MANAGEMENT

CONCEPTS AND
ORGANISATIONAL
BEHAVIOUR

Module -1
 MEANING OF MANAGEMENT
 Mary Parker Follet: “the art of getting things
done through people”
 F.W. Taylor : Art of knowing what you want to
do and then seeing that it is done the best and
cheapest way.
 Henry Fayol : To Manage is to forecast, to plan, to
organise, to command, to co-ordinate and to
control.
 Peter F.Drucker : Management is work and as
such it has its own skills, its own tools and its own
techniques..
SCOPE OF MANAGEMENT

 An Economic Resource : Management is one of

the factors of production along with land, labor and
capital. In modern organizations, the effective use
of the five M‘s of management (money, materials,
manpower, machinery and methods or ways of
doing things) depends to a great extent on the
quality of management. In other words, how
effectively and economically the five M‘s are
combined together to produce desired results.
Management as a system of authority:
According to Herbison and Myers, management is the
rule-making and rule-enforcing body. It is bound
together by a web of relationships between
superiors and subordinates, that i, people are bound
by authority relationships. Managers working at top
levels enjoy more authority than people working at
lower levels.
 Management as a class or elite :
Sociologists view management as a distinct class in
society having its own value system. The managerial
class has become very important in modern
organisations owing to its contribution to business
success. As a separate group, the term management
refers to the group of individuals occupying
managerial positions. All the managers from the chief
executive to the first line supervisors are collectively
addressed as Management‘, which refers to the group.
IMPORTANCE OF MANAGEMENT

 Optimum use of resources

 Effective leadership and motivation

 Establishes sound industrial relations

 Achievement of goals
EVOLUTION OF MANAGEMENT
THOUGHTS:
 Evolution of management thought may be
divided into four stages
1. Pre-scientific management period.
2. Classical Theory
(a) Scientific Management of Taylor
(b) Administrative Management of Fayol
(c) Bureaucratic Model of Max Weber
3. Neo-classical Theory or Behaviour Approach
4. Modern Theory or Systems Approach
PRE-SCIENTIFIC MANAGEMENT PERIOD
A- Professor Charles Babbage (UK) 1729
-1871):
 He was a Professor of Mathematics at
Cambridge University. Prof Babbage found that
manufacturers made little use of science and
mathematics, and that they (manufacturers)
relied upon opinions instead of investigations
and accurate knowledge.
 He felt that the methods of science and
mathematics could be applied to the solution of
methods in the place of guess work for the
solution of business problems.
 B- James Watt Junior (UK 1796 - 1848) and
Mathew Robinson Boulton (1770 - 1842): James
Watt Junior and Mathew Robinson Boulton
contributed to the development of management
thought by following certain management techniques
in their engineering factory at Soho in Birmingham.
They are:-
 Production Planning
 Standardization of Components
 Maintenance
 Planned machine layout
 Provision of welfare for personnel
 Scheme for executive development
 Marketing Research and forecasting
 Elaborate statistical records
 C- Robert Owens (UK 1771 - 1858): Robert
Owens, the promoter of co-operative and
trade union movement in England emphasized
the recognition of human element in industry.
He firmly believed that workers' performance
in industry was influenced by the working
conditions and treatment of workers. He
introduced new ideas of human relations -
shorter working hours, housing facilities,
training of workers in hygiene, education of
their children, provision of canteen etc.
D- Henry Robinson Towne (USA 1844 -1924): H.R
Towne was the president of the famous lock
manufacturing company "Yale and Town". He
urged the combination of engineers and
economists as industrial managers. This
combination of qualities, together with at least
some skill as an accountant, is essential to the
successful management of industrial workers. He
favored organized exchange of experience
among managers and pleaded for an organized
effort to pool the great fund of accumulated
knowledge in the art of workshop management.
 CLASSICAL THEORY

 Taylor's Scientific Management:

 Frederick Winslow Taylor well-known as the
founder of scientific management was the first
to recognize and emphasis the need for
adopting a scientific approach to the task of
managing an enterprise. He tried to diagnose
the causes of low efficiency in industry and
came to the conclusion that much of waste
and inefficiency is due to the lack of order and
system in the methods of management.
 The scientific method consists essentially of
 (a) Observation
 (b) Measurement
 (c) Experimentation and
 (d) Inference.
 He advocated a thorough planning of the job
by the management and emphasized the
necessity of perfect understanding and co-
operation between the management and the
workers both for the enlargement of profits
and the use of scientific investigation and
knowledge in industrial work.
MAIN POINTS :
 In 1911, Taylor published the book “ The
Principle of Scientific Management”
 In this book he suggested that productivity
would increase if jobs were divided into
parts
 The main idea was clear division of work
between managers and workers.
 He emphasized on systematic improvements.
B- ADMINISTRATIVE MANAGEMENT THEORY
(HENRY FAYOL (FRANCE, 1841 - 1925):
 Henry Fayol was the most important exponent of
this theory. The pyramidal form, scalar principle,
unity of command, exception principle, span of
control and departmentalization are some of the
important concepts set forth by Fayol and his
followers like Mooney and Reiley, Simon, Urwick,
Gullick etc.
 Henry Fayol is considered the father of modern theory
of general and industrial management. He divided
general and industrial management into six groups:
 1. Technical activities - Production, manufacture,
adaptation.
 2. Commercial activities - buying, selling and exchange.
 3. Financial activities - search for and optimum use of
capital.
 4. Security activities - protection of property and
persons.
 5. Accounting activities - stock-taking, balance sheet,
cost, and statistics.
 6. Managerial activities - planning, organization,
command, co- ordination and control.
14 FAYOL'S PRINCIPLES OF
MANAGEMENT:

