Principles and Practices of Management

CEOS QUOTES On BUSInESS

When you innovate, youve got to be prepared for everyone telling you youre nuts. Larry Ellison, CEO, Oracle Takeaway: Behind most great and successful products or businesses are entrepreneurs who were turned down a hundred times.

CEOS QUOTES On BUSInESS

Your most unhappy customers are your greatest source of learning. Bill Gates, Chairman and former CEO, Microsoft Takeaway: Spend time understanding and analyzing your mistakes and failures. Any customer that turned you down - if you can get them to talk - is a tremendous resource for boosting your business.
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Companies fail when they become complacent and imagine that they will always be successful. So we are always challenging ourselves. Even the most successful companies must constantly reinvent themselves.
--Bill Gates
Chairman and Chief Software Architect Microsoft

Unit 1
Concept, Nature, Scope and importance of Management and Organization. Overview of management process, roles, functions and Skills Ethics, Values & Social Responsibility of Business Evolution of Management Thought

What is Management?
The attainment of organizational goals in an effective and efficient manner through: Planning, Organizing, Leading, and Controlling of organizational resources.

Concept of Management
Management has decision oriented definition, people oriented definition, function oriented definition and production or efficiency oriented etc. definition.

Concept of Management
There is no precise definition of management. Generally management is defined as follow; Management is the process involving planning, organizing, staffing, directing and controlling human efforts to achieve stated objectives in an organization.

Concept of Management
Management may be defined as a process whereby scarce resources (human, material, & financial) are combined to achieve organizational goals. Without management, people would pursue their own objectives independently and this would lead to waste & inefficiency.

Concept of Management
According to Harold Koontz, Management is an art of getting things done through and with the people in formally organized groups. It is an art of creating an environment in which people can perform and individuals and can co-operate towards attainment of group goals. According to F.W. Taylor, Management is an art of knowing what to do, when to do and see that it is done in the best and cheapest way.

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Management in the New Millennium

A firm can be efficient by making the best use of people, money, physical plant, and technology. It is ineffective if its goals do not provide a sustained competitive advantage. A firm with excellent goals would fail if it hired the wrong people, lost key contributors, relied on outdated technology, and made poor investment decisions.

NATURE OF MANAGEMENT
The study and application of management techniques in managing the affairs of the organization have changed its nature over the period of time . Therefore the nature of management can be described as follow; Multidisciplinary Dynamic nature of principles
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NATURE OF MANAGEMENT
Relative, not absolute principles Management: Science or Art Management as Profession Universality of Management

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Management as Disciplinary
Although management has been developed as a separate discipline, it draws knowledge and concepts from various disciplines. It draws freely ideas and concepts from psychology, sociology, anthropology, economics, ecology etc. The integration of knowledge of various disciplines is the major contribution of management and this integrated discipline is known as management.
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Dynamic nature of principles

Principle is a fundamental truth which establishes causes and effect relationships of function. These principles are flexible in nature and with the changes in the environment in which an organization exists. Because of the continuous development in the field, many older principles are being changed by new Principles. In fact, there is nothing permanent in the landslide of management.
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Relative, not absolute Principle

Management principles are relative, not absolute and they should be applied according to the need of the organization. Each organization may be different from others. The difference may exits because of time, place, socio-culture factors etc. Individuals working within the same organization may also differ. Management practices are situational and conditional.
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MANAGEMENT: SCIENCE OR ART

There is a controversy whether management is science or art. Management is both science and Art. The technical aspects as research statistics are parts of science Organization culture, human behaviour for example are both art and science. Innovativeness, creativity, man handling is an art.
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Management as Profession
Existence of knowledge Acquisition of Knowledge Profession Association Ethical Codes Service motive Management as Emerging profession

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Management: a PROFESSION?
The following main points seem relevant: There must exist a body of principles, skills & techniques and specialized knowledge. There must be formal methods of acquiring training & experience. An organization should be established which forms ethical codes for the guidance & conduct of members.
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Universality of Management
Arguments for universality Distinction between management fundamental and techniques/ practice. Management as a process
A Process is a systematic way of doing things. Management as a process has
Planning Organizing Leading Controlling

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NATURE OF MANAGEMENT
Management is Goal-Oriented Management integrates Human, Physical and Financial Resources Management is Continuous Management is all Pervasive Management is a Group Activity

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SCOPE OF MANAGEMENT
Production Management
(a) designing the product (b) location and layout of plant and building (c) planning and control of factory operations (d) operation of purchase and storage of materials (e) repairs and maintenance (f) inventory cost and quality control (g) research and development etc.

