Management for Engineers

Instructor: Dr. Nelwin Raj N. R.

Preamble
• This course is intended to help the students to learn the basic
concepts and functions of management and its role in the
performance of an organization and to understand various decision-
making approaches available for managers to achieve excellence.
Learners shall have a broad view of different functional areas of
management like operations, human resource, finance and marketing.
Course Objectives
• Co1: Explain the characteristics of management in the contemporary
context (Cognitive Knowledge level: Understand).
• Co2: Describe the functions of management (Cognitive Knowledge level:
Understand).
• Co3: Demonstrate ability in decision making process and productivity
analysis (Cognitive Knowledge level: Understand).
• Co4: Illustrate project management technique and develop a project
schedule (Cognitive Knowledge level: Apply).
• Co5: Summarize the functional areas of management (Cognitive
Knowledge level: Understand).
• Co6: Comprehend the concept of entrepreneurship and create business
plans (Cognitive Knowledge level: Understand).
Syllabus (Module 1 – Introduction to
Management Theory)
• Introduction to management theory, Management Defined,
Characteristic of Management, Management as an art-
profession, System approaches to Management, Task and
Responsibilities of a professional Manager, Levels of
Manager and Skill required.
Syllabus (Module 2 – Management and
Organization)
• Management Process, Planning types , Mission, Goals,
Strategy, Programmes, Procedures, Organising, Principles of
Organisation, Delegation, Span of Control, Organisation
Structures, Directing, Leadership, Motivation, Controlling.
Syllabus (Module 3 – Productivity and
Organization)
• Concept of productivity and its measurement;
Competitiveness; Decision making process; decision making
under certainty, risk and uncertainty; Decision trees; Models
of decision making.
Syllabus (Module 4 – Project Management)
• Project Management, Network construction, Arrow diagram,
Redundancy. CPM and PERT Networks, Scheduling
computations, PERT time estimates, Probability of
completion of project, Introduction to crashing.
Syllabus (Module 5 – Functional Areas of
Management)
• Introduction to functional areas of management, Operations
management, Human resources management, Marketing
management, Financial management, Entrepreneurship,
Business plans, Corporate social responsibility, Patents and
Intellectual property rights.
Text Books:
•1. H. Koontz, and H. Weihrich, Essentials of Management: An International Perspective. 8th
ed., McGraw-Hill, 2009.
•2. P C Tripathi and P N Reddy, Principles of management, TMH, 4th edition, 2008.
•3. P. Kotler, K. L. Keller, A. Koshy, and M. Jha, Marketing Management: A South Asian
Perspective. 14th ed., Pearson, 2012.
•4. M. Y. Khan, and P. K. Jain, Financial Management, Tata-McGraw Hill, 2008.
•5. R. D. Hisrich, and M. P. Peters, Entrepreneurship: Strategy, Developing, and Managing a
New Enterprise, 4th ed., McGraw-Hill Education, 1997.
•6. D. J. Sumanth, Productivity Engineering and Management, McGraw-Hill Education,
1985.
•7. K.Ashwathappa, ‘Human Resources and Personnel Management’, TMH, 3 rd edition,
2005.
•8. R. B. Chase, Ravi Shankar and F. R. Jacobs, Operations and Supply Chain Management,
14th ed. McGraw Hill Education (India), 2015.
Syllabus (Module 1 – Introduction to
Management Theory)
• Introduction to management theory, Management Defined,
Characteristic of Management, Management as an art-
profession, System approaches to Management, Task and
Responsibilities of a professional Manager, Levels of
Manager and Skill required.
Introduction to Management
 Engineering Management
• Engineering - Technical excellence and social compatibility in
workplace are both important.
• Management - Broad knowledge and interest, managerial
perspective, training (lead, organize, plan and control) and
aptitude to manage are success factors.
• Engineering Management - Insight to use technologies for
creating business benefits.
 Definitions
• “Management is the art of getting things done by other
people” (Mary Parker Follett, 1941)
• “Management is an art of getting things done through
and with people in formally organized groups” (Harold
Koontz)
• “Management is the art of directing and inspiring
people” (J. D. Mooney and A.C. Railey)
 Definitions
• “To manage is to forecast , to plan, to organize, to co-ordinate and to
control” (Henry Fayol)
• “Management is principally the task of planning, coordinating,
motivating and controlling the efforts of others towards a specific
objective” (James L. Lundy)
• It is the art and science of organizing and directing human efforts
applied to control forces and utilize the material of nature for the
benefit of mankind (ASME)
• The process of optimising human, material and financial contributions
for achievement of organizational goals. (Pearce and Robinson, 1989).
 Definitions
• “Management is a multipurpose organ that manages
a business and manages manager , and manages
worker and work” (Peter Drucker)
• “Management is knowing exactly what you want
men do, and then seeing that they do it in the best
and cheapest way.” (FW Taylor)
 Defining Management
• The above definitions are not universally accepted
definitions as it fails to address
• The functions of manager
• Ignores scientific aspect of management
• Ignores human aspect and treats people as merely means of getting things done.
• The role of internal and external environment is ignored.
• “Management is the process of planning, organizing,
directing and controlling activities of and using resources
of an organization for accomplishing the organizational
goals efficiently and effectively in an ever changing
environment”
CHARACTERISTICS /FEATURES OF MANAGEMENT
• Management is Multidisciplinary discipline
• Management is a factor of production – 5 Ms in management as
factor of production
• Men
• Material
• Money
• Methods
• Machines
• Management is a social process – CSR
• Management is a dynamic function
• Management is situational
• Management is an Intangible force
CHARACTERISTICS /FEATURES OF MANAGEMENT
• Management is an activity/process
• Management is action based and achievement oriented
• Management involves achieving results through the efforts
of others
• Management is a group activity
• Management has no substitute
• Management is all pervasive
• Management is an art , science as well as a profession
 CHARACTERISTICS OF MANAGEMENT
• Management is an environment oriented
activity. Top
• Management is optimally utilizing the Executives
resources
• Management aims at co-ordination of activities
• Management follows certain principles Middle-Level
Managers
{delegation of authority, centralization of
authority, decentralization of authority}
• Management is innovative [techniques are First-Level
flexible, dynamic and innovative] Managers
• Management has different operational levels
 Art Vs Science
Art Science

