Revision Sheet

General
Management
Part-I
Management
Revision Notes

for RBI Grade B Exam

General Management Part 1 Management Revision Sheets

RBI GRADE B REVISION SHEETS

MANAGEMENT SECTION
GENERAL MANAGEMENT PART 1
Introduction:
• “Management is a distinct process consisting of planning, organizing, actuating and
controlling, performed to determine and accomplish stated objectives by the use of
human beings and other resources” – George R. Terry

Characteristics of Management:

Objectives of Management:
Management objectives can be broadly classified into 3 categories viz.
Organizational, Social and Personal objectives.
Levels of Management
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Top Level:
Consists of CEO, board of directors, Managing/ Executive Director who possess ultimate
authority over goals and policies of organization. Role of top management includes:
Middle Level:
Consisting of departmental and branch managers, they are accountable to top
management for smooth functioning and performance of department.
Lower Level:
Consisting of supervisors, section officers and superintendent, these executives work
largely with personal oversight and direction of operative managers/ employees.

Evolution of Management:
Evolution of management thought can be divided in to 3 periods:
• Classical theories
• Neo classical theories
• Modern theories

Classical Approach:
This approach is also known as traditional approach or empirical approach. It was
developed through three streams such as:
• Scientific Management developed by F.W. Taylor
• Administrative Theory developed by Henry Fayol
• Bureaucracy model developed by Max Webber.

Contribution made by classical thinkers

He managed a group of textile mills in Lanark (Scotland) during 1800 –
Robert Owen
1828. He said employees are Machines and their maintenance is
(1771 – 1858):
necessary. Throughout his life he worked for the building up of a spirit of
cooperation between the workers and management.
He found that manufactures were using traditional methods of work,
Charles
relying more on guess work and based decisions on old opinions. He
Babbage
(1792 – 1871): perceived that the methods of science and mathematics could be
applied to the operations of factories.
Scientific Management by Fredrick Winslow Taylor (1856 – 1915)
• F.W. Taylor is being called as the Father of scientific, management.
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• In 1878 he joined as a labourer at Midvale steel company in the USA. From that
position he progressed to become Chief Engineer in 1884.
• He published papers on “piece rate system”, “the art of cutting metals” and “shop
management”.
• He published a book on “The Principles of Management” in 1911.

Structure of Taylor’s Scientific Management

• Determination of fair day’s task for each worker through scientific methods
(including the best way of doing a job). For determining a fair day’s task for each
worker, Taylor recommended the use of scientific methods involving the conduct of
the following three types of work studies
✓ Time study
✓ Motion study
✓ Fatigue study
• Scientific selection and training of workers
• Standardization of raw materials, tools and working conditions

Functional Foremanship
The scheme of functional foremanship recommended by Taylor is, in fact, an
introduction of managerial specialization-at the shop-level. In Taylor’s view, instead of
a single foreman performing all the aspects of the foremanship task, there must be a
number of foremen-each concerned with only a particular aspect of foremanship.
• Differential piece-rate system of wage-payment: Workers who produce the
standard output or exceed the standard are paid according to the higher rate for all
the units produced by them. Those workers who are unable to come up to the
standard are paid according to the lower rate for all the units produced by them.

ADMINISTRATIVE THEORY OF MANAGEMENT:

• This approach is also known as functional or process approach and is based primarily
on the ideas of Henry Fayol (1841-1925).
• It focuses on organizational efficiency through development of managerial
principles and finding best ways of organizing jobs in a business.

Let us see important points regarding the ideas of Fayol:

• Fayol broke down the managerial function into five steps including planning,
organizing, commanding, coordinating and controlling.
• Henri Fayol outlined 14 principles for managing complex organizations
(administrative management).

They are,
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1. Division of Labor
2. Authority
3. Discipline
4. Unity of Command: An employee should receive orders from only one supervisor. If
this is not followed, confusion and conflict will emerge.
5. Unity of Direction: There should be one head and one plan for a group of activities.”
For example, the production department should have only one production manager
6. Remuneration
7. Subordination of Individual interest to common good
8. Centralization
9. Scalar chain: It means “Line of authority”. According to this principle, communication
that is, orders and instructions should be sent from the top management to the
lowest level in the organisation through the line of authority.
10. Order
11. Equity
12. Stability of Staff
13. Initiative
14. Espirit De Corps (Team Spirit)

Bureaucratic Management:
Bureaucratic management theory developed by Max Weber, contained two essential
elements, including structuring an organization into a hierarchy and having clearly
defined rules to help govern an organization and its members.
Max Weber theory of Bureaucratic Management deals with 6 principles of formalized
view of organizations.
• Proper Division of Labor
• Chain of Command
• Separation of personal and official property
• Application of Consistent and Complete Rules
• Selection and Promotion Based on Qualifications
• Training in job requirements and skills

NEO CLASSICAL THEORIES

• The theories under classical models focused on improving productivity through
changes in organizational structure, factory redesign and scientific modelling.
• Humans were considered as mere machines for generating output.
• This led to criticisms from various thinkers.