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SCOPE OF MANAGEMENT
Marketing Management
Marketing involves following activities (a) Marketing research to determine the needs and expectation of consumers (b) Planning and developing suitable products (c) Setting appropriate prices (d) Selecting the right channel of distribution, and (e) Promotional activities like advertising and salesmanship to communicate with the customers
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SCOPE OF MANAGEMENT
Financial Management
(a) Selecting the appropriate source of funds (b) Raising the required funds at the right time (c) Administration of earnings (d) Estimating the volume of funds

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SCOPE OF MANAGEMENT
Human Resource Management (a) Manpower planning (b) Recruitments (c) Selection (d) Training and Development (e) Performance Appraisal (f) Promotions and transfers (g) Compensation Administration (h) Employee welfare services, and (i) Personnel records and research, etc.
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SCOPE OF MANAGEMENT IN FUTURE

An awareness of & ability to relate to the economic, social, and political environment. An ability to manage in a turbulent environment. An ability to manage with complex organizational structures. An ability to be innovative & initiate change. An ability to manage & utilize increasingly sophisticated information systems. An ability to manage people with widely different & changing values and expectations.
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The Business World Today

Constant change!
Technology Society Environment Competition Diversity

IMPORTANCE OF MANAGEMENT
It helps in Achieving Group Goals Optimum Utilization of Resources Reduces Costs Establishes Sound Organization Establishes Equilibrium Essentials for Prosperity of Society

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Organization
Definition of Organization When two or more people work together in a structured way to achieve a specific goal or set of goals an organization is formed.

Thus, an organization is a social entity that is goal directed and deliberately structured.
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Organization
Organizations are basically classified on the basis of relationships. There are two types of organizations formed on the basis of relationships in an organization Formal Organization Informal Organization

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Effectiveness and Efficiency

Organizational effectiveness is the degree to which the organization achieves a stated goal, or succeeds in accomplishing what it tries to do. (Effectiveness means Doing The Right Thing)

Organizational efficiency refers to the amount of resources used to achieve an organizations goal. (Efficiency means Doing Things Right)

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Formal organization
It refers to a structure of well defined jobs each bearing a measure of authority and responsibility. It is a conscious determination by which people accomplish goals by adhering to the norms laid down by the structure. This kind of organization is an arbitrary set up in which each person is responsible for his performance. Formal organization has a formal set up to achieve pre- determined goals.
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Informal organizations
It refers to a network of personal and social relationships which spontaneously originates within the formal set up. They develop relationships which are built on likes, dislikes, feelings and emotions. Therefore, the network of social groups based on friendships can be called as informal organizations. There is no conscious effort made to have informal organization. It emerges from the formal organization and it is not based on any rules and regulations as in case of formal organization.
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TODayS ORGanIzaTIOnS
More decentralization

Employees have more autonomy to define their jobs, prioritize tasks, allocate time, monitor their own work, and set their own objectives. Empowerment allows employees to be less dependant on superiors to tell them what to do, and are encouraged to use their own ideas. Department barriers are breaking down by creating more teams.

Unit 1
Completed Till Now Concept, Nature, Scope and importance of Management and Organization. Overview of management process, roles, functions and Skills Ethics, Values & Social Responsibility of Business Evolution of Management Thought
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OVERVIEW OF Management Process

Three ways to examine how management works: Tasks performed Planning, organizing, staffing, leading, controlling Roles played (set of behaviors associated with a particular job) Interpersonal, information-based, decisionmaking Skills needed Conceptual, human relations, technical

Management PROCESS
Planning Organizing

Leading

Controlling

Planning
The management function that assesses the management environment to set future objectives and map out activities necessary to achieve those objectives. To be effective, the objectives of individuals, teams, and management should be coordinated to support the firms mission.

Organizing
The management function that determines how the firms human, financial, physical, informational, and technical resources are arranged and coordinated to perform tasks to achieve desired goals.

The deployment of resources to achieve strategic goals.

Leading
The management function that energizes people to contribute their best individually and in cooperation with other people.

This involves:
Clearly communicating organizational goals Inspiring and motivating employees Providing an example for others to follow Guiding others Creating conditions that encourage management of diversity

Controlling
The management function that measures performance, compares it to objectives, implements necessary changes, and monitors progress. Many of these issues involve feedback or identifying potential problems and taking corrective action.