Based on practice and Based on experimentation

creativity
It is theoretical body of Is a systematized body of
knowledge knowledge
Has personalized application Has universal application
 Management as Science
• Systematic body of knowledge: Science is organised and systematic
study material is available which is used to acquire the knowledge of
science. Like science in management also there is availability of
systematic and organised study material.
• Scientific principles are derived on the basis of logical and
scientific observations: The scientists perform logical observation
before deriving any principle or theory. They are very objective
while doing the observations. But when managers are observing
they have to observe human beings and observation of human
being cannot be purely logical and objective.
 Management as Science
• Principles are based on repeated experiments: Before developing
scientific principles scientists test these principles under different
conditions and places. Similarly, managers also test and experiment
managerial principles under different conditions in different
organisations.
• Universal Validity: Scientific principles have universal application
and validity. Management principles are not exact like scientific
principles so their application and use is not universal. They have to
be modified according to the given situation. So this feature of
science is not present in management.
 Management as Science

Replication is possible: In science replication is possible

as when two scientists are undertaking the same
investigation working independently and treating the
same data under the same conditions may desire or
obtain the identical or exactly same result.
 Management as an Art
• Systematic body of knowledge/Existence of theoretical
knowledge: In every art there is systematic and organized study
material available to acquire theoretical knowledge of the art. In
management also there is systematic and organised body of
knowledge available which can help in acquiring managerial
studies.
• Personalised application: Every artist must have personal skill and
creativity to apply that knowledge. In management also all
managers learn same management theories and principles.
 Management as an Art
• Based on Practice and creativity: The artist requires
regular practice of art to become more fine and perfect.
Without practice artists lose their perfection. Art requires
creative practice, i.e., artist must add his creativity to the
theoretical knowledge he has learned. Same way with
experience managers also improves their managerial
skills and efficiency.
 Management as a Profession
• Well defined body of knowledge/specialized knowledge:
Management has well defined body of knowledge as in
profession.
• Formal Education and Training/Restrict entry: Management
has restricted entry through an examination or degree as in
profession.
• Presence of professional associations/ Representative
Association: All profession has some associations affiliated to
it and even management has association affiliated to it.
 Management as a Profession
• Existence of ethical code/Code of Conduct: For every
profession there are some set of ethical codes fixed by
the profession association. Management also has some
ethical codes fixed by the concerned professional
association.
• Social Obligations/ Service Motive: Management has
some service motive as in a profession. A manager is
responsible not only to its owners but also to the society
and therefore he is expected to provide quality goods at
reasonable prices to the society.
Levels of Managers and Skill Required
 Levels of Management
Administrative, Managerial/Top-Level
Mangers: are responsible for controlling and
overseeing the entire organization.

Executive/ Middle-Level Managers: are responsible for execu

organizational plans which comply with the company’s polic
They act as an intermediary between top-level and low-lev
management.

