every artist, but each one has his own style and approach towards his job. That is why the level of success and quality of performance di‘fers from one person to another. E.g. there are several qualified painters but M.P. Hussain is recognized for his style. Similarly management as an art is also personalized. Every manager has his own way of managing things based on his knowledge, experience and personality, that is why some managers are known as good managers (like Aditya Birla, Rahul Bajaj) whereas others as bad. © Creativity: Every artist has an element of creativity in line. That is why he aims at producing something that has never existed before which requires combination of intelligence & imagination, Management is also creative in nature like any other art. It combines human and non-human resources in useful way so as to achieve desired results It tries to produce sweet music by combining chords in an efficient manner.© Perfection through practice: Practice makes a man perfect. Every artist becomes more and more proficient through constant practice. Similarly managers learn through an art of trial and error initially but application of management principles over the years makes them perfect in the job of managing. + Goal-Oriented: Every art is result oriented as it secks to achieve concrete results. In the same manner, management is also directed towards accomplishment of pre-determined goals. Managers use various resources like men, money, material, machinery & methods to promote growth of an organization. Thus, we can say that management is an art therefore it requires application of certain principles rather it 1s an crt of highest order because it deals with moulding the attitude and behavior of people at work towards desired goals, Management as both Science and Art: Management 1s both an art and a science. Lhe above mentioned points clearly reveals that management combines features of both science as well as art. It is considered as a science because it has an organizec body of knowledge which contains certain universal truth, It is called an art because managing requires certain skills which are personal possessions of managers. Science provides the knowledge & art deals with the application of knowledge and skills. A manager to be successful in his profession must acquire the knowledge of science & the art of applying it. Therefore management is a judicious blend of science as well as an art because it proves the principles and the way these principles are applied is a matter of art. Science teaches to *know” and art teaches to “do’. E.g. a person cannot become a good singer unless he has knowledge about various ragas & he also applies his personal skill in the art of singing. Same way it is net sufficient for manager to first know the principles but he must also apply them in solving various managerial problems that 1s why, science and art are not mutually exclusive but they are complementary to each other (like tea and biscuit, bread and butter etc.). The old saying that “Manager are Born” has been rejected in favor of “Managers are Made”. It has been aptly remarked that management is the oldest of art and youngest of science. 10 conclude, we can say that science 1s the root and artis the frurt.1.2 MANAGER Vs ENTREPRENEUR The terms entrepreneur and manager are considered one and the same. But the two terms have different meanings. Manager is a person who is responsible for performing the functions of management such as planning, organizing and directing the group towards the goals of management. Entrepreneur is also a person who starts the business and utilizes the resources of men, money, materials and machines. The difference between entrepreneur and manager is given in the flowing Table. SLNo. | Criteria 1 Motive Entrepreneur The main motive of an entrepreneur is to start a venture by setting up an enterprise. He understands the venture for his personal gratification. Manager But, the main motive of a manager is to render his services in an enterprise already set up by someone else ie,, entrepreneur. 2 | Status ‘An entrepreneur is the owner of the enterprise A menager is the servant in the enterprise owned by the entrepreneur. 3 Risk Bearing ‘An entrepreneur being the owner of the enterprise all and assumes. risks uncertainty involved in running the enterprise. A manager as a servant does not bear any risk involved in the enterprise. 4 | Rewards The reward an entrepreneur gets for bearing risks involved in the enterprise is profit which is highly A manager gets salary as reward for the services rendered by him in the enterprise. Salary of a PRINCIPLES OF MANAGEMENTuncertain. manager is certain and fixed. 5 | Innovation Entrepreneur himself) But, what a manager does is thinks over what and how | simply to execute the plans to produce goods to meet | prepared by the entrepreneur. the changing demands of) Thus, a manager simply the customers, Hence, he) translates the entrepreneur’s acts as an innovator also | ideas into practice. called a ‘change agent” 6 | Qualification s Aa] EREpTSOSTPSTECUSSEO RENN NStedity, @ manager possess qualities and| needs to possess distinct qualifigations like high| qualifications in| terms of achievement motive, origi-| sound knowledge in nity \. in ~~ thinkg, \mbtageman@yfeory and foresight," risk -bearing| practice ability and so on. | 1.2.1 Manager A manager is someone whose primary activities are a part of the management process. In particular, a manager is someone who plans, organizes, leads, and controls human, financial, physical, and information resources." The success or failure of an organization depends heavily on the ability of its managers to perform these tasks effectively. Managers can be classified in two ways: by their leve’ within the organization and by the scope of their responsibilities. PRINCIPLES OF MANAGEMENTTypes of Managers 0} ana 0) | Top managers are basically the; General managers Board of directors | presidents /voice presidents | C.E.Os & C.ROs Functions They