PRINCIPLES OF

MANAGEMENT

CHAPTER 1 -
INTRODUCTION
 • Describe the nature and purpose of
management
• Summarise the contributions to
management thought.
• Discuss managerial functions in the
Chapter International environment
• Identify the ethical standard in various
Objectives societies
• Outline the Managerial levels & skills,
• Distinguish Management and
Administration.
 Course Objectives

 On successful completion of this course, students will be

able to
 Explain the elements of effective management.
 Identify the various types of plans and show their inter-
relationships.
 Describe issues involved in managing a diverse workforce.
 Apply the functions of management at the workplace to
effectively meet organizational goals
 Outline the importance of both oral and written
presentations for organizational efficiency.
 Analyse the modern techniques of budgeting under
 THE CONVENTIONAL DEFINITION OF
MANAGEMENT IS GETTING WORK DONE
THROUGH PEOPLE, BUT REAL MANAGEMENT IS
DEVELOPING PEOPLE THROUGH WORK
AGHA HASAN ABEDI

Good management is the art of making

problems so interesting and their solutions so
constructive that everyone wants to get to work
and deal with them
Paul Hawken
Definition
• Management is the art of getting things done through
and with people in formally organized groups – Koontz

• Management is the accomplishment of results through

the efforts of other people

• A setof activities directed at the efficient & effective

utilization of resources in the pursuit of one or more
goals
Concept of Management
1. An art of getting things done
• Gets things done through others – by performing managerial
functions
2. As a process
• Involves a series of interrelated functions
3. As a group
• Used to identify – top management
4. As a discipline
• Emerged as a field of study
Imp Terminologies

• Productivity – O/P & I/P ratio within a time

period with due consideration to quality P=
OP/IP
• Efficiency – ability to minimize the use of
resources in achieving organizational
objectives – i.e. doing things right
• Effectiveness – the ability to determine
appropriate objectives – i.e. doing the right
thing
Management Concept

Human Physical
Resources Resources

Effective &
Managerial Efficient Goals
Activities
Utilization

Financial Informational
Resources Resources
Features of Management
1. Organized activities – group of people are involved
in working towards a common objective e.g.
any MNC, Social club etc

2. Existence of objectives – desired state of affairs

which an organization attempts to realize

3. Relationship among resources – integration of all

management resources

4. Working with & through people – assign activities

5. Decision making – at various levels
Importance of
Management
• Effective utilization of resources

• Development of resources

• To incorporate innovations

• Integrating various interest groups

• Stability in the society

Nature of
Management
• Multidisciplinary – draws ideas - psychology,
sociology, anthropology, economics, statistics

• Dynamic nature of principles – establish cause &

effect relationship of a function

• Management: Science or Art – both

• Management as profession
Schools of Management Thought
• With industrial revolution –
growth of management
techniques

• A series of inventions – by
various scientists

• Emerged schools of
management thought
Contd….
1. Classical theory

2. Neoclassical theory

3. Modern theory
Classical Theory/ Traditional Theory
– Also known as “structural theory of organization”

– In terms of purpose & formal function

– 3 view points
Classical Theory

Scientific Mgt Bureaucratic

Administrative Approach
Mgt
 • Emphasis on – division of labour & specialization, scalar &
functional processes, span of control

Features
• Importance on org. structure - ignoring human element
Classical
Theory • Org. – closed s/m – ignoring the impact of ext environment on org.
work

• e/e’s – motivated – economic rewards

Merits of Classical Theory

• Focuses on functions of mgrs – diff types of mgt.

• Emphasized on the role of financial incentives – motivating e/e’s

• Gives importance to org. & its objectives

• Frederick Winslow Taylor – Father of
Scientific mgt.

• Other contributors – Frank Gilbreth, Lillian Scientific

Gilbreth, Henry Gantt
Mgt
• Concerned with knowing exactly what you Approach
want men to do & then see in that they do it
in the best & cheapest way
 Principles of Scientific Mgt

 Replacement of old rule of thumb method – investigation should be

used – to decide

 Scientific selection & training of workers

 Co-operation b/w labour & mgt. – change of mental attitudes –

“Mental Revolution”
# efforts to increase – production
# creation of mutual trust & confidence
# inculcate – scientific attitude towards problems
 PRINCIPLES OF SCIENTIFIC MGT
CONTD…

• Maximum o/p – instead of restricted o/p

• Equal division of responsibility – b/w mgrs & workers

 Tall versus Flat Organizations
Chief
Chief
Executive
Executive
Tall Organization

hierarchy
Tallhierarchy
Tall

Chief Relatively narrow

Flat Organization Chief
Executive
Executive span of control
hierarchy
Flathierarchy
Flat

Relatively wide
span of control
Technique • Scientific task setting –
a fair days work
• Standardization

s of • Scientific selection &

Scientific • Work study training
- Method study
Mgt - Motion study • Differential piece wage
- Time study plan – low/high
- Fatigue study
• Specialization
• Planning the task • Mass production
Scientific management – Ford Motors
Henry Ford in his new "Quadricycle" in 1896
Rouge River Ford Motor Plant, Model T Ford
Ford's Model T, or "Tin Lizzie," first manufactured in
1909
Ford's Model T
Administrative Mgt…
• Also known as – management process school or
traditional or universalist school

