UNIT I

INTRODUCTION TO MANAGEMENT

INTRODUCTION:
In the present context, managing has become one of the most important areas of human activity
because of increasing role of large and complex organizations in the society. Because of their
increasing role, the organizations have attracted the attention of both practitioners and academicians to
find out the solutions for business problems.

CONCEPT:
Defining the term management precisely is not so simple because the term management is used in a
variety of ways. Being a new discipline, it has drawn concepts and principles from a number of
disciplines such as economics, sociology, psychology, anthropology, statistics and so on.

Each group of contributors has treated management differently. For example, economists have treated
management as a factor of production; sociologists have treated it as a class or group of persons;
practitioners have treated it as a process comprising different activities.

MANAGEMENT DEFINITIONS:
“Management is the art of getting things done through and with people in formally organized groups” -
-- Koontz

“Management is the art of knowing what you want to do and then seeing that it is done in the best and
cheapest way” – F.W. Taylor

“Management is the art of securing maximum results with minimum effort so as to secure maximum
prosperity and happiness for both employer and employee and give the public the best possible
service” --- John Mee

“Management is the accomplishment of results through the efforts of other people” - Lawrence

“Management is simply the process of decision making and control over the action of human beings
for the expressed purpose of attaining pre-determined goals” – Stanley V.

“Management is a process involving planning, organizing, staffing, directing and controlling human
efforts to achieve stated objectives in an organization.”

NATURE and FEATURES OF MANAGEMENT:

a) Management is a social process: Social process refers to the series of activities that are performed in
the Society. These activities are carried out by administrators, politicians, economists, housewives,
parents, doctors, lawyers and so on. Management is an integral part of social process. Management
helps everyone to carry out the activities in the society effectively. In other words, management is a
process of certain managerial functions in every organisation. It is a social process in particular
because managers, at all-levels, work with people.

b) Management also denotes a 'body of people' involved ill decision-making: When an institution is
very well run, it is said that the management of that institution takes personal interest in the institution.
Here, management denotes a body of people involved in decision-making.

c) Management is omnipresent and universal: Successful organisations show that management

principles apply to every kind of organisation and also to every level in it Hence, it is called
omnipresent and universal.

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d) It is an inexact science: Management principles are not like those in science or maths where things are
fairly clear or exact. Hence, they cannot be generalized precisely.

e) It is complex: Management functions are complex. They call for a fairly professional approach to
manage a given situation in an organisation.

f) Management is situational in nature: The same style of management cannot work for the same situation
'every time. The change in the situation may call for a change in the style of functioning of the manager.
Similarly, at different points of time also, the style of functioning can be different.

g) Management is an art and also a science: There is considerable discussion on whether management is an
art or science. An art is personal skill or deftful handling of business affairs. Art is characterized by
practical knowledge, personal creativity, and skill. The more one practices an art, the more professional
one becomes. Management can be considered as an art because it satisfies all these criteria of an art.
The management skills are highly individual-oriented and can be sharpened with more training and
practice. There is a lot of scope to apply creativity in the context of managing the affairs of a business
organisation. Thus, management is an art.
A science is a systematized body of knowledge of facts. It can establish cause and effect relationships
among various factors. It involves basic principles, which are capable of universal application, It also
helps to predict the future events. Management satisfies all these criteria to be considered as a 'science':
Thus, science and art are not mutually-exclusive but are complementary to each other. Science and art
are two sides of the same coin.
Mere knowledge of science will not assure results because one must know how to apply them. Here
comes the role of art or skill. Hence, management is-considered more as-both an art and a science.

h) Management is a profession: Profession refers to a vocation or a branch of advanced learning such

as engineering or medicine. Management helps to carry out every profession in a scientific manner.
The managers are professional in their approach and are governed by code of ethics. If the manager
violates the code of conduct, he can be dismissed from the organisation.

i) Management is inter-disciplinary: The subject of management is heavily dependent on other disciplines,

and the techniques of management are built around the techniques drawn from these subjects. The manager
uses extensively for instance, the theories of consumption and production from Economics; linear
programming, PERT and CPM from Operations Research; probability theories, correlation and regression
techniques from Statistics; theories of group behaviour from Sociology: theories of individual behaviour
from Psychology; the tools of decision-making such as matrices, calculus, integration, and differentiation
from Mathematics.

j) Manager has four types of resources-the Four M's: Men, money, materials, and machines are the
four types of resources the manager has to manage. However, this list Is only inclusive.

SCOPE or BRANCHES OF MANAGEMENT:

The operational aspects of business management, called the branches of management, are as follows:

1. Production Management
2. Marketing Management
3. Financial Management
4. Personnel Management and
5. Office Management

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1. Production Management:
Production means creation of utilities. This creation of utilities takes place when raw materials are
converted into finished products. Production management, then, is that branch of management ‘which
by scientific planning and regulation sets into motion that part of enterprise to which has been
entrusted the task of actual translation of raw material into finished product.’

It is a very important field of management, for every production activity which has not been hammered
on the anvil of effective planning and regulation will not reach the goal, it will not meet the customers
and ultimately will force a business enterprise to close its doors of activities which will give birth to so
many social evils.

Plant location and layout, production policy, type of production, plant facilities, material handling,
production planning and control, repair and maintenance, research and development, simplification and
standardization, quality control and value analysis, etc., are the main problems involved in production
management.