The Process of Management

Planning Select goals and ways to attain them

Resources
Human Organizing

Performance Attain goals Controlling Monitor activities and make corrections Products Services Assign responsibility for task accomplishment Efficiency Effectiveness

Financial
Raw Materials Technological Information

Leading
Use influence to motivate employees

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Management Roles
All organizations exist for certain purposes or goals and managers are responsible for combining and using organizational resources to ensure that their organizations achieve their purposes. The role of the Management is to move an organization towards its purposes or goals by assigning activities that organization members perform.

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Management Roles
Managers have authority within organizations Managers take on different roles to best use their authority
Interpersonal roles Information-related roles Decision-making roles

Management Roles
Interpersonal roles
A managers relationships with people Providing leadership with the company Interacting with others outside the organization Senior managers spend much of their time on interpersonal roles Represent the company in its relations with people outside the company, interacting with those people, and providing guidance and leadership to the organization Determine a companys culture

Management Roles
Information-related roles
Provide knowledge, news or advice to employees Holding meetings Finding ways of letting employees know about important business activities

Decision-making roles
Makes changes in policies, resolves conflicts, decides how to best use resources Middle and supervisory managers spend more time resolving conflicts than senior managers

Ten Managerial Roles

Informational Monitor Disseminator

Interpersonal Figurehead Leader

Decisional Entrepreneur Disturbance handler Resource allocator Negotiator

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Spokesperson

Liaison

Relative Amount of Emphasis Placed on Each Function of Management

CHANGING ROLES WITH CHANGING LEVELS OF MANAGEMENT

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CHANGING ROLES WITH CHANGING LEVELS OF MANAGEMENT

The role of the top management can be summarized as follows Top management lays down the objectives and broad policies of the enterprise. It issues necessary instructions for preparation of department budgets, procedures, schedules etc. It prepares strategic plans & policies for the enterprise.
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CHANGING ROLES WITH CHANGING LEVELS OF MANAGEMENT

It appoints the executive for middle level i.e. departmental managers. It controls & coordinates the activities of all the departments. It is also responsible for maintaining a contact with the outside world. It provides guidance and direction. The top management is also responsible towards the shareholders for the performance of the enterprise.
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CHANGING ROLES WITH CHANGING LEVELS OF MANAGEMENT

ROLES at Middle Level of Management They execute the plans of the organization in accordance with the policies and directives of the top management. They make plans for the sub-units of the organization. They participate in employment & training of lower level management. They interpret and explain policies from top level management to lower level.
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CHANGING ROLES WITH CHANGING LEVELS OF MANAGEMENT

They are responsible for coordinating the activities within the division or department. It also sends important reports and other important data to top level management. They evaluate performance of junior managers. They are also responsible for inspiring lower level managers towards better performance.
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CHANGING ROLES WITH CHANGING LEVELS OF MANAGEMENT

ROLES at Lower Level of Management
Assigning of jobs and tasks to various workers. They guide and instruct workers for day to day activities. They are responsible for the quality as well as quantity of production. They are also entrusted with the responsibility of maintaining good relation in the organization. They communicate workers problems, suggestions, and recommendatory appeals etc to the higher level and higher level goals and objectives to the workers.
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CHANGING ROLES WITH CHANGING LEVELS OF MANAGEMENT

They help to solve the grievances of the workers. They supervise & guide the sub-ordinates. They are responsible for providing training to the workers. They arrange necessary materials, machines, tools etc for getting the things done. They prepare periodical reports about the performance of the workers. They ensure discipline in the enterprise. They motivate workers. They are the image builders of the enterprise because they are in direct contact with the workers.
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Management Skills
Conceptual skills
Skills that help managers understand how different parts of a business relate to one another and to the business as a whole Decision making, planning, and organizing

Management Skills
Human relations skills
Skills managers need to understand and work well with people Interviewing job applicants, forming partnerships with other businesses, resolving conflicts

Management Skills
Technical skills
The specific abilities that people use to perform their jobs Operating a word processing program, designing a brochure, training people to use a new budgeting system

Management Skills
All levels of management require a combination of conceptual, human relations, and technical skills
Conceptual skills most important at senior management level Technical skills most important at lower levels Human relations skills important at all levels