Supervisory, Operative/
First-Level Managers

© Prentice Hall, 2002

 Administrative, Managerial, or Top Level of
Management
• The ultimate source of power and authority, since it oversees
the goals, policies, and procedures of a company.
• Their main priority is on the strategic planning and execution of
the overall business success.
• Laying down the objectives and broad policies of the business
enterprise.
• Issuing necessary instructions for the preparation of
department-specific budgets, schedules, procedures, etc.
 Administrative, Managerial, or Top Level of
Management
• Preparing strategic plans and policies for the organization.
• Appointing the executives for middle-level management, i.e.
departmental managers.
• Establishing controls of all organizational departments.
• Since it consists of the Board of Directors, the top management
level is also responsible for communicating with the
outside world and is held accountable towards an organization’s
shareholders for the performance of the enterprise.
• Providing overall guidance, direction, and encouraging harmony
and collaboration.
 Executive/ Middle-Level Managers
• The branch and departmental managers form this middle
management level.
• These people are directly accountable to top management
for the functioning of their respective departments,
devoting more time to organizational and directional
functions.
• For smaller organizations, there is often only one layer of
middle management, but larger enterprises can see senior
and junior levels within this middle section.
 Executive/ Middle-Level Managers
• Executing the plans of the organization in accordance with the
policies and directives laid out by the top management level.
• Forming plans for the sub-units of the organization that they
supervise.
• Participating in the hiring and training processes of lower-level
management.
• Interpreting and explaining the policies from top-level
management to lower-level management.
 Executive/ Middle-Level Managers
• Sending reports and data to top management in a timely
and efficient manner.
• Evaluating the performance of junior managers.
• Inspiring lower level managers towards improving their
performance.
 Supervisory, Operative/ First-Level Managers
• consists of supervisors, foremen, section officers,
superintendents, and all other executives whose work must do
largely with HR oversight and the direction of operative employees.
• managers at the lower level are primarily concerned with the
execution and coordination of day-to-day workflow that ensure
completion of projects and that deliverables are met.
 Supervisory, Operative/ First-Level Managers
• Assigning jobs and tasks to various workers.
• Guiding and instructing workers in day-to-day activities.
• Overseeing both the quality and quantity of production.
• Maintaining good relations within lower levels of the organization.
• Acting as mediators by communicating the problems, suggestions,
and recommendatory appeals, etc. of workers to the higher level of
management, and in turn elucidating higher-level goals and
objectives to workers.
 Supervisory, Operative/ First-Level Managers
• Helping to address and resolve the grievances of workers.
• Supervising and guiding their subordinates.
• Taking part in the hiring and training processes of their workers.
• Arranging the necessary materials, machines, tools, and resources, etc.
necessary for accomplishing organizational tasks.
• Preparing periodical reports regarding the performance of the
workers.
• Upholding discipline, decorum, and harmony within the workplace.
• Improving the enterprise’s image as a whole, due to their direct contact
with the workers.
Classical Management Theories
History of the Era
Industrial Age
- Migration to cities
- Reliance on electricity and
gasoline
- Changes both on the farm and in
factories
- Autos, airplanes, movies, and
radio became common
 Classical Management Theories
• Classical Management Theories: Oldest Management theories and Give
importance on achieving the organizational goals.
• Scientific Management Theory (Fredric Taylor): Everything in the
organization is a question for scientific investigation. Focus on increase
productivity.
• Micro level approach
• Administration Management Theory (Henry Fayol): focus on managing the
entire organization instead of managing the individual. According to this
“Getting things done by the people and through the people”.
• Managerial level approach
• The Bureaucratic Theory (Max Weber): Bureaucracy means certain
characteristics of the organization.
• Big Picture level approach
 Prior to Scientific Management
• Owner, manager, sales, and front office personnel had little direct
contact with production activity.
• A “superintendent” was responsible for all planning and staff
functions.
• Worked with “journeyman” mechanics to try to schedule production.
No recognized staff functions.
• Work methods were determined by individual mechanics based on
personal experience, preference, and what tools were available for
the job. “Rule of Thumb”
 Scientific Management Theory
• Frederick Winslow Taylor (20 March 1856-21 March 1915), widely known as F. W.
Taylor, was an American mechanical engineer who sought to improve industrial
efficiency.
• Started as an apprentice pattern maker and machinist in 1875
• Joined Midvale steel company in Philadelphia as machinist in 1878
• Rose to chief engineer in the same company after earning degree in engineering
• Known as “The Father of Scientific Management”
• His experience as apprentice, common laborer, foreman, master mechanic
and chief engineer of the same company helped to know the problems and
to see the great possibility for improving the quality of management.
 SCIENTIFIC MANAGEMENT
• The systematic study of relationships between people
and tasks for the purpose of redesigning the work
process to increase efficiency.
• It is the art of knowing what exactly you want from
your men to do & then seeing that it is done in best
possible manner.
• In simple words it is just an application of science to
management.
 Taylor’s view about management.
• Taylor believed that the industrial management of his day was
amateurish, that management could be formulated as an academic
discipline.
• Best results would come from the partnership between trained and
qualified management and a cooperative and innovative workforce.
• Each side needed the other and there is no need for trade unions.
 Taylor’s principles of management

The following are the Taylor’s Principles of Scientific Management

1.Science, not rule of thumb
2.Harmony, not discord
3.Co-operation, not individualism
4.Maximum output, not restricted output
5.Specialization, not generalization
6.Scientific selection, training and development of persons, not on
personal judgement
Taylor’s principles of management - Science, not
rule of thumb
• In scientific methods to improve industrial efficiency through higher
productivity, Taylor identified the following conditions and methods for this
purpose.
• Standardization of working conditions: Providing good working conditions:
Adequate lighting, best temperature and humidity, provision for seating, cleanliness,
ventilation, Noise control etc.
• Standardization of working methods: Analyze the work on scientific basis and
determining the best possible method for doing a job. Taylor invented motion study
technique. This study of scientific techniques eliminated the human wasted effort.
• Establishing the standard of performance: Taylor found out the production time of
each job by breaking a job into elements. Time study techniques were used for this
purpose and standard time for a job was fixed. This was used to plan the daily work
of each worker.
 Taylor’s principles of management
• Harmony not discord: Taylor said that the employer and
employee should have friendly relations (harmony) among
themselves. There should be no difference in opinion and
dispute/discord. The interest of employer and employees
should be same.
• Co-operation, not individualism: Taylor suggested that hearty
co-operation between the management and the worker
should be essential. The personnel should not always think
their own interests and should not be selfish. General interest
was more important than self interest.
 Taylor’s principles of management
• Maximum output, not restricted output: Taylor said that
workers must be encouraged for higher production by
giving incentive or higher wages. For this he introduced
“Differential piece rate system”. The workers produced
above the standard level were paid high piece rate and
those produced below standard level were paid a lower
piece rate.
 Taylor’s principles of management
• Specialization, not generalization: Taylor said that the
workers must be relieved from mental activities. He separated
mental activity from physical activity. Mental activities were
carried out by the office people where as physical activities
were carried out by the office people where as physical
activities were carried out by the people inside the factory.
Taylor evolved functional organization structure.
 Taylor’s principles of management