2. Marketing Management:
Marketing is a sum total of physical activities which are involved in the transfer of goods and services
and which provide for their physical distribution. Marketing management refers to the planning,
organizing, directing and controlling the activities of the persons working in the market division of a
business enterprise with the aim of achieving the organization objectives.

It can be regarded as a process of identifying and assessing the consumer needs with a view to first
converting them into products or services and then involving the same to the final consumer or user so
as to satisfy their wants with a stress on profitability that ensures the optimum use of the resources
available to the enterprise. Market analysis, marketing policy, brand name, pricing, channels of
distribution, sales promotion, sale-mix, after sales service, market research, etc. are the problems of
marketing management.

3. Financial Management:
Finance is viewed as one of the most important factors in every enterprise. Financial management is
concerned with the managerial activities pertaining to the procurement and utilization of funds or
finance for business purposes.

The main functions of financial management include:

• Estimation of capital requirements;
• Ensuring a fair return to investors;
• Determining the suitable sources of funds;
• Laying down the optimum and suitable capital

4. Personnel (HR) Management:

Personnel Management is that phase of management which deals with the effective control and use of
manpower. Effective management of human resources is one of the most crucial factors associated
with the success of an enterprise. Personnel management is concerned with managerial and operative
functions.

The operating functions of personnel management are:

• Personnel planning
• Directing the employees and Controlling
• Procurement of right kind and number of persons
• Training and development of employees
• Determination of adequate and equitable compensation of employees

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 • Integration of the interests of the personnel with that of the enterprise and
• Providing good working conditions and welfare services to the employees.

5. Office Management:
The concept of management when applied to office is called ‘office management’. Office management
is the technique of planning, coordinating and controlling office activities with a view to achieve
common business objectives. One of the functions of management is to organize the office work in
such a way that it helps the management in attaining its goals. It works as a service department for
other departments.

The success of a business depends upon the efficiency of its administration. The efficiency of the
administration depends upon the information supplied to it by the office. The volume of paper work in
office has increased manifold in these days due to industrial revolution, population explosion,
increased interference by government and complexities of taxation and other laws.

Harry H. Wylie defines office management as “the manipulation and control of men, methods,
machines and material to achieve the best possible results—results of the highest possible quality with
the expenditure of least possible effect and expense, in the shortest practicable time, and in a manner
acceptable to the top management.”

IMPORTANCE OF MANAGEMENT:

Management is viewed as a very significant tool for the following reasons:

a) It facilitates the achievement of goals through limited resources: An organisation, if well managed,
can accomplish its goals even though its resources are limited: The resources are scarce, and hence,
they have to be effectively allocated and utilized in an optimum manner. This is possible only through
management.

b) It ensures smooth sailing in case of difficulties: Manager guides the organisation, especially in
trouble. As long as things go normal, that is, everybody is doing his/her own function diligently, they
may not feel the need for a manager. In case of a crisis, it is the manager who ensures a smooth sailing.
How does he do this? He anticipates and makes necessary changes in the organisation to achieve the
targeted results.

c) It ensures continuity in the organisation: Continuity is very important in the organisations. Where
there are no proper guidelines for decision-making continuity cannot be guaranteed. It is quite natural
that new people join while some others retire or leave the organisation. It is only management that
keeps the organisation continuing. Modern organisations are based on systems and procedures. Thus,
continuity is ensured. Organisations do not just collapse when some key people leave them. Yes, there
could be a change in the focus or priorities in the organisation.

d) It ensures economy and efficiency: Without managers, it may be difficult to get the job performed
efficiently. It is the manager who plans, coordinates, and monitors the progress of work and suggests
whether the work is satisfactorily done or not. In case of shortfall, it is the manager who helps the
employees to perform better. Thus, organisational costs can be minimized through sound management
practices.

e) It focuses on group efforts: If each individual is allowed to plan and organize independently of what
others are doing, there will be nothing but chaos. Therefore, management is needed to guide and direct
group efforts.

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f) It is the key to the economic growth: Efficient management is equally important for the nation in
terms of social and economic development. The economic development of a country largely depends
on the quality of management of its resources. Capital investment or latest technology alone cannot
lead the nation to economic growth. The wealth and production resources in the country also have to be
managed efficiently. By producing wealth, managers facilitate the increase in national income and
thus, the living standard of the people. Management is, thus, the key to the economic growth.

FUNCTIONS OF MANAGEMENT:

To achieve the organizational objectives managers at all levels of organization should perform
different functions. A function is a group of similar activities.

The list of management functions varies from author to author with the number of functions varying
from three to eight.

Writers Management Functions

Henry Fayol Planning, Organizing, Commanding, Coordinating,
Controlling

Luther Gullick POSDCORD- Planning, Organising, Staffing, Directing,

Coordinating, Reporting, Directing

R. Davis Planning, Organising, Controlling

E.F.L. Breech Planning, Organising, Motivating, Coordinating,

Controlling

Koontz Planning, Organising, Staffing, Leading, Controlling

Different authors presented different variations. To sum up the important functions of management are:
Planning, Organizing, Staffing, Directing, and Controlling.

• Planning: Planning is the conscious determination of future course of action. This involves why an
action, what action, how to take action, and when to take action. Thus, planning includes determination
of specific objectives, determining projects and programs, setting policies and strategies, setting rules
and procedures and preparing budgets.

• Organising: Organising is the process of dividing work into convenient tasks or duties, grouping of
such duties in the form of positions, grouping of various positions into departments and sections,
assigning duties to individual positions, and delegating authority to each position so that the work is
carried out as planned. It is viewed as a bridge connecting the conceptual idea developed in creating
and planning to the specific means for accomplishment these ideas.