Relationship of Conceptual, Human, and Technical Skills to Management Level

Management Level Top Managers Middle Managers First-Line Managers Non-managers (Personnel) Conceptual Skills Human Skills Technical Skills

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Crisis Management
Stay Calm Be visible

Crisis Management Skills

Put people before business

Know when to get back to business

Tell the truth

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Management Competencies of Today

Embrace ambiguity Create organizations that are:
Fast Flexible Adaptable Relationship-oriented Leadership Staying connected to employees and customers Team building Developing a learning organization

Focus on:

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Unit 1
Completed Till Now Concept, Nature, Scope and importance of Management and Organization. Overview of management process, roles, functions and Skills Ethics, Values & Social Responsibility of Business Evolution of Management Thought
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Ethics, Values & Social Responsibility of Business

chapter 1

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Ethics, Values & Social Responsibility of Business

Business ethics (also known as corporate ethics) is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business conduct and is relevant to the conduct of individuals and entire organizations. Business ethics reflects the philosophy of business, one of whose aims is to determine the fundamental purposes of a company.
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Business Values at Abbacus Technologies

Business Purpose We create superior value for our customers, employees, communities and investors through the production, conversion, optimization, delivery of software products and through steadfast adherence to our business values. Business Values As Abbacus Technologies employees and representatives conduct business around the world, we uphold these business values in all our relationships:
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Business Values at Abbacus Technologies

Integrity

We behave ethically. We tell the truth. We keep our commitments. We meet both the spirit and letter of the law.
We care about people and the world in which we live. We operate safely. We are environmentally responsible. We strengthen our communities.
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Stewardship

Business Values at Abbacus Technologies

Inclusion

We value diversity and respect the dignity of each person. We value differences in people and perspectives. We build relationships based on mutual trust. We recognize the contributions of every individual.
We lead the way. We have the courage and creativity to shape the future. We have the discipline to manage risks. We act with speed and decisiveness.
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Initiative

Business Values at Abbacus Technologies

Teamwork
We work together to achieve superior results. We share ideas and talents to develop solutions. We support and rely on each other. We value clear and open communications.

Accountability
We take responsibility for our actions. We live our values. We set clear goals, measure results, and seek to improve.
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Ethics, Values & Social Responsibility of Business

Corporate social responsibility (CSR, also called corporate conscience, corporate social performance, or sustainable responsible business) is a form of corporate self-regulation integrated into a business model. The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere.
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Ethics, Values & Social Responsibility of Business

Furthermore, CSR-focused businesses would proactively promote the public interest(PI) by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. CSR is the deliberate inclusion of PI into corporate decision-making, that is the core business of the company or firm, and the honouring of a triple bottom line: people, planet, profit.
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Unit 1
Completed Till Now Concept, Nature, Scope and importance of Management and Organization. Overview of management process, roles, functions and Skills Ethics, Values & Social Responsibility of Business Evolution of Management Thought
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The Evolution of Management Thought

Early Management Thought Administrative Management Approach

Contemporary Management Approach

Behavioral Perspective

Operational Perspectives

Bureaucratic Management Approach

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Early Influences
In the period 1400 to 1450, merchants in Venice, Italy, operated various types of business organization, e.g. partnerships, trusts & holding companies. Control emerged in the form of a double-entry book-keeping system & related documentation & records. Also, there was standardization of material & systems of inventory control.
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Early Management Thought

Early ideas about management strategy
Sun Tzu, The Art of War

Early ideas about leadership

Nicol Machiavelli, The Prince

Early ideas about the design and organization of work

Adam Smith, The Wealth of Nations
division of labor

Classical Perspective

Emphasized a rational, scientific approach to the study of management. Sought to make organizations efficient.

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Classical Perspective Three Subfields

1. Scientific management 2. Administrative principles 3. Bureaucratic organizations

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TaylORS FOUR PRInCIPlES OF Scientific Management

Scientifically study each part of a task and develop the best method of performing the task. Carefully select workers and train them to perform the task by using the scientifically developed method. Cooperate fully with workers to ensure that they use the proper method. Divide work and responsibility so that management is responsible for planning work methods using scientific principles and workers are responsible for executing the work accordingly.

