CHAPTER 1

NATURE OF MANAGEMENT

1.1 Introduction
1.2 Administration, Organization and Management: Meaning and Definition
1.3 Nature of Management
1.4 Management is an Art, a Science and a Profession
1.5 Objectives and Goals of Management
1.6 Functions of Management
1.7 Levels of Management
1.8 Managerial Skills
1.9 Managerial Roles
1.9 Distinguish between Management and Administration

1.1 INTRODUCTION
In the modern times one of the most important human activities is managing group of people.
Ever since people began forming groups to accomplish aims they could not achieve as
individuals, managing has been essential to ensure the coordination of individual efforts. As
society has come to rely increasingly on group effort and as many organized groups have
become large the task of managers has been rising in importance.

1.2 CONCEPT RELATED TO MANAGEMENT;

Administration; is the force which lay down the objectives for which an organization and its
management are to strive and broad policies under which they are to be operate.
Or is the part of management which is concern with the installation of and carrying out the
procedure by which the process of activities is regulated and checked against plans.

Organization; is a group of people with a common purpose who work together to achieve
shared goals. Or is a social entity that is goals directed and deliberately structured.

Management; Management is an important factor for the success of any organized activity.
Today management basically concern with changes and challenges, and it is difficult to manage.
Management is an art of getting things done through others. Management is to plan, organize,
direct and control the resources of the organization for obtaining common objectives or goals. It
is related with resources like material, money, machinery, methods, manufacturing and
marketing. Management principles are universal in nature. Management is necessary for all types
of organization, such as public sector, private sector, govt. department, hotel, hospital, hostels,
educational institutes, require management for several growth and expansion.
1) According to Taylor:-
―Management is the art of knowing what you want to do and then seeing that it is done in the
best and cheapest way.‖

2) According to Lawrence:-
―Management is the accomplishment of results through the efforts of other people.‖

3) According to Henry Fayol:-

―To manage is to forecast and to plan, to organize, to co-ordinate and to control.‖ in nature.

Generally, management can be defined as the utilization of organization‘s resources to achieve

specific objectives through the function of planning, organizing, leading and controlling. An
organizational resource traditionally divided into three; human, financial and physical
resources, but recently development technological resources become important in the aspect of
management.

NATURE/ CHARACTERISTICS OF MANAGEMENT

1Management is goal oriented:

Management is concern with achievement of specific goals. It is always directed towards
achievement of objectives. The success of management is measured by the extent to which
objectives are achieved.

2 Management is a group activity;

The business comes into existence with certain objectives which are to be achieved by a group
and not by one person alone. Management gets things done by, with and through the efforts of
group members. It co-ordinates the activities and actions of its members towards a common goal.

3 Management is continuous process:

Management it is a never ending process. It is concerned with constantly identifying the problem
and solving them by taking adequate steps. It‘s on-going process.

4 Management is a discipline:
Management specifies a certain code of conduct for manager and indicates various methods of
managing an organization.

5 Management is universal:
Most of the principles and techniques of management are universal in nature.
They can be applied to government organization, military, educational institutes, religious
institutes etc. They provide working guidelines which can be adopted according to situations.
6 Management is integrating process:
Management undertakes the job of bringing together human, physical and financial resources so
as to achieve organizational purpose. Therefore, is an important function to bring harmony
between various factors.

7. Management is all pervasive;

Management required in all types of organization whether it is political social, cultural or
business because it helps and direct various efforts toward a defined purpose.

8 Management is an art, science and profession:

Management makes use of science as well as art. It is science because it collects knowledge with
the methods and data, analyzes and measures it and decision is taken with the help of
experiment. It is a systematic body of knowledge. Art means application of knowledge for
solving various problems. In modern times there is separation of ownership and management, so
professional experts are appointed.

MANAGEMENT IS AN ART, A SCIENCE AND A PROFESSION

Management is treated as art, science and profession because it has some characteristics of an
art, a science and a profession.

Management is an art because:

1. Practical knowledge; manager require to work practically with those principles of
management rather than using theory.
2. Personal skill; require to add their own skill, ability and knowledge to differentiate
him/her with other manager.
3. Creativity; manager must be creative in nature to ensure that human and non- human
resources are integrating.
4. Perfection through practice; practice makes a man perfect. Therefore every manager
must practice the principles of management in order to be perfect.
5. Goal oriented; A manager is responsible like other art to ensure that various resources
like human resource, materials, machinery, are utilized to achieve the desired goals.

Management as a science;
1. Universal acceptable principles; Like other science, also management includes some
universal principle which accepted in all organization worldwide such as principles of
unit of command.
2. Experimentation and observation; Management principles also based on scientific
enquire and observation. Such as the idea of Fredrick Taylor. Example in mgt it‘s
observed that fair remuneration to personnel helps to creating a satisfied workforce.
 3. Cause and Effect relationship; every science based on the relationship between cause
and effect but also in management, manager is required to see the cause and relate with
the impact of the cause. For example, loss is resulted from poor performance.

Management as a profession:-
1. Specialized knowledge; every profession must have a certain specialized knowledge;
similarly a manager also must be have devotion and involvement to acquire expertise in
the field of profession.
2. Social obligation; Profession is source of livelihood and responsible to motivate the
society, similarly, a manager is responsible not only to its owner but also to the society
and therefore is expected to provide quality goods at reasonable price to the society.
3. Code of conduct; Members of profession have to abide by code of conduct which
contains a certain rules and regulations, norms of honesty, integrity and special ethics, but
also manager must be work with the code of ethics and conduct.
4. Representative Association; For the regulation of profession, existence of representative
body is a must. Therefore, a professional manager must require having a body of
representative association.

OBJECTIVES OF MANAGEMENT
The major aim of management in contemporary organizations includes the following objectives.
These are;
1. Getting maximum result with minimum effort.
2. Increase the efficient and effective in the utilizations of resources.
3. Maximum prosperity for employer and employee‘s.

GOALS OF MANAGEMENT
The major task of management is to focus on the general desirable conditions to be
achieved within specific period of time. Therefore the goals of management include the
following,
1. To increase employee‟s motivation, this is made within an organization by the
management which is responsible for their employees by attracting them through
allowing them to enjoy continuous motivation such as to increase salary, time of work
etc.
2. Customer satisfaction, management always focuses on the aspect of satisfying the
demand of their customers in order to benefit from the quality products produced
within an organization‘s. To creates a good relationship with their clients for their
satisfaction.
3. Increase profit, in an organization, management is the major group which is
responsible to allocate the resources to each department within an organization with
 the aim of achieving the profit and not loss. It‘s the task of the management to ensure
that an organization is based on profit-oriented within a specific time.

LEVELS OF MANAGEMENT

Levels of management are the line of demarcations between various managerial

positions in the organization. The number of management increase when the size of
the business and workforce increase &vice-versa. Levels of management divided into
three types as follows;

1. Top level/ Administrative level.

It consists of board of director, chief executive or managing director. The top
management is the ultimate source of authority and it manages goals and policies for
an enterprise. It devotes more time on planning and coordinating function.

Roles of top level management

1. Top management lays down the objectives and broad policies of the enterprise.
2. It issue necessary instruction for the preparation of department budget, procedures
and schedule.
3. It control and coordinating the activities of all departments.

2. Middle level of management.

This branch includes managers and a departmental manager constitutes middle level. They are
responsible to the top management for the functioning of their department.

3. Lower level of management.

It‘s also called a supervisory/ operative level of management. It consists of supervision,
foreman, section officers, superintended etc.
 TOP/
ADMINISTRATIVE
LEVEL
MANAGEMENT

MIDDLE LEVEL
MANAGEMENT

LOWER LEVEL OF
MANAGEMENT

The figure above clearly shows the degree of administration and management performed by the
different levels of management.

