Ch 1- Nature and Significance of Management

Meaning and Definition of Management

• Management is an art of getting things done with and through others.
Management can be defined as, the process of getting things done with the aim of
achieving organizational goals effectively and efficiently.
• Definition- “Management is the process of designing and maintaining an
environment in which individuals work together in groups and efficiently
accomplish selected aims.”- by Harold Koontz and Heinz Weihrich
• The definition of management can be analysed by elaborating the terms- process,
efficiency and effectiveness.
Process
• Process means the primary functions or activities that management performs to
get the things done. These functions are planning, organizing, staffing, directing
and controlling (POSDICON). These functions are necessary in using the resources
to achieve specific goals.
• Efficiency and Effectiveness
• Efficiency means doing the task correctly at minimum cost through optimum
utilization of resources. It can be achieved by using less resources and deriving
more benefits and thus incurring less cost. Effectiveness is concerned with
completing the task correctly within stipulated time. In other words, it is
concerned with the end result.
• Although efficiency and effectiveness are different, yet they are inter- related. It is
important for management to maintain a balance between the two. High
efficiency associated with high effectiveness should be the aim of all managers.
Poor management is due to both inefficiency and ineffectiveness.

Functions of Management POSDC

1. Planning: It means thinking in advance what to do and who is going to do it. It bridges
the gap between where we are and where we want to reach. It involves setting of
goals and developing ways to achieve those goals.
2. Organising: It is the function of assigning duties, grouping tasks, establishing authority
and allocating resources to carry out a specific plan. It determines where and
when the task will be done. It involves establishing a framework within which the
employees will operate.
3. Staffing: It refers to recruitment, selection, training, development and appointment of
the employees. In simple words, staffing is concerned with finding the right
person for the right job. It is also known as human resource function.
4. Directing: It refers to guiding, instructing, influencing and motivating the employees. It
requires establishing an atmosphere through effective supervision, leadership,
motivation and communication that encourages the employees to do their best.
5. Controlling: It is the function of management which involves monitoring the
organizational performance towards the attainment of organizational goals. It
involves establishing standards of performance, measuring current performance,
comparing the actual performance with the standards and taking corrective
actions.

Characteristics/ Features of Management GPG CDIM

1. Management is a goal-oriented process Management is a goal-oriented process,

which ensures to achieve already specified and desired objectives by proper
utilization of available resources. These goals should be simple and clearly
stated.
 Ch 1- Nature and Significance of Management
2. Management is pervasive: Management is universal in nature. It is used in all
types of organizations whether economic, social or political irrespective of
its size, nature and location, at each and every level and at all times.
3. Management is a group activity: It is a group activity since it involves managing
and coordinating activities of different people as a team to attain the
desired objectives of the organization. This requires coordination of
individual effort in a common direction. At the same time management
should enable all its members to grow and develop.
4. Management is a continuous process: It consists of a series of function and its
functions are being performed by all managers simultaneously. The process
of management continues till an organization exists for attaining its
objectives.
5.Management is a dynamic function : It is a dynamic function since it has to adapt
according to need, time and situation of the changing business
environment. An organisation considers the impact of its external
environment which consists of various social, economic and political factors
and changes itself accordingly. For example, McDonalds made major
changes in its ‘Menu’ to survive in the Indian market.
6. Management is an intangible force: It is intangible force as it can’t be seen but its
effects can be felt in the form of results like whether the objectives are met
and whether employees are happy and motivated or not and there is
orderliness and coordination in the work environment instead of chaos.
7. Management is a multidimensional concept: It is multidimensional as it involves
management of work, people and operations.
(a) Management of work- Management translates the work in terms of goals and
assigns means to achieve the goals. It analyses the problems to be solved,
decisions to be made, plans to be established, budgets to be prepared,
responsibility and authority to be assigned.
(b) Management of people- Management is the art of getting things done through
people. It deals with employees as individuals having diverse needs and behavior
and as a group of people. It ensures to utilize the strength of employees to
achieve the organizational goals.
(c) Management of operations- In order to provide the product, management follows
a production process of transforming inputs into desired output by ensuring
systematic flow of input material and technology.
Objectives of Management OSP