Bureaucratic Management Approach

Max Weber Key Characteristics Specialization of labor Formal rules and procedures Impersonality Well-defined hierarchy Career advancement based on merit

Administrative Management Approach

Henry Fayols (1841-1925) in his book General and Industrial Management (1916) mentioned 14 Principles of Management:

Division of work Authority

Centralization The hierarchy Order Equity Stability of staff Initiative Esprit de corps

Discipline
Unity of command Unity of direction

Subordination of individual interest to the general interest

Remuneration

Behavioral Perspective
Mary Parker Follett & the Hawthorne Studies Mary Follett questioned the wisdom of scientific management because she believed it ignored many ways in which employees could contribute ideas and exercise initiative. She advocated increased employee participation, autonomy, and organization of teams It acknowledges that psychological and social processes of human behavior can result in improvements in productivity and work satisfaction.

Behavioral Perspective
The Hawthorne effect - when a manager shows concern for employees, their motivation and productivity levels are likely to improve. Human Relations Approach - the relationship between employees and a supervisor is a vital aspect of management.

Employee motivation Leadership style

Behavioral Viewpoint: Behaviorism, Human Relations, & Behavioral Science

Hugo Munsterberg - father of industrial psychology
1. Study jobs and determine which people are best suited to specific jobs 2. Identify the psychological conditions under which employees do their best work 3. Devise management strategies to influence employees to follow managements interests

Humanistic Perspective
Emphasized understanding human behavior.
Dealt with needs & attitudes in the

workplace. Truly effective control comes from within the individual worker rather than authoritarian control. Hawthorne Studies brought this perspective to forefront.

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MaSlOwS HIERaRCHy OF nEEDS

Theory X & Y
Theory X
People are lazy People lack ambition Dislike responsibility People are selfcentered People dont like change

Theory Y
People are energetic People want to make contributions People do have ambition People will seek responsibility

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MCGREGORS THEORy X anD Theory Y

Leaders and managers who hold Theory X assumptions believe that employees are inherently lazy and lack ambition.
A negative perspective on human behavior.

Leaders and managers who hold Theory Y assumptions believe that most employees do not dislike work and want to make useful contributions to the organization.
A positive perspective on human behavior.

Quantitative Viewpoints: Management Science & Operations Research

Management science
Stresses the use of rational, science-based techniques and mathematical models to improve decision making and strategic planning

The Operational Perspective

Scientific Management
Frederick W. Taylor

Quantitative Management
Ford W. Harris

Quality Management
Walter A. Shewhart

Contemporary Management Approach

Systems Theory Contingency Theory The Learning Organization Perspective

The Contemporary Perspective

Systems Theory
Views the organization as a system of interrelated parts that function in a holistic way to achieve a common purpose. Systems theory concepts that affect management thinking:
Open and closed systems Subsystems Synergy Equifinality

Systems Viewpoint
Systems viewpoint
regards the organization as a system of interrelated parts collection of subsystems part of the larger environment

Systems Viewpoint
Open system
continually interacts with its environment

Closed system
has little interaction with its environment

Contingency Theory
States that there is no one best way to manage an organization.
Because what works for one organization may not work for another Situational characteristics (contingencies) differ Managers need to understand the key contingencies that determine the most effective management practices in a given situation

Contingency Viewpoint
Contingency viewpoint
emphasizes that a managers approach should vary according to the individual and the environmental situation Most practical because it addresses problems on a case-by-case basis

Quality-Management Viewpoint
Quality control
the strategy for minimizing errors by managing each stage of production

Quality assurance
focuses on the performance of workers, urging employees to strive for zero defects

Quality-Management Viewpoint
Total quality management (TQM)
comprehensive approach-led by top management and supported throughout the organization-dedicated to continuous quality improvement, training, and customer satisfaction

Total Quality Management

1. Make continuous improvement a priority 2. Get every employee involved 3. Listen to and learn from customers and employees 4. Use accurate standards to identify and eliminate problems

Emerging Perspectives and Issues

The Modular Organization
Every function not regarded as crucial is outsourced to an independent organization. Disaggregated Corporation

The Intangible Organization

Shifts from tangible (plant and equipment) to intangible (know-how and product design) investments Mangers and employees in todays companies focus on opportunities rather than efficiencies

Management Perspectives Over Time

The Technology-Driven Workplace The Learning Organization Total Quality Management Contingency Views Systems Theory Management Science Perspective Humanistic Perspective Classical Perspective
1890 1940 1960 1980 2000 2010

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Unit 1
Completed Till Now Concept, Nature, Scope and importance of Management and Organization. Overview of management process, roles, functions and Skills Ethics, Values & Social Responsibility of Business Evolution of Management Thought
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