• Scientific selection, training and development of persons, not

a personal judgment: Taylor said that selection of workers
should done scientifically. Right person should be selected for
the right job. Taylor suggested that the workers should be
given proper training before doing a job in order to increase
the productivity. Promotions should be given for productive
labors.
 Administration Management Theory
• Henri Fayol (29 July 1841 – 19 November 1925), graduated as a mining
engineer in 1860. He published a book “General and Industrial
Administration”
• Joined as an engineer in mining company France.
• He was appointed as General manager of that company. At that time company’s
financial position was critical and the loss was more.
• Before his retirement in 1918, he developed company into a prosperous and one of
the most famous coal mines in France.
Administration Management Theory (Henri Fayol)
• It is the process of managing information through people
• Administrative management focused on management process and principles of
the entire organization.
• Fayol found that activities of an industrial organization can be divided into 6
groups:
• Technical: production, manufacturing
• Commercial: Buying, selling
• Financial: search for capital and its optimum use.
• Security: protection of property and person
• Accounting: balance sheets etc.
• Managerial: Planning, organizing etc.
• He pointed out that these activities exist in business of every size.
Administration Management Theory (Henri Fayol)
• Approach of studying management is divided into three parts
I. Managerial qualities and training: Manager requires these 6 types of
qualities
1. Physical (health, vigour)
2. Mental (position to make right judgement)
3. Moral (loyal, dignity)
4. Educational (awareness)
5. Technical (peculiar to the function being performed)
6. Experience (araising from work)
• Fayol Observed that the most important ability for a worker is a
technical
• The importance of managerial ability increases as one goes up the
Administration Management Theory (Henri Fayol)
II. General principles of management:

• The list of management principles is not exhaustive but

suggestive
• Principles of management are not rigid but flexible.
• Fayol has given 14 principles of management
Administration Management Theory (Henri Fayol)
14 principles of management
1. Division of work: This principle leads to specialization in any field
of activity. If a worker concentrates his efforts on a particular task,
he will become more skilled in that activity. It increases
productivity, quantity and quality of output. It got some
disadvantages.
1. Worker suffers boredom because of repetition of the same type of work.
2. Difficult to reschedule if any worker is absent.
Administration Management Theory (Henri Fayol)
14 principles of management
2. Authority and responsibility:
• Authority is the power given to a person to extract work from his
subordinates. Responsibility is the obligation of a person to perform his
duties towards a job.
• Authority may be delegated whereas responsibility cannot be delegated.
• People often seek authority but not responsibility.
• The fear of responsibility spoils initiative and destroys other good qualities.
• Authority without responsibility and responsibility without authority are the
major defects of any organization.
• Management should clearly arrange and distribute the Authority and
Responsibility.
Administration Management Theory (Henri Fayol)
14 principles of management
3. Discipline:
• Discipline is respect of agreements, sincere effort for completing a
given task and outward marks of respect.
• To maintain discipline requires
• Good supervisors at all levels.
• Clear and fair agreements
• Judicial application of penalty
• Effective communication
Administration Management Theory (Henri Fayol)
14 principles of management
4. Unity of Command:
• For any action, an employee must receive orders and instructions
from the supervisor only.
• Multiple commands will cause confusions and conflicts.
• Sound management should avoid dual commands.
Administration Management Theory (Henri Fayol)
14 principles of management
5. Unity of direction:
• There should be one head and one plan for each group of activities
having the same objectives.
• All the groups work together to achieve the common goal.
• Unity of command cannot function without unity of direction.
Administration Management Theory (Henri Fayol)
14 principles of management
6. Subordination of individual interest to general interest:
• An employee’s interest is to earn money to meet his personal needs where
organization interest is to maximize the production and develop the
business. The interest of organization is more important than the interest of
an employee.
• It is necessary to maintain unity and to avoid friction among the employees.
Therefore, supervisors should set the following to others to maintain general
interest.
• Fair agreements
• Effective supervision
• Good example
Administration Management Theory (Henri Fayol)
14 principles of management