determine objectives for their organizations(setting a goals) Making plans and polices for achieving that goals Assembling all the recourses such as money and fixed assets etc. Comparing the organizational environment with the with outside world To create a +ve organizational culture by language & by actions . They are not answerable to any one in the organizationI {Middle Manager) Middle tovel Managensent These are the heads of departments of an organizations such as * He is answerable to the top manager « Functions:Managerial Roles For better understanding, Mintzberg categorized all activities into ten managerial roles performed over the course of a day, These are as follows: Interpersonal Informational Decisional Roles Roles Roles ae cae tla Poneto erro Sees anny Interpersonal Roles ‘+ Figurehead — includes symbolic duties which are legal or social in nature. ‘+ Leader — includes all aspects of being a good leader. This involves building a team, coaching the members, motivating them, and developing strong relationships. © Liaison — includes developing and maintaining a network outside the office for information and assistance. Informational Roles ‘+ Monitor — includes seeking information regarding the issues that are affecting the organization, Also, this includes internal as well as extemal information, © Disseminator— On receiving any important information from internal or external sources, the same needs to be disseminated or transmitted within the organization, + Spokesperson ~ includes representing the organization and providing information about the orgenization to outsidersDecisional Roles + Entrepreneur — involves all aspects associated with acting as an initiator, designer, and also an ercourager of innovation and change. + Disturbance sandler — taking corrective action when the organization faces unexpected difficulttes which are important in nature. © Resource Allecator— being responsible for the optimumallocation of resources like time, equipment, funds, and also human resources, ete + Negotiator — includes representing the organization in negotiations which affect the manager’s scope of responsibility. What are Management Skills Management skills can b: defined as certain attributes or abilities that an executive should possess in order to fulfill specific tasks in an organization. They include the capacity to perform executive duties in an organization while avoiding crisis situations and promptly solving problems when they occur. Management skills can be developed through learning and practical experience as a manager. The skills help the manager to relate with their fellow co-workers and know how to deal well with their subordinates, which allows for the easy flow of activities in the organization Good management skills are vital for any organization to succeed and achieve its goals and objectives. A manager who fosters good management skills is able to propel the company’s mission and vision or business goals forward with fewer hurdles and objections from internal and external sources. Management and leadership skills are often used interchangeasly as they both involve planning, decision-making, problem-solving, communication, delegation, and time ‘management. Good managers are almost always good leaders as well. In addition to leading, a critical role of a manager is to also ensure that all parts of the organization are functioning cohesively. Without such integration, several issues can arise and failure is bound to happen. Management skills are crucial for various positions and at different levels of a company, from top leadership to intermediate supervisors to first-level managers. ‘Types of Management Ski According to American social and organizational psychologist Robert Katz, the three basic types of management skil's include;(oN (MANAGEMENT sKIUS —=—_Z 1. Technical Skills Technical skills involve skills that give the managers the ability and the knowledge to use a variety of techniques to achieve their objectives. These skills not only involve operating machines and software, production tools, and pieces of equipment tut also the skills needed to boost sales, design different types of products and services, and market the services and the products. Conceptual Skills These involve the skills managers present in terms of the knowledge and ability for abstract thinking and formulating ideas. The manager is able to see an entire concept, analyze and diagnose a problem, and find creative solutions. This helps the manager to effectively predict hurdles their department or the business as a whole may face. 3. Human or Interpersonal Skills The human or the interpersonal skills are the skills that present the managers’ ability to interact, work or relate effectively with people. These skills enable the managers to make use of human potential in the company and motivate the employees for better results.Types of Business Organization An organization engaged in some commercial activity or business with the motive of earni profit is known as a business enterprise. I? an individual or a group of individuals plans to start a new business or expand its existing business, selecting the right form of business organization is essential for them. There are five different forms of business organization from which one can select the best option for them. These are Sole Proprietorship, Joint Hindu Family Business, Partnership, Cooperative Societies and Jcint Stock Companies. Sole Proprietorship A popular form of busiress organization in which the business is owned, managed, and controlled by an individual is known as a sole proprietorship. This individual is the recipient of every profit and loss of the business and bears every risk coming to the business. Here, the word sole means only and proprietor means owner; hence, the only owner of the business. Usually, businesses with sersonalized services like hair salons, beauty parlours, retail shops, ete., run under sole proprietorship. In this form of business, the cwner is not separate