MANAGERIAL SKILLS

1. Conceptual Skills
Conceptual skills are the abilities to think about the creative terms understand and visualize the
future, to organize and translate observation into ideas & concepts. Conceptual skills are
essential to identify and diagnose the problems. This will helpful in determining the goals.

2. Analytical Skills [Decision making]

Analytical skills mean ability to work out a complex problem or situation into component.
Analytical skills are required for solving problems and decision making. This is also helpful for
evaluation of performance and arriving at judgment.

3. Human Skills
Human relation skills represent the ability to understand the behavior of people, their problems,
their needs, working conditions and motivation to people. These skills are essential in directing
the people and for better coordination.

4.Technical Skills
These skills are essential for first line managers. He requires knowledge of a job, ability to apply
the methods and techniques of job. He is responsible for providing technical guidance and
instructions to subordinates.
5.Communication Skills
Communication is systematic process of telling, listing and understanding. This skill requires the
ability of listening and speaking in an effective manner. The manager is responsible for getting
the things done by others. He should be expert in oral and written communication.
Communication skill is essential for getting success. It is depend upon the manager who achieves
the results with efforts of others. Co-ordination can be attained with the help of proper
communication. Success is depends upon proper communication.

MANAGERIAL ROLES;

In management, basically manager required to perform the following responsibilities;

1. Interpersonal roles cover the relationships that a manager has to have with others. In
this type, manager is responsible to ensure integration of employees within organization.

The three roles within this category are figurehead, leader and liaison.

 Figureheads Role; A manager must be a figurehead because of their formal authority

and symbolic position, representing their organizations.
 Leader Role; managers have to bring together the needs of an organization and those of
the individuals under their command.
 Liaison Role; deals with the horizontal relationships which work-activity studies have
shown to be important for a manager. A manager has to maintain a network of
relationships outside the organization.

2. Informational Role; Managers have to collect, disseminate and transmit information within
an organization and have three corresponding namely

 Monitor; A manager is an important figure in monitoring what goes on the organization,

 Disseminator Role; receiving information about both internal and external events and
transmitting it to others.
 Spokesperson Role; A manager often has to give information concerning the
organization to outsiders, to both the general public and those in positions of influence.

3. Making decisions Role; this is concerning with the issue related to identify and evaluating
the alternative to solve the problems. The four roles that he places in this category are based on
different classes of decision, namely,

 Entrepreneurs, As entrepreneurs, managers make decisions about changing what is

happening in an organization. They may have to both initiate change and take an active
part in deciding exactly what is to be done.
  Disturbance handle; manager is central to much organizational analysis. Clearly, a
manager has to make decisions which arise from events beyond their control and
unpredicted.
 Resource allocator, manager has to make decisions about the allocation of money,
people, equipment, time.
 Negotiator. A manager has to negotiate with others and in the process be able to make
decisions about the commitment of organizational resources.

THE DIFFERENT BETWEEN MANAGEMENT AND ADMINISTRATIONS

The concept of management and administration seems to be synonymous but differ in different
ways. The different between management and administration can be divided into two ways,
1. Based on functions
2. Bases on the usage/applicability

1. BASED ON THE FUNCTIONS

Meaning Management is n art of getting things done through others by directing their
effort towards achievements of pre-determined goals. While Administration, it
concerned with formulation of broad policies, plans and objectives.

Nature, management is an executive function while administration is a decision

making function.

Process, management decides who should as it and how should he/she does it while
administration decides what is to be done and when it is to be done.

Function, Management is a doing function because manager get work done under
their supervision while administration is a thinking function because plans and
policies are determined under it.

Skills, in management include only Technical and Human skills while administration
includes Conceptual and Human skills.

Level, management includes middle and lower levels while administration includes
only the Top level.
 2. ON THE BASIS OF USAGE/ APPLICABILITY

Applicability, management it is mostly applicable to business concerns that is profit

–making organization while administration it is applicable to non- profit business
concerns such as schools, hospitals etc.

Influence, the management decision are influenced by the values, opinions, beliefs
and decisions of the managers while the administration is influenced by public
opinions, government, policies, religious, organizations etc.

Status, management constitutes the employees of the organization who are paid
remuneration (in the form of salaries and wages) while administration represents
owners of the enterprise who earn return on their capital invested and profits in the
form of dividend.

NOTE;
Practically, there is no different between management and administration. Every
manager is concerned with both- administrative management function and operative
management function as shown in the figure. However, the manager who are higher
up in the management denote more time on administrative function and the middle
and lower levels denote more time on directing and controlling worker‘s performance
i.e. management.

FUNCTIONS OF MANAGEMENT
The major functions of management are discussed below:

1. PLANNING FUNCTION:
Planning is the basic function of management. It includes forecasting, formation of objectives,
policies, programmes, producer and budget. It is a function of determining the methods or path
of obtaining their objectives. It determines in advance what should be done, why should be done,
when, where, how should be done. This is done not only for organization as a whole but also for
every division, section and department. Planning is thinking before doing.

APPROACHES TO PLANNING;
1. Participatory Approach; it include all members of the organization and others
stakeholders in planning of the organization.
2. Non- participatory; it includes only a few individual to decide the planning of the
organization. Few individuals always include only the management which decide and
formulate the plan of the organization. Other employees and stakeholders were not
considered in planning.
3. Scientific approach; in this approach, the plan formulated by considering the scientific
process which involve the steps to formulate the best plan.
 4. Traditional approach; this is a routine approach which base on a simple way to formulate
the plan of the organization. In this approach basically, consider the estimation or ‗‘rule of
thumb‘‘.

PROCESS OF PLANNING
The steps involved in planning process are described as follows:-

1) Identification of problems & awareness of opportunities:-

The manager must identify the problems while planning so that suitable action can be taken. This
will help to take further steps for completing the objectives.

2) Establishing Objectives: -
The entire planning activity is directed towards achieving the objectives of the enterprise.
Determining objectives is a real starting point of planning process. Once the objectives are fixed
it is necessary to finalize objectives for various department.

3) Establishing Planning Premises: -

Premises are forecast about the future. Premises may be internal or external; it may be
controllable & uncontrollable. Normally, internal premises are controllable & external are
uncontrollable. Internal premises include capital investment, availability of material, labour &
financial position and external premises include economical, social, political & competitors. It
also includes government policies.

4) Determining Alternative Courses: -

In this step various possible course of action or plans are developed to achieve a particular
object.

5) Selecting Ideal Courses of Action: -

After the careful examination of various alternatives ideal course of action, the most suitable
course of action or plan is selected to achieve pre-determine objective.

6) Formulating Plans: -
Once the overall plan is selected it becomes essential to fix the detail sequence & timing of the
plan. Then subsidiary or derivative plan is to be considered. Primary plan of action is decided by
preparing separate derivative plans for each section or division of the enterprise.

7) Provision for Follow-up: -

Planning is always followed by action. Some modifications may be required for achieving pre-
determined objective & adequate follow up provides assurance about fulfillment of objective.
TYPES OF PLANNING
1. Short- term plans (1-5)
2. Mid-term plans (5-10)
3. Long-term plans (10 and above)

Characteristic of planning;
 Planning is goal oriented; means planning is made to achieve desired objectives of
organization. It identifies the action to be taken to achieve the organizational goals.
 Planning is intellectual process; it is a mental exercise involving creative thinking,
sound judgments and imagination. It requires knowledge of thinking to create defined
goals to be achieved.
 Planning involves choice and decision making; Planning require to choice among
various alternative in order to achieve the goals. Thus, decision making is an integral part
planning.
 Planning is the primary function of management; Planning is the foundation for the
function of management. It serves as a guide of organizing, staffing, directing and
controlling.
 Planning is a continuous process; Planning is a never ending function due to the
dynamic organization environment.
 Planning is all pervasive; It required in all level of management and in all departments
of an organization. The top level of management is more concerning with planning while
middle concerns with departmental plans an lower level implementation of the plans.