(1) Organizational objectives: Those objectives which are related to utilization of

human and physical resources to the maximum possible advantage are
called organizational objectives.
Organizational Objectives can be divided into Survival, Profit, and Growth .
(a) Survival – Management by taking positive decisions with regard to different
business activities ensures survival of business for long term. Thus it aims at
earning enough revenues to cover cost.
(b) Profit – It plays an important role in facing business risks and successful running
of business activities. Profit is essential to cover cost and risks of the
business.
(c) Growth – Management must ensure growth which can be measured by increase
in sales, number of employees, number of products, additional investment,
etc. A business must aim at improving its future prospects in the long run.
 Ch 1- Nature and Significance of Management
(2) Social Objectives:
Social objectives is to provide some benefits to society and fulfill its social
obligations. It involves using environmental friendly practices in the
production process and giving employment to disadvantaged sections of
society, providing basic amenities like schools and hospitals etc. Example:
TISCO, ITC, and Asian Paints.
(3) Personal Objectives:
Personal Objectives is to focus on diverse personal needs of people working in the
organization which must be reconciled with organizational objectives for
maintaining harmony. Such needs can be financial needs relating to salary
and perks, social needs like peer recognition and higher-level needs like
personal growth and development.

Importance of Management GEDPS

‘Management is the life-giving element in every business. Without it the resources of

production remains resources and shall never become production.’- Peter Drucker.
The importance of management can be summarized as under-
(1) Achieving Group Goals: Management creates team-work and coordination in the
group. Managers give common direction to individual efforts in achieving
the overall goals of the organization.
(2) Increases Efficiency: Management increases efficiency by using resources in the
best possible manner to reduce cost and increase productivity through
better planning, organizing , directing and controlling.
(3) Creates Dynamic organization: Management helps the employees overcome
their resistance to change and adapt the organisation as per changing
situation to ensure its survival and growth.
(4) Achieving personal objectives: Management helps the individuals achieve their
personal goals while working towards organizational objectives. Through
motivation and leadership, the management help individuals to develop
team spirit, cooperation and commitment to group success.
(5) Development of Society: Management helps in the development of society by
providing good quality products, creating employment opportunities and
adopting new technologies and thus leading the path towards growth and
development.
Levels of Management
• “Levels of management” means different categories of managers, the lowest to
the highest on the basis of their relative authority, responsibilities and status.
Every individual in the organizational hierarchy is assigned certain authority to
fulfil his/her responsibility. This authority-responsibility relationship binds them as
superiors and subordinates which gives rise to various levels of management in
the organisation.
Top Level Management
 Ch 1- Nature and Significance of Management
• Top management consists of Senior most executives of the organisation such as
Chairperson, Chief Executive Officer, Chief Operating Officer, Chief Marketing
Officer, Chief Finance Officer, Managing Director, Chairman, President, Vice-
President or equivalent. Their job is complex and stressful demanding long hours
and commitment.
• Functions of top-level management:
1. To integrate diverse elements and coordinate the activities of different
departments according to the overall objectives of the organisation.
2. To be responsible for welfare and survival of the organisation.
3. To analyse the business environment and its implications for the survival of the
firm.

4. To formulate overall organizational goals and strategies for their achievement.

To be responsible for all the activities of the business and for its impact on the
society.

Middle Level Management

• Middle level management is the link between top and lower level management.
Their main task is to carry out the plans formulated by the top managers. It
consists of divisional/ departmental heads like Human Resource Manager,
Production Manager, Marketing Manager, Finance Manager, Operations Manager,
Plant Superintendent, Regional Manager, Divisional Manager.

Functions:

1. To interpret the policies framed by the top management.

2. To ensure that their department has the necessary personnel.

3. To assign necessary duties and responsibilities to the employees of their

respective departments for implementation of the plan.

4. To motivate employees of their respective departments to achieve the desired

objectives.

5. To cooperate with other departments for smooth functioning of the organisation.

Lower/ Operational/ Supervisory Level of Management

• They are the managers at the lowest level in the hierarchy of the organisation. It
comprises of Foremen and Supervisors. Their authority and responsibility is
limited according to the plans drawn by the top management.