 The principles of management are given below:

 1. Division of work: Division of work or specialization
alone can give maximum productivity and efficiency.
Both technical and managerial activities can be
performed in the best manner only through division of
labour and specialization.
 2. Authority and Responsibility: The right to give order
is called authority. The obligation to accomplish is called
responsibility. Authority and Responsibility are the two
sides of the management coin. They exist together. They
are complementary and mutually interdependent.
 3. Discipline: The objectives, rules and regulations,
the policies and procedures must be honored by each
member of an organization. There must be clear and
fair agreement on the rules and objectives, on the
policies and procedures. There must be penalties
(punishment) for non-obedience or indiscipline. No
organization can work smoothly without discipline -
preferably voluntary discipline.
 4. Unity of Command: In order to avoid any possible
confusion and conflict, each member of an
organization must received orders and instructions only
from one superior (boss).
 5. Unity of Direction: All members of an organization
must work together to accomplish common objectives.
 6. Emphasis on Subordination of Personal Interest to
General or Common Interest: This is also called
principle of co-operation. Each shall work for all and
all for each. General or common interest must be
supreme in any joint enterprise.
 7. Remuneration: Fair pay with non-financial rewards
can act as the best incentive or motivator for good
performance. Exploitation of employees in any manner
must be eliminated. Sound scheme of remuneration
includes adequate financial and nonfinancial incentives.
 8. Centralization: There must be a good balance
between centralization and decentralization of
authority and power. Extreme centralization and
decentralization must be avoided.
 9. Scalar Chain: The unity of command brings about
a chain or hierarchy of command linking all members
of the organization from the top to the bottom. Scalar
denotes steps.

 10. Order: Fayol suggested that there is a place for

everything. Order or system alone can create a sound
organization and efficient management.

 11. Equity: An organization consists of a group of

people involved in joint effort. Hence, equity (i.e.,
justice) must be there. Without equity, we cannot have
sustained and adequate joint collaboration.
 12. Stability of Tenure: A person needs time to adjust
himself with the new work and demonstrate efficiency
in due course. Hence, employees and managers must
have job security. Security of income and employment is
a pre-requisite of sound organization and management.
 13. Esprit of Co-operation: Esprit de corps is the
foundation of a sound organization. Union is strength.
But unity demands co-operation. Pride, loyalty and sense
of belonging are responsible for good performance.
 14. Initiative: Creative thinking and capacity to take
initiative can give us sound managerial planning and
execution of predetermined plans.
C. BUREAUCRATIC MODEL:
 Max Weber, a German Sociologist developed the
bureaucratic model. His model of bureaucracy include
 (i) Hierarchy of authority.
 (ii) Division of labour based upon functional
specialization.
 (iii) A system of rules.
 (iv) Impersonality of interpersonal relationships.
 (v) A system of work procedures.
 (vi) Placement of employees based upon technical
competence.
 (vii) Legal authority and power.
 Bureaucracy provides a rigid model of an
organization. It does not account for important human
elements. The features of Bureaucracy are:-
 1. Rigidity, impersonality and higher cost of controls.
 2. Anxiety due to pressure of conformity to rules and
procedure.
 3. Dependence on superior.
 4. Tendency to forget ultimate goals of the
organization.
 Bureaucratic Model is preferred where change is not
anticipated or where rate of change can be predicated.
It is followed in government departments and in large
business organizations.
 NEOCLASSICAL THEORY
 Neo-classical Theory is built on the base of classical theory. It modified,
improved and extended the classical theory. Classical theory concentrated on job
content and management of physical resources whereas, neoclassical theory gave
greater emphasis to individual and group relationship in the workplace. The neo-
classical theory pointed out the role of psychology and sociology in the
understanding of individual and group behaviour in an organization.
 George Elton Mayo (Australia, 1880 - 1949): Elton Mayo was born in
Australia. He was educated in Logic and Philosophy at St. Peter's College,
Adelaide. He led a team of researchers from Harvard University, which carried
out investigation in human problems at the Hawthorne Plant of Western
Electrical Company at Chicago. They conducted some experiments (known as
Hawthorne Experiments) and investigated informal groupings, informal
relationships, patterns of communication, patterns of informal leadership etc.
Elton Mayo is generally recognized as the father of Human Relations School.
Other prominent contributors to this school include Roethlisberger, Dickson,
Dewey, Lewin etc.
 MODERN THEORY (SYSTEM APPROACH)
 The systems approach to management indicates the fourth major theory
of management thought called modern theory. Modern theory considers
an organization as an adaptive system which has to adjust to changes in
its environment. An organization is now defined as a structured process
in which individuals interact for attaining objectives.
 Meaning of "System": The word system is derived from the Greek
word meaning to bring together or to combine. A system is a set of
interconnected and inter-related elements or component parts to achieve
certain goals. A system has three significant parts:
 1. Every system is goal-oriented and it must have a purpose or objective
to be attained.
 2. In designing the system we must establish the necessary arrangement
of components.
 3. Inputs of information, material and energy are allocated for
processing as per plan so that the outputs can achieve the objective of
the system.
 The Design of a Basic System