ADVANTAGES OF PLANNING
 Planning facilitates management by objectives; it highlights the purpose for which
various activities are to be done. It begins with determination of objectives.
 Planning facilitates co-ordination; all activities are directed toward common goals. It
avoids duplication of effort between individual‘s employees.
 Planning improve employees morale; Planning creates an atmosphere of discipline and
order in organization. Employees know in advance what is expected to perform.
 Planning facilitates controlling; Planning provide pre-determined goals against which
actual performance is compared. Therefore, if planning is a root controlling is a fruits.
 Planning encourages innovation; through planning, managers have the opportunities of
suggesting ways and means of improving performance. Planning facilitates creative
thinking during decision making, therefore facilitate innovation during decision making.
 Planning provide competitive environment; Planning lead to best utilization of
resources so improve quality of production and thus the competitive strength of the
organization is improved.
 Planning minimize uncertainty;
 Planning facilitate minimum utilization of resources;
  Planning ensure effective economy in an organization;

LIMITATION OF PLANNING
There are two major factors which hinder the planning and lead to ineffective achievement of
planning. These are;-
1. Internal limitation
2. External limitation

1. Internal Limitation
 Rigidity
 Misdirected of planning
 Time consuming
 Probability of planning
 Expensive

2. External Limitation
 Political climate e.g. change of political system
 Labour unions e.g. lockout, strikes
 Technological change e.g. modern techniques, computerization
 Policies of competitors e.g. Policies of coca-cola and pepsi
 Natural calamities e.g. Earthquakes and Flood
 Change in Demand and Price e.g. change in fashion, change in taste

2.ORGANIZING FUNCTION:-
Is the process of bringing together physical, financial and human resources and developing
productive relationship amongst them for achievement of organizational goals. Organizing is a
function of management which follows after planning. In this, management structures the
organization into various departments and creates authority and responsibility so as to ensure the
achievement of an organization. It involving determining and providing human and non-human
resources to the organization structure. Organizing function in an organization is a process.
It require a certain steps;-
1. Identification of activities; all activities which have to be performed in a concern have
to be identified first. For example preparation of account, making sales, record keeping,
quality control etc.
2. Departmentally organizing the activities; in this step, the manager tries to combine and
group similar and related activities into unit or departments. This organization of dividing
the whole concern into independent units and department is called departmentation.
 3. Classifying the Authority; Once department are made, the manager likes to classify the
power and its extent to the manager. This activity of giving a rank in order to the
managerial position is called a hierarchy.
4. Co-ordination between Authority and Responsibility; relationship are established
among various groups to enable smooth interaction towards the achievement of the
organizational goals. Each individual made aware of his authority and responsibility.

IMPORTANCE OF ORGANIZING FUNCTION

 Specialization
 Well defined job
 Clarifies Authority
 Co-ordination
 Effective Administration
 Growth and Diversification

PRINCIPLES OF ORGANIZING FUNCTION

1. Principle of specialization; In this principle the whole of a concern should be divided
amongst the subordinates on the basis of qualification, abilities and skills.
2. Principles of Functional definition; in this principle, all the function in concern should
be completely and clearly defined to the manager and subordinates. This can be made by
defining the duties, responsibilities and authority relationship towards each others.
3. Principle of Span of Control; span of control means span of supervision which depict
the number of employees that can be handled and controlled effectively by a single
manager. Under this, a manager is required to have a group of individual employees and
handle them to achieve their responsibility.

Factors influencing span of control;

 Managerial abilities
 Competence on subordinates
 Nature of work
 Delegation of authority
 Degree of decentralization

4. Principle of scalar chain/ hierarchy; it is a chain of command or authority which flow

from top to bottom. With the presence of chain of command/ authority available wastages
of resources are minimized.
5. Principles of Unity of command; it implies one subordinates, one superior. Every
subordinate or employees must answerable and accountable to one boss at one time.
 3. STAFFING FUNCTION:-
Is the process of acquiring the number of personnel to a right place and right time. It includes
man power planning, recruitment, selection, placement and training. People are basically
responsible for the progress of the organization. Right man should be employed for right job. It
also involved training of personnel and proper remuneration. Staffing function involve the
following steps;-
1. Man power planning; this is a framework which show the number of personnel required
to an organization. It involves forecast and determining the future manpower needed by
an organization.
2. Recruitment; Once the requirement is notified, the next step is to inform and invite the
applicant to apply for the job.
3. Selection; the suitable candidates are selected on the basis of the skill, ability and
experience required. This involves the short listing of the applicants.
4. Orientation and Placement; the appointed candidates are made to be familiar to the
work units and work environment through the orientation programme. Placement takes
place by putting right man to a right position or job.
5. Training and Development; this involving the process of giving and developing
employee knowledge, skills and ability in order to ensure high job performance. Training
can be made in different techniques e.g. lecturing, coaching, job rotation etc.
6. Remuneration; it is a kind of compensation provided monetarily to the employees for
their work performances. This given according to the nature of the job. Skilled and un-
skilled.
7. Performance Evaluation; this ensure the assessment, evaluation and monitoring the
performances of each individual employees in relation to the instruction issued.
8. Promotion and Transfer; this resulted after performance appraisal where the
organization knows the performance of each employees, and then plan to promote and
transfer some of the employees within organization.

SOURCES OF RECRUITMENT
1. Internal source
2. External source

1. INTERNAL SOURCE
Is a type of recruitment which involving informing the employees within the organization
to apply for the anticipated job offered by an organization. Employees within an
organization are encouraged to apply for the existing job opening.

ADVANTAGES OF INTERNAL RECRUITMENT

1. Promotion are motivation to employees
2. Saving are made in recruiting the external employees
 3. Organization has a record of employees
4. Reduce too much time for integrating the external employees.

DISADVANTAGES OF INTERNAL RECRUITMENT

1. Lack of skills and knowledge
2. Encourage favoritisms
3. It leads to poor performance to the employee‘s.

2. EXTERNAL RECRUITMENT
Is the type of recruitment that encourages employees from outside the organization to apply for
the anticipated job opening. External recruitment depends on the nature of labour market.

ADVANTAGES OF EXTERNAL RECRUITMENT

 Wide choice of applicant having more skills.
 Avoiding favoritism

DISADVANTAGES OF EXTERNAL RECRUITMENT

 Too much cost in obtaining employees.
 Require more preparation in conducting the process
 It needs to know in deep the individuals applicant

4. DIRECTING FUNCTION:-
Directing; It includes decision making, supervising, and guidance, instruct and oversee the
performance of the worker to achieve the organizational goals. Directing function is said to be
heart of the management because any function of management cannot be success without
directing function. It reflects providing dynamic leadership. When the manager performs these
functions, he issues orders and instructions to supervisors and motivate the subordinates to
ensure good performance.

Direction has the following elements;-

 Supervision; means overseeing the work of subordinates by their superior. It is the act of
watching and directing work and workers.
 Motivation; means inspiring, stimulating or encouraging the subordinates to work.
 Leadership; means process by which manager guides and influencing the work of
subordinates in desired direction.
 Communication; is the process of passing information, experience, opinions etc from
one person to another.
TYPES OF LEADERSHIP

 The coercive style of leadership; demands immediate compliance. If this style were
summed up in one phrase, it would be "Do what I tell you." The coercive style is most
effective in times of crisis, such as in a company turnaround or a takeover attempt, or
during an actual emergency like a tornado or a fire.
 The democratic leader; builds consensus through participation. If this style were
summed up in one phrase, it would be "What do you think?" The democratic style is
most effective when the leader needs the team to buy into or have ownership of a
decision, plan, or goal, or if he or she is uncertain and needs fresh ideas from qualified
teammates
 Participative style of leadership; often called the democratic leadership style,
participative leadership values the input of team members and peers, but the
responsibility of making the final decision rests with the participative leader. Participative
leadership boosts employee morale because employees make contributions to the
decision-making process.
 Laissez fair style of leadership; the laissez faire style is sometimes described as a
"hands off" leadership style because the leader provides little or no direction to the
followers.
 Servant Leaders; Servant leaders care deeply about people. They seek to remove the
barriers and obstacles that hold others back from achieving their full potential. They
strive to create an environment where their followers can do their best work. Servant
leaders frequently ask, “How can I help?”

