1

Basic Management Concepts

What is management?
Ø Management is the art of getting things done through
people.
Ø In general "management" identifies a special group of people
whose job is to direct the effort and activities of other people
toward common objectives.
Ø Management is the process of setting and achieving goals
through the execution of five basic management functions –
planning, organizing, staffing, directing and controlling –
that utilize human, financial, and material resources in an
efficient and effective manner.
11/29/20 3
…cont’d
Effectiveness
Ø How well a set of result is accomplished? How well are the
resources utilized?
Ø Effectiveness is obtaining the desired results. It may reflect
output quantities, perceived quality or both.
Ø Effectiveness can also be defined as doing the right things.
Efficiency
Ø Efficiency can be defined as doing things right. Operational
efficiency refers to a ratio of outputs to standard inputs (like
land, capital, labor, etc.)
Why management?
• The Industrial Revolution brought about the emergence of
large-scale business and its need for professional managers.

• Management became more important as the developments

and complexities of technology and human relationships get
more challenging to those who perform managerial functions.

11/29/20 5
…cont’d

11/29/20 6
Functions of management

§ The subject of management can be considered a process

involving certain functions that a manager performs:
1. Planning
2. Organizing
3. Staffing
4. Leading
5. Controlling

11/29/20 7
…cont’d

1. Planning

Planning involves:

Ø the predetermining of the course of action to be taken in

relation to the known event.

Ø It also includes anticipating the possibilities of future

problems that might appear.

11/29/20 8
…cont’d

• It is a systematic activity which determines when, how and

who is going to perform a specific job.

• It is rightly said :-

“Well plan is half done”

“Failing to plan means planning to fail”

11/29/20 9
Planning at different level of an organization

1. Strategic planning:-

Ø In business, top management is involved mainly with long-

term planning.

Ø That is concerned primarily with deciding what the

objectives and policies of the business should be for two,
four, five or even ten years ahead.

11/29/20 10
…cont’d

2. Tactical planning:

ØSenior management will be involved in tactical planning,

that is, planning how the overall strategies are to be
achieved.

ØThis often entails devising and operating short-term

plans, for up to a year ahead to execute the strategic plan.

11/29/20 11
…cont’d
3. Operational planning:
Ø lower levels management, including supervisors and/or
foremen, are involved mainly in very short-term activities
planning called operational planning.
Ø That involves planning the day- to-day running of departments
or sections and individual assignments, for example planning
how to meet a particular quota of production, or deciding what
each member of staff should be doing at any given time.
11/29/20 12
…cont’d
§ In general, the planning process may systematically be
composed of five elements:

I. Setting primary and intermediate goals :

Ø The principal/primary goals are set by top

management groups and

Ø the intermediate goals which help to clarify the

primary goals are set by middle management group.
11/29/20 13
…cont’d
II. Search for opportunities:
Ø In this, examining for opportunities of business activities.
Ø This includes forecasting events and identifying changes in
demand, competition, technology, finance and industrial
facilities
III. Formulation of plans:
Ø This is translating or converting the opportunities
discovered into strategies and policies which are directed
toward the primary and intermediate goals.
11/29/20 14
…cont’d
IV. Target setting:

Ø This in effect is translating the formulated plans into

specific and detailed quantities and times for many decision
makers and workers.

V. Follow-up of plans:

Ø involves continual checks whether the actual performance

is consistent with the original plan.

11/29/20 15
…cont’d
2. Organizing

• Organizing may be defined as the structure and process by

which:

Ø a group allocates its tasks among its members,

Ø identifies relationships and

Ø integrates its activities toward common objectives

16
…cont’d
• The organizing brings together human and physical resources
in an orderly manner and arranges them in coordinated
pattern to accomplish planned objectives.

• Each organizational resource (human, non-human (material,

machineries, finance etc.)) represent an investment from
which the management system must get the return from the
invested resources.
17
…cont’d
Some of the benefits of organizing are:

ØGood communication between the management and

employees,

ØSound basis to evaluate the performance of individuals and

groups,

ØWell defined areas of works for each employee, and

ØAdequate and effective control,

18
…cont’d
3. Staffing
ØThis function includes the process of placing the right person
in the right organizational position.
ØThe process of matching the people and the jobs is done by
careful preparation of specifications necessary for positions
and
ØRaising the performance of personnel by training and
retraining of people to fit the needs of the organizational
position.