7. Remuneration of personnel:
• Remuneration is the money paid to the employees for their
physical and mental efforts in carrying out a work.
• It should be fair and satisfy both the employees and employers.
Administration Management Theory (Henri Fayol)
14 principles of management
8. Centralization:
• If most of the power and responsibilities are retained at top level
management, the organization is centralized.
• All the decisions are taken only by the top executive at the centre.
• If the power is delegated to the subordinates, the organization is
decentralized. Management is effective for a decentralized form.
• Delegation of authority to subordinates helps to take quick decision on all
important problems.
Administration Management Theory (Henri Fayol)
14 principles of management
9. Scalar Chain:
• Scalar chain means line of authority
• Instructions and orders should be sent from top level to the bottom level
only through the line of authority.
• There should be an unbroken line of power and command from top level to
bottom level.
• Overlapping any one in the organization structure will spoil the performance
of the management system.
Administration Management Theory (Henri Fayol)
14 principles of management
10. Order:
• This principle deals with the arrangement of things and persons.
• Two types:
• 1. Material order: A place for everything and everything in its place.
• 2. Social order: A place for everyone and everyone in his place.
• Scientific selection, training and placement are necessary so that
materials can be easily taken out and men can be easily located.
Administration Management Theory (Henri Fayol)
14 principles of management
11. Equity:
• The manager should treat the employees equally and kindly.
• The employee’s morale, sincerity and loyalty will be improved.
• There will not be any friction among the employees.
Administration Management Theory (Henri Fayol)
14 principles of management
12. Stability of tenure of personnel:
• Stable and secure work force is an asset to any organization.
• It will take some time for an employee to work efficiently in his job
even if he has the required skill and knowledge.
• The management should create favorable working conditions by
providing good salary, promotion opportunities, welfare facilities
etc.
Administration Management Theory (Henri Fayol)
14 principles of management
13. Initiative:
• Initiative is the power of thinking and executing any task with
enthusiasm voluntary.
• When employees come forward with new ideas, new methods
etc., they must be encouraged
• It improves good morale among the employees
Administration Management Theory (Henri Fayol)
14 principles of management
14. Espirit de corps:
• It is a French word meaning feeling of harmony and union among
personnel of an organization.
• Management should treat the employees kindly and equally to
develop co-operation among them.
• Management should avoid the policy of divide and rule.
Administration Management Theory (Henri Fayol)
• 3. Elements of Management
• Fayol believed that management should be viewed as a process of 5
elements/functions:
• Planning: managers forecast the events and developing an operating
plan
• Organizing: determine appropriate combinations of resources such as
men, machine, material to accomplish task.
• Commanding: directing the activities of subordinates through two way
communication
• Coordinating: arrange and integrate efforts towards unity of action
• Controlling: ensuring actual activities are according to the plan set
 The Bureaucratic Management Theory
• Max Weber (21 April 1864 – 14 June 1920), a German scientist, defines bureaucracy as a
highly structured, formalized, and also an impersonal organization.
 The Bureaucratic Theory (Max Weber):

• He found some outcomes such as

• In traditional authority, Most workplaces used relationships,

kinship or customs to lead and make decisions.

• In particularism, employees were hired or fired for a variety of

non-organizational reasons such as religion, race, sex and
relational or family connections – favoritism.
 The Bureaucratic Theory (Max Weber):
• He suggests,
• Organizations should act rationally to achieve their goals
• Clarified leadership structure
• Clarified rules for decision making
• Legal-Rational Authority
• Organizations should look like the Government and the Legal System
• The legitimate authority of leadership positions should be formalized and fixed to those
positions
• Consistent with societal law, organizations should be run by formal rules and policies
• Not Traditional, Family based leadership, Not Charisma-based leadership approach to
organization
 The Bureaucratic Theory (Max Weber):
• Bureaucracy has different parts
• Fixed division of labor among participants: divide work into small, separate steps
• Hierarchy of offices
• Set of general rules that govern performance, Decision making on rational and
objective criteria
• Rigid separation of personal life from work life
• Selection of personnel on the basis technical qualifications and equal treatment
of all employees. Employment and promotion based on demonstrated
competence
• Participants view employment as a career; tenure protects against unfair
arbitrary dismissal. Fixed salary based on status and guaranteed pension as
security for old age
Neo-Classical Management Theories
 Neo-Classical Management Theory
• There is coexistence of informal organization within very formal
organization and both affect each other
• Human beings are not independent, they are mostly interdependent in an
organization.
• Behavior of an human being is affected by so many social and psychological
factors.
• There is always a high level of conflict between organizational goals and
individual goals.
• Motivation of human being plays a key role in the growth of the
organization which is a highly complex process.
• Terminologies: Flat Structure, Decentralization, Informal Organization
 Criticism of Neo-Classical Management
Theory
• This theory based on flat structure that lack hierarchy level, which may
affect authority, delegation.
• This theory lacks unified approach. It is just a modification of Classical
theory of management.
• This theory is based on many assumptions which may not be true (one
cannot satisfy everyone).
Elton Mayo 1880-1949 – Human
Relations Approach
• He was interested in:

• Motivation
• Commitment
• Human emotion
• Worker management relations
Elton Mayo
• He highlighted the importance of communication between
management and workers and for managers to show respect to their
staff

• He identified that work satisfaction lay in recognition, security and a

sense of belonging rather than monetary rewards
Hawthorne studies 1924-1932
- It is an experiment conducted at Hawthorne plant of Western
Electric Company of Chicago.