CHARACTERISTICS OF LEADERS

 Honesty;
 Flexibility; easy to adopt the environment change
 Direction; a leaders require to know how to lead and guide a group of individuals
 Communication; a leader must be part and parcel in providing information
 Motivation; also a leader should be required to know how to motivate their
subordinates
 Conviction; a leader require to work with strong vision to ensure the organization
achievement
 5. CONTROLLING FUNCTION:
It is a process of checking actual performance against standard performance. If there is any
difference or deviation then these differences should be detected and necessary steps should be
taken. Controlling consists of verifying whether everything occurs in conformities with the plans
adopted, instructions issued and the principles established. Controlling function requires steps
when managers require performing;-:

1. Establishment of standard of performance.

2. Measurement of actual performance.
3. Comparison of actual performance with the standards performance
4. Corrective action

6. CO-ORDINATION FUNCTION

This function of management is known as ‗coordinating‘ function. It ensures unity of action

among individuals, work groups and departments, and brings harmony in carrying out the
different activities and tasks so as to achieve the organizational goals efficiently. The concept of
coordinating always applies to group efforts. There is no need for coordination when only single
individual is working.

In other words, coordinating function is the orderly arrangement of individual and group efforts
to provide unity of action in the pursuit of a common goal. In an organization, all the
departments must operate in an integrated manner so that the organizational goals are duly
achieved. Coordinating function involves synchronization of different efforts of the various
departments so that the planned objectives are achieved with minimum conflict. The
coordinating function of the management prevents overlapping and conflict so that the unity of
action is achieved.

Coordination; The process whereby an executive develops an orderly pattern of group

effort among his subordinates and secures unity of action in the pursuit of common
purpose

Coordination; The rational process of pulling together the different parts of an

organization and unify them into a team to achieve predetermined goals in effective
manner.
Julian et al (2005) points out three elements namely;

1. Balancing i.e. ensuring that enough of one thing is available to support or counter balance the
other

2. Timing i.e. bringing together different activities under the common time table

3. Integrating i.e. unification of diverse interests under a common purpose

Objectives of coordination;

1. Reconciliation of goals
2. Total accomplishment
3. Economy and efficiency
4. Good Human Relation
5. Retention of managerial and other personnel
6. Team work become easy
7. To lead large and complex organization
8. Synergy Effect i.e. by unifying efforts

Coordinating function cannot be separated from other functions as described below.

 Coordinating through planning – Coordinating is a part of planning, because it tells

what to include in a good plan and how to execute it. Planning facilitates co-ordination by
integrating the various plans through mutual discussion, exchange of ideas.
 Coordinating through organizing – Coordinating is the very essence of organizing. It is
part of organizing, because it takes the first lead. In fact when the management assigns
and groups various activities to the departments, coordinating of the activities is the
uppermost in its mind.
 Coordinating through staffing – Coordinating is part of staffing, because it specifies
who will be a staff and its rational placement. Management always ensures that, for better
coordination, the right number of personnel in various positions with right type of
education and skills are taken so that there are right men on the right job.
 Coordinating through directing – Coordinating is part of directing, because it gives it a
clear focus. The purpose of giving orders, instructions and guidance to the subordinates is
served only when there is a harmony between the superiors and the subordinates.
 Coordinating through controlling – Coordinating is a part of reporting, because it
makes it realistic. Management ensures through coordinating that there is no difference in
actual performance as compared to the standard performance so as to achieve the
organizational goals.
Importance of coordinating function

The following points highlight the importance of coordinating function of the management.

 It provides proper direction; to the various departments of the organization by

integrating (bringing together) the different activities of the departments for achieving the
common goals or objectives of the organization.
 It facilitates motivation; Coordinating gives complete freedom to the employees. It
encourages the employees to show initiative. It helps them in getting the job satisfaction
through achievement of the objectives and thus getting motivated.
 It helps to ensure unity of action in the face of disruptive forces; By working together
different departments and sections into one entity, coordinating ensures the stability and
growth of an organization.
 It encourages team spirit; There exist many conflicts and misunderstanding between
individuals, departments, between a line and staff, etc. Similarly, conflicts are also
between individual objectives and organizational objectives. Coordinating function
arranges the work and the objectives in such a way that can be performed by jointly
efforts.
 It results into higher efficiency and economy in the organization; Coordinating helps
to improve the efficiency of operations by avoiding overlapping efforts and duplication of
work. Integration and balancing of individual efforts provide a smooth and harmonious
team work.
 It makes optimum utilization of resources; Coordinating function helps in avoiding
cross purpose work since it brings together the human and material resources of the
organization.
 It helps to achieve the organizational objectives quickly; by ensuring a systematic and
smooth working in the organization. All the work in the organization is done in a planned
manner without any conflict.

Importance criteria to ensure effective coordination;

 Clearly defined goals

 Harmonized policies and procedures
 Co-operation
 Managerial Hierarchy
 Sound Organization structure
 Committee
 Communication system
The other functions of management are as follows:

Motivation:-
In a well organization unforeseen problems are created. It becomes necessary for the workers to
have a leader, to whom they can consult for the guidance. One must help the worker to solve
their problems.
Decision Making:-It is the process in which a lot of actions are involved and lot of alternatives
is available. A manager has to choose right alternative for attainment of his goals. There are
many decisions which include marketing decision, cost price decision and capital investment
decision.

CHAPTER 2
EVOLUTION OF MANAGEMENT THOUGHT

2.1 Introduction
2.2 Contribution of F. W. Taylor
2.3 Contribution of Henry Fayol
2.4 Contribution of Max Weber (Theory of Bureaucracy)

2.1 INTRODUCTION
Management started when man started living in groups. It relates to achieve certain objectives.
According to George management begin in family, and after that it is expanded in tribes &
finally the scope was increased up to urbanization. The reference of management was found in
Babylonia (civilization on the bank of Nil\e River). After that Egypt provides us with an example
of decentralized organization with little control. Management thoughts are shown in planning
and organizing in the construction of Pyramids.
The ancient philosopher first recognized the need for proper methodology for employees‘
selection and training.
Greek provides extensive documentation of management principles. These principles of
management are worldwide famous. It is considered as management is an art. It includes
employees‘ selection, delegation of authority, time study, motion study etc.

Looking at the entire process of management thoughts, in the early period management was
based on trial basis. There was no exchange of ideas and no practice of communication. It grows
accordingly to changes in the social & political & economic changes. There are five stages of
evolution of management thoughts.

1. Pre – Historical Period:-

Management is as old as man. Awareness of needs & satisfaction of needs is the part & parcel of
management. In the ancient time in the villages, head of the village plans for the villages. There
was a good labor planning. Villages were isolated. The basic needs in the villages were satisfied
by the persons in the villages. Responsibilities were distributed among the people to satisfy the
basic needs.

2. Organized Society: (Church & Military)

The next contribution to the development of organization & management was by roman church.
1500 years ago Chinese ruler advised government about management of human institutions. The
German public gives contribution towards management thoughts. During this period
management techniques were largely developed in administrative military & state
administration.

3. Industrial Revolution:-
This period is known as the period of scientific management. It is proved that management is
related with enterprise & business. In this period lots of technological changes took place. With
the industrial revolution the question of traditional management appears. The traditional
management concept was replaced by professional management.