from the business; hence, no separate legal entity. Besides, the owner does not have to perform any legal formality and can start the business whenever they want. Joint Hindu Family Business A form of business organization found only in India in which te business is owned and carried on by the HUF(Hindu Undivided Family) members is known as Joint Hindu Family Business. It is one of the cldest forms of business organization in India. This form is governed by the ‘Hindu Law’. The eldest member and head of the family, also known as “Karta,” controls the business. Membership in this form of business organization is based on the birth: in a specific family. The three successive members of the family can be the members of the business. Every member of the business have equal right and ownership over their ancestor’s property, and these members are known as ‘co-parceners.” The two conditions for the existence of a Joint Hinds Family Business are: there must be some ancestral property, and a minimum of two male members must be in the family. Partnership The most crucial disadvantage of a sole proprietorship is the lack of enough financing in the business, which is resolved in this form of business organization. According to the Indian Partnership Act, 1932, a partnership is a form of business organization in which there is a relation between two or more people with an agreement to share the firm’s profits carried on by every partner or any one of the partners acting for all. It solves :he need to acquire greater capital investment, risk-sharing, and a variety of skills in the business, which is not available in Sole Proprietorship and Joint Hindu Family Business. The mirimum number of partners required in a partnership firm is two. There are different types of partners and partnerships in this form of business organization. Cooperative Society A voluntary association of people joining together with the main objective of members’ welfare is known as a cooperative society. As the name suggests, people in this form of business organization work together and with other people for the accomplishment of acommon purpose. The pewer to make decisions in a Cooperative Society is in the hands of an elected managing committee. The Cooperative Societies Act, of 1912 states that it is compulsory to register a Cooperative Society. Setting up and forming this form of business organization requires the consent of at-least ten adult people. The capital for the business is raised by its members through the issue of shares. Afier the registration of the Cooperative Society is complete, it acquires a separate legal identity in the market. There are different types of cooperative societies categorized on the basis of their nature of operations. Joint Stock Company An association of different individuals formed to carry out business activities is known as a joint stock company. This form of organization has an independent legal status from its members. Basically, a joint stock company is an artificial individual with a separate legal entity, common seal and perpetual succession. The Joint Stock Company form of organization is governed by the Companies Act, 2013. The shareholders of the company are its owners; however, the Board of Directors is elected by the shereholders and is the chief ‘managing body of the company. Usually, the sharcholders or the owners of the company have indirect control over its operations. A company can be either private or a public company. Private and Public Enterprise All types of business regardless of its being large or small, manufacturing or trading, privately or government-owned exists in India and across the globe that affects a country’s economy. Indian economy is an amalgamation of both private and government business enterprises, popularly known as the mixed economy. Therefore, the economy is further classified into the private and public sectors Private Enterprise- The private sector or enterprise are the businesses that are owned by a private group or an. individual, Different types of businesses under private enterprises are a partnership, sole proprietorship, cooperative, and company. + It refers to the business enterprises which are owned, managed and controlled by an individual or a group of individuals. + The government cannot interfere in the functions of private enterprises as it has no control over it. + Ibis that type of business units which are carried on with the motive of earning profits. + Itcan be small in size or large in size. + Example: /CICI Bank Limited, ITC Limited, HDFC Bank Limited, Wipro etc. Public Enterprise- The sector or enterprises are the businesses that are owned and controlled by the goverment. Here, a company can be partially or completely managed by the central or state government and participate in many economic activities of a nation.+ The public sector consists of various organizations owned and managed by the government. + These organizations may be either partly or wholly owned by the central or state government. + The government ean participate in economic activities through these enterprises of the country. + The forms of organization which a public enterprise may take are as follows: © Departmental undertaking © Statutory corporation © Government company Difference between the private and public sector enterprises- BASIS (1) Objective (2)0wnership (3)Management (4)Capital (5)Area of Operation PRIVATE SECTOR ENTERPRISES Profit maximization Owned by an individual or a group of individuals Managed or run by owners, partners, the board of directors, etc. Arranged by owners, partners, Karta, and shareholders. Operates in all areas with the exception of national security with sufficient return on investment. PUBLIC SECTOR ENTERPRISES Social welfare Owned by Central Government, State Government or by local authorities. Managed by the Central Government or State Government or both. Arranged by Central Government or State Government or General Public. Operates in basic and public utility sectors.