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• Staffing: Staffing involves manning the various positions created by the organizing process. It includes
preparing inventory of personal available and identifying the sources of people, selecting people,
training and developing them, fixing financial compensation, appraising them periodically etc.

• Directing: when people are available in the organization, they must know what they are expected to do
in the organization. Managers fulfill this requirement by communicating to subordinates about their
expected behavior. Once subordinates are oriented, the superiors have continuous responsibility of
guiding and leading them for better work performance and motivating them to work with zeal and
enthusiasm. Thus, directing includes communicating, motivating and leading.

• Controlling: Controlling involves identification of actual results, comparison of actual results with
expected results as set by planning process, identification of deviations between the two, if any, and
taking of corrective action so that actual results match with expected results.
MANAGERIAL SKILLS:
Management is a challenging job. It requires certain skills to accomplish such a challenge. Thus,
essential skills which every manager needs for doing a better management are called as Managerial
Skills.

According to Professor Robert Katz, there are three managerial skills, viz.,

1. Conceptual Skills,
2. Human Relations Skills, and
3. Technical Skills.

According to Prof. Robert Katz, all managers require above three managerial skills. However, the
degree (amount) of these skills required varies (changes) from levels of management and from an
organisation to organisation.

The above picture or diagram shows the managerial skills which are required by managers working at
different levels of management. The top-level managers require more conceptual skills and less
technical skills. The lower-level managers require more technical skills and fewer conceptual skills.
Human relations skills are required equally by all three levels of management.

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1. Conceptual Skills: Conceptual skill is the ability to visualize (see) the organization as a whole. It
includes Analytical, Creative and Initiative skills. It helps the manager to identify the causes of the
problems and not the symptoms. It helps him to solve the problems for the benefit of the entire
organization. It helps the manager to fix goals for the whole organisation and to plan for every
situation. According to Prof. Robert Katz, conceptual skills are mostly required by the top-level
management because they spend more time in planning, organizing and problem solving.
2. Human Relations Skills: Human relations skills are also called Interpersonal skills. It is an ability to
work with people. It helps the managers to understand, communicate and work with others. It also
helps the managers to lead, motivate and develop team spirit. Human relations skills are required by all
managers at all levels of management. This is so, since all managers have to interact and work with
people.
3. Technical Skills: A technical skill is the ability to perform the given job. Technical skills help the
managers to use different machines and tools. It also helps them to use various procedures and
techniques. The low-level managers require more technical skills. This is because they are in charge of
the actual operations.

The figure below indicates the skills managers must have and the degree of importance for each level
of managers.

In addition to above skills, a manager also needs following managerial skills.

4. Communication Skills: Communication skills are required equally at all three levels of management.
A manager must be able to communicate the plans and policies to the workers. Similarly, he must
listen and solve the problems of the workers. He must encourage a free-flow of communication in the
organisation

5. Administrative Skills: Administrative skills are required at the top-level management. The top-level
managers should know how to make plans and policies. They should also know how to get the work
done. They should be able to co-ordinate different activities of the organisation. They should also be
able to control the full organisation

6. Leadership Skills: Leadership skill is the ability to influence human behaviour. A manager requires
leadership skills to motivate the workers. These skills help the Manager to get the work done through
the workers

7. Problem Solving Skills: It also called as Design skills. A manager should know how to identify a
problem. He should also possess an ability to find a best solution for solving any specific problem.
This requires intelligence, experience and up-to-date knowledge of the latest developments

8. Decision Making Skills: Decision-making skills are required at all levels of management. However, it
is required more at the top-level of management. A manager must be able to take quick and correct
decisions. He must also be able to implement his decision wisely. The success or failure of a manager
depends upon the correctness of his decisions

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 MANAGERIAL ROLES:

The activities that are carried out by the managers are key elements. The way, in which the managerial
Roles are carried out, are influenced by individual and situational factors. Henry Mintzberg initially
divided the ten managerial roles into three sub categories:

1. Interpersonal
2. Informational
3. Decisional

Let's look at each of the ten managerial roles in greater detail.

1. Interpersonal Roles: The managerial roles in this category involve providing information and ideas.

a) Figurehead – As a manager, you have social, ceremonial and legal responsibilities. You're expected to
be a source of inspiration. In this role, every manager has to perform some duties of a ceremonial
nature, such as greeting the touring dignitaries, attending the wedding of an employee, taking an
important customer to lunch and so on.
b) Leader: As a leader, every manager must motivate and encourage his employees. He must also try to
reconcile their individual needs with the goals of the organization.
c) Liaison: In this role of liaison, Managers must communicate with internal and external contacts. The
manager must be able to network effectively outside his vertical chain of command to collect
information useful for his organization.

2. Informational Roles: The managerial roles in this category involve processing information.

a) Monitor – In this role, you regularly seek out information related to your organization and industry,
looking for relevant changes in the environment. You also monitor your team, in terms of both their
productivity, and their well-being.
b) Disseminator: In the role of a disseminator, the manager passes potentially useful information to his
subordinates who would otherwise have no access to it.
c) Spokesperson: In this role, the manager informs and satisfies various groups and people who
influence his organization. Thus, he advises shareholders about financial performance, assures
consumer groups that the organization is fulfilling its social responsibilities and satisfies government
that the origination is abiding by the law.

