Chapter 1

Fundamentals of management
Because of human limitation, people started cooperation and working in-group. To coordinate
and lead groups of people to achieve their pre-stated goals, functions of management i.e.,
planning, organizing, staffing, leading/ directing, and controlling are important and essential. The
monumental accomplishments and scripts of the ancient societies proved their importance.
However, the discipline needs to be studied in a modern way.

When people started working in group, although it was not formalized, they planned their work,
they organized their activities, assigned people to those positions, led their people/workers and
checked whether they achieved their interest or planned action or not; and these activities were
prevalent and apparent. This is to say that, management, had existed in the past, exists today, and
will exist tomorrow.
1 Learning Objectives:
After studying this unit, you will be able to
 Define management and
 Understand the nature of management
 Understand whether management is science, an art, or profession?
 Understand the management levels, skills and roles
 Understand the functions of management
 Explain the universality of management

1.1 Definition of management

As far as the definition of management is concerned, it is rich in definition. Hence, there is no
one universally accepted definition of management. This is because,
(i) Management as a discipline is recent in origin: management as a field of study is too
young, to develop.
(ii) Management is so broad that it is difficult to encompass all of its aspects in a single
definition.

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 (iii) There are different approaches to management, definitions change as the environment
changes. The environment of an organization change because of changes in political,
economic, social, ethical, etc environment changes.

Management has been given various but mutually supportive definitions by different authors and
scholars. Among others the following are several of them:
1) According to F.W. Taylor, "Management is the art of knowing what you want to do... in the
best and cheapest way."
2) According to H. Koontz and his co-author, "Management is the process of designing and
maintaining an environment in which individuals are working together in-group to
accomplish efficiently selected aims."
3) According to Terry and Franklin, "Management is a distinct process consisting of activities
of planning, organizing, actuating, and controlling, performed to determine and accomplish
stated objectives with the use of human beings and other resources.

Graphically

Planning Actuating

Men and
Women
Materials
Machines
Methods
Money
Markets Organizing Controlling

4) According to Henery Fayol; "to manage is to forecast and plan, to organize, to command, to
coordinate, and to control.
5) According to Mery Parker Fellott; "the art getting things done through the efforts of other
people."
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6) According to Kinard, "Management is the process of maximizing the potential of an
organization's people and co-ordinating their efforts to attain predetermined goals.
7) Management is defined as the process of planning, organizing, leading and controlling the
efforts of organization members and of using all other organizational resources to achieve
stated organizational goals.

From the various definitions of management, we can derive the following important points.
a) Management refers to the managerial functions of planning, organizing, staffing,
leading and controlling.
b) Management co-ordinates both human and non-human resources (land and capital) for
the accomplishment of objectives.
c) Management is applied to all types of organization
- Profit or not for profit
- Large, medium or small organization
- Manufacturing or service giving, etc.
d) Management deals with creating a comfortable internal environment, with a great
consideration of the external environment.

For the sake of convenience, we can define management as a distinct process consisting of
managerial functions of planning, organizing, staffing, directing/leading, and controlling so
as to design and maintain a conducieve environment in order to achieve common group
goals and organizational objectives efficiently and effectively.

From this definition, we have the following points that characterize management:
a) Management is a continuous process whenever there is a group endeavor/effort, the
need for management arises.
b) Management is viewed in terms of the managerial function a manager does.
c) Management deals with the coordination of both human and non-human
resources/physical resources.
d) Management is applied wherever there is an organization with an objective to be
achieved.
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 e) Since an organization exists in an open system, management creates a favorable
environment in order to achieve organizational goals.
f) The target of managerial process is to achieve organizational objective-reason for their
existence.
The Nature of Management
1. Universal Application:- Management is applied in any organization (large, small in size, or
service or manufacturing or for-profit or not-for-profit) and its functions are practiced in any
level of management.
2. Goal Oriented:- Any organization is established to achieve objectives, and management is
important for any organization to achieve its pre-stated objectives efficiently and effectively.
3. Guidance:- The main task of management is guidance in the utilization of material and
human resources in the best possible manner. Without the involvement of management,
resources might be mis utilized and wasted. Through the optimum utilization of resources, it
to ensure that the objectives are attained.
4. Divorced/Separated from proprietorship:- Management does not signify
proprietorship/ownership. Managers work for the attainment of organizational goals and
objectives.
5. Management is a human activity:- Management functions are discharged by individuals
not by machines such a computers. However, it can be aided by such instruments as
computers.
6. Management signifies Authority:- Since the significance of management is to direct, to
guide and to control, it has to have authority. Authority is the power to compel others to work
and behave in particular manner.
7. Leadership:- The manager has to lead a team of workers. He/she must be capable of
inspiring, motivating and winning their confidence.
8. Management is Multidisciplinary:- It has grown as a body of discipline taking the help of
so many social sciences like sociology, psychology, economics, etc.

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1.2 Significance of management

 management is significant because the coordination of resources is impossible with

out management
 It affects the establishment and re-establishment of many economic social and
political goals of the country
 The success or failure of the organization mostly depends on the management system
 B/c it is the wise utilization of scarce resources for unlimited human wants.