19
…cont’d

4. Leading

• different organizations use different terms such as

§ Directing, Executing, Supervising, Ordering and Guiding

• What ever terms are assigned to it, the idea of directing is to

put into effect/implement the decisions, plans and programs
that have been worked out by the respective managers.

11/29/20 20
Leadership styles
There are four types of leadership styles :-

1. The dictatorial leader maintains a highly critical and negative

attitude in his relation with subordinates and advocates the
accomplishment of tasks through fear of penalties.

21
…cont’d
2. The benevolent - autocratic leader assumes a paternalistic
role which forces the workers to rely on him for satisfaction.
– This type of leader must be exceptionally strong and wise
individual, so that his personality generates respect and
allegiance.
– The subordinates develop dependence on the leader to the
extent that they have very little chance of developing
leadership qualities.
22
…cont’d
3. The democratic leader suggests better methods and tries to
improve the worker's attitude.

§ Unlike the others, not only he/she depends on his/her

capabilities but encourages consultation with subordinates
in planning, decision making and organizing.

§ With this type of leadership satisfaction is gained through a

feeling of group accomplishments.

23
…cont’d

4. The fourth type of leadership style is a laissez - faire

§ where the leader assumes the role of just another member of

the group and

§ depends completely on subordinates to establish their own

goals and make their own decision.

24
…cont’d
5. Controlling
• Controlling is the process of measuring current activities,
quantitatively (if possible), and guiding it toward some
predetermined goal, plan, policy, standard, decision, rule and
criterion.

• The essence of control lies in checking current activities and

correcting actions against desired results in the planning
process
25
…cont’d
Summary

Planning Organizing Staffing Leading Controlling

Lead to
Defining goals, Determining Locating Motivating, Monitoring
establishing what needs to prospective leading, and activities to
strategy, and be done, how employees to any other ensure that Achieving the
developing it will be fill the job actions they are organizations
plans to done, and created by the involved in accomplished stated
coordinate who is to do it organizing dealing with as planned purposes
activities process people

26
…cont’d
FIVE FUNCTIONS OF MANAGEMENT
Summary

1 2 3 4 5
Planning Organizing Staffing Directing/Leading Controlling
• It bridges the • It involves • Hiring Right • It involves • It involves setting
gap between grouping of task people for right supervision, standards,
where we are
< • It involves job motivation, measuring
and where we specialisation, • It is devoted to leadership, and performance as per
want to be allocation, span of acquiring, communication standards, finding
• It helps facing control, and training, • It is a very people deviations, and taking
future with departmentalizatio appraising, and oriented function of necessary corrective
confidence n compensating management action
employees
Organization structure
• An organization is a stable and formal social structure that
takes resources from the environment and processes them to
produce outputs.
• An organizational structure is a system that outlines how
certain activities are directed in order to achieve the goals of
an organization.
• Organizational structure determines how the roles, power and
responsibilities are assigned, controlled, and coordinated, and
how information flows between the different levels of
management.

11/29/20 28
Organization structure
• The stages in the setting up of an effective organizational
structure are;
a. The activities which are necessary to achieve the
objectives of the business must be established.
b. The various related activities are grouped together into
departments; the most logical grouping is by 'function',
that is, by type of activity: production, marketing, finance,
etc.
c. The activities of a particular department will be further
divided, and grouped together into sections;
11/29/20 29
…cont’d
d. Then an organization chart should be produced to depict
the proposed organization
e. Based on estimates of the volume of work, which will be
performed by each section, the number of staff required
must be determined.
f. Depending on the type of work to be performed and on
other factors, the number of supervisors, junior and
middle managers per section and department is
determined.

11/29/20 30
…cont’d
g. The special knowledge or talents required by departmental
and sectional managers must be laid down.
h. The equipment necessary for the proper functioning of each
section and department must be decided upon, and provision
made for its positioning when considering the layout of the
accommodation for each unit.
i. To ensure effective coordination of all parts of the enterprise,
effective procedures and systems of communication must be
devised and installed.

11/29/20 31
Types of organizational structure

There are four different types of organizational structures,

namely:

I. Line,

II. Functional,
III. Line and staff, and

IV. Matrix organization.

11/29/20 32
…cont’d

I. Line organization

• is the simplest form of organization, and can be very

efficient, particularly in small and medium-size enterprises

• There is a clear 'line' of responsibility and authority right

through the management structure from the top

management to the lowest level of supervision.

11/29/20 33
…cont’d

• The 'chain of command‘ is direct and so decisions can usually be

made quickly and implemented rapidly,

• Because of the directness of the control, the coordination of the

activities of all those employed in a department is simplified.