3. Decisional Roles: The managerial roles in this category involve using information.

a) Entrepreneur: In this role, the manager constantly looks out for new ideas and seeks to improve his
unit by adapting it to changing conditions in the environment.
b) Disturbance Handler: In this role, the manager has to work like a fire fighter. He must seek solutions
of various unanticipated problems – a major customer may go bankrupt; a supplier may renege on his
contract, and so on.
c) Resource Allocator: In this role, the manager must divide work and delegate authority among his
subordinates. He must decide who will get what. This involves allocating funding, as well as assigning
staff and other organizational resources.
d) Negotiator: The manager has to spend considerable time in negotiations. Thus, the chairman of a
company may negotiate with the union leaders a new strike issue, the foreman may negotiate with the
workers a grievance problem, and so on.

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MANAGEMENT LEVELS - (A HIERARCHICAL VIEW):

An organization can have many different managers, across many different titles, authority levels, and
levels of the management hierarchy.

Management Levels: Most organizations have three management levels:

• Top-level Management (managers)

• Middle-level Management (managers) and
• Low-level Management (managers)

These managers are classified in a hierarchy of authority, and perform different tasks. In many
organizations, the number of managers in every level resembles a pyramid.

Below, you’ll find the specifications of each level’s different responsibilities and their likely job titles.

TOP-LEVEL MANAGERS:

The board of directors, president, vice-president, and CEO are all examples of top-level managers.

These managers are responsible for controlling and overseeing the entire organization. They develop
goals, strategic plans, company policies, and make decisions on the direction of the business.

In addition, top-level managers play a significant role in the mobilization of outside resources.

Top-level managers are accountable to the shareholders and general public.

MIDDLE-LEVEL MANAGERS:

General Managers, Branch Managers, and Department Managers are all examples of Middle-level
managers. They are accountable to the top management for their department’s function.

Middle-level managers devote more time to organizational and directional functions than top-level
managers. Their roles can be emphasized as:

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 • Executing organizational plans in conformance with the company’s policies and the objectives of
the top management;
• Defining and discussing information and policies from top management to lower management;
and most importantly
• Inspiring and providing guidance to low-level managers towards better performance.

Some of their functions are as follows:

• Designing and implementing effective group and intergroup work and information systems;
• Defining and monitoring group-level performance indicators;
• Diagnosing and resolving problems within and among work groups;
• Designing and implementing reward systems supporting cooperative behavior.

LOW-LEVEL MANAGERS:
Supervisors, section leads, and foremen are examples of low-level management titles. These managers
focus on controlling and directing.

Low-level managers usually have the responsibility of:

• Assigning employees tasks;

• Guiding and supervising employees on day-to-day activities;
• Ensuring the quality and quantity of production;
• Making recommendations and suggestions; and
• Up channeling employee problems.

Also referred to as first-level managers, are role models for employees. These managers provide:

• Basic supervision; Motivation;

• Career planning; Performance feedback; and
• Staff supervision.

CHALLENGES OF MANAGEMENT:
Organizations are faced with a variety of external factors that provide potential opportunities and threats
for short-term and long-term success in any given environment. Encompassing a macro-environmental
perspective, these factors can be effectively summarized with the acronym PESTEL.

Political

Legal Economical

Organiza
tion

Environmental Social

Technological

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PESTEL stands for the political, economic, social, technological, environmental, and legal
influences a business encounters as it pursues its objectives. Analyzing the entirety of the macro-
environment is an extensive and complex task, but understanding the framework of basic influences
allows for an organized and strategic approach to isolating each opportunity or threat. It is common to
conduct a PESTEL assessment before any serious decisions are made or any large projects are
undertaken. Understanding each of these influencing factors is the first step to addressing them
properly.

Political: Politics play a role in business, as there is a balance between free markets and systems of
control. Political factors affecting business specifically revolve around taxes, import and export tariffs,
environmental and labor laws, potential subsidies, and the stability of a given operational region. As
global economics now supersede domestic economics for many businesses, companies must consider a
number of opportunities and threats when expanding into new regions or identifying optimal areas for
production, sales, or corporate headquarters.

Economical: Economic factors are metrics that measure and assess the health of a given economic
microcosm within the entire global economy. These factors incorporate exchange rates, gross domestic
product (GDP), consumer purchasing indices, interest rates, inflation, and a number of other indicators
of economic health or direction. These indicators are critical to management, as they can reveal a good
time to borrow, as well as whether an economy will be friendly to an industry where businesses
fluctuate substantially with GDP or spending power, etc.

Social: Social factors could loosely be defined as a demographic analysis, where specific groups
display preferences or tendencies that can be leveraged or that can threaten a given incumbent. For
example, in the United States, consumers are becoming more health-conscious. This trend affords the
food industry opportunities to create products that meet this social desire; as a result, candy
manufacturers may want to consider diversification. The social movement of living "green" is another
example of this kind of macro-environmental opportunity or potential threat.

Technological: Technology plays a larger and larger role each year in business and will continue to do
so as research and development drive new innovations. Recognizing the potential technologies
available to optimize internal efficiency is a powerful asset in management. Technology also presents a
number of threats, as CD-player manufacturers and Blockbuster Video can attest. These companies
were hurt by "disruptive innovations" such as the MP3 player and Netflix. Keeping pace with
technology and adapting accordingly are important strategies to sidestep threats and embrace
opportunities.