• Functions:

1. To oversee the efforts of the workforce.

2. To interact with the actual workforce and pass on the instructions of the middle
level management to the workers.
 Ch 1- Nature and Significance of Management
3. To ensure that the quality of output is maintained and wastage of material is
minimised.

4. To ensure safety standards are maintained.

• Managers at the top level spend more time in planning and organizing than
managers at lower levels of the organisation.

NATURE OF MANAGEMENT-
MANAGEMENT AS AN ART
• Art refers to skillful and personal application of existing knowledge to achieve
desired results. It can be acquired through study, observation and experience. The
features of art as follows:
(1) Existence of theoretical knowledge: In every art, systematic and organized study
material provides basic principles which are necessary to acquire theoretical
knowledge to be applied.
(2) Personalized application: The use of basic knowledge differs from person to
person and thus, art is a very personalized concept.
(3) Based on practice and creativity: Art involves consistent and creative practice of
existing theoretical knowledge which makes an artist perfect in the
performance of that art.
• We will now analyse whether above requirements of an art are present in
management or not:
• In management, the day to day job of managing an organisation is based on study,
observation and experience. A huge volume of literature and books are available
on different aspects of management which imparts theoretical knowledge to
managers.
• Every manager has his own unique style of managing things and people. A
manager applies the principles developed by management scholars to a given
situation or problem, in his own unique style and manner. Thus, application of
knowledge is personalized and skillful. Also, the manager can formulate his own
theories to handle a given situation.
• A manager uses his creativity in applying management techniques and his skills
improve with regular application. A good manager works through a combination
of practice, creativity, imagination, initiative and innovation. Perfection is
achieved after regular practice of management aspects.
Since all the features of art are present in management, it can be called an art.
Management as a Science
• Science is a systematized body of knowledge that is based on general truths or the
general laws which can be tested anywhere, anytime. The features of Science are
as follows:
(1) Systematized body of knowledge: Science has a systematized body of knowledge
based on principles and experiments. The principles of science are based on
cause and effect relationship.
(2) Principles based on experiments and observation: Scientific principles are
developed through observation and tested through repeated experiments
under controlled conditions.
(3) Universal validity: Scientific principles have universal validity and application.
 Ch 1- Nature and Significance of Management
• We will now analyse whether above requirements of science are present in
management or not:
1. Management has systematic body of knowledge. It has its own theory and
principles that are developed over a period of time. It has its own vocabulary of
terms and concepts.
2. Its principles are developed over a period of time based on repeated experiments
& observations in different types of organisations. However, the outcome of these
experiments cannot be accurately predicted as management deals with human
behavior.
3. The application of principles of management is not universal. They have to be
modified according to given situation. However, these principles are used to
provide standards for training and development of managers.
• As the principles of management are not as exact as the principles of pure science,
it may be called an inexact science.
Management as a Profession
• Profession means an occupation for which specialized knowledge and skills are
required and entry is restricted. The main features of profession are as follows:
(1) Well-defined body of Knowledge: All the professions are based on well defined
body of knowledge that can be acquired through instruction.
(2) Restricted Entry: The entry in every profession is restricted through examination
or through some minimum educational qualification.
(3) Professional Associations: All professions are affiliated to a professional
association which regulates entry, grants certificate of practice and frames
code of conduct relating to the profession.
(4) Ethical Code of Conduct: All professions are bound by a code of conduct which
guides the behavior of its members.
(5) Service Motive: The main aim of a profession is to serve its clients’ interest by
rendering dedicated and committed service.
• We will now analyse whether above requirements of a profession are present in
management or not:
1. Management is based on a systematic body of knowledge comprising well defined
principles. This knowledge can be acquired at various colleges and
institutions through a number of books and other publications. So, this
criteria is fulfilled.
2. There is no restriction on anyone being designated or appointed as manager in any
business enterprise. It is not mandatory for the managers to possess any
specific degree. He/ She should possess professional knowledge and
training. So, this criteria is not met.
3.There are several associations of practicing managers like All India Managers
Association (AIMA) that lays code of conduct for its members. However, it is
not compulsory for managers to be a member of such an association. So,
this criteria is not met.
4. The code of conduct devised by AIMA has no statutory backing (not legally
enforced). So, this criteria is not met
5. An organisation having efficient and effective managers , automatically serves
society by providing good quality products at reasonable prices. Profit
 Ch 1- Nature and Significance of Management
maximization is not the sole objective of management in today’s
competitive world. This criteria is slowly being met.
• Management does not fulfill all the features of a profession and thus it is not a full-
fledged profession as other professions like doctor, lawyer, etc.,
Coordination- The Essence of Management
• Coordination is the force which synchronizes all the functions of management and
activities of different departments. Lack of coordination results in overlapping,
duplication, delays and chaos. It is concerned with all the three levels of
management as if all the levels of management are looked at together, they
become a group and as in the case of every group, they also require coordination
among themselves. So, it is not a separate function of management, rather it is
the essence of management.