• The position (and status) of all different people working in a

department can be easily seen, and the extent of their
responsibilities, authority and duties can be clearly defined
and understood.
11/29/20 34
…cont’d
Line organizational structure
President

Vice President

Plant Manager

Foreman A Foreman B Foreman C

Staff Staff Staff

11/29/20 35
…cont’d

II. Functional structure

• It is the function (the type of activity), which determines the areas of
authority and responsibility.
• An expert or specialist is placed in charge of each function, and will
have direct control of that function wherever it is undertaken within
the enterprise.
• For example, the personnel manager will have authority over
employees in whichever department they may work.
11/29/20 36
…cont’d
• As the functional specialists are not involved in the day-to-day
running of the enterprise, they are free to concentrate on their
particular functions that produce many benefits for the
enterprise.
• However, this form of organization makes control difficult as
there are no clear lines of authority and it is similarly difficult to
establish responsibility when things do not go right.
• Staff as well as supervisors and junior managers become
confused at being subjected to the authority of more than one
functional managers.

11/29/20 37
…cont’d
Functional structure BOSSES

I J K L

A B C D E F G H

OPERATOR

11/29/20 38
…cont’d
III. Line and staff organization

• In such a structure, the line managers control the primary

functions, such as marketing and production, which are
directly concerned with achieving the objectives of the
business;

• whilst the staff managers are generally involved with

secondary functions which assist the smooth and efficient
running of the primary functions.
11/29/20 39
…cont’d
Line and staff structure
Managing Director

L L L S
Works Manager Sales Manager Personnel Manager
Accounts Manager

L L L S S

Section managers, Section Managers, Section managers, Employment

supervisors and supervisors and supervisors and Training officer
officer
Operators salesmen clerks

L – Line relationship: S – staff relationship

Responsibility and authority shown by
Supervisors and Supervisors and
Staff. Advisory relationship shown by ---------- clerks
clerks

11/29/20 40
…cont’d
IV. Matrix organization (Project Organization)
• These are temporary organizational structures formed for specific
projects for a specific period of time and are dismantled, once the
required goal is achieved.
• A typical example for this kind of organizational structure can be the
goal to design and build a new power plant station.
• The specialists are selected primarily on the basis of task-related skills
and expertise rather than decision making experience or planning
ability.
11/29/20 41
…cont’d
• These structures are very useful when:

– The project is clearly defined in terms of objectives to be

achieved and the target date for completion of the project.

– The project must be separate and unique and not be a part

of daily work routine of the organization.

– The project must be temporary in nature and not extended

into other related projects.

11/29/20 42
…cont’d
• This kind of organization occurs frequently in:

– Construction (e.g. building a bridge, dam)

– Aerospace engineering (i.e. designing and launching

weather satellite, airplanes)
– Marketing (e.g. advertising company for new product)

– Installation of an electronic data processing system, etc.

11/29/20 43
…cont’d
Matrix organizational structure General Manager

Labor Research Finance Personnel Technical

Services

Project A Manager

Project B Manager

Project C Manager

11/29/20 44
…cont’d
• In matrix organization, it is possible for the individual
employee to have two managers. However, matrix
organization provides flexibility to work on critical projects.

• Matrix organization also brings together the specialized talent

that is often necessary to complete a project.

• Resource utilization is efficient, because key resources are

shared across several important programs or products at the
same time.
11/29/20 45
…cont’d
– Decision making is decentralized to a level where information is
processed properly and relevant knowledge is applied.
– Extensive communication networks help to process large
amount of information.
– Employee learns the collaborative skills needed to function
through frequent meeting and more informal interactions.

11/29/20 46
 PRODUCTIVITY

11/29/20 47
The basics of productivity

• Productivity is defined as the ratio of value of output to the

value of input.

• Productivity is crucial to the welfare of industrial firm as

well as for the economic progress of the country.

• Productivity refers to the efficiency of the production

system.

11/29/20 48
…cont’d

• Productivity is the quantitative relation between what we

produce and we use as a resource to produce them,

• It is arithmetic ratio of the amount produced (output) to the

amount of resources (input). i.e.

+%',%'
!"#$%&'(#) =
-),%'

11/29/20 49
…cont’d

• Productivity is the concept that guides the management of

production system.

• Productivity is an indicator to how well the factors of

production (human, material, land, capital, labor and energy)
are utilized.

• Generally, it is the relationship between goods and services

produced and the resources employed in their production.