Environmental: The impact of business upon the environment is a growing concern, and companies
must consider both the social and political segments of PESTEL in conjunction with environmental
factors. Consumers and governments both penalize companies that adversely affect the environment.
Governments levy enormous fines upon companies that pollute beyond given specifications, and
consumers are more than willing to switch brands if they perceive that a business is ignoring its
environmental responsibilities. The environment can also be a source of benefit to a company, such as
running water for a hydro-power plant.

Legal: The last factor in PESTEL concerns legal elements, which can also be tied to the political
framework. Legal issues such as affirmative action, patent infringements (a recent example being
Apple vs. Samsung), antitrust laws (see Microsoft), health regulations, and safety regulations can all
significantly affect a company that does not act responsibly. Understanding this legal landscape is
important for businesses that want to avoid legal pitfalls and remain within the confines of established
regulations.

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 EVOLUTION OF MANAGEMENT

Management has been practiced in some form or the other since the dawn of civilization. Ever since
human beings started living together in groups, techniques of organization and management were
evolved. The Egyptian pyramids, The Roman Catholic Church, the military organizations and the
Great Wall of China, for instance, are tangible evidence that projects of tremendous scope, employing
tens of thousands of people, were undertaken well before the modern times.

The pyramids are particularly interesting examples. The construction of a single pyramid occupied
more than 1,00,000 workers for 20 years. Who told each worker that what did one do? Who ensured
that there would be enough stones at the site to keep the workers busy? The answer is Managers,
regardless of what managers were called at that time.

However, two pre-twentieth-century events played significant roles in promoting the study of
management. First is Adam Smith’s contribution in the field of management and second is influence of
Industrial Revolution in management practice

a) Adam Smith concluded that division of labor increased productivity by increasing each worker’s
skill and dexterity, by saving time lost in changing tasks, and by creating labor-saving inventions and
machinery. He used the pin-manufacturing industry for his example. Smith noted that 10 individuals,
each doing a specialized task, could produce about 4800 pins a day. However, if each worked
separately and had to perform each task, it would be quite an accomplishment to produce even 10 pins
a day.

b) Industrial Revolution is another most important aspect that influences management in pre-
twentieth century. The major contribution of the industrial revolution was the substitution of machine
power for human power resulted in less manufacturing cost, etc., fostered the development of big
organization.

Now, a formal theory to guide managers in running their organization was needed.

EVOLUTION OF MANAGEMENT THOUGHTS

MANAGEMENT THOUGHTS PERIOD

Early Contributions Upto19th century
Scientific Management 1900-1930
Administrative/operational management 1916-1940
Human relations approach 1930-1950
Social systems approach 1940-1950
Decision theory approach 1945-1965
Management science approach 1950-1960
Human behavior approach 1950-1970
Systems approach 1960s onwards
Contingency approach 1970s onwards

I. CLASSICAL APPROACH TO MANAGEMENT

i. Weber’s Theory of Bureaucratic Management
ii. Taylor’s Theory of Scientific Management and
iii. Henry Fayol’s Administrative management

II. NEO-CLASSICAL APPROACH TO MANAGEMENT

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 i. Human Relations Movement
a. Elton Mayo’s Hawthorne Experiment
ii. Behavioral System
a. Abraham Maslow’s Hierarchy of Need Theory
b. Douglas McGregor’s Theory X & Theory Y
c. Frederick Herzberg’s Two Factor Theory of Motivation

III. MODERN APPROACH TO MANAGEMENT

i. Systems Approach
ii. Quantitative Approach
iii. IT Approach
iv. Contingency Approach

I. CLASSICAL APPROACH TO MANAGEMENT:

Classical approach of management professes the body of management thought based on the belief that
employees have only economical and physical needs and that the social needs & need for job
satisfaction either does not exist or are unimportant. Accordingly, it advocates high specialization of
labor, centralized decision making & profit maximization.

• Classical approach is the oldest formal school of thought which began around 1900 and continued into
the 1920s.
• It’s mainly concerned with the increasing the efficiency of workers and organizations based on
management practices, which were an outcome of careful observation.
• Classical approach mainly looks for the universal principles of operation in the striving for economic
efficiency.
• Theories of Classical approach includes:
i. Weber’s Theory of Bureaucratic Management
ii. Taylor’s Theory of Scientific Management and
iii. Henry Fayol’s Administrative management

i. BUREAUCRATIC MANAGEMENT:

During 1800’s, European Organization were managed on a personal, family-like basis. Employees loyal
towards a single individual. Resources used to realize individual desires.
Weber envisioned Organization would be managed on an impersonal, rational basis. This form of
Organization is known as Bureaucracy.
Bureaucratic Management emphasized the necessity of organizations to operate in rational way instead
of following the “arbitrary whims” or irrational motions and intentions of owners and managers.
Principles of Bureaucratic Management Approach:
1. Proper Division of Labor: Division of labor specialization should be fixed and there should be a balance
between power and responsibilities
2. Chain of Command: The chain of command or organizational hierarchy should be constructed in a way
that information related to decision and works can flow effectively from top to bottom
3. Separation of personal and official property: Owners and organizations assets are separate and can’t
be treated as same by the owner or the organization
4. Applications of consistent and complete rules: There should be proper rules and regulations in the
organization for running the organization
5. Selection and promotion based on qualifications: The selection and promotion of workers should be
based on equalization like skills, experience, age. It should not be influenced by personal relations and
benefits.