4 phases to the experiment:

1. The Illumination Experiments

2. The Relay Assembly Test Room
3. The Massive Interviewing Programme
4. The Bank Wiring Observations Room
 1. Illumination experiment: (1924 – 1927)
• Experiment was conducted to find whether the lighting is
having effect on the productivity or not.
• Two groups of female workers were formed and each group
contains five female workers.
• Experimental group
• Control group
• First group was exposed constant intensity of lighting.
• Second group was exposed to different intensities of lighting.
 Results and Conclusions
• The productivity of both groups were found same.
• There was no change of productivity even though both groups were
exposed to different intensities of lighting.
• Production was influenced by factors other than changes in physical
conditions
• By analyzing the above experiment, find that illumination lighting has
no effect on productivity.
 Relay Assembly Test Room (1927 – 32)
• Two women workers were chosen and they were asked to choose four more
co-workers on their own choice. They were placed in a separate test room.
• The conditions of work were gradually changed during first two years.
• Incentive scheme and group bonus were introduced. Then break hours was
increased. Working hours were reduced. Number of working days per week
were reduced. Free snacks were offered.
• While doing all these change it was discussed with the workers. Productivity
was increased by 30%.
• Then suddenly all the schemes were withdrawn. All the privileges were taken
after consulting with the workers. Now also, the productivity was increased
by 30%.
 Results and Conclusions
• The workers were given more freedom
• They were discussed for every change and so they developed the sense of
responsibility.
• They maintained the self-discipline.
• They developed a good relationship with the supervisors.
• Because of the above factors, the workers change their attitude towards their
work. So the productivity was increased – Not because of the attractive
scheme introduced.
• The productivity was increased because the workers felt that they were given
due importance.
The Massive Interview Programme
• 20,000 interviews conducted
• Set of prepared questions on workers feelings towards:
• Supervision
• General conditions at work
• However, workers wanted to talk about other conditions
• Interviewers changed their style to non-directive, open questions
• Workers true feelings and attitudes were analysed
• By observation, it was known that individual workers behaviour was
mostly influenced by group behaviour.
 Bank wiring observation room
• There were nine women, three solder men and two inspectors, who were
paid on group basis.
• It was expected that, each worker would work more to earn more – to get
more group bonus. However, it happened differently.
• The group of workers fixed a target. No workers were allowed to produce
more.
• The individual feared that, if the production is more, then it would lead to
unemployment.
• The individual feared that once he produced more, then management
would raise the standard.
• Some workers normally produced less. To protect them, others produced
less.
 Hawthorne Experiments: Summary

• To attain the organizational goals, employee attitude is

very much important. The employee should understand
the organisational goal. He should be co-operative
voluntarily to attain the goal. He should dedicate himself
to attain the goal.
• The employee will perform satisfactorily, if he is satisfied
with the management and with his co-workers.
• The employee’s job satisfaction is also important for him
to perform well.
 Hawthorne Experiments: Summary
• If the management changes its policy, then the change
should be explained clearly to the employees. The
employee should know the actual meaning of the change.
• The management cannot collect any correct information
by analysing an individual employee. However, it can
gather real information by analysing the group behaviour.
• By this experiment, the management identifies the
problems with employees.
 Hawthorne Experiments: Major factors
• Social factor: the productivity is set by the society/group of workers.
Although a worker is strong enough to produce more, he will not
produce more because of social norms
• Group: the group determines target and group norms. Group
behaviour is more important for the management to deal with
group.
• Leader: informal leader is elected by the workers and he is
important than formal leader. But supervisor (formal leader) is
appointed by the management. Informal leader is directing the
group. He is the important person to be dealt by the management.
If the informal leader is not loyal to the workers, then he will be
dethroned by the workers.
 Hawthorne Experiments: Major factors
• Communication: workers should be clearly explained about the
changes made by the management. Workers should be discussed
for important decision making process so that they will have the
responsibility to achieve the target.
• Conflict: The employee should not have any conflict of objectives.
He should change himself to adjust with the organisation.
Adjustment is very much important otherwise, the output may
decline.
• Supervisor: The increase of productivity is also attained by the
proper supervision. He should know how to get things done.
Cleverness of supervisor is needed to maintain proper relationship.
 Neo-Classical Theory – Behavioral Science
Approach
• It is a redefined form of human relations approach emerged in late years of
1940s and emphasis on group behavior
• Individual behavior, Motivation, job design, leadership, communication,
group dynamic & participative management are the core of the approach.
• Emphasis on self direction & self control rather than control imposed by top
management.
• This approach is the basis of management discipline – organizational
behavior
• This approach is universally not applicable to all the organizations which
operate in different social, religious and cultural background
Behavioural Science approach – Abraham
Maslow (Maslow’s Hierarchy of Needs)
Behavioural Science approach – Frederick
Herzberg (Two-factor theory)
Behavioral Science approach – Douglas
McGregor (Theory X and Theory Y)
• Theory X Assumes: Theory Y Assumes:
• Need to be controlled • People find satisfaction in their work
• People are lazy • Right environment = people will be productive
• Will avoid working if • Can think themselves and make decisions
possible • Share ownership of tasks.
• Strict rules need to be • Want to be involved
imposed
• Have good ideas
• Need incentive schemes
• Can engage in some level of self management
• Have to be directed to do
• Will find work more rewarding if given
things that they don’t
responsibility and a variety of taks.
enjoy
Behavioral Science approach – David
McClelland (Needs Theory)
• Need for Power – Desire to influence or control others, be responsible and
have authority over others
• Need for Achievement – Desire to accomplish something difficult, attain
high standards of success, master complex tasks, surpass others
• Need for Affiliation – Desire to form close personal relationships and
friendships, avoid conflict.
Behavioral Science approach – Rensis Likert
(Likert Scale)