4. Towards Consolidation:-
This stage mark the beginning of the work of investigation of principles of management i.e.
division of work, authority, responsibility, discipline, scalar chain. These ideas were developed
by ‗Henry Fayol‘.

5. Recent Development:-
Recently management concepts are based on mathematical analysis. They are based on linear
programming, operational research, PERT (Programme Evaluation and Review Technique),
CPM (Critical Path Method). These techniques are useful in decision making, controlling,
problem solving etc. In today‘s competitive world these techniques are essential for controlling
the cost that is why management is called as a separate profession.

2.2 CONTRIBUTION OF F.W. TAYLOR (SCIENTIFIC MANAGEMENT)

Scientific management is a part of early management approaches which came to be formulated in
the beginning of the twentieth century. The chief contributor of scientific management is F. W.
Taylor. He is known as Father of Scientific Management (1856 to 1915) was born in USA. He
did most of his schooling in France & Germany. He couldn‘t finish his graduation & join
Midvale Co. (Steel Work). He worked there for 6 years. In 1884 he raised to the position of
Chief Engineers, as mean while he obtained Masters Degree in Physics, Mathematics &
Engineering.
In 1898, he joined Bethlehem Steel Co. where he did his experiment to increase the loading
capacity of each worker with regards to material handling equipment. Fredrick W. Taylor,
pointed out that management is a true science resting upon clearly fixed law, rule and principles
as a foundation.

Definition:-
Scientific management is concern with exactly knowing what you want men to do & then see
that they are doing in best & cheapest way.

Contribution of F. W. Taylor:-
1. At Midvale Steel Co. he improved proper distribution of work for each worker.
2. In Midvale Steel Co. he analyzed the work done by workers in specific job & allotted standard
time.
3. In Bethlehem Steel Co. he had made experiments with material handling equipment for
increasing the capacity of each worker.
4. In 1901, he presented a paper on differential piece rate system.
5. In 1906, he published article on art of cutting metals.
6. In 1903, he presented important paper on shop management – In that he explained gang boss,
speed boss, repair boss & inspector.
7. In 1911, he gave the principles of scientific management, for which he is remembered as
‗Father of Scientific Management‘.

TAYLOR‟S BASIC PRINCIPLES OF SCIENTIFIC MANAGEMENT (1856-1915)

The basic principles which proposed by F. Taylor theory of scientific management are as
follows,

1. Replacement of „‟Rule of Thumb‟‟ with science. This is a technique of pre- scientific

management era. Taylor maintained that the rule of thumb should be replaced by
organized knowledge. While the rule of thumb emphasized estimation, scientific
methods, denotes precision in determining any aspect of work. Therefore, it‘s essential
that should be measured precisely and not merely estimation.

2. Harmony in Group Action.

Taylor emphasizes harmony rather than Discord that should be obtained in group action.
Harmony means that a group should work as a unit and contribute to the maximum.
 Within it there should be mutual give and take situation and proper understand for better
result.

3. Cooperation and Not Individualism

In scientific management according to Taylor, require that parts of the industrial body
should cooperate with each others. It based on mutual confidence, cooperation and
Goodwill. It requires a mental revolution on the part of both the workers and the
management as to their attitude toward one another and also toward their work.

4. Maximum Production.
Workers should be selected on the basis of procedures scientifically selected. Carefully, select
workers so that they possess skills and abilities that match the needs of the task, and train them to
perform the task according to the established rules and procedures. Scientific selection also
implies proper placement of workers. After selection the workers should be trained and develop
to the fullest extent possible or his own and for the company highest prosperity.

5. Division of work nearly equally between managers and workers.

Mechanism of Scientific Management:

1. Separation of Planning & Doing:-

Before Taylor‘s scientific management a worker used to plan about his work & instruments
necessary for that. Supervisors‘ job was to see how the workers were performing. This creates a
lot of problems. So Taylor has separated planning & doing authority.

2. Functional Foremanship:-
Separation of planning from doing resulted into development of supervision system. In this
system 8 persons were engaged, out of that 4 persons were engaged in planning department.

3. Job Analysis:-
It is related with finding out best way of doing. It means that least movements in doing job. It
will lead to complete production in less time & lesser cost. It includes:-

 Time Study: It concern with the relationship between time and working performed.

 Motion study: It means study of movement while performing a job i.e. elimination of
wasteful movement in performing a job, only necessary movements are engaged.

 Fatigue Study:-
It shows the amount & frequency of rest required, while completing the work.
  Standardization:-
As far as possible standardization should be maintained in respect of Instruments & tools,
period of work, amount of work, working conditions etc.

 Scientific Selection & Training of Workers:-

Taylor has been suggested that worker should be selected on scientific basis taking into
account their education, work experience, attitude & physical strength.

 Financial Incentives:-
Financial incentives help to motivate workers in maximum efforts. Higher wages lead to
increase in efforts. He applied differential piece rate system.

 Economy:-
Techniques of cost estimated & control should be adopted. Waste should be controlled
properly. Profit will be achieved with elimination of wastage. He explained how
resources are wasted.

 Mental Revolution:-
Scientific management depends upon mutual co-operation between workers &
management. Taylor say‘s great revolution takes place in the mental attitude of two
parties under scientific management.

STRENGTH ON THE THEORY OF SCIENTIFIC MANAGEMENT

1. It is usefully both industrial and government organization.
2. It makes considerable contribution to the acceptance of efficiency as a primary goal of
management and administration.
3. It reforms the government and civil service such as centralization of authority,
accountability and establishment of merit system.
4. It provides training and developing workers.
5. It increase confidence to the workers
6. Reduce absenteeism

CRITICISMS/ WEAKNESS OF THE THEORY OF SCIENTIFIC MANAGEMENT

In the beginning Taylor‘s scientific management was considered as something very unique. But
after some time it was subjected to several criticism.

1) Taylor‟s scientific management was related to production management. It takes practical

view of management & focuses attention only on the production management. Taylor‘s study of
management has become the study of lower level management. He stressed on efficiency on
lower level. He has neglected marketing, financial and decision making aspects completely.

2) Scientific management is applicable to large scale organization. It involves high

expenditure. It is a luxury for small scale organization. It involves research, experiment &
analysis. It is difficult for small scale organization.

3) It was also argued that devices of work analysis, time study & motion & fatigue study can‘t be
applied in the practical life.

4) The idea of best way of doing a job was also criticized. Everyone has his own natural style
of work & he can give best only if he is allowed to work in his style.
The maximum efficiency will be attained by the group & not by individual worker.

5) Wages of workers are not increased in a direct proportion of productivity. It leads to

exploitation to workers.

6) People are not ready to use the word „scientific‟. The scientific does not have any
significance. Management is a social science and not an exact science.

2. CONTRIBUTION OF HENRY FAYOL‟S ADMINISTRATIVE MANAGEMENT

THEORY (MODERN OPERATIONAL THEORY)
Henry Fayol was born in 1841 as French. He is the industrialist who developed the
administrative theory. He is also known as father of general management. He got his engineering
degree and joined a French company as an junior executive in 1860 and senior executive
in 1888. He published his classic book on general and industrial administration in 1916, which
explained the first complete theory of management. He emphasized on 14 principles of general
management and attempted to provide guidance and direction to other management.

Henry Fayol has been considered as the real father of modern management. He was a French
industrialist and graduated as a mining engineer in 1860. In 1908, Fayol contributed his famous
―functional approach‖ to the management literature. Fayol‘s writings were first published in
1916 in French, but up to 1918, it was not translated into English. His ideas were accepted after
his death in 1925. Henry Fayol has written a book for his contribution in which he has explained
the problems managing & organization from top management point of view. He has used the
term administration instead of management.
He has listed certain fundamental principles which are to be adopted by managers in dealing with
sub-ordinates. The contribution of Fayol to the growth of classical administrative thought can be
studied under three heads. These are,

1. Activities of an industrial undertaken, in this include,

 Technical
 Commercial
 Finance
 Accounting
 Administrative etc.
2. Elements of Administration, which include,
 Forecasting and planning
 Organizing
 Commanding
 Controlling

3. Fayol‟s 14 Principles of Management

In his idea Fayol‘s argued that,

i. These principles of management can be followed in every organization.
ii. These principles are not fixed. They are flexible.