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 6. Training in job requirements and skills: There is a difference between management and other parts of
organization and training and improving skills of management is important.

ii. SCIENTIFIC MANAGEMENT THEORY:

“Scientific management is concerned with knowing exactly what you want to do and then see that they
do it in the best and cheapest way”
The concept of scientific management was coined by Frederick Winslow Taylor, the father of
Scientific Management. In 1898, Taylor joined Bethlehem Steel, he was a mechanical engineer who
sought to improve industrial efficiency.
Taylor had observed that workers’ purposively operating well below their capacity because of 3 causes.
1. If they become more productive, fewer of them would be needed and remaining would be eliminated.
2. Workers’ fear that management will decrease their per-unit pay if the quantity increases
3. Workers’ waste much of their effort by relying on rule-of-thumb methods rather than on optimal work
methods that ca be determined by scientific study of the task

Taylor insisted that management itself would have to change and further, that the manner of change
could be determined only be in a scientific way. Hence, term “Scientific Management” evolved
Taylor suggested that decisions based on rules of thumb and tradition be replaced with precise
procedures developed after careful study of individual situations. The main things Taylor noticed for
inefficiency are:

1. The lack of standard tools or techniques,

2. There is no match between skill and job and
3. No motivation from the management.

In order to improve the efficiency Taylor suggested 4 principles called as Taylor’s principles of
Scientific Management:

1. Replace rule-of-thumb work methods with methods based on a scientific study of the tasks
2. Scientifically select, train, and develop each worker rather than passively leaving them to train
themselves
3. Cooperate with the workers to ensure that the scientifically developed methods are being followed
4. Divide work nearly equally between managers and workers, so that the managers apply scientific
management principles to planning the work and the workers actually perform the tasks

Taylors Contribution to Management:

Demonstrated the importance of compensation for performance
Initiated the careful study of tasks and jobs
Demonstrated the importance of personnel selection and training

iii. FAYOL’S ADMNISTRATIVE MANAGEMENT:

Henry Fayol is a French Industrialist and the father of modern operational management theory. Fayol
recognized the following organizational activities.

Organizational Activities: Fayol divided the activities of organization into 6 groups:

1) Technical (related to production)
2) Commercial (buying, selling and exchange)
3) Financial (search for capital and its optimum use)
4) Security (protection of property and person)
5) Accounting
6) Managerial (planning, organizing, commanding, coordinating and controlling)
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 Among the above activities Fayol considered managerial activities are the most important for the success
of business and he concentrated more on that. He developed 14 principles called as general principles of
management, management can become effective by practicing them in the organization.

GENERAL PRINCIPLES OF MANAGEMENT: Henri Fayol, developed a set of 14 principles:

1. Division of work: It is helpful to take the advantage of specialization. Here, the work is divided among
the members of the group based on the employees’ skills and talents. It can be applied at all levels of
the organization.

2. Authority and Responsibility: Fayol finds authority as a continuation of official and personal factors.
Official authority is derived from the manager’s position and personal authority is derived from
personal qualities such as intelligence, experience, moral worth, past services, etc., Responsibility
arises out of assignment of activity. In order to discharge the responsibility properly, there should be
parity between authority and responsibility.

3. Discipline: All the personal serving in an organization should be disciplined. Discipline is obedience,
application, behavior and outward mark of respect shown by employees.

4. Unity of Command: Unity of command means that a person should get orders from only one superior.
Fayol has considered unity of command as an important aspect in managing an organization. He says
that “should it be violated, authority is undermined, discipline is in jeopardy, order disturbed, and
stability threatened.”

5. Unity of Direction: According to this principle, each group of activities with the same objective must
have one head and one plan. It is concerned with functioning of the organization I respect of grouping
of activities or planning. Unity of direction provides better coordination among various activities to be
undertaken by an organization.

6. Subordination of individual interest to general interest: Individual interest must be subordinate to

general interest when there is conflict between the two. However, factors like ambition, laziness,
weakness, etc., tend to reduce the importance of general interest. Therefore, superiors should set an
example in fairness and goodness.

7. Remuneration to Personnel: Remuneration to employees should be fair and provide maximum

possible satisfaction to employees and employers. Fayol did not favor profit sharing plan for workers
but advocated it for managers. He was also in favor of non-financial benefits.

8. Centralization: Everything which goes to increase the importance of subordinate’s role is

decentralization; everything which goes to reduce it is centralization. The degree of centralization or
decentralization is determined by the needs of the company.

9. Scalar Chain: There should be a scalar chain of authority and of communication ranging from the
highest to the lowest. It suggests that each communication going up or coming down must flow
through each position in the line of authority. It can be short-circuited only in special circumstances.

10. Order: This is a principle relating to the arrangement of things and people. In material order, there
should be a place for everything and everything should be in its place. Similarly, in social order, there
should be the right man in the right place.

11. Equity: Equity is the combination of justice and kindness. Equity in treatment and behavior is liked by
everyone and it brings loyalty in the organization. The application of equity requires good sense,
experience and good nature.

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 12. Stability of tenure: No employee should be removed within short time. There should be reasonable
security of jobs. Stability of tenure is essential to get an employee accustomed to new work and
succeeding in doing it well

13. Initiative: Within the limits of authority and discipline, managers should encourage their employees
for taking initiative. Initiative is concerned with thinking out and execution of a plan. Initiative
increases zeal and energy on the part of human beings.

14. Esprit de corps: Union is strength, and it comes from the harmony and mutual understanding of the
personnel. Management should not follow the policy of ‘divide and rule’. Rather it should strive to
maintain team spirit and co-operation among employees so that they can work together as a team for
the accomplishment of common objectives.