To accomplish Objectives, while in actuality the members might be working in opposite

direction, to prevent this from occurring and to ensure coordination of work to accomplish the
objectives, management is needed. As 'a brain' of an organization therefore, management gives
direction for all other parts of organization.

1.3 Managerial Functions: An Overview

Regardless of the type, size and objective of the firm, all managers have certain basic functions.
These are planning, organizing, staffing, leading/directing/, and controlling. The nature and
scope of these functions differ from manager to manager and from firm to firm.

Planning
It is a decision making process which involves selection of missions and objectives and choose
the best course of action to achieve them from among alternatives. It is an intellectual task,
which bridges the gap between the present and future conditions of the organization. (From
where we are to where we want to be in a desired future). Planning is a decision making process
that determines what to be done, how it is to be done, why it is to be done, when it is to be done,
and by whom it is to be done.

Organizing:
It is a managerial activity that involves establishing an intentional structure of roles for people to
fill in an organization. In other words, it is the process of creating an environment for human

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performance depending on the objectives set. In short, organizing is the process of determining
the role by which an individual plays and the individual roles are related and integrated to
achieve the common organizational goal. Organizing, thus involves:
Staffing:
Staffing is the process of acquiring, developing and maintaining human resource which is needed
to attain objectives set in planning. It is the process of filling and keeping filled the positions in
the organization structure. This is done by identifying work force requirements, inventorying the
people available, recruiting and selecting, placing or promoting, compensating, training and
developing both candidates and current job holders to accomplish their tasks effectively and
efficiently.

Leading:
It is influencing, motivating and directing people so that they will contribute to organizational
and group goals; it has to do predominantly with the interpersonal aspect of managing.
Leadership requires good interpersonal skills. Leading /directing has the following three
elements:
(i) Motivation
(ii) Leadership styles
(iii) Communication
Controlling
Controlling refers to measuring and correcting the activities of subordinates, to ensure that events
conform to plans. It also involves taking corrective measures (actions) if negative deviations
exist.
The controlling function involves the following steps:
 Establishing standards of performance:
 Measuring actual performance and comparing it against the plan the goal /the established
standard;
 Taking corrective measures if there are deviations. (Taking corrective actions when standards
are not met or in anticipation that they may not be met.)
Actual results may differ from desired results in any area, but the three that require the most
attention are product quality, worker performance, and cost control.
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1.4 Levels of Management and Type of Managers
Managers can be classified into two ways,
A. By their level in the organization – so called first line, middle and top managers and
B. By the range of organizational activities for which they are responsible – so called
Functional and general managers.
A. By their level in the organization
(1) First line Managers- Managers who are responsible for the work of operating employees
only and do not supervise other managers; they are the first or lowest levels of managers in
the organizational hierarchy. These pest people are managers at the firing line where most
concrete organizational tasks are performed.

It includes office managers, superintendents, foreman, chief clerks, supervisors, etc. First
level management is often called "supervisors". They are mainly concerned with:
i) Planning of day to day work.
ii) Assignment of jobs
iii) Keeping a watch on workers performance.
iv) Sending reports and statements to superiors
v) Maintaining close and personal contacts with workers and evaluation of
their work.
(2) Middle level Managers: are managers, who direct the activities of lower level managers
and sometimes extends to supervision of operating employees. Their principal
responsibilities are to direct the activities that implement their organization's policies and
to balance the demands of their superiors with the capacities of their subordinates. The
titles include Department heads, deputy department heads, branch managers, work
managers, etc.
(3) Top Managers:- composed of a comparatively small group of executives and they are
responsible for the overall management of an organization.
 They establish operating policies and guide the organization's interactions with
environment. Typical titles include CEO, president, senior vice president, etc.
 Responsibility of planning and executing broad policy decisions.

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 B. By the range of organizational activities and responsibilities
The other major classification of managers depends on the scope of the activities they manage.
1. Functional Managers:- these are managers responsible for only one organizational activity,
such as production, marketing, sales, or finance. The people and activities headed by a
functional manager are engaged in a common set of activities.
2. General Managers:- these managers, on the other hand, oversee a complex unit, such as a
company, a subsidiary, or an independent operating division. He or she is responsible for all
the activities of that unit, such as its production, marketing, sales, and finance. Managers who
are responsible for managing the entire operations of a more complex unit or division which
may have two or more functional units.