11/29/20 50
Factors Influencing Productivity
• Can be classified broadly into two categories:

11/29/20 51
…cont’d

(A) Controllable (or internal) factors

1. Product factor: In terms of productivity means the extent to

which the product meets output requirements.
2. Plant and equipment:. The increased availability of the plant
through proper maintenance and reduction of idle time
increases the productivity.

11/29/20 52
…cont’d
3. Technology:

§ Innovative and latest technology improves productivity to

a greater extent.

§ Automation and information technology helps to achieve

improvements in material handling, storage,
communication system, quality control, production
planning and control, and repairs and maintenance.

11/29/20 53
…cont’d
4. Material and energy:
Efforts to reduce materials and energy consumption brings about
considerable improvement in productivity. This can be achieved by:-
i. Selection of quality material.

ii. Control of wastage and scrap.

iii. Effective stock control.
iv. Development of sources of supply.
v. Optimum energy utilization and energy savings.
11/29/20 54
…cont’d

5. Human factors: Productivity is basically dependent upon

human competence and skill. Motivation of employees will
also influence productivity.
6. Work methods: Improving the ways in which the work is
done improves productivity,
7. Management style: A flexible and dynamic management style
is a better approach to achieve higher productivity.

11/29/20 55
…cont’d

(B) Un-controllable (or external) factors

1. Structural adjustments: include both economic and social
changes. This may include:

a) Shift in employment from agriculture to manufacturing

industry,

b) Import of technology, and

c) Industrial competitiveness.
11/29/20 56
…cont’d

2. Natural resources:- Manpower, land and raw materials are

vital to the productivity improvement.

3. Government and infrastructure:- Government policies and

programmes are significant to productivity. Fiscal policies
(interest rates, taxes) influence productivity to the greater
extent.

11/29/20 57
Measuring productivity

• Total Productivity Measure (TPM):- It is based on all the

inputs. The model can be applied to any manufacturing
organization or service company.

• Partial Productivity Measures (PPM): - Depending upon the

individual input partial productivity measures are calculated.

11/29/20 58
…cont’d
,-.%/ #0 #%'1%'
!"#$%&'()('* =
,-.%/ #0 (21%'

Single factor productivity

345645 345645 345645
= , ,
789:; =85>;?8@A B86?58@

Multifactor productivity
C%'1%' C%'1%'
= ,
D-E#" + G-'/"(-.H + C)/"ℎ/-$ D-E#" + J2/"K* + L-1('-.

Total factor productivity

M##$H -2$ H/")(&/H 1"#$%&/$
=
N.. (21%'H %H/$ '# 1"#$%&/ 'ℎ/O

11/29/20 59
…cont’d

• An increase in production does not necessarily by itself

indicate an increase in productivity.

• That means, if the input of resources goes up in direct

proportion to the increase in output the productivity
remains the same, therefore productivity will not increase.

11/29/20 60
…cont’d

• If input increases by a greater percentage than output,

higher products will be achieved at the expense of
reduction in productivity

• In short, higher productivity means to produce more with

the same expenditure, or with a minimum increase in
expense, or the same amount is produced at less cost in
terms of resources.

11/29/20 61
…cont’d

• The outputs may be products or services and the inputs or

resources may be land, materials, plant machineries, tools
and human resources.

♦ Land Productivity: Better seed, fertilizer and better

method of cultivation may increase the yield from two
quintals to three quintals. Hence land productivity has
increased by 50 percent.

11/29/20 62
…cont’d

♦ Material Productivity:

§ If a skillful worker is able to produce 300 formworks from

400 pieces of 2m ´ 1m sheet metal,

§ while an unskillful worker can only produce 250 out of

the same material, then with the skilful worker the
material was used with 20 percent greater productivity

11/29/20 63
…cont’d

♦ Machine Productivity:

§ If a machine tool has been producing 100 pieces per a

working day, and through the use of improved cutting
tool and/or proper maintenance procedure its output in
the same period is increased to 120 pieces, the
productivity of that machine has been increased by 20
percent.

11/29/20 64
…cont’d

♦ Productivity of Man:

§ If a shoe maker has been producing 30 pieces of leather

parts per hour, and if improved methods of work enable
him to produce 40 pieces per hour the productivity of
that man has increased by 10 percent

11/29/20 65
…cont’d

• To sum up, a low level of productivity implies a low growth of

economy.
• A low growth of economy meant, low income leading to low
standard of living and a low level of savings, resulting low
productivity

11/29/20 66
Productivity Improvement Techniques

11/29/20 67
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11/29/20 Productivity improvement techniques 68