1) Division of Work (specialization):-

A business activity carried out by small scale may be managed & controlled by proprietor. As
business expands, activities grow & need more people to control those activities. Organization is
jointly managed by a group of person. Fayol has advocated division of work to take the
advantage of specialization.

2) Authority & Responsibility:-

Authority represents a power enjoyed by a person of his position in the organization. It may be
for taking decision, spending money or in many other ways. Responsibility is obligation created
upon a person for the use of authority, which is entrusted to him. These two terms are co-related.
Fayol suggested that there must be balance between authority & responsibility.

3) Discipline:-
All the personnel serving in an organization must follow discipline. Discipline is obedience,
application of behavior & energy shown by an employee. Discipline may be self employed or
command discipline. Discipline can be obtained lower remuneration, dismissal, demotion of
position. While applying such circumstances proper proof should be taken into account.
4) Unity of Command:-
Each employee should receive order from single superior. In the organization structure it should
be clearly stated that who is responsible to whom? & who should receive order from whom?

5) Unity of Direction:-
According to this principle each group of activity with some objective must have one head.
There is a difference between unity of command & unity of direction. Direction is concerned
with planning & unity of command is concerned with reporting.

6) Subordination of individual interest to general interest:-

In an organization individual interest should not be given any importance. The manager should
always keep organizational interest before him & should determine such policies which will be
beneficial to entire group & not just few personnel. It is responsibility to management to create
common understanding between all.
7) Remuneration:-
Every employee must be paid an adequate remuneration for his services. Remuneration should
be fair & should provide maximum satisfaction to person who is working in the organization.
Personal factors such as demand for labor, position of the labor & competition as well as cost of
living index should be taken into account. General Economic Conditions should be considered
while deciding the remuneration of an employee. In any case exploitation of the worker should
be avoided.

8) Order:-
Fayol has suggested that at one position one person should be appointed. Each person must have
appropriated position in organization.

9) Centralization:-
It means the extent to which authority should be concentrated in the hands of top level
management. It may be centralized or decentralized. There are limitations of complete
centralization & complete decentralization. Therefore, there should be proper balance between
this two.
10) Scalar Chain: - (Straight line & Command)
It shows the straight line of authority from highest level to lower level for communication. Scalar
chain is the extract of organization chart & shows the responsibility or position of everybody in
an organization.

11) Stability of Tenure:-

Effort must be made to keep the employee stuck to organization so that the labour turnover can
be low by keeping check on administrative cost of organization. Care must be taken to satisfy the
staff otherwise there will be bad effect & loss of labour. In order to avoid the labour turnover,
manager is required to make a good relation with employees and care them for various aspects
including by motivating them and provide clear rules and regulation which cannot affect the
employee‘s performance.

12) Equity:-
Equity is combination of justice & kindness; equity in treatment & behavior is liked by everyone
& it brings loyalty in the organization.

13) Initiative:-
Within the limits of authority & discipline manager should encourage their employees for taking
initiative. Initiative is concern with thinking. Thinking leads to execution of plan. Initiative
increases energy on the part of human being.

14) Espirit De Corps (Harmony or union is strength)

This is a French term. It means manager is like a captain of a team who is responsible to
maintain high moral between all workers. It may be possible by effective communication among
all persons in organization. His understanding & differences in opinions should not be harmful.
The best way of taking such situation is to establish dialogue between parties. Participation of
workers in the process of decision making is important.

STRENGTH OF FAYOL‟S THEORY OF ADMINISTRATIVE MANAGEMENT

1. The theory is being comprehensive, as it covers just about anything one might need to do
in a management position to ensure success.
2. Fayol‘s emphasize the important of working as a team/ unity, as it seem in the principle
of unity of direction.
3. Fayol‘s also gave much of the basic terminology and concepts (Organizational structure),
which would be elaborated upon by future researchers such as Max Weber theory of
Bureaucracy.
4. Fayol was the first person to actually give a definition of management which is generally
familiar today namely 'forecast and plan, to organize, to command, to co-ordinate and to
control'.
WEAKNESS OF FAYOL‟S ADMINISTRATIVE MANAGEMENT THEORY

1. Gave more attention to functional aspect and neglected structural aspect.

2. Fourteen principles have a great deal of overlapping.
3. His theory is more applicable for manufacturing company rather than big public
organizations.
4. Unity of command and coordination may conflict.
5. For Barnard and Simon, the informal side of organization and social-psychological or
emotion needs of the employees were ignored.
6. The theory is still based on humans. As humans we are naturally going to make mistakes.
Human beings have different attitudes, personalities, emotions and other behaviors which
are not fixed but are flexible.

DIFFERENCE BETWEEN CONTRIBUTION OF F. W. TAYLOR & HENRY FAYOL

THEORIES OF MANAGEMENT

1) Place of origin:-
F. W. Taylor belongs to U.S.A While Henry Fayol was a French man.

2) Working Process:-
The work of F.W. Taylor was related on operative level, bottom level & first line Manager
While Henry Fayol started his theory from top level to lower level.

3) Importance given by them:-

Taylor emphasis on work study, motion study, time study & fatigue study, differential piece rate
(scientific management) While Henry Fayol gave importance to the activities of top level
management i.e. controlling & planning.

4) Difference in approach: -
Taylor stress on the efficiency of workers. He considered production management as important
factor in the organization while Henry Fayol gave importance to principle of management which
can be applied universally.

5) Their contribution: -
Taylor gave a scientific base to management while Henry Fayol gave importance to management
training.
6) System of wage payment: -
Taylor advocated system of differential piece rate system while H.Fayol did not mention
anything about wage payment.

7) Faith: -
Taylor had faith in scientific management while Fayol had faith in administrative management.

3. BEHAVIOURAL SCIENCE THEORY OF MANAGEMENT

The behavioural science theorists writing in the first half of the twentieth century all chose a
theme that focused on how managers should personally behave in order to motivate employees
and encourage them to perform at high levels and be committed to the achievement of
organizational goals. The behavioural approach is an improvised, systematized and more
sophisticated version of the human relations approach to organization. In contrast to human
relation which assume that happy workers are productive workers, the behavioural scientist have
been goals and efficiency oriented and consider understanding of human behaviors to be the
major means to that ends.
The contribution of behavioural scientist to management practices consists primarily of
producing new insights rather those new techniques. The main exponents of this school or theory
are Chester Bernard and Herbert Simon. In this connection the contribution of C. Bernard needs
special attention. His approach to organization can be called behavioral as he laid emphasize on
the psychological aspects of management. His book, the Function of the Executive (1938), is a
product of ripe experience and abiding interest in economic, psychology and allied fields of
knowledge.
The major contributions of Bernard can be studied as follows,
 He suggest that classical concept of organization does not fully explain the features of an
organization. According to Bernard a formal organization is a system of an organization
or consciously coordinated activities or forces two or more persons.
 He developed an equilibrium theory of organization exist by maintaining an equilibrium
between the contributions and satisfactions of its particular members. In his option an
organization exists when three condition are fulfilled,
1. They are persons able to communicate with one another.
2. They are willing to contribute to the action.
3. They attempt to accomplish a common purpose.
 Also said that organization can be divided into two parts,
1. Formal organization has consciously co-ordinate interaction which have a
deliberately and a common purpose.
2. Informal organization, refer to those social interaction which do not have
consciously co-ordinate joint purpose.
Both formal and informal organization depends on each other and there is continuous interaction
between them.
Hebert Simon develops Bernard‘s further, especially in his collaborative work with Merch.
Simon was basically concerned with the behaviour of organization as goal oriented and adaptive
entities. Simon introduce the concept of ‗‘satisfying‘‘ behaviour. According to this concept,
human beings seek really to ‗‘attain a satisfactory level of performance and not the ideal or
maximum one‘‘. He emphasize the actual behaviour in the decision making process rather than
the ideal behaviour.