Strongly Disagree Undecided Agree Strongly Agree

Disagree
1 2 3 4 5
 Neo-Classical Theory – Behavioral Science
Approach
Behavioral Science theory believes that:
• Organization is a socio economic and technical system
• A variety of factor influence the interpersonal and group behavior of people in
organizations
• Individuals working in an organization have goals which may differ from
organizational goals
• Conflict is inevitable
• Individuals differ in personality, attitude, beliefs, perception etc
• Motivated workers are key to productivity
• High performance can better be achieved by self direction and control
• An open and trusting organizational climate improves productivity
Human Relations Approach and Behavioral Science
Approach
Human Relations Approach Behavioral Science Approach
Emphasis on Individual Needs Emphasis on group behaviour and
individual motivation
Assumes organization as social system Assumes organization as a socio-
technical economic system
Assumes workers are not scientifically Assumes workers are scientifically
verifiable verifiable
Believes all workers have similar set Assumes individuals are different and
of needs need structure is dynamic
Originated from Hawthorne studies Emerged by refinement of human
relations approach
Modern Management Theories
Modern Management Theory
• It focus on the improvement of organization, employees
• Its started after 1960s.
• In the words of W. G. Scott, the distinctive qualities of
modern organization theory are its
• Conceptual analytical base
• Its reliance on empirical research data
• Its integrating in nature
Modern Management Theory
• It’s composed of 3 approaches
• Systems Approach: Interrelation of components or subsystems to
form a unified whole system.
• Contingency or situational Approach: Emerged from Systems
approach, Actions depend on situations
• Quantitative Approach Theory: uses the scientific method
especially mathematical models
System Approaches to Management
 System Concept
• An organization is a totality of many, inter-related, inter-dependent parts, put
together for achieving the organizational objectives.
• A system is defined as a sum total of individuals but inter-related parts (sub-
systems) and are put together according to a specific scheme or plan to achieve
the pre-stated objectives.
• A system can be biological (human body), physical (machine) or social
(commercial organization, voluntary bodies etc.).
• A system has the following components:
• A number of parts of sub-systems which when put together in a specific manner form a
whole system.
• Boundaries within which it exists.
• A specific goal or goals. This goal is expressed in terms of an output which is achieved by
receiving input and processing it to form the output.
• Close inter-relationship and inter-dependency among the various sub-systems.
 System Concept
The inter-relationship of the sub-system can be defined in terms of:
•The flows which exist among them, such as flow of information, money, materials
etc.
•The structure within which they relate to each other. This structure may be
physical, geographic or organizational and shall be dealt with in the section entitled
'organizing'.
•The procedures by which the sub-systems relate to one another. By procedures we
mean those planned activities which affect the performance of the entire system.
In the context of an organization, this refers to planning.
•The feedback and the control process mechanisms which exist to ensure that the
system is moving towards its desired objectives. This shall be referred as
controlling.
 A Closed System

• A system can be closed or open. A closed system is self-sufficient and

self-regulatory and has no interaction with the environment in which it
exists.
• The feedback from the output triggers o a control mechanism which then
regulates the input to bring back the output to the desired level.
An Open System
 An Open System
• An open system is one which interacts with the environment in which
it exists.
• All living, biological and social systems are examples of open systems.
• An organization is an open system and its sub-systems are its various
divisions and departments. But at the same time, it is a subsystem of
the environmental system within which it operates.
 A Firm and its Environment

The environment itself consist of social, economic, political and legal sub systems.
 A Firm and its Environment

• The importance of the system concept is that it helps manager to

identify the critical sub-systems in his organization and their inter-
relationships with each other and the environment.
• A system is always seeking an equilibrium state, that is, where all the
subsystems are at the optimum level, in tune with and at rest with
each other and the desired output is being achieved.
 Contingency Approach
• Systems approach offers models which may not suit every type of
organization
• A structure suitable for one unit may not be suitable for another.
• Contingency approach suggest that one size doesn’t fits all.
• Structure or Design must tailor made as per the units, organization
and situation.
 The Contingency Approach
• Also sometimes called the situational approach.
• This approach suggest that needs, requirements, situations of a particular
organization should be considered while designing an organizational structure.
• There is no one universally applicable set of management principles (rules) by
which to manage organizations.
• Organizations are individually different, face different situations (contingency
variables), and require different ways of managing.
• It tries to identify the best technique that will be effective in a particular situation
at a particular time.
• This attempts to integrate all the management approaches.
 Popular Contingency Variables