II. NEO CLASSICAL APPROACH TO MANAGEMENT:

The word neo means new and the word classical refers to work done by group of economists in the back
(18th & 19th) century.

i. Human Relations Movement

a. Elton Mayo’s Hawthorne Experiment

ii. Behavioral System

a. Abraham Maslow’s Hierarchy of Needs
b. Douglas McGregor’s Theory X & Theory Y
c. Frederick Herzberg’s Two Factor Theory of Motivation

i. HUMAN RELATIONS MOVEMENT:

A human relation is the relationship between human resources of the organization. It incorporates
management-employees, employees-employees relationship. The approach of human relations deals
with the psychological variables of organisational functioning in order to increase the efficiency of
organisations.

i. a. THE HAWTHORNE STUDIES:

Workers in the Hawthorne experiments reacted positively because management cared about them. The
Hawthorne effect is the tendency of people to behave differently when they receive attention because
they respond to the demands of the situation.

ii. BEHAVIORAL SYSTEM:

It can also be called as mature version of human relation theory. This theory is how the managers
should behave to motivate the employees and encourage them to perform at high levels and be
committed to the achievement of organizational goals.
The Behavioral Theory of Management, often referred to as Neo-Classical Management Theory,
focuses upon individual behavior, motivations, and social interactions. Specifically, it incorporates the
study of human behavior through psychology, sociology, and anthropology.

ii. a. ABRAHAM MASLOW’S HIERARCHY OF NEEDS:

Maslow proposed that human behavior is purposeful and is motivated by the desire to satisfy needs and
that lower-level needs must be met before a person can focus on the next level of needs. A need that is
satisfied no longer motivates. An unmet need is a primary motivator. Thus, Maslow’s hierarchy
provides managers with a visual representation of employee motivation.

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Abraham Harold Maslow, in his 1943 paper “A Theory of Human Motivation,” proposed that people
are motivated by five categories of needs: physiological, safety, love, esteem, and self-actualization.
These needs are represented as a pyramid, with basic physiological needs such as food, water and
shelter at the base and the need for self-actualization at the top. According to him, there is hierarchy for
need, which is presented in the following way.

Physiological needs: These refer to basic physical needs like drinking when thirsty or eating when
hungry. Until these needs are satisfied to the degree needed for the efficient operation of the body, the
majority of a person’s activities will probably at this level, and the other level will provide him with
little motivation.
A famous saying ‘man can live on bread alone if there is no bread’ suggests that man first try to
acquire necessities for their survival.

Safety Needs: Once physiological needs are satisfied to a reasonable level, the next level in the
hierarchy is safety. Safety means being free of physical danger or self-preservation. In the industrial
society, employee can be motivated through either positive action like pension plan, insurance plan
etc... Or negative actions like laid off or demotions.

Social needs: After the first two needs are satisfied, social needs become important in the need
hierarchy. Since man is a social being, he has a need to belong and to be accepted by various groups. In
the organisation, workers form informal group environment to support unfulfilled social needs such as
affiliation.
Esteem needs: These needs are concerned with self-respect, self-confidence, a feeling of personal
worth, feeling of being unique and recognition. Satisfaction of these needs produces feelings of self-
confidence, prestige, power and control. These needs are satisfied through adaptive behaviour, matured
behaviour or with irresponsible actions.

Self-actualization needs: It is the need to maximize one’s potential, whatever it may be. It is related
with the development of intrinsic capabilities which lead people to seek situations that can utilize their
potential. This includes competence which implies control over environmental factors both physical
and social and achievement.

Conclusion: Maslow suggest that the various levels are interdependent and overlapping, each higher-
level need emerging before the lower-level need has been completely satisfied. Since one need does
not disappear when another emerges, all needs tend to be partially satisfied in each area. Psychologist’s
claims that need have a certain priority, as the more basic needs are satisfied, an individual seeks to
satisfy the higher needs. If his basic needs are not met, efforts to satisfy the higher needs should be
postponed.

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ii. b. DOUGLAS Mc GREGOR’S THEORY:

Douglas McGregor presented two sets of assumptions managers make about the nature of their
employees, these sets are named as theory X and theory Y.
Under theory X, it is assumed that:
• employees are inherently lazy
• they require constant guidance and support
• sometimes they require even coercion and control
• given an opportunity, they would like to avoid responsibility
• they don’t show up any ambition but always seek security
To explain theory X, McGregor elaborated Taylor's observations about workers using the rule of
thumb approach.

Theory Y focuses a totally different set of assumptions about the employees.

Theory Y states that
• some employees consider work as natural as play or rest
• these employees are capable of directing and controlling performance on their own. They are
much committed to the objectives of the organisation
• higher rewards make these employees more committed to organisation
• given an opportunity, they not only accept responsibility but also look for opportunities to
outperform others
• most of them are highly imaginative, creative, and display ingenuity in handling organisational
issues

iii. b. HERZBERG’S MOTIVATION – HYGIENE THEORY:

Frederick Hertzberg conducted a structured interview Programme to analyze the experience and
feelings of 200 engineers and accountants in nine different companies in Pittsburg area, U.S.A. During
the structured interview, they were asked to describe a few previous job experiences in which they felt
‘exceptionally good’ or exceptionally bad about jobs.
In his analysis, he found that there are some job conditions which operate primarily to dissatisfy
employees when the conditions are absent, however their presence does not motivate them in a strong
way. Another set of job conditions operates primarily to build strong motivation and high job
satisfaction, but their absence rarely proves strongly dissatisfying.
The first set of job conditions has been referred to as maintenance or hygiene factors and second set of
job conditions as motivational factors.