1.5 Managerial Skills and Roles

1.5.1 Managerial Skills
A skill is a person's or an individual's ability to do or perform a certain thing expertly or
intellectually. Similarly, managerial skills are skills of a manageability of a manager to perform
his duties and responsibilities expertly. These skills help managers to perform their activity in
efficient and effective way/manner for the achievement of the objective of the organization.
These managerial skills can be classified as:
(i) Technical skills
(ii) Human skills
(iii) Conceptual skills
1. Technical skills: These skills are the abilities of a manager that are necessary to carry out a
specific task. It involves the ability to use specialized knowledge and expertise with work
related tools, procedures, and techniques. Technical knowledge is of great importance at
lower levels where the organization's goods and services are produced. Examples include:
- Writing computer programs
- Completing accounting statements
- Analyzing marketing statistics
- Drafting a design for a certain building etc…

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Technical skills are usually obtained through training programs that an organization may offer its
managers, or employees, or may be obtained by way of a college degree.
2. Human Skills: the ability to work with, motivate, direct individuals or groups in the
organization whether they are subordinates, pears, or superiors and the ability to resolve
conflict. Because, all tasks in an organization are done with people, these skills are equally
important to all levels of management. This skill includes:-
- effective communication (writing and speaking);
- creation of positive attitude toward others and the work setting;
- development of co-operation among group members; and
- motivation of subordinates.
3. Conceptual skill:- the ability of a manager "to see" the big picture of the organization /to
view the organization from a broad perspective. It is the ability of a manager to see the
organizational system in its totality, how its different parts are interrelated and how they
affect each other. A manager needs conceptual skills to recognize the interrelationships of
various situational factors, and; therefore, make decisions that will be in the best interests of
the organization. They are most important in strategic (long range) planning; therefore, it is
top level managers/executives who require more conceptual skill than middle level managers
and supervisors.

Top Strategic Planning

Level and
Conceptual Skill

Management Decision Making

Human Skill

Technical Skill

Middle Coordination and Planning for

Management Implementation
First Line Management
/supervisors. Implementation

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 Fig. 1.1 Managerial levels, required skills, and primary responsibilities.
1.5.2 Managerial Roles
Managerial functions are general administrative duties that need to be carried out in all
productive organizations. Managerial roles are specific categories of behavior/managerial
behavior. Managerial functions involve "desired out comes". These outcomes are achieved
through the performance of managerial roles (actual behavior). In other words, Roles are the
means and functions are the ends of the manager's job.

Henry Mintzberg identified ten different but interrelated organized sets of behavior, or roles.
These ten roles can be separated into three categories /general groupings.
1. Interpersonal roles: three managerial roles are enacted when the manager engages in
interpersonal relationship. They are:
 Figure head role:- this role is played by managers who are required to perform duties of
ceremonial and symbolic in nature such as signing documents, receiving visitors, etc.
- e.g. When the president of a college hands out diplomas at graduation.
 Leader role:- managers play this role through hiring, training, motivating and disciplining
employees to get the job done properly.
 Liaison role:- managers play this role by contacting people outside the group, ^ by serving
as a link in a horizontal (as well as vertical) chain of communication.
- e.g. the sales manager who gains information from the personnel manager with in the
same company. -Internal liaison.
- The sales manager who has contact with other company’s sales executive through a
making trade association. – External liaison.
2. Informational role: - All managers, to some degree, will receive and collect information
from organizations and institutions outside his or her own. Managers play:
 Monitor role: - as a monitor, the manager tries to keep informed about what is happening in
the organization or group. Managers serve as a focal point for non-routine information; they
receive all types of information from news reports, trade publications, magazines, clients, etc.

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 Disseminator role:- the information a manager gathers as a monitor must be gleaned and
transmitted to appropriate members of the organization. As a disseminator, a manager sends
out side information into the organization and internal information from one subordinate to
another. /Transmitting selected information to subordinates.
 Spokesperson role:- it is the role of a manager in transmitting selected information to
outsiders. It is played by a manager whenever he/she represents the organization or its
position to other groups, including government agencies, customer, and trade organizations.
3. Decisional roles:- Both interpersonal and informational roles are really includes to the
decisional role. It involves decision-making. The manager plays this role as:
 Entrepreneurial role: managers as an entrepreneur initiate and oversee new projects that
will improve their organization's performance. (Designing and initiating changes within the
organization.
 Disturbance handler role: - taking corrective actions in none routine situations/the manager
deals with situations our which he or she has little control. These may involve conflict
between people or groups or unexpected events out side the company may affect the firm's
operations.
 Resource allocator role:- managers play this role when they are in a position to decide exactly
who should get what resources. (These resources include time, money, people-people, physical
resources)
 Negotiator role:- participating in negotiating sessions with other parties (e.g. vendors and
unions) to make sure the organizations interests are adequately represented. Managers
perform this role, in which they discuss and bargain with other units to gain advantages for
their own unit.

1.6 Universality of Management

Management is universal in the sense that
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 Basic applications of management in any organizations are the same whether it is small or
complex, business or non-business. The managerial functions exist in every organization
regardless of the size and the type of the organization. This is because any organization has
an objective to be achieved and goal achievement requires planning, organizing, staffing
leading and controlling. (The army general, the bishop of the church, the financial manager
use the same management principles to achieve objectives.)
 The concept of universality of management is also applicable to all levels of management
within an organization; it is not confined to a particular level. Although the scope of authority
held, responsibility assigned and the types of problems dealt vary from one level to another,
as managers all obtain results by establishing an environment for effective group endeavor.
 Managers can be transferred from one organization to another and the higher the
management level the less will be the operating non-managerial job components and the
more "pure" will be the managerial jobs and the easier the transferability of managers.

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