• Henry Fayol – father of Admn. Mgt

• Defined mgt in terms of functions – given 14 principles

• Managerial activity deserve the more attention

14 Principles
1. Division of work – among various e/e – to bring about
specialization in every activity

2. Authority & Responsibility – power to give orders –

A, duty which the e/e is expected to perform by virtue
of his position

3. Discipline – obedience, application, energy &

outward marks of respect
14 Principles Contd…
4. Unity of command – e/e should receive orders from one
superior only

5. Unity of direction – group of activities must have one

head & one plan – body corporate rather than to
personnel (decisions are not made at the top)

6.Subordination of individual interest to the general

interest – reconciliation of objectives of individual
with org.
 7. Remuneration – fair &
just payment – satisfy both
e/e & e/r

14 Principles 8. Centralization – the extent

to which the authority is
Contd… concentrated or dispersed

9. Scalar Chain – chain of

superiors from highest to
lowest ranks – slow &
distortion of communication
14 Principles Contd…
A
B L
C M
D N
E O
F P
G Q
Fayol’s Gang Plank in Scalar Chain
 10. Order – a place for everything
(everyone), & everything (everyone) in
its (his/her) place – material order &
14 Principles social order
Contd…
11. Equity – fair judgement in dealing with
human beings – to enhance loyalty

12. Stability of tenure – Labour Turnover –

cause & the effect of bad mgt.
 13. Initiative – give opportunity to initiate
14 Principles the work - increases morale
Contd…
14. Esprit de corps (union is strength) –
spirit of loyalty & devotion which unites
the group members – enhanced team
work
Bureaucracy
A structure of highly operating
routine tasks achieved through
specialization, very formalized
rules and regulations, tasks
that are grouped into
functional departments,
centralized authority, narrow
span of control, and decision
making that follows the chain
of command.
Bureaucracy contd..
• Org with a legalized formal &
hierarchical structure - bureaucracy

• Developed by – German Sociologist –

Max Weber – father of bureaucratic
mgt

• https://www.cleverism.com/
bureaucratic-vs-matrix-organizational-
structures/
 1. Division of work – both at
operative & admn level – leads
to specialization
2. Hierarchy – s/m of ranking,
authority increases as one
Bureaucracy moves up the ladder in the org
contd.. 3. Rules & Regulations –
procedures laid by the top mgt
4. Impersonal conduct – total
depersonalization
 5. Staffing – tenure of the service –
governed by rules, pay – based on
work & length of service

Bureaucracy 6. Technical competence –

contd.. bureaucrats are selected based on
their technical competency

7. Official records – use of filing s/m

Demerits
• Rigid – inflexible

• Delay & Red Tapism (Unnecessary Bureaucracy

rules) – slow operations
contd..
• Ineffective communication – slow
& chances of distortion
Bureaucracy contd..
• Compartmentalization of
activities – restricts e/e – perform
– preservation of jobs –
redundant

• Empire building – by using

positions
Neo-Classical
Theory
 Neo-classical Theory/ Human
Relations Approach

• Org is a social s/m – human factor is imp

• Father of human relations approach –

Elton Mayo

• Business org – a social s/m

• Individual behavior – influenced by the

informal group
Neo-classical Theory/ Human
Relations Approach contd…

• Monetary reward alone cannot motivate –

psychological needs imp

• Cooperative attitude – results

• Develop social & leadership skills along

with technical skills
Factors affecting Human Relations

Work
Individual Environment

Work Group Leader

 ELTON MAYO
AND
HAWTHORNE EXPERIMENTS
HAWTHORNE EXPERIMENTS
The Master Brains…

• ELTON MAYO
• WHITE HEAD
• FRITZ ROTHISBERGER
• WILLIAM DICKSON

Known as Management guru

Founder of human relations movement.
Author of the book “human problems of
an industrial civilization (1933)
Fritz Roethlisberger
*He was a Social Scientist and
Management Theorist

*He was also the Professor of

Harvard Business School
Hawthorne Studies
(1924 - 1932)
• Hawthorne works of the Western Electric
company Chicago

1. The illumination experiments

• Researcher modified the level of
illumination

• Two groups - control group and

experimental group
 Illumination was
Illumination was
not changed for
changed
the control group
constantly for the
throughout the
experimental
course of
Hawthorne Studies experiment
group

(1924 - 1932) contd…

Experimental
Control group -
group - when
No change of
illumination
illumination -
enhanced
productivity
productivity
increases
increased
 Researchers identified that productivity is
influenced by some other factor
2. Relay assembly room experiments

Hawthorne
Elton mayo and Fritz J. Roethlisberger
Studies (1924 -
1932) contd…
Initially 2 girls were selected for the
experiment
In turn they were asked to choose 4 other
girls
 Hawthorne Studies (1924 - 1932)
contd…
• These girls were placed in a test room where they
had to assemble telephone relays

• Productivity can be identified by variables like

rest pauses, cutting down on work hours,
decreasing temperature and humidity
Relay Assembly Room Experiment
 Findings