Side by side, with scientific managers studying the person task mix to increase efficiency, other
researchers were focusing on administrative management—the study of creating an
organizational structure that leads to high efficiency and effectiveness.

Organizational structure is the system of task and authority relationships that control how
employees use resources to achieve the organization‘s goals. Two of the most influential views
regarding the creation of efficient systems of organizational administration were developed in
Europe. Max Weber, a German professor.

The Theory of Bureaucracy

Max Weber (1864–1920) wrote his work at the start of the twentieth century, when Germany
was undergoing its Industrial Revolution. Its historical roots and most common usage apply to
public bureaucracies. Bureaucracy however is a generic term and private companies typically
have bureaucracy as well. In Germany Bureaucracy helps to manage its growing industrial
enterprises at a time when it was striving to become a world power.
The origin of bureaucracy, started during the middle age in Western World, also some elements
of Bureaucracy was found in ancient states as china, Egypt and Roman Empire.

Factors which influence the development of bureaucracy include,

 Means of expanding authority i.e. the need for bodies of officials to oversee official
functions or activities.
 Cultural factor and social factors, religion, gender, race, age and concept of diversity
management ij general.
 Increasing the size of states and organizations.
 Growth of money economy.
 Increasing economic and technological Advancement.
 Need to administer social and economic programs, example
1. Construction work
2. Tax collection
3. Social institutions
Weber developed the principles of bureaucracy—a formal system of organization and
administration designed to ensure efficiency and effectiveness.

Bureaucracy Is a system of organization and management in which roles, tasks, and relationship
among people and positions are clearly defined fully prescribed and controlled in accordance
with formal authority and rules.

Authority The power to hold people accountable for their actions and to make decisions
concerning the use of organizational resources.

Rules formal written instructions that specify actions to be taken under different circumstances
to achieve specific goals

Standard Operating Procedures (SOPs), Specific sets of written instructions about how to
perform a certain aspect of a task.

Norms Unwritten rules and informal codes of conduct that prescribe how people should act in
particular situations.

Bureaucracy is a large administrative organization that handles the day-to-day business of a

government or society. Here in America, the government's bureaucracy operates on national,
state, and local levels.

Bureaucracies have the following characteristics that make their resemblance to beehives
all the more apparent.

 A clear hierarchy - Bureaucracies have a firm chain of command. Every worker has his
or her own place in the chain, and everyone's work is overseen by someone on the next
level up. Power flows down from the top of the hierarchy and diminishes as it approaches
the bottom. Just think of the beehive. The queen bee stands at the top, and each worker
bee or drone has its own place in the hive's chain of command.
 Competence on merit, candidates for the post in the bureaucracy are selected on the
basis their qualification. So employees were obtained by demonstrate the necessary
competence or the job for example having reached certain education standards. Therefore
it assumed that open competition for jobs is more likely to produce the best men or
women for the job than a system which for example discriminate against coloures or
female application.
 Separations of person from the office, The officials has no personal claims over the
property of his office, thus ensuring that the property remain under public control.
 Security of Tenure, Normally, the position of the officials is held for life at least in
public bureaucracy and this is increasingly the case for all similar structures. The salary is
not measured like a wage in terms of work done. But according to the status that is
 according to the kind of function performed.

 Specialization - Everyone in a bureaucracy has a specific job to do and often becomes an

expert at it. Bees have specific jobs, too, collecting pollen, making honey, or populating
the hive.

 A division of labor - In a bureaucracy, nearly every task is broken down into its
component parts, and different people work on different parts of the task. Together they
get the job done, just like bees in a hive who divide their labor for maximum efficiency.

 A set of formal rules - These so-called standard operating procedures are the clear,
written instructions for each specialized job at every level of the hierarchy. Workers who
follow them can be sure that they are on the same page as their colleagues and are doing
their jobs properly. According to beekeepers, bees, too, have a sophisticated system of
communication that keeps their hives running smoothly.

PRINCIPLES OF BUREAUCRACY

1. Specialization jobs are divided into simple, routine and fixed category based on
competence and functional specialization. When the tasks and authority associated with
various positions in the organization are clearly specified, managers and employees know
what is expected of them and what to expect from each other. Moreover, an organization
can hold all its employees strictly accountable for their actions when each person is
completely familiar with his or her responsibilities.

2. Hierarchically. To ensure uniformity and to regulate actions of employees, managers

must depend heavily upon formal organizational rules and regulations. Thus, rules of law
lead to impersonality in interpersonal relations. This helps employees know whom to
report to and who reports to them. Managers must create an organizational hierarchy of
authority that makes it clear,

(a) Who reports to whom and

(b) To whom managers and employees should go if conflicts or problems
arise.

3 Rule and Regulation rules, SOPs, and norms provide behavioral guidelines that improve
the performance of a bureaucratic system because they specify the best ways to accomplish
organizational tasks. Rules are formal written instructions that specify actions to be taken under
different situations to achieve specific goals.
 4. Formal selection: – All organizational members are to be selected on the basis
of technical qualifications and competence demonstrated by training, education
or formal examination.
5. Impersonality: – Rules and controls are applied uniformly, avoiding
involvement with personalities and preferences of employees. Nepotism and
favoritism are not preferred.

6. Career orientation: – Career building opportunity is offered highly. Lifelong

employment and adequate protection of individuals against arbitrary dismissal is
guaranteed. Here managers are professional officials rather than owners units
they manage. They work for a fixed salaries and pursue their career within the
organization.

FUNCTIONS OF THE BUREAUCRACY

Bureaucracy play a great role in ordering and controlling modern organization such as follows,

1. The bureaucracy implements the laws and policies made by elected officials.

These laws and policies need to be put into practice in specific situations and applied in all the
contingencies of daily life. For example, a city council has decided that all dog owners must have
their pets licensed and micro chipped, but the city council members don't have the time to make
sure that their decision is carried out.

2. The bureaucracy provides necessary administrative functions, like conducting examinations,

issuing permits and licenses, and collecting fees.

3. The bureaucracy regulates various government activities. In other words, it creates the rules
and regulations that clarify how various laws work on a daily basis. For instance, the
bureaucracy is responsible for writing rules and regulations for public schools, including
curriculum standards, examination procedures, discipline methods, teacher training and licensing
requirements, and administrative policies.

4. Calculability of results in each employee within an organization.

5. Precision, mean boundaries what and whom responsibility

6. Strengthen the discipline to their employees

ADVANTAGES OF BUREAUCRACY
1. Central authority in bureaucracy makes it effective in organizing.
Advocates for bureaucracy have positive views on having hierarchy in an organization. They say
that since there is a chain of command, there will be specific roles and tasks for people involved
in the departments.

2. It supports the hiring of specialized officials.

Supporters of bureaucracy prefer the idea of designating appointed officials who have the
educational background and expertise on the agency they will assigned to. These bureaucrats
also have the training and skills particular to their designation.

3. It follows Standard Operating Procedure.

Proponents of bureaucracy look at these formalized rules to bring about efficiency and
predictability in results. In this set-up, officials are to follow instructions and procedures step by
step in handling tasks and situations. This way, outcomes will be within the specified range.