Two important movements in Neo-classical theories are Human Relations movement

and Behavioral Sciences movement.
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• Human Relations Movement: deals with finding ways which will encourage better
performance of workers. Improving working conditions in ways other than monetary
factors like lowering working hours, introducing rest periods or enhancing social
interaction at work lead to improved productivity. Elton Mayo and Mary Parker
Follett are the main contributors of human relations approach.

• Mayo is called as father of human relations approach. He is

Elton Mayo:
known for his work which is commonly referred as the Hawthorne
studies.
• According to him, humans are one of the most influential and powerful inputs for
any organization and their needs other than economic needs, cannot be ignored.
• His endeavor was to propagate believes pertaining to human beings’ motivation
through fulfillment of social needs, respect, recognition, participation and other non-
monetary benefits in addition to monetary ones.

Hawthorne
studies:
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It is an extended version of human relations theory and places wide

Behavioral
emphasis on inter-personal relationships and responsibilities and strives
Science
Movement: to find application of sociology and social psychology to understand
organizational behavior. It includes studying attitudes and behaviors of
individuals and groups in context of an organization.
This approach has concentrated on inter-personal roles and responsibilities.
Basic features of this approach are
• An organization is a socio-technical system
• There should a good relationship between organizational goals and human needs
• Many factors will influence inter-personal and group behaviour of people in the
organization
• conflicts are inevitable in the organizations.

Classical Versus Neo-Classical Theories:

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Points Classical Neo-Classical

Focus Economic and Functional Emotions and human aspect
demands
Structure Impersonal Social/ Informal
Emphasis Discipline, Science and Social needs, security,
Rationality recognition
Application Autocratic Democratic
Details Scientific, administrative and Hawthorne, Human Relations,
bureaucratic management Organizational Behavior
Goal of worker Maximum remuneration Alignment with Organizational
goal

MODERN THEORIES (1960 to Present):

A synthesis of several theories, it focuses on complexities of organizations in terms of
interaction between workers and environment. Also, present approaches place equal
emphasis on man and technology.
Majorly it is categorized into 3 streams:
• Mathematical Approach/ Quantitative approach
• Systems approach
• Contingency approach

1. Mathematical Approach/ Management Science Approach/ Quantitative

Approach/ Operations Approach:
• Gives a scientific basis for managerial decision-making and includes mathematical
models, processes and precision in management.
• This contributes to structured thinking, management discipline and systematic
analysis of problems.

The quantitative approach relies on:

✓ Scientific Management – Use of mathematics and statistics in problem-solving;
✓ Operations Management – Combining inputs like materials, capitals and workers
which lead to smooth production of goods and services;
✓ Management Information Systems – Storing and analyzing past, current and
projected data to generate useful insights which can aid in effective management;
✓ Systems Management Theory – Transformation of inputs into outputs and
implementing a feedback loop mechanism.
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Some of the important quantitative approaches under Management Science are:

✓ CPM (Critical Path Method)
✓ PERT (Program Evaluation and Review Technique)

These methods help in scheduling and managing complex projects. The assumption on
which these are based is that any given task has one or more predecessor and one or
more successor tasks as well except for the start and end nodes.
Let us have a look at them elaborately:
PERT involves planning, monitoring, evaluating and controlling projects where time
taken for each activity is not known. Various events necessary for final achievement of
objectives are identified in this method and a flow diagram of these evens is made. Time
taken for completion of each activity is estimated through probability.
Critical Path Method: Duration of individual activities is known, thus earliest possible
start time and latest possible start time for each activity can be determined. In this
method, critical activities are identified (whose delay can delay the entire project).
Longest path in the network determines the duration of entire project, which is known
as critical path.

Linear Programming:
This method is constrained optimization which optimizes a given criterion with some
constraints. The relationship between objective functions and constraints is linear.
Different methods which are used in linear programming are Game theory, Decision
Theory, Queuing theory, inventory models and simulation.

2. Systems Approach:
• Any organization is divided into subsystems which are interdependent and
constantly interacting with each other.
• A system receives input in terms of material, energy and information post which it
undergoes a transformation process and generates an output which in turn serves as
input to some other system.
• Chester Barnard was the first one to utilize systems approach in management by
emphasizing on keeping a balance between events and conflicting forces.

3. Contingency Approach:
• It has evolved from System’s approach and focuses on integrating theory with
practice. According to this theory, there exists no single best approach for
management, rather everything depends on situation.
• It outlines an approach where behavior of any sub-unit is dependent on
relationships with other sub-units and environment under which it operates and if a
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manager wants to change behavior of any sub-part, he must try changing situation
which is influencing the behavior of that unit.

Some other Contributions to Management

➢ MANAGEMENT BY OBJECTIVES: Peter Drucker originated the concept of
Management by Objectives (MBO). It stresses on participative management where
managers at all levels participate in the goal setting process so that individual
performance synthesizes with organizational performance.
➢ Theory of Tom Peters: Tom Peters advocates the concept of ‘liberation
management’ which challenges the rigid organisation structure that inhibits people’s
creativity. Organisation structures should be flexible. Modern managers are
concerned with not only what happens inside the organisation but also with what
happens outside the organization.

The Role of Manager in an Organization:

Henry Mintzberg concluded that what managers do can best be described by looking at
the managerial roles they engage in at work. The term managerial roles refer to specific
actions or behaviors expected of and exhibited by a manager.
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