Note:
1. Generally there are three basic inputs that enter the processor of the
system namely information (Technology), energy (motive power) and
materials to be transformed into goods.
2. If the output is service, materials are not included in the inputs.
3. If we have a manufacturing company, output are goods or materials.
4. If we have a power generating company, output is energy.
SYSTEMS APPROACH APPLIED
TO AN ORGANIZATION
When systems approach is applied to organization,
 we have the following features of an organization as an open
adaptive system:-
 1. It is a sub-system of its broader environment.
 2. It is a goal-oriented – people with a purpose.
 3. It is a technical subsystem – using knowledge, techniques,
equipment and facilities.
 4. It is a structural subsystem – people working together on
interrelated activities.
 5. It is a psychosocial system – people in social relationships.
 6. It is co-ordinate by a managerial sub system, creating, planning,
organizing, motivating,
 communicating and controlling the overall efforts directed towards
set goals.
CHARACTERISTICS OF MODERN MANAGEMENT
THOUGHT:
 1. The Systems Approach: An organization as a
system has five basic parts -
 (1) Input
 (2) Process
 (3) Output
 (4) Feedback and
 (5) Environment.
 It draws upon the environment for inputs to produce
certain desirable outputs. The success
 of these outputs can be judged by means of feedback.
If necessary, we have to modify
 out mix of inputs to produce as per changing demands.
 4. Multimotivated: Classical theory assumed a
single objective, for instance, profit.
Systems approach recognizes that there may be
several motivations behind our actions and
behaviour. Management has to compromise these
multiple objectives eg: - economic objectives and
social objectives.
 5. Multidisciplinary: Systems approach integrates
and uses with profit ideas emerging from different
schools of thought. Management freely draws
concepts and techniques from many fields of study
such as psychology, social psychology, sociology,
ecology, economics, mathematics, etc.
 Multivariable: It is assumed that there is no simple cause-
effect phenomenon. An event may be the result of so many
factors which themselves are interrelated and interdependent.
Some factors are controllable, some uncontrollable. Intelligent
planning and control are necessary to face these variable factors.
 7. Adaptive: The survival and growth of an organization in a
dynamic environment demands an adaptive system which can
continuously adjust to changing conditions.
 An organization is an open system adapting itself through the
process of feedback.
 8. Probabilistic: Management principles point out only
probability and never the certainty of performance and the
consequent results. We have to face so many variables
simultaneously. Our forecasts are mere tendencies. Therefore,
intelligent forecasting and planning can reduce the degree of
uncertainty to a considerable extent.
CONTINGENCY THEORY
 : Systems approach emphasizes that all sub- systems of an
organization along with the super system of environment are
interconnected and interrelated. Contingency approach analysis
and understands these interrelationship so that managerial
actions can be adjusted to demands of specific situations or
circumstances.
 Thus the contingency approach enables us to evolve practical
answers to problems demanding solutions. Organization design
and managerial actions most appropriate to specific situations
will have to be adopted to achieve the best possible result under
the given situation. There is no one best way (as advocated by
Taylor) to organize and manage. Thus, Contingency Approach
to management emphasizes the fact that management is a
highly practice-oriented discipline.
 Contingency approach guides the manager to be
adaptive to environment. It tells the manager to be
pragmatic and open minded. The contingency
approach is an improvement over the systems
approach. It not only examines the relationships
between sub-systems of the organization, but also
the relationship between the organization and its
environment.
However, the contingency approach suffers from two
limitations:-
 1. It does not recognize the influence of management
concepts and techniques on environment.
 2. Literature on contingency management is yet not
adequate.