4. It sets no room for favoritism.

People in favor of bureaucracy claim that with the regulations and procedure to be followed in
order to achieve results, the risks of favoring some individuals over others will be minimal if not
none at all. A scenario mentioned is one of a student applying for a loan. There is a systematic
process involved and certain requirements to be met to get an approval.

5. It allows for merit-based hiring and promotion.

For a non-elective member of a government agency, he or she should be qualified and pass the
qualifying exams to be employed or appointed as well as climb the hierarchy. This means that
whoever is appointed has the knowledge, expertise and skills to handle the job. No one will be
considered simply because he or she is a relative or a friend of a high-ranking official in the
agency.

6. It plays an important role in policy making.

Although civil servants do not make policies, they gather the data forwarded to the political
executive. They are also responsible for formulating several alternative policies and determine
the pros and cons of each. In turn, the political executive will choose one policy which will then
be used as an alternative.

DISADVANTAGES OF BUREAUCRACY IN AN ORGANIZATION

1. Rigidity Lack of flexibility within an organization does not allow changes to take place within
and outside organization. Such rigidity can also result from the desire of the official to protect
him or her from adverse criticism.
2. It can hamper achievement of results in time.
Critics are arguing that with the certain steps needed to carry out tasks and the need to follow a
chain of command to proceed, lots of time can be lost especially if decisions and results are
needed immediately.

3. It breeds boredom and can affect productivity.

Opponents are criticizing the repetitive tasks in specialized jobs. They claimed that in time, it can
bore members of the organization or agency. The routine might just be too much from them and
may result to absenteeism and less productivity.

4. It results to passive and rule-based human beings.

Another disadvantage being pointed out by some people who do not like a bureaucratic structure
say that the strict rules and regulations imposed in bureaucracies seem to remove the freedom of
an individual to act and discern on his or her own because of certain restrictions.

5. It can result to inefficiency.

In bureaucracy, there is less competition since hiring and promotion is based on merits and
qualifications. Moreover, once a civil servant is appointed, he or she has a fixed salary, works on
specialized tasks and cannot function outside the sphere of the department he or she belongs to.

6. It distorts communication and innovative ideas as a result of hierarchical divisions.

CHAPTER 5
DECISION MAKING

5.1 Introduction
5.2 Nature of Decision Making
5.3 Types of Decisions
5.4 Process of Decision Making
5.5 Styles of Decision Making
5.6 Who makes the Decision?
5.7 Techniques used in Decision Making

INTRODUCTION
Management is essentially a decision making process. In case of every section of management, a
manager has to make a choice among alternative courses of action. Whatever a manager does, he
does it through making, decisions. A decision is an act or choice where the organization reaches
to conclusion. What must not be done in a given situation is explained by decision making. It is a
point where policies, procedures & objectives come into action. The main purpose of decision
making is to direct human behavior.
Definition:
―Decision making is a rational process including all those investigative, creative, diagnostic and
evaluative activities which take place while making a decision.

Nature or characteristics of decision making

i) Decision making is a process of making a rational choice or selecting one of the various
alternative courses of action.
ii) Decision making is necessary only when different alternative solutions are available.
iii) Decision making is a purposeful activity.
iv) Decision making involves the commitment of resources and reputation of the organization.
v) Decision making is always related to the situation or environment.

TYPES OF DECISIONS;

1. Programmed Decision;
Are the routine in nature; It does not involve any risk factor. It can be easily delegated. They are
according to rules, regulations & policies.
2. Un-programmed decisions Is type of decision making deal with unique problems which
involve risk factor & high expenditure;

Other types of Decision Making;

1.Major Decision & Minor Decision: -
Decision may be major or minor. Major decision includes purchase of raw material, flow of
production process. E.g.: - Major decisions are: - Location of plant, schedule of production, etc.
E.g.: - Minor decisions are: - Purchase of stationary.

3) Group Decisions & Personal Decisions:

Group decisions are known as ‗Organizational Decisions‘ which are related with formulating of
policies. These decisions are taken by BOD, Shareholders, MD & all committee members. On
the other hand, Personal Decisions are taken by Manager as an individual & not as a member.
Normally in sole proprietary organization, personal decision is taken.

4) Policy Decisions & Operating Decisions: Policy Decisions are taken by Top Level
Management such as to give bonus to employee, expansion of plan, change of product line etc.
On the other hand, operating decisions are taken by middle or lower management such as
follow up production process, calculation of bonus etc.

5) Long Term & Departmental Decisions:

In long term decisions, the period of decisions are more than 1 year. These decisions are taken by
top level management. It involves risk. E.g Replacement of machinery, change in technology etc.
Departmental Decisions are related with departments. It is taken by Departmental Heads such
as production department, sales department, purchase department, finance department.

5.4 PROCESSES/ STEPS IN DECISION MAKING;

1. Define the problem; In this step, manager first is required to realize the need for decision.
The purpose of decision making is to identify the aspects which influence manager to make
decision, such as environment change, change in price etc
2 Gathering information; It requires manager to collect and finding different information
related to the problem identified. For example from books, journals, and other friends like
customers.

3. Generate Alternatives; Manager must develop feasible alternative course of action. It is

hard to develop creative alternatives, so managers need to look for new ideas.

4. Evaluate/ weight the alternatives; after developed the alternatives, manager is required
to specify criteria and evaluate them to ensure the best alternative to solve the problem.

Managers required evaluating the alternatives by considering the following criteria's;

 Legality; is it applicable and acceptable in the government.

 Ethicalness; It concern about the acceptance in the society.

 Economic Feasibility; It concern about matching the alternative with the organizational
financial position.

 Practicality; It consider how the alternative can be easier to be implemented by all

employees.

5. Choose among alternatives; Managers must be sure all the information's available is relevant
to the alternatives then choose the best alternative to solve the problem.

6. Implement chosen alternatives; Manager must now carry out the alternatives. Therefore,
manager implements the alternative to solve the problem.

7. Evaluate the feedback; Manager should consider what went right and wrong with the
decision and learn for the future.

Without feedback, manager does not learn from experience and will repeat the same mistake.

STYLES OF DECISION MAKING

There are various styles adopted by executives for taking decisions. The most commonly used
styles are as follows.

1) Autocratic Decision Making –

Autocratic executives think that their subordinates do not have necessary abilities to take correct
decisions and they do not like to take responsibility, hence he prefers to take decision on his
own. He does not feel that it is necessary to discuss the problem with subordinates and in order
to avoid wastage of time he takes decision and makes others to implement it. If anything goes
wrong he tends to criticize the process of implementation rather than rationality of the decisions.

2) Participative Decision Making –

A participative executive believes that subordinates are aware about the problems and have
necessary skill and abilities to solve them. In order to take advantage of the expertise and talents
of the subordinates in the process of decision making, he believes that participative decision
tends to be more realistic, practicable and acceptable to the subordinates. On account of their
participation it motivates them to implement such decisions effectively and efficiently.

3) Consultative Decision Making –

When executives face complex and highly technical problems they prefer to discuss the issues
with experts in related fields and after consultation they prefer to take decision. Sometimes they
have to provide consultation to their subordinates for taking decisions.

WHO MAKES THE DECISION?

Technically, the higher authority, that is top management, makes the decision. But, in practice, it
may have been delegated by convention or rules. It the cost of correction is large and if the
chances of being wrong are high, then delegation is not desirable.

TECHNIQUES USED IN DECISION MAKING

In the decision making process, three specific techniques have proved valuable. These are
marginal analysis, financial analysis and the Delphi decision making techniques. It has been
observed that there is a current emphasis on competitive analysis. Various disciplines have
contributed to research and development of application of mathematical techniques. The
significance of their contribution depends essentially on the management attitude behind them.
Techniques are only aid to judgment and not substitute for judgment. Experience,
experimentation, research and analysis also come into play in making decisions. Planning and
control are closely inter-related and they determine the accuracy of decision making. Control
function ensures that objectives are met.