• Organization size
• As size increases, so do the problems of coordination.
• Routineness of task technology
• Routine technologies require organizational structures, leadership styles, and control
systems that differ from those required by customized or non-routine technologies.
• Environmental uncertainty
• What works best in a stable and predictable environment may be totally inappropriate
in a rapidly changing and unpredictable environment.
• Individual differences/ People working in the organization
• Individuals differ in terms of their desire for growth, autonomy, tolerance of ambiguity,
and expectations.
 The Contingency Approach
• The successful application of one technique in one situation will not
be successful in another situation
• Examine each situation in terms of how it is affected by the
contextual, organizational and human dimensions.
• Contingency theory is designed to provide the manager with the
capabilities to examine numerous possible solutions to a problem.
 Quantitative Management Theory
• The quantitative approach to management involves the use of quantitative
techniques, such as statistics, information models and computer simulations
to improve decision making.
• Managers can use computer models to figure out the best way to do – saving
both money and time
• Mathematical modeling helps to make projections that are useful in the
planning process.
• Inventory modeling helps control inventories by mathematically establishing
how and when to order a product.
• Queuing theory helps allocate service personnel or workstations to minimize
customer waiting and service cost.
 Criticism of Modern Management Theory
• It is not a standalone theory rather mixture of different
theories
• It does not identify the precise relationships among the
organization and its external system.
• It is not useful for smaller organizations
Tasks and Responsibilities of a
Professional Manager
Professional Manager
Takes Various Decisions

❑HR decision
❑Financial decision
❑Marketing decision
❑Strategy decision
❑Operational decision
Professional Manager – HR Decisions
• Recruitment • Promote
• Hiring process • Increase number of hierarchy,
• As per requirement individual feels growth
• Assessing progress
• Retain
• Increment, decrement
• Making job interesting
• Demotion, firing
• Games, transfer policy, grievance redressal
• Rotation • Motivate
• More work in name of enrichment,
training
• Bonus, salary, incentive, appreciation
letter, award etc.
Professional Manager – Financial Decision
• Profit – check process feasibility
• Evaluation of strategy – which will provide better return on
investment
• Financing options – lower cost of money
• Financial efficiency – tendering, purchase
Professional Manager – Marketing Decision
• Expand/Exit from market
• Promote
• Advertise
• Introduce product
• How to gain market share
Professional Manager – Strategy Decision
• Which project
• Where
• When
• How
• Long term impact
• Decision cannot be reverse
Professional Manager – Operational Decision
• Working efficiency
• Logistics
• Innovation
• R&D/ Technology
• Cost cutting
Tasks and Responsibilities of Professional
Managers
• Providing purposeful direction to the Firm
• Managing Survival and Growth
• Maintaining Firm's Efficiency in terms of profit generation
• Meeting the challenge of increasing competition
• Managing for innovation
• Building Human organization
• Retaining talent and inculcating sense of loyalty.
Tasks and Responsibilities of Professional
Managers
• Sustaining leadership effectiveness
• Maintaining balance between creativity and conformity.
• Postponing managerial obsolescence
• meeting the challenge of change
• Coping with growing technological sophistication
• Coping with growing public criticism and political opposition-
both objective and irrational
• Coping with increasing levels of aspiration
• Maintaining relations with various society segments.
 Responsibilities Of Management To Society
• Optimum utilization of resources
• Cordial industrial relations
• Sound leadership and motivation
• Expansion, growth development
• Satisfactions to consumers
• Fair return to investors
• Provide financial support to social and cultural activities
• Create employment opportunities
• Use a part of project made for social good
• Improve quality of products
 Responsibilities towards Stakeholders
• Responsibility towards
• Customers
• Shareholders
• Employees
• Suppliers
• Distributors and Retailers
• Industry and competition
• Union
• Government
• Society
 Responsibilities towards Customers
• Customer most important provide revenue
• Quality of product
• Reasonable price
• Reliable after sales service
• Grievance redressal
• Avoid unethical promotion.
 Responsibilities towards Shareholders
• Able to earn profit on their capital
• Shareholders are owners, keep them informed on all
important decisions, activities and results.
• eg: Satyam Computers – Ramalinga Raju
 Responsibilities towards Employees
• Internal customer. Satisfied employee can make satisfied customer.
• Fair wages and salaries
• Compliance with the statutory obligation of provident fund, gratuity,
insurance, bonus.
• Work environment & Safety
• Need for internal marketing
• Township, education for children
• Need for CSR activity within company
• Free of child labour, bonded labour, workers suffering from diseases
because of unhealthy, unsafe working environments.
 Responsibilities towards Suppliers
• Part of supply chain. Provide input. Sometime needs
help, credit, technology
• Need timely payment
• Make partner in supplies by implementing JIT (Just-In-
Time, ERP (Enterprise Resource Planning) etc.
Responsibilities towards Distributors and Retailers
• Link between the firm and the actual customers
• Source of valuable feedback
• Timely quality supplies
• Motivate dealers to push products harder. Provide support –
extending credit, sharing promotion cost, after sales service and
decoration of showroom.
Responsibilities towards Industry and Competition
• Competitors associates to lobby for or represent industry eg.
OPEC countries.
• Protect and promote the interests of the industry, seek
concessions from government.
• Provide a forum for sharing and disseminating information
• Healthy competition encourages firms to improve their
performance and nurtures progress.
 Responsibilities towards Union
• Union is friend of the firm
• Acknowledge the bargaining power
• Attempt to involve the union in the process of
managing the firm
• Relationship should be based on mutual trust.
 Responsibilities towards Government

• Pay tax/duties timely

• Follow legal framework
 Responsibilities towards Society

• Avoid pollution – Bhopal Gas tragedy

• Social, economic development of those who lost
livelihood
• Another way of marketing, repute building ultimate
customers