Above diagram shows that coordination is implicit and inherent in all functions of
management.
• The process of coordinating the activities of an organisation begins at the planning
stage itself. Top management plans for the entire organisation.
• According to these plans the organizational structure or framework is developed.
• The staffing function is performed to fill the roles designed in the organizational
structure.
• In order to ensure that these plans are executed according to plans, directing is
required.
• Any deviation between actual and standard performance are taken care of at the
stage of controlling.
Thus, coordination is not a separate function of management, but it is the essence. It
is required to efficiently and effectively achieve the goals of an organisation.
Definitions of Coordination
• According to Theo Haimann; “Coordination is the orderly synchronizing of efforts
of subordinates to provide proper amount, timing and quality of execution so that
their united efforts lead to the stated objectives, namely, the common purpose of
the enterprise.”
• In the words of Henri Fayol; “ Coordination harmonises, synchronises and unifies
individual efforts for better action and for the achievement of the business
objectives”.
• According to McFarland; “ Coordination is the process whereby an executive
develops an orderly pattern of group efforts among his subordinates and secures
unity of action in the pursuit of common purpose”.
 Ch 1- Nature and Significance of Management
Characteristics/ Nature/ Features of Coordination
l. Coordination integrates group efforts: It integrates diverse business activities into
purposeful group activity ensuring that all people work in one direction to
achieve organizational goals.
2. Coordination ensures unity of action: It directs the activities of different
departments and employees towards achievement of common goals and
brings unity in individual efforts. For example, the production and sales
departments have to coordinate their work, so that production takes place
according to the demand in the market.
3. Coordination is a continuous process: It is not a specific activity matter or a one-
time function. It begins at the planning stage and continues till controlling. It
is required till the organization continues its operations.
4. Coordination is a pervasive function: Coordination is required in all types of
organisations, in all departments and at all levels. It synchronizes the
activities of all levels and departments as they are interdependent to
maintain organizational balance. In the absence of coordination, there is
overlapping and chaos in various departments instead of harmony and
integration of activities.
5. Coordination is the responsibility of all managers: It is equally important at all the
three-top, middle and lower levels of management. At the top level,
managers coordinate with their subordinates for effective implementation
of overall policies of the organisation. At middle level, the managers have to
coordinate with both top and lower level mangers. At the lower level,
managers have to integrate the activities of workers.
6. Coordination is a deliberate function: Coordination is never established by itself
rather it is a conscious effort on the part of every manager. Cooperation is
voluntary effort of employees to help one another. Effective coordination
cannot be achieved without cooperation of group members. Cooperation in
the absence of coordination may lead to wasted efforts and coordination
without cooperation may lead to dissatisfaction among employees.
Importance of Coordination
• The need for coordination arises because of the following reasons:
1. Growth in size- With the growth in size of an organisation, the number of people
employed by it also increases. They might have their individual goals. For
organizational efficiency, it is important to harmonise individual goals and
organisational goals through coordination.
2. Functional Differentiation- Organisations might have separate departments of
production, finance, marketing or human resource. The activity of each
department needs to be focused on the achievement of common organisational
goals. They have their own strategy and plan of action. Coordination ensures unity
of action and avoid conflicts between them.
3. Specialisation- Specialisation arises out of the complexities of modern technology
and the diversity of tasks to be performed. Therefore, a number of specialists are
needed. These specialists are professional experts and they do not take advice or
suggestions from others. This leads to conflict amongst different specialists and
other managers in the organisation. So, coordination is required to reconcile the
differences in approach and opinion of the specialists.

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