Irrespective of the changes made

Hawthorne Studies there was an overall increase in
(1924 - 1932) contd… the productivity

Researcher realized that since the girls

were given a great deal of freedom,
they had formed an informal group,
which also included the observer -
informal organization concept
Hawthorne Studies (1924 - 1932) contd…
3. Interview phase/ Mass Interview
• During the time of experiment 21000 people were interviewed over
three-year period (1928 - 30)
• Social factor – influenced - productivity
 4. Bank wiring observation room experiments
(1931 - 1932)

Aimed to understand the power of an informal

group and peer pressure on workers productivity

Hawthorne Studies (1924 - There are 14 participants

1932) contd…

No change in the physical working conditions

Workers were paid on the basis of an incentive

pay plan
Hawthorne Studies
(1924 - 1932) contd…
• o/p stayed at fairly constant level

• Economic man model behavior is not

seen

• Group acceptance appeared – imp to

workers

• Informal & social relations with in

group
Hawthorne Studies • e/e’s will work hard if they believe – mgt is
(1924 - 1932) concerned about their welfare &
contd… supervisors paid special attention to them
– Hawthorne Effect
 SOCIAL S/M –
INTERACTING PARTS – INFORMAL ORG – TO GROUP DYNAMICS –
ROLES & NORMS DETERMINE ATTITUDE & CHANGE WITH THE
PERFORMANCE GROUP
Contributions of HS/
Features of neo-classical
approach

INFORMAL LEADER – SETS 2 WAY COMMUNICATION

& ENFORCES GROUP – TOP TO BOTTOM & VICE
NORMS VERSA
 Limited focus
on work – Non
gives imp to economic
interpersonal reward
relations
Contributions of HS/
Features of neo-classical
Approach contd…

Over
emphasis on Criticism
group
Dynamic
Engagement
Approach
Dynamic Engagement
Approach contd..
• The view that time & human
relationships are forcing mgt to
rethink traditional approaches in
the face of constant, rapid change

• Continuous change, growth &

activity – dynamic

• Intense involvement with others –

engagement
 6 different mgt themes

Dynamic
Engagement
Approach 6 Management Themes

contd.. • New org environment – showing concern

towards everyone

• Ethics & social responsibility

• Globalization & management

Dynamic Engagement
Approach contd..

• Inventing & reinventing org

• Cultures & multiculturalism

• Quality
Systems Approach/ Modern Mgt.
• Org is a s/m – its components are
interrelated & interdependent
Characteristic of s/m
• s/m is goal oriented
Systems
• Consist of sub s/m’s which are Approach contd..
interrelated

• transformation of i/p in to o/p

• Has boundary
Why System’s
Approach?
Features of systems
approach
• Open s/m view – importance is given to
the environmental factors

• Adaptive s/m – adjust to the changing

environment

• Interdependent sub s/m – all depts. are

interconnected
 Features of systems approach contd..

WHOLE ORG – INTEGRATE SYNERGY – O/P OF A S/M IS

ALWAYS MORE THAN THE
MULTIDISCIPLINARY
SUB S/M’S TO INCREASE
PRODUCTIVITY COMBINED O/P OF ITS PARTS –
MORE PRODUCTIVE WHEN –
INTERACT THAN IN ISOLATION
Contributions of System’s Approach

• Conc on the working of sub s/m – growth

• Change in one sub s/m – impact on other sub s/m,

thus environmental influences were considered

• Problem analysis – in groups – integrated

thinking
 Abstract analysis – fail to
explain the relationship b/w
various sub s/m

Limitations
Limited application – action
framework applicable to all
types of org
What is an
Organization?

• A consciously coordinated social unit,

composed of 2 or more people , that functions
on a relatively continuous basis to achieve a
common goal or set of goals

• Org are sets of people who wk together to

achieve shared goals
Management Roles
Interpersonal Informational Decisional

Figure Head: Performs Nerve Centre: Much of the Entrepreneur: Acts as an

certain functions such as non routine information initiator and designer of
receiving important coming into the organization controlled change in the
visitors and signing is received by the manager organization
documents
Leader: Motivates and Disseminator: Must transmit Disturbance handler: Non-
encourages subordinates much of the information routine problems must be
received to subordinates dealt with.

Liaison: Establishes and Spokesperson: Information Resource allocator:

maintains a network of about the organization must Allocates the monetary
relationships with be transmitted to the and non monetary
outsiders outsiders resources

Negotiator: Frequently
must negotiate with the
outsiders in the matters
affecting the organization
 1.Technical skill: an ability to use a special proficiency or expertise
relating to a method, process or procedure

2. Human skill:

Managers should be able to work with the good understanding of

Management people coupled with the art of motivating them

Skills Human skills help mgrs – motivate e/e & obtain desired behavior
– showing concern for the e/e family probl

Without the cooperation of employees, managers cannot run the

organization smoothly and achieving goals will be difficult

3. Conceptual skills: it is the ability to analyze the complex

situations rationally process and interpret available information.
Managerial Functions

• Planning
• Organizing
• Staffing
• Directing
• Controlling