• Hygiene Factors: Hygiene factors are the basic requirements such as company policies and
procedures, salary, security, supervision, working conditions, personal and social life, and so on. If
these are provided, it may not lead to happiness. But if these are not provided, it may lead to
unhappiness. In other words, hygiene factors do not motivate. These-set minimum criteria for normal
functioning of the organisation. If these are provided, people can work in the organisation in the
normal way. But if these are not provided, it results in dissatisfaction.

• Motivational Factors: The other set comprising motivators refers to the higher order needs such as-
recognition on the job front, awards and rewards, challenging assignments, promotion, and so forth.
All these needs are built around the nature and content of the job. Where these, at least a few, are taken
care of, it leads to satisfaction. If not, it may not result in satisfaction. But it does not definitely end up
in dissatisfaction.

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 III. MODERN APPROACH TO MANAGEMENT

A. QUANTITATIVE APPROACH:

This approach emphases the use of mathematical models in solving many complex management
problems. The quantitative tools and methodologies, known as Operations Research Techniques are
designed to aid in decision making relating to operations and production.

These operational research techniques are extensively used in many fields. Some of them are:

(i) Capital budgeting,

(ii) Production scheduling
(iii) Planning for manpower development programs
(iv) Inventory control
(v) Transportation and aircraft scheduling
(vi) Resource allocation
(vii) Queuing theory or waiting line and service problems
(viii) Preventive control and replacement problems
(ix) Competitive problems and problems of game theory.

B. SYSTEMS APPROACH TO MANAGEMENT:

A system, by concept, is a collection of interrelated parts called sub-systems, which constitute one
whole unit. Systems approach facilitates the study of each of these parts in detail to have a close
understanding of the whole system.

Human body is often cited as the best example for a system. In human body we have different sub-
systems such as digestive system, central nervous system, and so on. Every part of the body such as the
eyes, brain, heart, and so forth, can also be viewed as a sub-system. A study of each of the parts of the
body is necessary to understand the whole body.
Systems theory treats an organization as a system, with all the distinct parts of the organization
interacting to create a complex whole. A system can be either closed or open, but most approaches
treat an organization as an open system. An organisation as a system has five basic parts:

1. Input 2. Process 3. Output 4. Feedback and 5. Environment

Systems approach to management provides a conceptual basis as well as guidelines for establishing a
more efficient system for planning, organisation, directing and controlling. It forces the manager to

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 look upon his business as an open adaptive system. Information is an important part of the system
because an organisation must act and interact with its environment.

Systems are of two types:

Closed system: Closed system has no interaction with the outside world.
Open system: Continually interacts with its environment. All living systems are open system.

Features of Systems Approach to Management

1. An organisation is a whole system consists of many sub-systems.

2. All the sub-systems are mutually related to each other.
3. The sub-parts should be studied in their interrelated and interdependent relationships rather than in
isolation from each other.
4. The organisation provides a boundary, which separates it from other systems. It determines which parts are
internal and which parts are external.
5. Organisation is an open system and it interacts with its environment.
6. As a system an organisation draws inputs (energy. Information, materials, etc.). From its environment. It
transforms these inputs and returns the output back into the environment in the form of goods and services.
7. Every system is a part of a super system.

C. IT APPROACH TO MANAGEMENT:

The current trend is that every manager embraces Information Technology (IT) solutions for delivering
quality services with improved administration. IT empowers everyone to perform effectively and
efficiently, for instance, retailers adopt new technologies, such as – the self-scanners; Indian Railways
adopt surge pricing wherein the railway tickets cost more when there is heavy demand – if the demand is
less, the tickets cost less.

In other words, IT has become an integral part of our lives. Virtually there is no sector which is not
revolutionized by IT. IT is extensively deployed to develop IT applications, business solutions and
devices. The extent has been so widespread that one can switch on the air conditioner even while sitting
at the office.

IT approach to management has directly triggered to cost reduction and profit maximization besides
increasing service efficiency.

IT approach to management has contributed to improvement in quality of life, shortening of transaction

time, large number of jobs in both software and hardware.

The IT approach to management delivers a unique experience to every stakeholder including customer,
employee, team leaders, management, owners, and general public and regulatory agencies.

D. CONTINGENCY APPROACH:

Another important approach which has arisen because of the inadequacy of the Quantitative,
Behavioral and System Approach to management is the Contingency Approach. Pigors and Myers
propagated this approach in 1950.

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This approach is based on the concept that there is ‘no one best way’ in management. For every
situation there is a set of circumstances, which determine how a situation is to be dealt with. This
approach is sometimes also called the ‘Situational Approach’. As given by the name, it is all about
dealing with a situation by focus on it alone and not comparing with any other. It states that every
situation is unique and not one situation is same as another; and each situation should be dealt
differently. These days especially, this approach is probably the most commonly used due to the very
dynamic environment we face in the business world. One day a firm could be a leader in its industry,
the next, a certain technology comes out with disruptive innovation and the firm goes totally bankrupt.
So, managers need to be able to quickly shift and adjust their goals and have very flexible plans.

The best management practice comes from applying a bit of all the approaches, especially where
needed. However, there has never been a time with a more dynamic business environment than today’s
and where people cared so much for their quality of life and job satisfaction. Thus, although all the
approaches are still very useful, the Contingency and Behavioral approach is probably the most
prominent these days.

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